-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UEJaSPMim9sWvoMfyZJY4vjI2oKcfnl/xCGpk11CYjaLFte+YXTybAb+LkunX14u FhV2pljOyeJh8D3QGdxEgg== 0000950134-09-004049.txt : 20090227 0000950134-09-004049.hdr.sgml : 20090227 20090227172429 ACCESSION NUMBER: 0000950134-09-004049 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20081231 FILED AS OF DATE: 20090227 DATE AS OF CHANGE: 20090227 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APARTMENT INVESTMENT & MANAGEMENT CO CENTRAL INDEX KEY: 0000922864 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 841259577 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13232 FILM NUMBER: 09644419 BUSINESS ADDRESS: STREET 1: 4582 S ULSTER ST PARKWAY CITY: DENVER STATE: CO ZIP: 80237 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 4582 S ULSTER ST PARKWAY CITY: DENVER STATE: CO ZIP: 80237 10-K 1 d66458e10vk.htm FORM 10-K e10vk
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
 
     
(Mark One)    
þ
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
    For the fiscal year ended December 31, 2008
or
o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period from          to          
 
Commission File Number 1-13232
Apartment Investment and Management Company
(Exact name of registrant as specified in its charter)
 
     
Maryland
  84-1259577
(State or other jurisdiction of
incorporation or organization) 		  (I.R.S. Employer
Identification No.)
4582 South Ulster Street Parkway, Suite 1100
Denver, Colorado
(Address of principal executive offices) 		  80237
(Zip Code)
 
Registrant’s telephone number, including area code: (303) 757-8101
 
Securities Registered Pursuant to Section 12(b) of the Act:
 
     
Title of Each Class
 
Name of Each Exchange on Which Registered
 
Class A Common Stock
  New York Stock Exchange
Class G Cumulative Preferred Stock
  New York Stock Exchange
Class T Cumulative Preferred Stock
  New York Stock Exchange
Class U Cumulative Preferred Stock
  New York Stock Exchange
Class V Cumulative Preferred Stock
  New York Stock Exchange
Class Y Cumulative Preferred Stock
  New York Stock Exchange
 
Securities Registered Pursuant to Section 12(g) of the Act: none
 
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.  Yes þ     No o
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o     No þ
 
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 þ     No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
             
Large accelerated filer þ
  Accelerated filer o   Non-accelerated filer o
(Do not check if a smaller reporting company) 		  Smaller reporting company o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o     No þ
 
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant was approximately $2.8 billion as of June 30, 2008. As of February 25, 2009, there were 117,298,253 shares of Class A Common Stock outstanding.
 
 
 
 
DOCUMENTS INCORPORATED BY REFERENCE
 
Portions of the registrant’s definitive proxy statement to be issued in conjunction with the registrant’s annual meeting of stockholders to be held April 27, 2009, are incorporated by reference into Part III of this Annual Report.
 

 

 
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
 
TABLE OF CONTENTS
 
ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended December 31, 2008
 
                 
Item
      Page
 
  1.     Business     2  
  1A.     Risk Factors     9  
  1B.     Unresolved Staff Comments     17  
  2.     Properties     17  
  3.     Legal Proceedings     18  
  4.     Submission of Matters to a Vote of Security Holders     18  
 
                 
  5.     Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities     19  
  6.     Selected Financial Data     22  
  7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations     23  
  7A.     Quantitative and Qualitative Disclosures About Market Risk     42  
  8.     Financial Statements and Supplementary Data     43  
  9.     Changes in and Disagreements With Accountants on Accounting and Financial Disclosure     43  
  9A.     Controls and Procedures     44  
  9B.     Other Information     46  
 
  10.     Directors, Executive Officers and Corporate Governance     46  
  11.     Executive Compensation     46  
  12.     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters     46  
  13.     Certain Relationships and Related Transactions, and Director Independence     46  
  14.     Principal Accountant Fees and Services     46  
 
  15.     Exhibits and Financial Statement Schedules     47  
 EX-3.1
 EX-21.1
 EX-23.1
 EX-31.1
 EX-31.2
 EX-32.1
 EX-32.2
 EX-99.1


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FORWARD-LOOKING STATEMENTS
 
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Annual Report contains or may contain information that is forward-looking, including, without limitation, statements regarding the effect of acquisitions and redevelopments, our future financial performance, including our ability to maintain current or meet projected occupancy, rent levels and same store results, and the effect of government regulations. Actual results may differ materially from those described in these forward-looking statements and, in addition, will be affected by a variety of risks and factors, some of which are beyond our control, including, without limitation: financing risks, including the availability and cost of financing and the risk that our cash flows from operations may be insufficient to meet required payments of principal and interest; earnings may not be sufficient to maintain compliance with debt covenants; national and local economic conditions; energy costs; the terms of governmental regulations that affect us and interpretations of those regulations; the competitive environment in which we operate; real estate risks, including fluctuations in real estate values and the general economic climate in the markets in which we operate and competition for tenants in such markets; insurance risk; acquisition and development risks, including failure of such acquisitions to perform in accordance with projections; the timing of acquisitions and dispositions; natural disasters and severe weather such as hurricanes; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us. In addition, our current and continuing qualification as a real estate investment trust involves the application of highly technical and complex provisions of the Internal Revenue Code and depends on our ability to meet the various requirements imposed by the Internal Revenue Code, through actual operating results, distribution levels and diversity of stock ownership. Readers should carefully review our financial statements and the notes thereto, as well as the section entitled “Risk Factors” described in Item 1A of this Annual Report and the other documents we file from time to time with the Securities and Exchange Commission.
 
PART I
 
Item 1.   Business
 
The Company
 
Apartment Investment and Management Company, or Aimco, is a Maryland corporation incorporated on January 10, 1994. We are a self-administered and self-managed real estate investment trust, or REIT, engaged in the acquisition, ownership, management and redevelopment of apartment properties. As of December 31, 2008, we owned or managed a real estate portfolio of 992 apartment properties containing 162,807 apartment units located in 44 states, the District of Columbia and Puerto Rico. We are one of the largest owners and operators of apartment properties in the United States. Our portfolio includes garden style, mid-rise and high-rise properties.
 
We own an equity interest in, and consolidate the majority of, the properties in our owned real estate portfolio. These properties represent the consolidated real estate holdings in our financial statements, which we refer to as consolidated properties. In addition, we have an equity interest in, but do not consolidate for financial statement purposes, certain properties that are accounted for under the equity or cost methods. These properties represent our investment in unconsolidated real estate partnerships in our financial statements, which we refer to as unconsolidated properties. Additionally, we provide property management and asset management services to certain properties, and in certain cases, we may indirectly own generally less than one percent of the operations of such


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properties through a partnership syndication or other fund. Our equity holdings and managed properties are as follows as of December 31, 2008:
 
                 
    Total Portfolio  
    Properties     Units  
 
Consolidated properties
    514       117,719  
Unconsolidated properties
    85       9,613  
Property management
    34       3,252  
Asset management
    359       32,223  
                 
Total
    992       162,807  
                 
 
Through our wholly-owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, we own a majority of the ownership interests in AIMCO Properties, L.P., which we refer to as the Aimco Operating Partnership. As of December 31, 2008, we held an interest of approximately 91% in the common partnership units and equivalents of the Aimco Operating Partnership. We conduct substantially all of our business and own substantially all of our assets through the Aimco Operating Partnership. Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are referred to as “OP Units.” OP Units include common OP Units, partnership preferred units, or preferred OP Units, and high performance partnership units, or High Performance Units. Generally, after a holding period of twelve months, holders of common OP Units may redeem such units for cash or, at the Aimco Operating Partnership’s option, Aimco Class A Common Stock, which we refer to as Common Stock. At December 31, 2008, we had 101,176,232 shares of our Common Stock outstanding and the Aimco Operating Partnership had 9,484,191 common OP Units and equivalents outstanding for a combined total of 110,660,423 shares of Common Stock and OP Units outstanding (excluding preferred OP Units).
 
Since our initial public offering in July 1994, we have completed numerous transactions, including purchases of properties and interests in entities that own or manage properties, expanding our portfolio of owned or managed properties from 132 properties with 29,343 apartment units to a peak of over 2,100 properties with 379,000 apartment units. As of December 31, 2008, our portfolio of owned and/or managed properties consists of 992 properties with 162,807 apartment units.
 
Except as the context otherwise requires, “we,” “our,” “us” and the “Company” refer to Aimco, the Aimco Operating Partnership and their consolidated entities, collectively. As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to a limited partner in a limited partnership or a member in a limited liability company.
 
Available Information
 
Our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to any of those reports that we file with the Securities and Exchange Commission are available free of charge as soon as reasonably practicable through our website at www.aimco.com. The information contained on our website is not incorporated into this Annual Report. Our Common Stock is listed on the New York Stock Exchange under the symbol “AIV.” In 2008, our chief executive officer submitted his annual corporate governance listing standards certification to the New York Stock Exchange, which certification was unqualified.
 
Financial Information About Industry Segments
 
We operate in two reportable segments: real estate (owning, operating and redeveloping apartments) and investment management (portfolio strategy, capital allocation, joint ventures, tax credit syndication, acquisitions, dispositions and other transaction activities). For further information on these segments, see Note 18 of the consolidated financial statements in Item 8, and Management’s Discussion and Analysis in Item 7.
 
Business Overview
 
Our principal financial objective is to increase long-term stockholder value per share, as measured by Economic Income, which consists of cash dividends and changes in Net Asset Value, or NAV, which is the estimated fair value of our assets, net of debt.


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We strive to meet our objectives through:
 
  •  property operations — using scale and technology to increase the effectiveness and efficiency of attracting and retaining apartment residents;
 
  •  portfolio management — allocating capital among geographic markets and apartment property types such as Class A, Class B and Class C with redevelopment potential;
 
  •  redevelopment of properties — making substantial upgrades to the physical plant and, sometimes, to the services offered to residents;
 
  •  earning fee income from providing investment management services such as property management, financial management, accounting, investor reporting, property debt financings, tax credit syndication, redevelopment and construction management;
 
  •  managing our cost and risk of capital by using leverage that is largely long-term, laddered in maturity, non-recourse and property specific; and
 
  •  reducing our general and administrative and certain other costs consistent with the reduced size of our portfolio.
 
Our business is organized around three core activities: Property Operations, Redevelopment, and Investment Management. These three core activities, along with our financial strategy, are described in more detail below.
 
Property Operations
 
Our portfolio is comprised of two business components: conventional and affordable. Our conventional operations, which are market-rate apartments with rents paid by the resident, include 310 properties with 93,444 units. Our affordable operations consist of 289 properties with 33,888 units, with rents that are generally paid, in whole or part, by a government agency. Affordable properties tend to have relatively more stable rents and higher occupancy due to government rent payments and thus are much less affected by market fluctuations.
 
We operate a broad range of property types, from suburban garden-style to urban high-rise properties in 44 states, the District of Columbia and Puerto Rico at a broad range of average monthly rental rates, with most between $700 and $1,200 per month, and reaching as high as $10,000 per month at some of our premier properties. This diversification insulates us, to some degree, from inevitable downturns in any one market.
 
Our property operations currently are organized into five areas, which are further subdivided according to our target markets, which are the largest 20 U.S. markets as measured by total market capitalization, or the total market value of institutional-grade apartment properties in a particular market. To manage our nationwide portfolio more efficiently and to increase the benefits from our local management expertise, we have given direct responsibility for operations within each area to an Area Vice President, or AVP, with regular senior management reviews. To enable the AVPs to focus on sales and service, as well as to improve financial control and budgeting, we have dedicated an area financial officer to support each AVP, and with the exception of routine maintenance, our specialized Construction Services group manages all on-site improvements, thus reducing the need for AVPs to spend time on oversight of construction projects.
 
We seek to improve our corporate-level oversight of property operations by developing better systems, standardizing business goals, operational measurements and internal reporting, and enhancing financial controls over field operations. Our objectives are to focus on the areas discussed below:
 
  •  Customer Service.  Our operating culture is focused on our residents. Our goal is to provide our residents with consistent service in clean, safe and attractive communities. We evaluate our performance through a customer satisfaction tracking system. In addition, we emphasize the quality of our on-site employees through recruiting, training and retention programs, which we believe contributes to improved customer service and leads to increased occupancy rates and enhanced operational performance.
 
  •  Resident Selection and Retention.  In apartment properties, neighbors are a meaningful part of the product, together with the location of the property and the physical quality of the apartment units. Part of our property


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  operations strategy is to focus on resident acquisition and retention — attracting and retaining credit-worthy residents who are good neighbors. We have structured goals and coaching for all of our sales personnel, a tracking system for inquiries and a standardized renewal communication program. We have standardized residential financial stability requirements and have policies and monitoring practices to maintain our resident quality.
 
  •  Revenue Management.  For our conventional properties, we are focusing on people, processes and technology to build a revenue management model that is competitive with the best in our industry. We seek to increase revenue by optimizing the balance between rental and occupancy rates. We are also focused on the automation of on-site operations, as we believe that timely and accurate collection of property performance and resident profile data will enable us to maximize revenue through better property management and leasing decisions. We have standardized policies for new and renewal pricing with timely data and analyses by floor-plan, thereby enabling us to maximize our ability to modify pricing, even in challenging sub-markets. During 2008, we established a centralized revenue management team with leaders from the airline, hospitality and property management industries, and centralized our rental rate pricing function in partnership with our area portfolio management teams.
 
  •  Controlling Expenses.  Cost controls are accomplished by local focus at the area level and by taking advantage of economies of scale at the corporate level. As a result of the size of our portfolio and our area concentrations of properties, we have the ability to spread over a large property base fixed costs for general and administrative expenditures and certain operating functions, such as purchasing, insurance and information technology.
 
  •  Ancillary Services.  We believe that our ownership and management of properties provide us with unique access to a customer base that allows us to provide additional services and thereby increase occupancy and rents, while also generating incremental revenue. We currently provide cable television, telephone services, appliance rental, and carport, garage and storage space rental at certain properties.
 
Capital Replacements and Capital Improvements
 
We believe that the physical condition and amenities of our apartment properties are important factors in our ability to maintain and increase rental rates. In 2008, we spent $101.4 million (Aimco’s share), or $799 per owned apartment unit, for Capital Replacements, which represent the share of expenditures that are deemed to replace the consumed portion of acquired capital assets. Additionally, we spent $124.9 million (Aimco’s share), or $985 per owned apartment unit, for Capital Improvements, which are non-redevelopment capital expenditures that are made to enhance the value, profitability or useful life of an asset from its original purchase condition.
 
Redevelopment
 
In addition to maintenance and improvements of our properties, we focus on the redevelopment of certain properties each year. We believe redevelopment of certain properties in superior locations provides advantages over ground-up development, enabling us to generate rents comparable to new properties with lower financial risk, in less time and with reduced delays associated with governmental permits and authorizations. Redevelopment work also includes seeking entitlements from local governments, which enhance the value of our existing portfolio by increasing density, that is, the right to add residential units to a site. We have historically undertaken a range of redevelopment projects: from those in which a substantial number of all available units are vacated for significant renovations to the property, to those in which there is significant renovation, such as exteriors, common areas or unit improvements, typically done upon lease expirations without the need to vacate units on any wholesale or substantial basis. We have a specialized Redevelopment and Construction Services group, which includes developers, engineers, architects and construction managers, to oversee these projects.
 
Our share of 2008 redevelopment expenditures on active and completed projects totaled $226.3 million and $113.9 million in conventional and affordable redevelopment projects, respectively. During 2008, we completed redevelopment projects at 13 conventional properties and 21 affordable properties with 6,524 and 2,903 units, respectively. During 2008, we delivered 4,817 conventional and 1,780 affordable redeveloped units, respectively, some of which are part of redevelopment projects completed in 2008 and some of which are part of ongoing


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projects. As of December 31, 2008, we had 37 conventional and four affordable redevelopment projects at various stages of completion.
 
In 2009, we expect to decrease our redevelopment expenditures, with an investment between $50.0 and $75.0 million in conventional redevelopment projects and between $30.0 and $45.0 million in affordable redevelopment projects, predominantly funded by third-party tax credit equity.
 
Investment Management
 
Investment management includes activities related to our owned portfolio of properties as well as services provided to affiliated partnerships. Activities and services that fall within Investment Management include portfolio strategy, capital allocation, joint ventures, tax credit syndication, acquisitions, dispositions and other transaction activities. Within our owned portfolio, we refer to these activities as “Portfolio Management” and they include strategic portfolio and capital allocation decisions through transactions to buy, sell or modify our ownership interest in properties, including through the use of partnerships and joint ventures. The purpose of these transactions is to adjust Aimco’s investments to reflect our decisions regarding target allocations to geographic markets and to investment types. When we provide these services with respect to our own investments, there is no separate compensation, and their benefit is seen in property operating results and in investment gains. For affiliated partnerships, we refer to these activities as “Asset Management,” and they include property management, financial management, accounting, investor reporting, property debt financings, tax credit syndication, redevelopment and construction management. When we provide these services to affiliated partnerships, we are separately compensated through fees paid by third party investors. Those fees may be recognized in a subsequent period upon the occurrence of a current transaction or a transaction expected to close within twelve months, or improvement in operations that generates sufficient cash to pay the fees. Although many teams at Aimco are involved in the delivery of these services, the negotiation of transactions for Aimco’s account and the oversight of services provided to others is primarily the responsibility of our Investment Management team.
 
Conventional Portfolio Management
 
Portfolio management involves the ongoing allocation of investment capital to meet our geographic and product type goals. We target geographic balance in Aimco’s diversified portfolio in order to optimize risk-adjusted returns and to avoid the risk of undue concentration in any particular market. We also seek to balance the portfolio by product type, with both high quality properties in excellent locations and also high land value properties that support redevelopment activities.
 
During 2007, we refined our geographic allocation strategy to focus on our target markets. We believe these markets to be deep, relatively liquid and to possess desirable long-term growth characteristics. They are primarily coastal markets, and also include a number of Sun Belt cities and Chicago, Illinois. We may also invest in other markets on an opportunistic basis. Following this strategy through dispositions, acquisitions and redevelopment spending, we have reduced our investment in markets outside our target markets and increased our investment in our target markets. We expect that increased geographic focus will also add to our investment knowledge and increase operating efficiencies based on local economies of scale.
 
Portfolio management also includes dispositions of properties located within markets we intend to exit, properties in less favored locations within our target markets and properties that do not meet our long-term investment criteria. Property sales proceeds are used to fund redevelopment spending, acquisitions, and other corporate purposes, such as debt reduction, preferred stock redemptions or purchases and special dividends. In 2008, we sold 130 conventional properties generating net cash proceeds to us, after repayment of existing debt, payment of transaction costs and distributions to limited partners, of $852.2 million. In 2008, we exited six markets, and as of December 31, 2008, our conventional portfolio included 310 properties with 93,444 units in 40 markets.
 
As of December 31, 2008, conventional properties in our target markets comprised 84.2% of our Net Asset Value (which is the estimated fair value of our assets, net of debt, or NAV) attributable to our conventional properties. Our top five markets by NOI contribution include the metropolitan areas of Washington, D.C.; Los Angeles, California; “Other” Florida (which is comprised of Ft. Lauderdale, Jacksonville, Orlando, Palm Beach County and Tampa); Chicago, Illinois and Boston, Massachusetts.


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During 2008, we invested in our conventional portfolio primarily by funding redevelopment. In 2008, we invested $226.3 million in redevelopment of properties in our conventional portfolio. We also completed acquisitions of three conventional properties, containing approximately 470 residential units for an aggregate purchase price of approximately $111.5 million (excluding transaction costs). These properties are located in San Jose, California, Brighton, Massachusetts and Seattle, Washington.
 
Portfolio management can include the use of partnerships and joint ventures to allow us to attract and serve high quality investment partners, and to rebalance efficiently our geographic market allocation of capital while maintaining our local operating platform and its operational scale.
 
Affordable Portfolio Management
 
The portfolio management strategy for our affordable portfolio is similar to that for our conventional portfolio. During 2008, we invested $113.9 million in redevelopment of affordable properties, funded primarily by proceeds from the sale of tax credits to institutional partners. As with conventional properties, we also seek to dispose of properties that are inconsistent with our long-term investment and operating strategies. During 2008, we sold 25 properties from our affordable portfolio, including six unconsolidated properties, generating net cash proceeds to us, after repayment of existing debt, payment of transaction costs and distributions to limited partners, of $169.8 million. As of December 31, 2008, our affordable portfolio included 289 properties with 33,888 units.
 
Financial Strategy
 
We are focused on improving liquidity and balancing our sources and uses of cash. During 2008, using proceeds from asset dispositions, we repaid in full our $75.0 million term loan which was scheduled for payment in September 2009, repaid all of the outstanding amounts due on our revolving credit facility and repurchased approximately $27.0 million of outstanding variable rate preferred stock. Also during 2008, in connection with property dispositions, we repaid approximately $1.1 billion in non-recourse property debt. As of December 31, 2008, the amount available under our revolving credit facility, which matures in May 2010 (inclusive of a one-year extension option we expect to exercise), was $578.8 million (after giving effect to $56.2 million outstanding for undrawn letters of credit issued under the revolving credit facility). Additionally, we had $72.0 million of available capacity on our $200.0 million non-recourse secured credit facility which, inclusive of two one-year extension options, matures in October 2012. During 2009, we intend to use proceeds from asset dispositions to continue to reduce the remaining balance on our term loan, which matures in March 2011. That term loan has an outstanding balance of $350.0 million after we repaid $50.0 million in January 2009. Other than the term loan and any borrowings under the revolving credit facility, we have no recourse corporate debt.
 
Our revolving credit facility includes customary financial covenants, including the maintenance of specified ratios with respect to total indebtedness to gross asset value, total secured indebtedness to gross asset value, aggregate recourse indebtedness to gross asset value, variable rate debt to total indebtedness, debt service coverage and fixed charge coverage; the maintenance of a minimum adjusted tangible net worth; and limitations regarding the amount of cross-collateralized debt. The credit facility includes other customary covenants, including a restriction on distributions and other restricted payments, but permits distributions during any four consecutive fiscal quarters in an aggregate amount of up to 95% of our funds from operations for such period, subject to certain non-cash adjustments, or such amount as may be necessary to maintain our REIT status. These covenants are calculated on a quarterly basis and are monitored as various strategic decisions are considered. We were in compliance with all such covenants as of December 31, 2008.
 
We are also focused on minimizing our cost of capital on a risk-adjusted basis. We primarily use non-recourse property debt with laddered maturities and minimize reliance on corporate debt. The lower risk inherent in non-recourse property debt permits us to operate with higher debt leverage and a lower weighted average cost of capital. We use floating rate property and corporate debt to provide lower interest costs over time at a level that considers acceptable earnings volatility. During 2008, we closed property loans totaling $962.2 million at an average interest rate of 5.51%, which included the refinancing of property loans totaling $472.9 million with prior interest rates averaging 5.58%. In addition to the refinancing activity, the property loans included new financings on existing properties, redevelopment loans and the modification of terms on existing property debt. In 2009, 2010 and 2011, 38


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property loans will mature and our share of these maturities totals $273.9 million, $279.9 million and $102.3 million, respectively. We expect to refinance a number of such loans in the first half of 2009.
 
Competition
 
In attracting and retaining residents to occupy our properties we compete with numerous other housing alternatives. Our properties compete directly with other rental apartments as well as condominiums and single-family homes that are available for rent or purchase in the markets in which our properties are located. Principal factors of competition include rent or price charged, attractiveness of the location and property and quality and breadth of services. The number of competitive properties relative to demand in a particular area has a material effect on our ability to lease apartment units at our properties and on the rents we charge. In certain markets there exists oversupply of single family homes and condominiums and household consolidation, both of which affect the pricing and occupancy of our rental apartments. Additionally, we compete with other real estate investors, including other apartment REITs, pension and investment funds, partnerships and investment companies in acquiring, redeveloping and managing apartment properties. This competition affects our ability to acquire properties we want to add to our portfolio and the price that we pay in such acquisitions.
 
Taxation
 
We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, which we refer to as the Code, commencing with our taxable year ended December 31, 1994, and intend to continue to operate in such a manner. Our current and continuing qualification as a REIT depends on our ability to meet the various requirements imposed by the Code, which relate to organizational structure, distribution levels, diversity of stock ownership and certain restrictions with regard to owned assets and categories of income. If we qualify for taxation as a REIT, we will generally not be subject to United States Federal corporate income tax on our taxable income that is currently distributed to stockholders. This treatment substantially eliminates the “double taxation” (at the corporate and stockholder levels) that generally results from an investment in a corporation.
 
Even if we qualify as a REIT, we may be subject to United States Federal income and excise taxes in various situations, such as on our undistributed income. We also will be required to pay a 100% tax on any net income on non-arm’s length transactions between us and a TRS (described below) and on any net income from sales of property that was property held for sale to customers in the ordinary course. We and our stockholders may be subject to state or local taxation in various state or local jurisdictions, including those in which we transact business or our stockholders reside. In addition, we could also be subject to the alternative minimum tax, or AMT, on our items of tax preference. The state and local tax laws may not conform to the United States Federal income tax treatment. Any taxes imposed on us reduce our operating cash flow and net income.
 
Certain of our operations (property management, asset management, risk, etc.) are conducted through taxable REIT subsidiaries, each of which we refer to as a TRS. A TRS is a C-corporation that has not elected REIT status and, as such, is subject to United States Federal corporate income tax. We use TRS entities to facilitate our ability to offer certain services and activities to our residents and investment partners, as these services and activities generally cannot be offered directly by the REIT.
 
Regulation
 
General
 
Apartment properties and their owners are subject to various laws, ordinances and regulations, including those related to real estate broker licensing and regulations relating to recreational facilities such as swimming pools, activity centers and other common areas. Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions, as well as changes in laws affecting development, construction and safety requirements, may result in significant unanticipated expenditures, which would adversely affect our net income and cash flows from operating activities. In addition, future enactment of rent control or rent stabilization laws, such as legislation that has been considered in New York, or other laws regulating multifamily housing may reduce rental revenue or increase operating costs in particular markets.


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Environmental
 
Various Federal, state and local laws subject property owners or operators to liability for management, and 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 or presence of the hazardous substances. In connection with the ownership, operation and management of properties, we could potentially be liable for environmental liabilities or costs associated with our properties or properties we acquire or manage in the future. These and other risks related to environmental matters are described in more detail in Item 1A, “Risk Factors.”
 
Insurance
 
Our primary lines of insurance coverage are property, general liability, and workers’ compensation. We believe that our insurance coverages adequately insure our properties against the risk of loss attributable to fire, earthquake, hurricane, tornado, flood, terrorism and other perils, and adequately insure us against other risk. Our coverage includes deductibles, retentions and limits that are customary in the industry. We have established loss prevention, loss mitigation, claims handling, litigation management and loss reserving procedures to manage our exposure.
 
Employees
 
At December 31, 2008, we had approximately 4,500 employees, of which approximately 3,400 were at the property level, performing various on-site functions, with the balance managing corporate and area operations, including investment and debt transactions, legal, financial reporting, accounting, information systems, human resources and other support functions. Unions represent approximately 120 of our employees. We have never experienced a work stoppage and believe we maintain satisfactory relations with our employees.
 
As further described in Note 3 to the consolidated financial statements in Item 8, we initiated an organizational restructuring during 2008. As a result of the restructuring, we plan to eliminate approximately 300 jobs on or before March 1, 2009, with reductions in staffing within corporate, redevelopment and construction services, property management and investment management functions. Approximately half of the planned job eliminations had been completed at December 31, 2008.
 
Item 1A.   Risk Factors
 
The risk factors noted in this section and other factors noted throughout this Annual Report, describe certain risks and uncertainties that could cause our actual results to differ materially from those contained in any forward-looking statement.
 
Our existing and future debt financing could render us unable to operate, result in foreclosure on our properties, prevent us from making distributions on our equity or otherwise adversely affect our liquidity.
 
We are subject to the risk that our cash flow from operations will be insufficient to make required payments of principal and interest, and the risk that existing indebtedness may not be refinanced or that the terms of any refinancing will not be as favorable as the terms of existing indebtedness. If we fail to make required payments of principal and interest on secured debt, our lenders could foreclose on the properties and other collateral securing such debt, which would result in loss of income and asset value to us. As of December 31, 2008, substantially all of the properties that we owned or controlled were encumbered by debt. Our organizational documents do not limit the amount of debt that we may incur, and we have significant amounts of debt outstanding. Payments of principal and interest may leave us with insufficient cash resources to operate our properties or pay distributions required to be paid in order to maintain our qualification as a REIT.
 
Our strategy is generally to incur debt to increase the return on our equity while maintaining acceptable coverage ratios. For the year ended December 31, 2008, we had a ratio of free cash flow (net operating income less spending for capital replacements) to combined interest expense and preferred stock dividends of 1.43:1. For the year ended December 31, 2008, as calculated based on the provisions in our credit agreement, which is further


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discussed in Note 7 to the consolidated financial statements in Item 8, we had a ratio of earnings before interest, taxes and depreciation and amortization to debt service of 1.63:1 and a ratio of earnings to fixed charges of 1.43:1.
 
At December 31, 2008, we had swap positions with two financial institutions totaling $422.1 million. The related swap agreements provide for collateral calls to maintain specified loan-to-value ratios. In the event the values of the real estate properties serving as collateral under these agreements decline, we may be required to provide additional collateral pursuant to the swap agreements, which would adversely affect our cash flows.
 
Disruptions in the financial markets could affect our ability to obtain financing and the cost of available financing and could adversely affect our liquidity.
 
Our ability to obtain financing and the cost of such financing depends on the overall condition of the United States credit markets and the level of involvement of certain government sponsored entities, specifically, Federal Home Loan Mortgage Corporation, or Freddie Mac, and Federal National Mortgage Association, or Fannie Mae, in secondary credit markets. Recently the United States credit markets have experienced significant liquidity disruptions, which have caused the spreads on debt financings to widen considerably and have made obtaining financing, both non-recourse property debt and corporate borrowings, such as our term loan or revolving credit facility, more difficult.
 
Further or prolonged disruptions in the credit markets could result in Freddie Mac or Fannie Mae reducing their level of involvement in secondary credits markets which would adversely affect our ability to obtain non-recourse property debt financing. Additionally, further or prolonged disruptions in the credit markets could lead to the failure of additional financial companies, some of which may have financial commitments within our revolving credit facility. This may affect our access to liquidity through our credit facility’s scheduled maturity in May 2010 (inclusive of a one-year extension option we expect to exercise). When the revolving credit facility matures, disruptions in the credit markets may also affect our ability to renew such credit facility with similar commitments.
 
If our ability to obtain financing is adversely affected, we may be unable to satisfy scheduled maturities on existing financing through other sources of liquidity, which could result in lender foreclosure on the properties securing such debt and loss of income and asset value, each of which would adversely affect our liquidity.
 
Increases in interest rates would increase our interest expense and reduce our profitability.
 
As of December 31, 2008, we had approximately $1,309.5 million of variable-rate indebtedness outstanding and $73.0 million of variable rate preferred stock outstanding. Of the total debt subject to variable interest rates, floating rate tax-exempt bond financing was $563.4 million. Floating rate tax-exempt bond financing is benchmarked against the Securities Industry and Financial Markets Association Municipal Swap Index, or SIFMA, rate (previously the Bond Market Association index), which since 1989 has averaged 69% of the 30-day LIBOR rate. If this historical relationship continues, we estimate that an increase in 30-day LIBOR of 1.0% (0.69% in tax-exempt interest rates) with constant credit risk spreads would result in our income before minority interests being reduced by $11.6 million and our income attributable to common stockholders being reduced by $11.1 million on an annual basis. At December 31, 2008, we had approximately $717.2 million in cash and cash equivalents, restricted cash and notes receivable, the majority of which bear interest. We also had approximately $127.3 million of variable rate debt associated with our redevelopment activities, for which we capitalize a portion of the interest expense. The effect of our interest-bearing assets and of capitalizing interest on variable rate debt associated with our redevelopment activities would partially reduce the effect of an increase in variable interest rates. Considering these offsets, the same increase in 30-day LIBOR would result in our income before minority interests being reduced by $3.1 million and our income attributable to common stockholders being reduced by $4.3 million on an annual basis.
 
Failure to generate sufficient net operating income may limit our ability to fund necessary capital expenditures or adversely affect our ability to pay dividends.
 
Our ability to fund necessary capital expenditures on our properties depends on our ability to generate net operating income in excess of required debt payments. If we are unable to fund capital expenditures on our properties, we may not be able to preserve the competitiveness of our properties, which could adversely affect our net operating income.


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Our ability to make payments to our investors depends on our ability to generate net operating income in excess of required debt payments and capital expenditure requirements. Our net operating income and liquidity may be adversely affected by events or conditions beyond our control, including:
 
  •  the general economic climate;
 
  •  competition from other apartment communities and other housing options;
 
  •  local conditions, such as loss of jobs or an increase in the supply of apartments, that might adversely affect apartment occupancy or rental rates;
 
  •  changes in governmental regulations and the related cost of compliance;
 
  •  increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents;
 
  •  changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multifamily housing; and
 
  •  changes in interest rates and the availability of financing.
 
Covenant restrictions may limit our ability to make payments to our investors.
 
Some of our debt and other securities contain covenants that restrict our ability to make distributions or other payments to our investors unless certain financial tests or other criteria are satisfied. Our credit facility provides, among other things, that we may make distributions to our investors during any four consecutive fiscal quarters in an aggregate amount that does not exceed the greater of 95% of our Funds From Operations for such period, subject to certain non-cash adjustments, or such amount as may be necessary to maintain our REIT status. Our outstanding classes of preferred stock prohibit the payment of dividends on our Common Stock if we fail to pay the dividends to which the holders of the preferred stock are entitled.
 
Because real estate investments are relatively illiquid, we may not be able to sell properties when appropriate.
 
Real estate investments are relatively illiquid and cannot always be sold quickly. Our freedom to sell properties is also restricted by REIT tax rules. Thus, we may not be able to change our portfolio promptly in response to changes in economic or other market conditions. We also intend to use proceeds from property sales to repay our corporate debt. Our ability to dispose of assets in the future will depend on prevailing economic and market conditions, including the cost and availability of financing. This could have a material adverse effect on our financial condition or results of operations.
 
Competition could limit our ability to lease apartments or increase or maintain rents.
 
Our apartment properties compete for residents with other housing alternatives, including other rental apartments, condominiums and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale. Competitive residential housing in a particular area could adversely affect our ability to lease apartments and to increase or maintain rental rates. The current challenges in the credit and housing markets have increased housing inventory that competes with our apartment properties.
 
Our subsidiaries may be prohibited from making distributions and other payments to us.
 
All of our properties are owned, and all of our operations are conducted, by the Aimco Operating Partnership and our other subsidiaries. As a result, we depend on distributions and other payments from our subsidiaries in order to satisfy our financial obligations and make payments to our investors. The ability of our subsidiaries to make such distributions and other payments depends on their earnings and cash flows and may be subject to statutory or contractual limitations. As an equity investor in our subsidiaries, our right to receive assets upon their liquidation or reorganization will be effectively subordinated to the claims of their creditors. To the extent that we are recognized


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as a creditor of such subsidiaries, our claims may still be subordinate to any security interest in or other lien on their assets and to any of their debt or other obligations that are senior to our claims.
 
Redevelopment and construction risks could affect our profitability.
 
We intend to continue to redevelop certain of our properties. These activities are subject to the following risks:
 
  •  we may be unable to obtain, or experience delays in obtaining, necessary zoning, occupancy, or other required governmental or third party permits and authorizations, which could result in increased costs or the delay or abandonment of opportunities;
 
  •  we may incur costs that exceed our original estimates due to increased material, labor or other costs;
 
  •  we may be unable to complete construction and lease up of a property on schedule, resulting in increased construction and financing costs and a decrease in expected rental revenues;
 
  •  occupancy rates and rents at a property may fail to meet our expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development by competitors of competing communities;
 
  •  we may be unable to obtain financing with favorable terms, or at all, for the proposed development of a property, which may cause us to delay or abandon an opportunity;
 
  •  we may abandon opportunities that we have already begun to explore for a number of reasons, including changes in local market conditions or increases in construction or financing costs, and, as a result, we may fail to recover expenses already incurred in exploring those opportunities;
 
  •  we may incur liabilities to third parties during the redevelopment process, for example, in connection with resident lease terminations, or managing existing improvements on the site prior to resident lease terminations; and
 
  •  loss of a key member of a project team could adversely affect our ability to deliver redevelopment projects on time and within our budget.
 
If we are not successful in our acquisition of properties, our results of operations could be adversely affected.
 
The selective acquisition of properties is a component of our strategy. However, we may not be able to complete transactions successfully in the future. Although we seek to acquire properties when such acquisitions increase our net income, Funds From Operations or net asset value, such transactions may fail to perform in accordance with our expectations. In particular, following acquisition, the value and operational performance of a property may be diminished if obsolescence or neighborhood changes occur before we are able to redevelop or sell the property.
 
We may be subject to litigation associated with partnership acquisitions that could increase our expenses and prevent completion of beneficial transactions.
 
We have engaged in, and intend to continue to engage in, the selective acquisition of interests in partnerships controlled by us that own apartment properties. In some cases, we have acquired the general partner of a partnership and then made an offer to acquire the limited partners’ interests in the partnership. In these transactions, we may be subject to litigation based on claims that we, as the general partner, have breached our fiduciary duty to our limited partners or that the transaction violates the relevant partnership agreement or state law. Although we intend to comply with our fiduciary obligations and the relevant partnership agreements, we may incur additional costs in connection with the defense or settlement of this type of litigation. In some cases, this type of litigation may adversely affect our desire to proceed with, or our ability to complete, a particular transaction. Any litigation of this type could also have a material adverse effect on our financial condition or results of operations.


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We are self-insured for certain risks, and the cost of insurance, increased claims activity or losses resulting from catastrophic events may affect our operating results and financial condition.
 
We are self-insured for a portion of our consolidated properties’ exposure to casualty losses resulting from fire, earthquake, hurricane, tornado, flood and other perils. We recognize casualty losses or gains based on the net book value of the affected property and any related insurance proceeds. In many instances, the actual cost to repair or replace the property may exceed its net book value and any insurance proceeds. We also insure certain unconsolidated properties for a portion of their exposure to such losses. In addition, we are self-insured for a portion of our exposure to third-party claims related to our employee health insurance plans, workers’ compensation coverage and general liability exposure. With respect to our insurance obligations to unconsolidated properties and our exposure to claims of third parties, we establish reserves at levels that reflect our known and estimated losses. The ultimate cost of losses and the impact of unforeseen events may vary materially from recorded reserves, and variances may adversely affect our operating results and financial condition. We purchase insurance (or reinsurance where we insure unconsolidated properties) to reduce our exposure to losses and limit our financial losses on large individual risks. The availability and cost of insurance are determined by market conditions outside our control. No assurance can be made that we will be able to obtain and maintain insurance at the same levels and on the same terms as we do today. If we are not able to obtain or maintain insurance in amounts we consider appropriate for our business, or if the cost of obtaining such insurance increases materially, we may have to retain a larger portion of the potential loss associated with our exposures to risks. The extent of our losses in connection with catastrophic events is a function of the severity of the event and the total amount of exposure in the affected area. When we have geographic concentration of exposures, a single catastrophe (such as an earthquake) or destructive weather trend affecting a region may have a significant impact on our financial condition and results of operations. We cannot accurately predict catastrophes, or the number and type of catastrophic events that will affect us. As a result, our operating and financial results may vary significantly from one period to the next. While we anticipate and plan for losses, there can be no assurance that our financial results will not be adversely affected by our exposure to losses arising from catastrophic events in the future that exceed our previous experience and assumptions.
 
We depend on our senior management.
 
Our success depends upon the retention of our senior management, including Terry Considine, our chief executive officer. There are no assurances that we would be able to find qualified replacements for the individuals who make up our senior management if their services were no longer available. The loss of services of one or more members of our senior management team could have a material adverse effect on our business, financial condition and results of operations. We do not currently maintain key-man life insurance for any of our employees. The loss of any member of senior management could adversely affect our ability to pursue effectively our business strategy.
 
Government housing regulations may limit the opportunities at some of our properties and failure to comply with resident qualification requirements may result in financial penalties and/or loss of benefits, such as rental revenues paid by government agencies.
 
We own consolidated and unconsolidated equity interests in certain properties and manage other properties that benefit from governmental programs intended to provide housing to people with low or moderate incomes. These programs, which are usually administered by HUD or state housing finance agencies, typically provide mortgage insurance, favorable financing terms, tax-credit equity, or rental assistance payments to the property owners. As a condition of the receipt of assistance under these programs, the properties must comply with various requirements, which typically limit rents to pre-approved amounts and impose restrictions on resident incomes. Failure to comply with these requirements and restrictions may result in financial penalties or loss of benefits. We usually need to obtain the approval of HUD in order to acquire or dispose of a significant interest in or manage a HUD-assisted property. We may not always receive such approval.
 
During 2008, 2007 and 2006, for continuing and discontinued operations, our rental revenues include $119.1 million, $123.8 million and $135.2 million, respectively, of subsidies from government agencies. Any loss of such benefits would adversely affect our liquidity and results of operations.


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Laws benefiting disabled persons may result in our incurrence of unanticipated expenses.
 
Under the Americans with Disabilities Act of 1990, or ADA, all places intended to be used by the public are required to meet certain Federal requirements related to access and use by disabled persons. Likewise, the Fair Housing Amendments Act of 1988, or FHAA, requires apartment properties first occupied after March 13, 1990, to be accessible to the handicapped. These and other Federal, state and local laws may require modifications to our properties, or affect renovations of the properties. Noncompliance with these laws could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. Although we believe that our properties are substantially in compliance with present requirements, we may incur unanticipated expenses to comply with the ADA and the FHAA in connection with the ongoing operation or redevelopment of our properties.
 
Potential liability or other expenditures associated with potential environmental contamination may be costly.
 
Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property, including lead-based paint. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous 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 properties, we could potentially be liable for environmental liabilities or costs associated with our properties or properties we acquire or manage in the future.
 
Moisture infiltration and resulting mold remediation may be costly.
 
We have been named as a defendant in lawsuits that have alleged personal injury and property damage as a result of the presence of mold. In addition, we are aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements. We have only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure. We have implemented policies, procedures, third-party audits and training, and include a detailed moisture intrusion and mold assessment during acquisition due diligence. We believe these measures will prevent or eliminate mold exposure from our properties and will minimize the effects that mold may have on our residents. To date, we have not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change, we can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on our consolidated financial condition or results of operations.
 
We may fail to qualify as a REIT.
 
If we fail to qualify as a REIT, we will not be allowed a deduction for dividends paid to our stockholders in computing our taxable income, and we will be subject to Federal income tax at regular corporate rates, including any applicable alternative minimum tax. This would substantially reduce our funds available for payment to our investors. Unless entitled to relief under certain provisions of the Code, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. In addition, our failure to qualify as a REIT would place us in default under our primary credit facilities.


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We believe that we operate, and have always operated, in a manner that enables us to meet the requirements for qualification as a REIT for Federal income tax purposes. Our continued qualification as a REIT will depend on our satisfaction of certain asset, income, investment, organizational, distribution, stockholder ownership and other requirements on a continuing basis. Our ability to satisfy the asset tests depends upon our analysis of the fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. Our compliance with the REIT income and quarterly asset requirements also depends upon our ability to manage successfully the composition of our income and assets on an ongoing basis. Moreover, the proper classification of an instrument as debt or equity for Federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT qualification requirements. Accordingly, there can be no assurance that the Internal Revenue Service, or the IRS, will not contend that our interests in subsidiaries or other issuers constitutes a violation of the REIT requirements. Moreover, future economic, market, legal, tax or other considerations may cause us to fail to qualify as a REIT, or our Board of Directors may determine to revoke our REIT status.
 
REIT distribution requirements limit our available cash.
 
As a REIT, we are subject to annual distribution requirements, which generally limit the amount of cash we retain for other business purposes, including amounts to fund our growth. We generally must distribute annually at least 90% of our net REIT taxable income, excluding any net capital gain, in order for our distributed earnings not to be subject to corporate income tax. We intend to make distributions to our stockholders to comply with the requirements of the Code. However, differences in timing between the recognition of taxable income and the actual receipt of cash could require us to sell assets or borrow funds on a short-term or long-term basis to meet the 90% distribution requirement of the Code.
 
We have in the past chosen, and may in the future choose, to pay dividends in our own stock, in which case you may be required to pay income taxes in excess of the cash dividends you receive.
 
We have in the past distributed, and may in the future distribute, taxable dividends that are payable in cash and shares of our Common Stock. Stockholders subject to the payment of income tax receiving such dividends will be required to include the full amount of the dividend as taxable income to the extent of our current and accumulated earnings and profits for U.S. Federal income tax purposes. As a result, a U.S. stockholder may be required to pay income taxes with respect to such dividends in excess of the cash dividends received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our Common Stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our Common Stock.
 
Further, various aspects of such a taxable cash/stock dividend are uncertain and have not yet been addressed by the IRS. No assurance can be given that the IRS will not impose additional requirements in the future with respect to taxable cash/stock dividends, including on a retroactive basis, or assert that the requirements for such taxable cash/stock dividends have not been met.
 
Limits on ownership of shares in our charter may result in the loss of economic and voting rights by purchasers that violate those limits.
 
Our charter limits ownership of our Common Stock by any single stockholder (applying certain “beneficial ownership” rules under the Federal securities laws) to 8.7% of our outstanding shares of Common Stock, or 15% in the case of certain pension trusts, registered investment companies and Mr. Considine. Our charter also limits ownership of our Common Stock and preferred stock by any single stockholder to 8.7% of the value of the outstanding Common Stock and preferred stock, or 15% in the case of certain pension trusts, registered investment companies and Mr. Considine. The charter also prohibits anyone from buying shares of our capital stock if the purchase would result in us losing our REIT status. This could happen if a transaction results in fewer than 100 persons owning all of our shares of capital stock or results in five or fewer persons (applying certain attribution


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rules of the Code) owning 50% or more of the value of all of our shares of capital stock. If anyone acquires shares in excess of the ownership limit or in violation of the ownership requirements of the Code for REITs:
 
  •  the transfer will be considered null and void;
 
  •  we will not reflect the transaction on our books;
 
  •  we may institute legal action to enjoin the transaction;
 
  •  we may demand repayment of any dividends received by the affected person on those shares;
 
  •  we may redeem the shares;
 
  •  the affected person will not have any voting rights for those shares; and
 
  •  the shares (and all voting and dividend rights of the shares) will be held in trust for the benefit of one or more charitable organizations designated by us.
 
We may purchase the shares of capital stock held in trust at a price equal to the lesser of the price paid by the transferee of the shares or the then current market price. If the trust transfers any of the shares of capital stock, the affected person will receive the lesser of the price paid for the shares or the then current market price. An individual who acquires shares of capital stock that violate the above rules bears the risk that the individual:
 
  •  may lose control over the power to dispose of such shares;
 
  •  may not recognize profit from the sale of such shares if the market price of the shares increases;
 
  •  may be required to recognize a loss from the sale of such shares if the market price decreases; and
 
  •  may be required to repay to us any distributions received from us as a result of his or her ownership of the shares.
 
Our charter may limit the ability of a third party to acquire control of us.
 
The 8.7% ownership limit discussed above may have the effect of precluding acquisition of control of us by a third party without the consent of our Board of Directors. Our charter authorizes our Board of Directors to issue up to 510,587,500 shares of capital stock. As of December 31, 2008, 426,157,736 shares were classified as Common Stock, of which 101,176,232 were outstanding, and 84,429,764 shares were classified as preferred stock, of which 24,950,146 were outstanding. Under our charter, our Board of Directors has the authority to classify and reclassify any of our unissued shares of capital stock into shares of capital stock with such preferences, rights, powers and restrictions as our Board of Directors may determine. The authorization and issuance of a new class of capital stock could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in our stockholders’ best interests.
 
Maryland business statutes may limit the ability of a third party to acquire control of us.
 
As a Maryland corporation, we are subject to various Maryland laws that may have the effect of discouraging offers to acquire us and increasing the difficulty of consummating any such offers, even if an acquisition would be in our stockholders’ best interests. The Maryland General Corporation Law restricts mergers and other business combination transactions between us and any person who acquires beneficial ownership of shares of our stock representing 10% or more of the voting power without our Board of Directors’ prior approval. Any such business combination transaction could not be completed until five years after the person acquired such voting power, and generally only with the approval of stockholders representing 80% of all votes entitled to be cast and 662/3% of the votes entitled to be cast, excluding the interested stockholder, or upon payment of a fair price. Maryland law also provides generally that a person who acquires shares of our capital stock that represent 10% or more of the voting power in electing directors will have no voting rights unless approved by a vote of two-thirds of the shares eligible to vote. Additionally, Maryland law provides, among other things, that the board of directors has broad discretion in


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adopting stockholders’ rights plans and has the sole power to fix the record date, time and place for special meetings of the stockholders. In addition, Maryland law provides that corporations that:
 
  •  have at least three directors who are not employees of the entity or related to an acquiring person; and
 
  •  are subject to the reporting requirements of the Securities Exchange Act of 1934,
 
may elect in their charter or bylaws or by resolution of the board of directors to be subject to all or part of a special subtitle that provides that:
 
  •  the corporation will have a staggered board of directors;
 
  •  any director may be removed only for cause and by the vote of two-thirds of the votes entitled to be cast in the election of directors generally, even if a lesser proportion is provided in the charter or bylaws;
 
  •  the number of directors may only be set by the board of directors, even if the procedure is contrary to the charter or bylaws;
 
  •  vacancies may only be filled by the remaining directors, even if the procedure is contrary to the charter or bylaws; and
 
  •  the secretary of the corporation may call a special meeting of stockholders at the request of stockholders only on the written request of the stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting, even if the procedure is contrary to the charter or bylaws.
 
To date, we have not made any of the elections described above.
 
Item 1B.   Unresolved Staff Comments
 
None.
 
Item 2.   Properties
 
Our properties are located in 44 states, the District of Columbia and Puerto Rico. Our geographic allocation strategy focuses on target markets which are grouped by region below. The following table sets forth information on all of our property operations as of December 31, 2008 and 2007:
 
                                 
    2008     2007  
    Number of
 		    Number
 		    Number of
 		    Number
 		 
    Properties     of Units     Properties     of Units  
 
Conventional:
                               
Pacific
    38       10,504       39       10,616  
Northeast
    66       20,169       70       23,490  
Sunbelt
    104       30,928       144       39,554  
Chicago
    19       5,555       22       6,344  
                                 
Total target markets
    227       67,156       275       80,004  
Opportunistic and other markets
    83       26,288       164       47,528  
                                 
Total conventional owned and managed
    310       93,444       439       127,532  
                                 
Affordable owned and managed
    289       33,888       312       37,104  
Property management
    34       3,252       36       3,228  
Asset management
    359       32,223       382       35,176  
                                 
Total
    992       162,807       1,169       203,040  
                                 
 
At December 31, 2008, we owned an equity interest in and consolidated 514 properties containing 117,719 apartment units, which we refer to as “consolidated properties.” These consolidated properties contain, on average, 229 apartment units, with the largest property containing 2,113 apartment units. These properties offer residents a range of amenities, including swimming pools, clubhouses, spas, fitness centers and tennis courts. Many of the apartment units offer features such as vaulted ceilings, fireplaces, washer and dryer hook-ups, cable television,


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balconies and patios. Additional information on our consolidated properties is contained in “Schedule III — Real Estate and Accumulated Depreciation” in this Annual Report on Form 10-K. At December 31, 2008, we held an equity interest in and did not consolidate 85 properties containing 9,613 apartment units, which we refer to as “unconsolidated properties.” In addition, we provided property management services for 34 properties containing 3,252 apartment units, and asset management services for 359 properties containing 32,223 apartment units. In certain cases, we may indirectly own generally less than one percent of the operations of such properties through a partnership syndication or other fund.
 
Substantially all of our consolidated properties are encumbered by mortgage indebtedness. At December 31, 2008, our consolidated properties classified as held for use in our consolidated balance sheet were encumbered by aggregate mortgage indebtedness totaling $6,281.1 million having an aggregate weighted average interest rate of 5.55%. Such mortgage indebtedness was secured by 497 properties with a combined net book value of $8,005.6 million. Included in the 497 properties, we had a total of 37 mortgage loans on 25 properties, with an aggregate principal balance outstanding of $483.7 million, that were each secured by property and cross-collateralized with certain (but not all) other mortgage loans within this group of mortgage loans (see Note 6 of the consolidated financial statements in Item 8 for additional information about our indebtedness).
 
Item 3.   Legal Proceedings
 
See the information under the caption “Legal Matters” in Note 8 of the consolidated financial statements in Item 8 for information regarding legal proceedings, which information is incorporated by reference in this Item 3.
 
Item 4.   Submission of Matters to a Vote of Security Holders
 
No matters were submitted to a vote of security holders during the fourth quarter of 2008.


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PART II
 
Item 5.   Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
Our Common Stock has been listed and traded on the NYSE under the symbol “AIV” since July 22, 1994. The following table sets forth the quarterly high and low sales prices of our Common Stock, as reported on the NYSE, and the dividends declared in the periods indicated:
 
                                 
                      Dividends
 		 
                Dividends
 		    Declared
 		 
                Declared
 		    (per share,
 		 
Quarter Ended
  High(2)     Low(2)     (per share)     adjusted)(3)  
 
2008
                               
December 31, 2008(1)
  $ 43.67     $ 7.01     $ 3.88     $ 3.17  
September 30, 2008(1)
    42.28       29.25       3.00       2.13  
June 30, 2008
    41.24       33.33       0.60       0.43  
March 31, 2008
    41.11       29.91       0.00       0.00  
2007
                               
December 31, 2007(1)
  $ 49.15     $ 33.97     $ 3.11     $ 2.10  
September 30, 2007
    51.62       38.65       0.60       0.41  
June 30, 2007
    58.98       47.10       0.60       0.41  
March 31, 2007
    65.79       54.08       0.00       0.00  
 
 
(1) During 2007 and 2008, our Board of Directors declared special dividends which were paid part in cash and part in shares of Common Stock as noted below. Our Board of Directors declared the dividends to address taxable gains from 2007 and 2008 property sales.
 
                                                         
                                        Effective
 		 
                                        Increase in
 		 
                                        Shares on
 		 
    Payment
 		    Dividend
 		    Total
 		    Portion Paid
 		    Portion Paid
 		    Shares
 		    Record
 		 
Declaration Date
  Date     Declared     Dividend     in Cash     in Stock     Issued     Date  
 
December 21, 2007
    January 30, 2008     $ 2.51     $ 232.9 million     $ 55.0 million     $ 177.9 million       4,594,074       4.95 %
July 18, 2008
    August 29, 2008     $ 3.00     $ 256.9 million     $ 51.4 million     $ 205.5 million       5,731,310       6.70 %
October 16, 2008
    December 1, 2008     $ 1.80     $ 159.6 million     $ 53.2 million     $ 106.4 million       12,572,267       14.18 %
December 18, 2008
    January 29, 2009     $ 2.08     $ 210.4 million     $ 60.6 million     $ 149.8 million       15,627,330       15.45 %
 
(2) High and low sales prices of our Common Stock have not been retroactively adjusted for the effect of additional shares of Common Stock issued pursuant to the special dividends discussed in Note (1) above.
 
(3) Dividends declared per share have been retroactively adjusted for the effect of additional shares of Common Stock issued pursuant to the special dividends discussed in Note (1) above.
 
Our Board of Directors determines and declares our dividends. In making a dividend determination, the Board of Directors considers a variety of factors, including: REIT distribution requirements; current market conditions; liquidity needs and other uses of cash, such as for deleveraging and accretive investment activities, including the repurchase of our common and preferred shares. We have previously announced that we intend to adjust the regular annual per share dividend from $2.40 (or $0.60 per quarter) to $1.00 (or $0.25 per quarter). The Board of Directors may further adjust the dividend amount or the frequency with which the dividend is paid based on then prevailing facts and circumstances.
 
On February 25, 2009, the closing price of our Common Stock was $5.47 per share, as reported on the NYSE, and there were 117,298,253 shares of Common Stock outstanding, held by 3,018 stockholders of record. The number of holders does not include individuals or entities who beneficially own shares but whose shares are held of record by a broker or clearing agency, but does include each such broker or clearing agency as one recordholder.


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As a REIT, we are required to distribute annually to holders of common stock at least 90% of our “real estate investment trust taxable income,” which, as defined by the Code and United States Department of Treasury regulations, is generally equivalent to net taxable ordinary income.
 
From time to time, we issue shares of Common Stock in exchange for common and preferred 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 or the applicable conversion ratio for preferred OP Units. The shares are generally issued in exchange for OP Units in private transactions exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof. During the three and twelve months ended December 31, 2008, approximately 4,400 and 160,000 shares of Common Stock were issued in exchange for common OP Units, respectively. During the three and twelve months ended December 31, 2008, no shares of Common Stock were issued in exchange for preferred OP Units.
 
The following table summarizes repurchases of our equity securities in the quarter ended December 31, 2008(1):
 
                                                 
                            Total Number
 		       
                Total
 		          Of Shares
 		    Maximum Number
 		 
    Total
 		          Number
 		          Purchased
 		    of Shares that
 		 
    Number
 		    Average
 		    of Shares
 		    Average
 		    As Part of Publicly
 		    May Yet Be
 		 
    of Shares
 		    Price Paid
 		    Purchased
 		    Price Paid
 		    Announced Plans or
 		    Purchased Under
 		 
Fiscal period(2)
  Purchased     per Share     (adjusted)     per Share (adjusted)     Programs     Plans or Programs (3)  
 
October 1 — October 31, 2008
    2,018,471     $ 24.77       2,660,765     $ 18.81       2,018,471       19,324,299  
November 1 — November 30, 2008
    —       N/A       —       N/A       —       19,324,299  
December 1 — December 31, 2008
    —       N/A       —       N/A       —       19,324,299  
                                                 
Total
    2,018,471     $ 24.77       2,660,765     $ 18.81       2,018,471          
                                                 
 
 
(1) Our Board of Directors has, from time to time, authorized us to repurchase shares of our outstanding capital stock. As of December 31, 2008, we were authorized to repurchase approximately 19.3 million additional shares. This authorization has no expiration date. These repurchases may be made from time to time in the open market or in privately negotiated transactions.
 
(2) During the year ended December 31, 2008, we repurchased approximately 13.9 million shares of Common Stock for approximately $473.5 million, or $34.02 per share, or 19.3 million shares for $24.48 per share, as adjusted for the special dividends.
 
(3) The number of shares authorized for repurchase was not affected by the special dividends.
 
(4) Since we began repurchasing shares in the third quarter of 2006, we have repurchased approximately 23.7 million shares, or approximately 24.3% of the shares outstanding on July 31, 2006, at an average price of $38.84, or 33.7 million shares for $27.19 per share, as adjusted for the special dividends.
 
Dividend Payments
 
Our Credit Agreement includes customary covenants, including a restriction on dividends and other restricted payments, but permits dividends during any four consecutive fiscal quarters in an aggregate amount of up to 95% of our Funds From Operations for such period, subject to certain non-cash adjustments, or such amount as may be necessary to maintain our REIT status.
 
Performance Graph
 
The following graph compares cumulative total returns for our Common Stock, the Standard & Poor’s 500 Total Return Index (the “S&P 500”), the NASDAQ Composite, the SNL REIT Residential Index and the MSCI US REIT Index. The SNL REIT Residential Index was prepared by SNL Securities, an independent research and publishing firm specializing in the collection and dissemination of data on the banking, thrift and financial services industries.
 
The MSCI US REIT Index is published by Morgan Stanley Capital International Inc., a provider of equity indices. The indices are weighted for all companies that fit the definitional criteria of the particular index and are


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calculated to exclude companies as they are acquired and add them to the index calculation as they become publicly traded companies. All companies of the definitional criteria in existence at the point in time presented are included in the index calculations. The graph assumes the investment of $100 in our Common Stock and in each index on December 31, 2003, and that all dividends paid have been reinvested. The historical information set forth below is not necessarily indicative of future performance.
 
Total Return Performance
 
PERFORMANCE GRAPH
 
                                                 
    For the Years Ended December 31,  
Index   2003     2004     2005     2006     2007     2008  
 
Aimco
    100.00       120.39       127.96       198.59       144.33       88.40  
NASDAQ Composite
    100.00       108.59       110.08       120.56       132.39       78.72  
SNL REIT Residential Index
    100.00       132.64       150.68       210.79       158.12       117.89  
MSCI US REIT
    100.00       131.49       147.44       200.40       166.70       103.40  
S&P 500
    100.00       110.88       116.33       134.70       142.10       89.53  
 
Source: (other than with respect to S&P 500) SNL Financial LC, Charlottesville, VA ©2009.
 
The Performance Graph will not be deemed to be incorporated by reference into any filing by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates the same by reference.
 
The information required by Item 5 with respect to securities authorized for issuance under equity compensation plans is incorporated by reference in Part III, Item 12 of this Annual Report.


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Item 6.   Selected Financial Data
 
The following selected financial data is based on our audited historical financial statements. This information should be read in conjunction with such financial statements, including the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included herein or in previous filings with the Securities and Exchange Commission.
 
                                         
    For the Years Ended December 31,  
    2008     2007(1)     2006(1)     2005(1)     2004(1)  
    (Dollar amounts in thousands, except per share data)  
 
OPERATING DATA:
                                       
Total revenues
  $ 1,457,918     $ 1,376,820     $ 1,274,163     $ 1,058,290     $ 950,894  
Total operating expenses
    (1,253,151 )     (1,135,065 )     (1,044,052 )     (873,442 )     (759,647 )
Operating income
    204,767       241,755       230,111       184,848       191,247  
Income (loss) from continuing operations(2)
    (129,298 )     (53,184 )     (50,104 )     (31,957 )     46,933  
Income from discontinued operations, net(3)
    544,761       83,095       226,891       102,939       220,521  
Cumulative effect of change in accounting principle
    —       —       —       —       (3,957 )
Net income
    415,463       29,911       176,787       70,982       263,497  
Net income attributable to preferred stockholders
    53,708       66,016       81,132       87,948       88,804  
Net income (loss) attributable to common stockholders
    361,755       (36,105 )     95,655       (16,966 )     174,693  
Earnings (loss) per common share — basic and diluted(4):
                                       
Loss from continuing operations (net of income attributable to preferred stockholders)
  $ (1.51 )   $ (0.85 )   $ (0.93 )   $ (0.87 )   $ (0.31 )
Net income (loss) attributable to common stockholders
  $ 2.98     $ (0.26 )   $ 0.68     $ (0.12 )   $ 1.28  
BALANCE SHEET INFORMATION:
                                       
Real estate, net of accumulated depreciation
  $ 8,102,368     $ 7,887,042     $ 7,325,217     $ 6,546,302     $ 6,028,863  
Total assets
    9,403,157       10,606,532       10,289,775       10,019,160       10,074,316  
Total indebtedness
    6,777,121       6,402,972       5,612,045       4,874,966       4,249,107  
Stockholders’ equity
    1,418,434       1,749,704       2,339,892       2,716,103       3,008,160  
OTHER INFORMATION:
                                       
Dividends declared per common share(4)
  $ 5.73     $ 2.92     $ 1.63     $ 2.03     $ 1.63  
Total consolidated properties (end of period)
    514       657       703       619       676  
Total consolidated apartment units (end of period)
    117,719       153,758       162,432       158,548       169,932  
Total unconsolidated properties (end of period)
    85       94       102       264       330  
Total unconsolidated apartment units (end of period)
    9,613       10,878       11,791       35,269       44,728  
Units managed (end of period)(5)
    35,475       38,404       42,190       46,667       49,074  
 
 
(1) Certain reclassifications have been made to conform to the 2008 presentation. These reclassifications primarily represent presentation changes related to discontinued operations in accordance with Statement of Financial Accounting Standards No. 144.
 
(2) Loss from continuing operations for the year ended December 31, 2008, includes a $107.5 million pre-tax provision for impairment losses on real estate development assets, which is discussed further in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7.
 
(3) Income from discontinued operations for the year ended December 31, 2008, includes $618.2 million in gains on disposition of real estate, net of minority partners’ interest, resulting from the sale of 151 properties, which is discussed further in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7.
 
(4) Per share amounts for each of the periods presented have been retroactively adjusted for the effect of shares of Common Stock issued in connection with special dividends paid during 2008 and in January 2009 (see Note 1 to the consolidated financial statements in Item 8 for further discussion of the special dividends).
 
(5) The years ended 2008, 2007, 2006, 2005 and 2004 include 32,223, 35,176, 38,617, 41,421 and 41,233 units, respectively, for which we provide asset management services only, although in certain cases we may indirectly own generally less than one percent of the operations of such properties through a partnership syndication or other fund.


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Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Executive Overview
 
We are a self-administered and self-managed real estate investment trust, or REIT, engaged in the acquisition, ownership, management and redevelopment of apartment properties. Our property operations are characterized by diversification of product, location and price point. As of December 31, 2008, we owned or managed 992 apartment properties containing 162,807 units located in 44 states, the District of Columbia and Puerto Rico. Our primary sources of income and cash are rents associated with apartment leases.
 
The key financial indicators that we use in managing our business and in evaluating our financial condition and operating performance are: NAV; Funds From Operations, or FFO; Adjusted Funds From Operations, or AFFO, which is FFO less spending for Capital Replacements; same store property operating results; net operating income; net operating income less spending for Capital Replacements, or Free Cash Flow; Economic Income; financial coverage ratios; and leverage as shown on our balance sheet. FFO and Capital Replacements are defined and further described in the sections captioned “Funds From Operations” and “Capital Expenditures” below. The key macro-economic factors and non-financial indicators that affect our financial condition and operating performance are: rates of job growth; single-family and multifamily housing starts; interest rates; and availability and cost of financing.
 
Because our operating results depend primarily on income from our properties, the supply and demand for apartments influences our operating results. Additionally, the level of expenses required to operate and maintain our properties, the pace and price at which we redevelop, acquire and dispose of our apartment properties, and the volume and timing of fee transactions affect our operating results. Our cost of capital is affected by the conditions in the capital and credit markets and the terms that we negotiate for our equity and debt financings.
 
As the financial and economic environment became more challenging during 2008, we focused on: serving and retaining residents; controlling costs and increasing efficiency through improved business processes and automation; controlling capital spending; minimizing our cost of capital, building cash and reducing leverage; and upgrading the quality of our portfolio through portfolio management. Additionally, in connection with 2008 property sales and expected reductions in redevelopment and transactional activities, we initiated an organizational restructuring during the fourth quarter of 2008. We expect 2009 to continue to be very difficult and will continue to evaluate our activities and organizational structure, and intend to adjust as necessary.
 
Our portfolio management strategy includes property dispositions and acquisitions aimed at concentrating our portfolio in our target markets. Over the next two years and subject to market conditions and various REIT requirements, we expect to sell approximately $2.0 billion of conventional and affordable assets located primarily outside these target markets.
 
The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with the accompanying consolidated financial statements in Item 8.


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Results of Operations
 
Overview
 
2008 compared to 2007
 
We reported net income of $415.5 million and net income attributable to common stockholders of $361.8 million for the year ended December 31, 2008, compared to net income of $29.9 million and net loss attributable to common stockholders of $36.1 million for the year ended December 31, 2007, increases of $385.6 million and $397.9 million, respectively. These increases were principally due to the following items, all of which are discussed in further detail below:
 
  •  an increase in income from discontinued operations, primarily related to higher net gains on sales of real estate;
 
  •  an increase in gain on dispositions of unconsolidated real estate and other, primarily related to our disposition in 2008 of interests in two unconsolidated real estate partnerships; and
 
  •  an increase in net operating income associated with property operations, reflecting improved operations of our same store properties and other properties.
 
The effects of these items on our operating results were partially offset by:
 
• a provision for impairment losses on real estate development assets;
 
  •  an increase in depreciation and amortization expense, primarily related to completed redevelopments; and
 
  •  a restructuring provision recognized during the fourth quarter of 2008.
 
2007 compared to 2006
 
We reported net income of $29.9 million and net loss attributable to common stockholders of $36.1 million for the year ended December 31, 2007, compared to net income of $176.8 million and net income attributable to common stockholders of $95.7 million for the year ended December 31, 2006, decreases of $146.9 million and $131.8 million, respectively. These decreases were principally due to the following items, all of which are discussed in further detail below:
 
  •  a decrease in income from discontinued operations, primarily due to decreases in net gains on dispositions of real estate;
 
  •  an increase in interest expense, reflecting higher loan principal balances resulting from refinancings, share repurchases and acquisitions; and
 
  •  an increase in depreciation and amortization expense, primarily related to completed redevelopments and newly consolidated properties.
 
The effects of these items on our operating results were partially offset by:
 
  •  an increase in net operating income associated with property operations, reflecting improved operations of our same store properties and other properties; and
 
  •  the recognition in 2007 of deferred debt extinguishment gains in connection with the refinancing of certain mortgage loans that had been restructured in a 1997 bankruptcy settlement.
 
The following paragraphs discuss these and other items affecting the results of our operations in more detail.
 
Business Segment Operating Results
 
We have two reportable segments: real estate (owning, operating and redeveloping apartments) and investment management (portfolio strategy, capital allocation, joint ventures, tax credit syndication, acquisitions, dispositions and other transaction activities). Several members of our executive management team comprise our chief operating decision maker, as defined in FASB Statement of Financial Accounting Standards No. 131, Disclosures About


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Segments of an Enterprise and Related Information, and use various generally accepted industry financial measures to assess the performance and financial condition of the business, including: NAV; FFO; AFFO; same store property operating results; net operating income; Free Cash Flow; Economic Income; financial coverage ratios; and leverage as shown on our balance sheet. The chief operating decision maker emphasizes net operating income as a key measurement of segment profit or loss. Segment net operating income is generally defined as segment revenues less direct segment operating expenses.
 
Real Estate Segment
 
Our real estate segment involves the ownership and operation of properties that generate rental and other property-related income through the leasing of apartment units. Our real estate segment’s net operating income also includes income from property management services performed for unconsolidated partnerships and unrelated parties.
 
The following table summarizes our real estate segment’s net operating income for the years ended December 31, 2008, 2007 and 2006 (in thousands):
 
                         
    Year Ended December 31,  
    2008     2007     2006  
 
Real estate segment revenues:
                       
Rental and other property revenues
  $ 1,350,950     $ 1,296,142     $ 1,212,958  
Property management revenues, primarily from affiliates
    6,345       6,923       12,312  
                         
      1,357,295       1,303,065       1,225,270  
Real estate segment expenses:
                       
Property operating expenses
    626,001       596,902       549,716  
Property management expenses
    5,385       6,678       6,289  
                         
      631,386       603,580       556,005  
                         
Real estate segment net operating income
  $ 725,909     $ 699,485     $ 669,265  
                         
 
Consolidated Conventional Same Store Property Operating Results
 
Same store operating results is a key indicator we use to assess the performance of our property operations and to understand the period over period operations of a consistent portfolio of properties. We define “consolidated same store” properties as our conventional properties (i) that we manage, (ii) in which our ownership interest exceeds 10%, (iii) the operations of which have been stabilized, and (iv) that have not been sold or classified as held for sale, in each case, throughout all periods presented. The following tables summarize the operations of our consolidated conventional rental property operations:
 
                         
    Year Ended December 31,        
    2008     2007     Change  
 
Consolidated same store revenues.
  $ 837,748     $ 821,287       2.0 %
Consolidated same store expenses
    325,514       329,122       (1.1 )%
                         
Same store net operating income
    512,234       492,165       4.1 %
Reconciling items(1)
    213,675       207,320       3.1 %
                         
Real estate segment net operating income
  $ 725,909     $ 699,485       3.8 %
                         
Same store operating statistics:
                       
Properties
    219       219       —  
Apartment units
    69,565       69,565       —  
Average physical occupancy
    94.9 %     94.7 %     0.2 %
Average rent/unit/month
  $ 970     $ 954       1.7 %


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(1) Reflects property revenues and property operating expenses related to consolidated properties other than same store properties (e.g., affordable, acquisition, redevelopment and newly consolidated properties) and casualty gains and losses.
 
For the year ended December 31, 2008, compared to the year ended December 31, 2007, consolidated same store net operating income increased $20.1 million, or 4.1%. Revenues increased $16.5 million, or 2.0%, primarily due to higher average rent (up $16 per unit) and an increase in average physical occupancy. Expenses decreased by $3.6 million, or 1.1%, primarily due to decreases of $2.2 million in repair and maintenance expense, $1.4 million in turnover expense and $1.9 million in employee compensation and related expenses, offset by an increase of $2.0 million in utilities expense.
 
For the year ended December 31, 2008, compared to the year ended December 31, 2007, consolidated real estate segment net operating income related to consolidated properties other than same store properties increased by $6.4 million, or 3.1%. Increases in net operating income attributable to affordable, acquisition and redevelopment properties contributed to the increase, and were partially offset by increases in casualty losses of $6.5 million, including $2.7 million related to Tropical Storm Fay and Hurricane Ike during the year ended December 31, 2008.
 
                         
    Year Ended December 31,        
    2007     2006     Change  
 
Consolidated same store revenues
  $ 821,287     $ 780,052       5.3 %
Consolidated same store expenses
    329,122       315,461       4.3 %
                         
Same store net operating income
    492,165       464,591       5.9 %
Reconciling items(1)
    207,320       204,674       1.3 %
                         
Real estate segment net operating income
  $ 699,485     $ 669,265       4.5 %
                         
Same store operating statistics:
                       
Properties
    219       219       —  
Apartment units
    69,565       69,565       —  
Average physical occupancy
    94.7 %     94.7 %     —  
Average rent/unit/month
  $ 954     $ 914       4.4 %
 
 
(1) Reflects property revenues and property operating expenses related to consolidated properties other than same store properties (e.g., affordable, acquisition, redevelopment and newly consolidated properties) and casualty gains and losses.
 
For the year ended December 31, 2007, compared to the year ended December 31, 2006, consolidated same store net operating income increased $27.6 million, or 5.9%. Revenues increased $41.2 million, or 5.3%, primarily due to higher average rent (up $40 per unit) and a $6.4 million increase in utility reimbursements. Expenses increased by $13.7 million, or 4.3%, primarily due to increases of $5.1 million in employee compensation and related expenses, $2.5 million in contract services expense, $2.3 million in marketing expense, $2.1 million in taxes and $2.0 million in insurance expense.
 
For the year ended December 31, 2007, compared to the year ended December 31, 2006, consolidated real estate segment net operating income related to consolidated properties other than same store properties increased by $2.6 million, or 1.3%. Increases in net operating income attributable to affordable, acquisition and redevelopment properties contributed to the increase, and were partially offset by an unfavorable change in casualty losses, resulting from casualty gains recognized in 2006.
 
Investment Management Segment
 
Our investment management segment includes activities and services related to our owned portfolio of properties as well as services provided to affiliated partnerships. Activities and services that fall within investment management include portfolio strategy, capital allocation, joint ventures, tax credit syndication, acquisitions, dispositions and other transaction activities. Within our owned portfolio, we refer to these activities as “Portfolio


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Management,” and their benefit is seen in property operating results and in investment gains. For affiliated partnerships, we refer to these activities as “Asset Management,” for which we are separately compensated through fees paid by third party investors. The expenses of this segment consist primarily of the costs of departments that perform these activities. These activities are conducted in part by our taxable subsidiaries, and the related net operating income may be subject to income taxes.
 
Transactions occur on varying timetables; thus, the income varies from period to period. We have affiliated real estate partnerships for which we have identified a pipeline of transactional opportunities. As a result, we view asset management fees as a predictable part of our core business strategy. Asset management revenue includes certain fees that were earned in a prior period, but not recognized at that time because collectibility was not reasonably assured. Those fees may be recognized in a subsequent period upon occurrence of a transaction or a high level of the probability of occurrence of a transaction within twelve months, or improvement in operations that generates sufficient cash to pay the fees.
 
The following table summarizes the net operating income from our investment management segment for the years ended December 31, 2008, 2007 and 2006 (in thousands):
 
                         
    Year Ended December 31,  
    2008     2007     2006  
 
Asset management and tax credit revenues
  $ 100,623     $ 73,755     $ 48,893  
Investment management expenses
    21,389       20,514       14,742  
                         
Investment segment net operating income(1)
  $ 79,234     $ 53,241     $ 34,151  
                         
 
 
(1) Excludes certain items of income and expense, which are included in our consolidated statements of income in: other expenses, net; interest expense; interest income; (loss) gain on dispositions of unconsolidated real estate and other; and minority interest in consolidated real estate partnerships.
 
For the year ended December 31, 2008, compared to the year ended December 31, 2007, net operating income from investment management increased $26.0 million, or 48.8%. This increase is attributable to a $30.7 million increase in promote income, which is income earned in connection with the disposition of properties owned by our consolidated joint ventures, and a $9.2 million increase in other general partner transactional fees, partially offset by a $7.4 million decrease in asset management fees, a $0.9 million increase in investment management expenses and a $5.0 million decrease in revenues associated with our affordable housing tax credit syndication business, including syndication fees and other revenue earned in connection with these arrangements.
 
For the year ended December 31, 2007, compared to the year ended December 31, 2006, net operating income from investment management increased $19.1 million, or 55.9%. This increase is primarily attributable to a $9.6 million increase in promote income, an $8.6 million increase in asset management fees and an increase of $9.1 million in revenues associated with our affordable housing tax credit syndication business, including syndication fees and other revenue earned in connection with these arrangements. These increases were partially offset by an increase in expenses and a decrease in other general partner transactional fees.
 
Other Operating Expenses (Income)
 
Depreciation and Amortization
 
For the year ended December 31, 2008, compared to the year ended December 31, 2007, depreciation and amortization increased $54.8 million, or 13.6%. This increase reflects depreciation of $74.8 million for newly acquired properties, completed redevelopments and other capital projects recently placed in service. This increase was partially offset by a decrease of $25.7 million in depreciation adjustments necessary to reduce the carrying amount of buildings and improvements to their estimated disposition value, or zero in the case of a planned demolition (see Impairment of Long-Lived Assets in Note 2 to the consolidated financial statements in Item 8).
 
For the year ended December 31, 2007, compared to the year ended December 31, 2006, depreciation and amortization increased $35.0 million, or 9.5%. This increase reflects depreciation of $23.7 million for newly acquired properties, completed redevelopments and other capital projects recently placed in service. Depreciation


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also increased by approximately $8.6 million as a result of depreciation adjustments necessary to reduce the carrying amount of buildings and improvements to their estimated disposition value, or to zero in connection with a planned demolition (see Impairment of Long-Lived Assets in Note 2 to the consolidated financial statements in Item 8).
 
General and Administrative Expenses
 
For the year ended December 31, 2008, compared to the year ended December 31, 2007, general and administrative expenses increased $8.4 million, or 9.2%. This increase is primarily attributable to higher personnel and related expenses of $6.1 million and an increase of $1.5 million in information technology communications costs.
 
For the year ended December 31, 2007, compared to the year ended December 31, 2006, general and administrative expenses decreased $0.9 million, or 1.0%. This decrease is primarily due to a reduction in variable compensation, partially offset by an increase in salaries and benefits (net of capitalization) related to additional redevelopment personnel and an increase in director compensation resulting from the addition of two new board members.
 
Other Expenses, Net
 
Other expenses, net includes franchise taxes, risk management activities, partnership administration expenses and certain non-recurring items.
 
For the year ended December 31, 2008, compared to the year ended December 31, 2007, other expenses, net changed unfavorably by $3.4 million. The net unfavorable change includes a $5.4 million write-off of certain communications hardware and capitalized costs during 2008 (see Capitalized Software Costs in Note 2 to the consolidated financial statements in Item 8) and a $1.2 million write-off of redevelopment costs associated with a change in the planned use of a property during 2008. The net unfavorable change also reflects $3.6 million of income recognized in 2007 related to the transfer of certain property rights to an unrelated party. These unfavorable changes were partially offset by a $3.7 million reduction in expenses of our self insurance activities (net of $2.8 million of costs in 2008 related to Tropical Storm Fay and Hurricane Ike) and a net decrease of $2.0 million in costs related to certain litigation matters.
 
For the year ended December 31, 2007, compared to the year ended December 31, 2006, other expenses, net changed unfavorably by $3.6 million. The net unfavorable change is primarily attributable to our self insurance activities, including a $7.9 million increase in claims on our consolidated properties in excess of reimbursements from third parties, and the settlement of certain litigation matters which resulted in a $2.5 million unfavorable change during the year ended December 31, 2007. These unfavorable changes were partially offset by favorable changes related to a $2.9 million charge recorded in 2006 related to the valuation of the High Performance Units (see Note 10 to the consolidated financial statements in Item 8) and a $1.7 million charge for one-time benefits to certain employees terminated in 2006 that did not recur in 2007. Other expenses, net for the year ended December 31, 2007, also includes $3.6 million of income related to the transfer of certain property rights to an unrelated party.
 
Restructuring Costs
 
In connection with 2008 property sales and an expected reduction in redevelopment and transactional activities, during the three months ended December 31, 2008, we initiated an organizational restructuring program that included reductions in workforce and related costs, reductions in leased corporate facilities and abandonment of certain redevelopment projects and business pursuits. As a result, we recognized a restructuring charge of $22.8 million ($20.5 million net of tax), which consists of: severance costs of $12.9 million; unrecoverable lease obligations and related costs of $6.4 million related to space that we will no longer use; and the write-off of deferred transaction costs totaling $3.5 million associated with certain acquisitions and redevelopment opportunities that we will no longer pursue. No comparable restructuring costs were incurred during the years ended December 31, 2007 or 2006.


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Interest Income
 
Interest income consists primarily of interest on notes receivable from non-affiliates and unconsolidated real estate partnerships, interest on cash and restricted cash accounts, and accretion of discounts on certain notes receivable from unconsolidated real estate partnerships. Transactions that result in accretion occur infrequently and thus accretion income may vary from period to period.
 
For the year ended December 31, 2008, compared to the year ended December 31, 2007, interest income decreased $23.8 million, or 58.1%. The decrease is primarily attributable to a decrease of $16.0 million due to lower interest rates on notes receivable, cash and restricted cash balances and lower average balances. The decrease also includes the effect of a $5.8 million net adjustment to accretion on certain discounted notes during the year ended December 31, 2008, resulting from a change in the estimated timing and amount of collection, and $1.5 million of accretion income recognized during the year ended December 31, 2007, related to the prepayment of principal on certain discounted loans collateralized by properties in West Harlem in New York City, which were funded in November 2006.
 
For the year ended December 31, 2007, as compared to the year ended December 31, 2006, interest income increased $8.7 million, or 27.1%. This increase is primarily due to $5.9 million of interest income earned during 2007 on loans collateralized by properties in West Harlem in New York City, which were funded in November 2006, and an increase in interest income earned on escrowed funds related to a tax exempt bond financing transaction and certain property sales during 2007.
 
Interest Expense
 
For the year ended December 31, 2008, compared to the year ended December 31, 2007, interest expense, which includes the amortization of deferred financing costs, increased $13.3 million, or 3.7%. Interest on property loans payable increased $19.1 million due to higher balances resulting primarily from refinancing activities, offset by lower average interest rates. Interest expense also increased by $4.6 million due to decreases in capitalized interest related to redevelopment activities. These increases were partially offset by a $10.4 million decrease in corporate interest expense primarily due to lower average interest rates.
 
For the year ended December 31, 2007, compared to the year ended December 31, 2006, interest expense, which includes the amortization of deferred financing costs, increased $29.4 million, or 9.0%. Interest on property debt increased $32.5 million primarily due to higher balances resulting from refinancing activities and mortgage loans on newly acquired properties, offset by lower weighted average rates. Corporate interest increased by $3.1 million as a result of higher weighted average rates and a higher average balance during the year ended December 31, 2007. These increases were partially offset by a $6.2 million increase in capitalized interest related to increased levels of redevelopment and entitlement activities.
 
Deficit Distributions to Minority Partners
 
When real estate partnerships that are consolidated in our financial statements disburse cash to partners in excess of the carrying amount of the minority interest, we record a charge equal to the excess amount, even though there is no economic effect or cost.
 
For the year ended December 31, 2008, compared to the year ended December 31, 2007, deficit distributions to minority partners increased $10.4 million. Deficit distributions to minority partners increased in 2008 partially due to $17.0 million in deficit distributions to minority interests in the Aimco Operating Partnership, resulting from higher cash distributions associated with Aimco Operating Partnership’s special distributions discussed in Note 1 to the consolidated financial statements in Item 8. This increase was partially offset by lower levels of distributions to minority interests in consolidated real estate partnerships in 2008, including distributions in connection with debt refinancing transactions.
 
For the year ended December 31, 2007, compared to the year ended December 31, 2006, deficit distributions to minority partners increased $17.1 million. This increase reflects higher levels of distributions to minority interests in consolidated real estate partnerships in 2007, including several large distributions in connection with debt refinancing transactions.


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Provision for Operating Real Estate Impairment Losses
 
Real estate and other long-lived assets to be held and used are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of a property may not be recoverable, we make an assessment of its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the estimated aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.
 
For the year ended December 31, 2008, compared to the year ended December 31, 2007, provision for operating real estate impairment losses increased by $4.0 million, from $1.6 million to $5.6 million. This increase is primarily attributed to a reduction in the estimated holding period for certain assets anticipated to sell within twelve months, but that did not otherwise meet the criteria to be classified as held for sale at December 31, 2008.
 
For the year ended December 31, 2007, compared to the year ended December 31, 2006, provision for operating real estate impairment losses increased by $2.4 million, from a recovery of $0.8 million in 2006 to a provision of $1.6 million in 2007. This increase is attributable to impairment losses recognized during 2007 on four properties classified as held for use relative to recoveries on previously recorded impairment losses recognized in 2006.
 
Provision for Impairment Losses on Real Estate Development Assets
 
In connection with the preparation of our annual financial statements, we assessed the recoverability of our investment in our Lincoln Place property, located in Venice, California. Based upon the recent decline in land values in Southern California and the expected timing of our redevelopment efforts, we determined that the total carrying amount of the property was no longer probable of full recovery and, accordingly, during the three months ended December 31, 2008, recognized an impairment loss of $85.4 million ($55.6 million net of tax).
 
Similarly, we assessed the recoverability of our investment in Pacific Bay Vistas (formerly Treetops), a vacant property located in San Bruno, California, and determined that the carrying value for the property exceeded its estimated fair value. Accordingly, we recognized an impairment loss of $5.7 million for this property during the three months ended December 31, 2008.
 
As part of the March 2002 acquisition of Casden Properties, Inc., we invested $50.0 million for a 20% passive interest in Casden Properties LLC, an entity organized to buy, re-entitle and develop land parcels in Southern California. Based upon the profit allocation agreement, we account for this investment as a note receivable and have been amortizing the discounted value of the investment to the $50.0 million previously estimated to be collectible through January 2, 2009, the initial dissolution date of the entity. The managing member is seeking to extend the dissolution date. In connection with the preparation of our annual financial statements and as a result of the aforementioned decline in Southern California land values, we determined our recorded investment of $47.1 million is not fully recoverable, and accordingly recognized an impairment loss of $16.3 million ($10.0 million net of tax) during the three months ended December 31, 2008.
 
The impairments discussed above totaled $107.5 million and are included in provisions for impairment losses on real estate development assets in our consolidated statement of income for the year ended December 31, 2008 included in Item 8. We recognized no comparable impairments on real estate development assets during the years ended December 31, 2007 or 2006.
 
Gain on Dispositions of Unconsolidated Real Estate and Other
 
Gain on dispositions of unconsolidated real estate and other includes our share of gains related to dispositions of real estate by unconsolidated real estate partnerships, gains on disposition of interests in unconsolidated real estate partnerships, gains on dispositions of land and other non-depreciable assets and costs related to asset disposal activities. For the year ended December 31, 2007, gain on dispositions of unconsolidated real estate and other also includes a gain on extinguishment of debt. Changes in the level of gains recognized from period to period reflect the changing level of disposition activity from period to period. Additionally, gains on properties sold are determined


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on an individual property basis or in the aggregate for a group of properties that are sold in a single transaction, and are not comparable period to period.
 
For the year ended December 31, 2008, compared to the year ended December 31, 2007, gain on dispositions of unconsolidated real estate and other increased $67.5 million. This increase is primarily attributable to a $98.4 million net gain on the disposition of interests in two unconsolidated real estate partnerships and a $1.7 million gain on the sale of an undeveloped land parcel during the year ended December 31, 2008. During 2007, we recognized a $6.0 million non-refundable option and extension fee resulting from the termination of rights under an option agreement to sell the North and Central towers of our Flamingo South Beach property, approximately $6.7 million of net gains on dispositions of land parcels and our share of gains on dispositions of properties by unconsolidated real estate partnerships, and a $19.4 million gain on debt extinguishment related to seven properties in the VMS partnership (see Note 3 to the consolidated financial statements in Item 8).
 
For the year ended December 31, 2007, compared to the year ended December 31, 2006, gain on dispositions of unconsolidated real estate and other increased $4.3 million. This increase is primarily related to a $19.4 million gain on debt extinguishment related to seven properties in the VMS partnership (see Note 3 to the consolidated financial statements in Item 8), the recognition of a $6.0 million non-refundable option and extension fee resulting from the termination of rights under an option agreement to sell the North and Central towers of our Flamingo South Beach property, and approximately $6.7 million of net gains on dispositions of land parcels and our share of gains on dispositions of properties by unconsolidated real estate partnerships in 2007, as compared to net gains of $27.7 million during the year ended December 31, 2006, on the sale of parcels of land, interests in unconsolidated real estate properties and an interest in an unconsolidated joint venture that owned and operated several student housing properties.
 
Income Tax Benefit
 
Certain of our operations, such as property management, asset management and risk management, are conducted through, and certain of our properties are owned by, taxable REIT subsidiaries, each of which we refer to as a TRS. A TRS is a C-corporation that has not elected REIT status and, as such, is subject to United States Federal corporate income tax. We use TRS entities to facilitate our ability to offer certain services and activities to our residents and investment partners, as these services and activities generally cannot be offered directly by the REIT. We also use TRS entities to hold investments in certain properties. Income taxes related to the results of continuing operations of our TRS entities are included in income tax benefit in our consolidated statements of income.
 
For the year ended December 31, 2008, compared to the year ended December 31, 2007, income tax benefit increased by $33.5 million. This increase was primarily attributed to $36.1 million of income tax benefit recognized in 2008 related to the impairments of our Lincoln Place property and our investment in Casden Properties LLC, both of which are owned through TRS entities.
 
For the year ended December 31, 2007, compared to the year ended December 31, 2006, income tax benefit increased by $8.7 million. This increase was primarily attributable to an increase in losses from continuing operations of our TRS entities, due largely to favorable results from our self-insurance activities, which reduced losses of our TRS entities during 2006.
 
Minority Interest in Consolidated Real Estate Partnerships
 
Minority interest in consolidated real estate partnerships reflects minority partners’ share of operating results of consolidated real estate partnerships. This generally includes the minority partners’ share of property management fees, interest on notes and other amounts eliminated in consolidation that we charge to such partnerships. However, we generally do not recognize a benefit for the minority interest share of partnership losses for partnerships that have deficits in partners’ equity.
 
For the year ended December 31, 2008, compared to the year ended December 31, 2007, minority interest in consolidated real estate partnerships changed favorably by $20.9 million. The change includes a $9.1 million favorable change relating to the minority interest share of losses for real estate partnerships consolidated during the fourth quarter of 2007, and the remainder relates to increases in the minority partners’ share of losses of our other consolidated real estate partnerships.


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For the year ended December 31, 2007, compared to the year ended December 31, 2006, minority interest in consolidated real estate partnerships changed favorably by $13.6 million. This change is primarily attributable to our revised accounting treatment for tax credit arrangements (see Tax Credit Arrangements in Note 2 to the consolidated financial statements in Item 8) which resulted in the reversal in 2006 of a previously recognized benefit of $9.0 million for losses of tax credit partnerships that were allocated to minority interests in prior years, but which are absorbed by us under our revised accounting treatment. This favorable change was in addition to an increase in the minority interest partners’ share of losses of other consolidated real estate partnerships.
 
Income from Discontinued Operations, Net
 
The results of operations for properties sold during the period or designated as held for sale at the end of the period are generally required to be classified as discontinued operations for all periods presented. The components of net earnings that are classified as discontinued operations include all property-related revenues and operating expenses, depreciation expense recognized prior to the classification as held for sale, property-specific interest expense and debt extinguishment gains and losses to the extent there is secured debt on the property, and any related minority interest. In addition, any impairment losses on assets held for sale and the net gain or loss on the eventual disposal of properties held for sale are reported in discontinued operations.
 
For the years ended December 31, 2008, 2007 and 2006, income from discontinued operations, net totaled $544.8 million, $83.1 million and $226.9 million, respectively. The $461.7 million increase in income from discontinued operations from 2007 to 2008 was principally due to a $515.3 million increase in gain on dispositions of real estate, net of minority partners’ interest and income taxes, a $31.2 million decrease in interest expense and a $36.3 million increase in recovery of deficit distributions to minority partners, partially offset by a $39.4 million decrease in operating income, a $19.1 million increase in real estate impairment losses, a $41.1 million increase in minority interest in Aimco Operating Partnership and a decrease of $22.8 million attributable to a 2007 gain on debt extinguishment related to eight properties in the VMS partnership. The $143.8 million decrease in income from discontinued operations from 2006 to 2007 was principally due to a $163.4 million decrease in gain on dispositions of real estate, net of minority partners’ interest and income taxes, a $16.6 million decrease in recovery of deficit distributions to minority partners, a $12.0 million decrease in operating income and a $5.3 million increase in real estate impairment losses, partially offset by a $21.7 decrease in interest expense, a $15.7 million decrease in minority interest in Aimco Operating Partnership and an increase of $22.8 million attributable to a 2007 gain on debt extinguishment related to eight properties in the VMS partnership.
 
During 2008, we sold 151 consolidated properties, resulting in a net gain on sale of approximately $578.2 million (which is net of $40.0 million of related income taxes). Additionally, we recognized $24.0 million in impairment losses on assets sold or classified as held for sale in 2008 and $30.1 million of net recoveries of deficit distributions to minority partners. During 2007, we sold 73 consolidated properties, resulting in a net gain on sale of approximately $62.9 million (which is net of $2.1 million of related income taxes). Additionally, we recognized $4.9 million in impairment losses on assets sold or classified as held for sale in 2007 and $6.2 million of deficit distributions to minority partners. During 2006, we sold 77 consolidated properties and the South Tower of the Flamingo South Beach property, resulting in a net gain on sale of approximately $226.3 million (which is net of $32.6 million of related income taxes). Additionally, we recognized $0.4 million in impairment recoveries on assets sold in 2006 and $10.4 million of net recoveries of deficit distributions to minority partners. For the years ended December 31, 2008, 2007 and 2006, income from discontinued operations includes the operating results of the properties sold or classified as held for sale as of December 31, 2008.
 
Changes in the level of gains recognized from period to period reflect the changing level of our disposition activity from period to period. Additionally, gains on properties sold are determined on an individual property basis or in the aggregate for a group of properties that are sold in a single transaction, and are not comparable period to period (see Note 13 of the consolidated financial statements in Item 8 for additional information on discontinued operations).
 
Critical Accounting Policies and Estimates
 
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, or GAAP, which requires us to make estimates and assumptions. We believe that


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the following critical accounting policies involve our more significant judgments and estimates used in the preparation of our consolidated financial statements.
 
Impairment of Long-Lived Assets
 
Real estate and other long-lived assets to be held and used are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of a property may not be recoverable, we make an assessment of its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the estimated aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.
 
From time to time, we have non-revenue producing properties that we hold for future redevelopment. We assess the recoverability of the carrying amount of these redevelopment properties by comparing our estimate of undiscounted future cash flows based on the expected service potential of the redevelopment property upon completion to the carrying amount. In certain instances, we use a probability-weighted approach to determine our estimate of undiscounted future cash flows when alternative courses of action are under consideration. As discussed in Provision for Impairment Losses on Real Estate Development Assets within the preceding discussion of Results of Operations, during 2008 we recognized impairment losses on our Lincoln Place and Pacific Bay Vistas properties of $85.4 million ($55.6 million net of tax) and $5.7 million, respectively.
 
Real estate investments are subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of our real estate investments. These factors include:
 
  •  the general economic climate;
 
  •  competition from other apartment communities and other housing options;
 
  •  local conditions, such as loss of jobs or an increase in the supply of apartments, that might adversely affect apartment occupancy or rental rates;
 
  •  changes in governmental regulations and the related cost of compliance;
 
  •  increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents;
 
  •  changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multifamily housing;
 
  •  availability and cost of financing;
 
  •  changes in market capitalization rates; and
 
  •  the relative illiquidity of such investments.
 
Any adverse changes in these and other factors could cause an impairment in our long-lived assets, including real estate and investments in unconsolidated real estate partnerships. In addition to the impairments of Lincoln Place and Pacific Bay Vistas discussed above and our investment in Casden Properties LLC discussed below, based on periodic tests of recoverability of long-lived assets, for the years ended December 31, 2008 and 2007, we recorded net impairment losses of $5.6 million and $1.6 million, respectively, related to properties to be held and used. For the year ended December 31, 2006, we recorded net recoveries of previously recorded impairment losses of $0.8 million.
 
Notes Receivable and Interest Income Recognition
 
Notes receivable from unconsolidated real estate partnerships consist primarily of notes receivable from partnerships in which we are the general partner. Notes receivable from non-affiliates consist of notes receivable from unrelated third parties. The ultimate repayment of these notes is subject to a number of variables, including the performance and value of the underlying real estate and the claims of unaffiliated mortgage lenders. Our notes receivable include loans extended by us that we carry at the face amount plus accrued interest, which we refer to as


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“par value notes,” and loans extended by predecessors, some of whose positions we generally acquired at a discount, which we refer to as “discounted notes.”
 
We record interest income on par value notes as earned in accordance with the terms of the related loan agreements. We discontinue the accrual of interest on such notes when the notes are impaired, as discussed below, or when there is otherwise significant uncertainty as to the collection of interest. We record income on such nonaccrual loans using the cost recovery method, under which we apply cash receipts first to the recorded amount of the loan; thereafter, any additional receipts are recognized as income.
 
We recognize interest income on discounted notes receivable based upon whether the amount and timing of collections are both probable and reasonably estimable. We consider collections to be probable and reasonably estimable when the borrower has closed transactions or has entered into certain pending transactions (which include real estate sales, refinancings, foreclosures and rights offerings) that provide a reliable source of repayment. In such instances, we recognize accretion income, on a prospective basis using the effective interest method over the estimated remaining term of the loans, equal to the difference between the carrying amount of the discounted notes and the estimated collectible value. We record income on all other discounted notes using the cost recovery method. Accretion income recognized in any given period is based on our ability to complete transactions to monetize the notes receivable and the difference between the carrying value and the estimated collectible amount of the notes; therefore, accretion income varies on a period by period basis and could be lower or higher than in prior periods.
 
Allowance for Losses on Notes Receivable
 
We assess the collectibility of notes receivable on a periodic basis, which assessment consists primarily of an evaluation of cash flow projections of the borrower to determine whether estimated cash flows are sufficient to repay principal and interest in accordance with the contractual terms of the note. We recognize impairments on notes receivable when it is probable that principal and interest will not be received in accordance with the contractual terms of the loan. The amount of the impairment to be recognized generally is based on the fair value of the partnership’s real estate that represents the primary source of loan repayment. In certain instances where other sources of cash flow are available to repay the loan, the impairment is measured by discounting the estimated cash flows at the loan’s original effective interest rate.
 
During the years ended December 31, 2008, 2007 and 2006 we recorded net provisions for losses on notes receivable of $4.2 million, $4.0 million and $2.8 million, respectively. We will continue to evaluate the collectibility of these notes, and we will adjust related allowances in the future due to changes in market conditions and other factors.
 
Additionally, as discussed in Provision for Impairment Losses on Real Estate Development Assets within the preceding discussion of Results of Operations, during 2008 we recognized an impairment loss of $16.3 million ($10.0 million net of tax) on our investment in Casden Properties LLC, which we account for as a note receivable.
 
Capitalized Costs
 
We capitalize costs, including certain indirect costs, incurred in connection with our capital expenditure activities, including redevelopment and construction projects, other tangible property improvements and replacements of existing property components. Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with the planning, execution and control of all capital expenditure activities at the property level. We characterize as “indirect costs” an allocation of certain department costs, including payroll, at the area operations and corporate levels that clearly relate to capital expenditure activities. We capitalize interest, property taxes and insurance during periods in which redevelopment and construction projects are in progress. We charge to expense as incurred costs that do not relate to capital expenditure activities, including ordinary repairs, maintenance, resident turnover costs and general and administrative expenses (see Capital Expenditures and Related Depreciation in Note 2 to the consolidated financial statements in Item 8).
 
For the years ended December 31, 2008, 2007 and 2006, for continuing and discontinued operations, we capitalized $25.7 million, $30.8 million and $24.7 million of interest costs, respectively, and $78.1 million, $78.1 million and $66.2 million of site payroll and indirect costs, respectively.


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Funds From Operations
 
FFO is a non-GAAP financial measure that we believe, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding our performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets such as machinery, computers or other personal property. The Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss), computed in accordance with GAAP, excluding gains from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We compute FFO for all periods presented in accordance with the guidance set forth by NAREIT’s April 1, 2002, White Paper, which we refer to as the White Paper. We calculate FFO (diluted) by subtracting redemption or repurchase related preferred stock issuance costs and dividends on preferred stock and adding back dividends/distributions on dilutive preferred securities, discounts on preferred stock redemptions or repurchases and interest expense on dilutive mandatorily redeemable convertible preferred securities. FFO should not be considered an alternative to net income or net cash flows from operating activities, as determined in accordance with GAAP, as an indication of our performance or as a measure of liquidity. FFO is not necessarily indicative of cash available to fund future cash needs. In addition, although FFO is a measure used for comparability in assessing the performance of real estate investment trusts, there can be no assurance that our basis for computing FFO is comparable with that of other real estate investment trusts.
 
For the years ended December 31, 2008, 2007 and 2006, our FFO is calculated as follows (in thousands):
 
                         
    2008     2007     2006  
 
Net income (loss) attributable to common stockholders(1)
  $ 361,755     $ (36,105 )   $ 95,655  
Adjustments:
                       
Depreciation and amortization(2)
    458,595       403,786       368,783  
Depreciation and amortization related to non-real estate assets
    (18,012 )     (20,815 )     (22,898 )
Depreciation of rental property related to minority partners and unconsolidated entities(3)(4)
    (36,571 )     (22,277 )     1,973  
Depreciation of rental property related to minority partners’ interest — adjustment(5)
    —       —       7,377  
Gain on dispositions of unconsolidated real estate and other
    (99,602 )     (32,061 )     (27,730 )
Income tax arising from disposition of unconsolidated real estate and other
    (433 )     (17 )     —  
Gain on dispositions of non-depreciable assets and debt extinguishment gain
    1,670       26,702       11,526  
Deficit distributions to minority partners(6)
    43,013       32,599       15,519  
Discontinued operations:
                       
Gain on dispositions of real estate, net of minority partners’ interest(3)
    (618,168 )     (65,076 )     (258,970 )
Depreciation of rental property, net of minority partners’ interest(3)(4)
    50,786       65,334       107,545  
Deficit distributions (recovery of deficit distributions) to minority partners, net(6)
    (30,127 )     6,161       (10,441 )
Income tax arising from disposals
    43,146       2,135       32,918  
Minority interest in Aimco Operating Partnership’s share of above adjustments(7)
    18,574       (36,830 )     (21,721 )
Preferred stock dividends
    55,190       63,381       74,284  
Preferred stock redemption related (gains) costs
    (1,482 )     2,635       6,848  
                         
Funds From Operations
  $ 228,334     $ 389,552     $ 380,668  
Preferred stock dividends
    (55,190 )     (63,381 )     (74,284 )
Preferred stock redemption related gains (costs)
    1,482       (2,635 )     (6,848 )
Dividends/distributions on dilutive preferred securities
    4,850       1,875       202  
                         
Funds From Operations attributable to common stockholders — diluted
  $ 179,476     $ 325,411     $ 299,738  
                         
Weighted average number of common shares, common share equivalents and dilutive preferred securities outstanding(8):
                       
Common shares and equivalents(9)
    121,672       143,307       144,774  
Dilutive preferred securities
    2,314       856       105  
                         
Total
    123,986       144,163       144,879  
                         
 
 
Notes:
 
(1) Represents the numerator for earnings per common share, calculated in accordance with GAAP.
 
(2) Includes amortization of management contracts where we are the general partner. Such management contracts were established in certain instances where we acquired a general partner interest in either a consolidated or an unconsolidated partnership. Because the recoverability of these management contracts depends primarily on the operations of the real estate owned by the limited partnerships, we believe it is consistent with the White


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Paper to add back such amortization, as the White Paper directs the add-back of amortization of assets uniquely significant to the real estate industry.
 
(3) “Minority partners’ interest,” means minority interest in our consolidated real estate partnerships.
 
(4) Adjustments related to minority partners’ share of depreciation of rental property for the year ended December 31, 2007, include the subtraction of $15.1 million and $17.8 million for continuing operations and discontinued operations, respectively, related to the VMS debt extinguishment gains (see Note 3 to the consolidated financial statements in Item 8). These subtractions are required because we added back the minority partners’ share of depreciation related to rental property in determining FFO in prior periods. Accordingly, the net effect of the VMS debt extinguishment gains on our FFO for the year ended December 31, 2007, was an increase of $9.3 million ($8.4 million after Minority Interest in Aimco Operating Partnership).
 
(5) Represents prior period depreciation of certain tax credit redevelopment properties that Aimco included in an adjustment to minority interest in real estate partnerships for the year ended December 31, 2006 (see Tax Credit Arrangements in Note 2 to the consolidated financial statements in Item 8). This prior period depreciation is added back to determine FFO in accordance with the NAREIT White Paper.
 
(6) In accordance with GAAP, deficit distributions to minority partners are charges recognized in our income statement when cash is distributed to a non-controlling partner in a consolidated partnership in excess of the positive balance in such partner’s capital account, which is classified as minority interest on our balance sheet. We record these charges for GAAP purposes even though there is no economic effect or cost. Deficit distributions to minority partners occur when the fair value of the underlying real estate exceeds its depreciated net book value because the underlying real estate has appreciated or maintained its value. As a result, the recognition of expense for deficit distributions to minority partners represents, in substance, either (a) our recognition of depreciation previously allocated to the non-controlling partner or (b) a payment related to the non-controlling partner’s share of real estate appreciation. Based on White Paper guidance that requires real estate depreciation and gains to be excluded from FFO, we add back deficit distributions and subtract related recoveries in our reconciliation of net income to FFO.
 
(7) During the years ended December 31, 2008, 2007 and 2006, the Aimco Operating Partnership had 7,191,199, 7,367,440 and 7,853,174 common OP Units outstanding and 2,367,629, 2,379,084 and 2,379,084 High Performance Units outstanding.
 
(8) Weighted average common shares, common share equivalents and dilutive preferred securities amounts for the periods presented have been retroactively adjusted for the effect of shares of Common Stock issued in connection with the special dividends paid during 2008 and in January 2009, which are further discussed in Note 1 to the consolidated financial statements in Item 8.
 
(9) Represents the denominator for earnings per common share — diluted, calculated in accordance with GAAP, plus additional common share equivalents that are dilutive for FFO.
 
Liquidity and Capital Resources
 
Liquidity is the ability to meet present and future financial obligations. Our primary source of liquidity is cash flow from our operations. Additional sources are proceeds from property sales and proceeds from refinancings of existing mortgage loans and borrowings under new mortgage loans.
 
Our principal uses for liquidity include normal operating activities, payments of principal and interest on outstanding debt, capital expenditures, dividends paid to stockholders and distributions paid to partners, repurchases of shares of our Common Stock, and acquisitions of, and investments in, properties. We use our cash and cash equivalents and our cash provided by operating activities to meet short-term liquidity needs. In the event that our cash and cash equivalents and cash provided by operating activities are not sufficient to cover our short-term liquidity demands, we have additional means, such as short-term borrowing availability and proceeds from property sales and refinancings, to help us meet our short-term liquidity demands. We may use our revolving credit facility for general corporate purposes and to fund investments on an interim basis. We expect to meet our long-term liquidity requirements, such as debt maturities and property acquisitions, through long-term borrowings, both secured and unsecured, the issuance of debt or equity securities (including OP Units), the sale of properties and cash generated from operations.


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The current state of credit markets and related effect on the overall economy may have an adverse affect on our liquidity, both through increases in interest rates and credit risk spreads, and access to financing. As further discussed in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, we are subject to interest rate risk associated with certain variable rate liabilities, preferred stock and assets. Based on our net variable rate liabilities, preferred stock and assets outstanding at December 31, 2008, we estimate that a 1.0% increase in 30-day LIBOR with constant credit risk spreads would reduce our income attributable to common stockholders by approximately $4.3 million on an annual basis. From January 1, 2008 to December 31, 2008, both the SIFMA (previously the Bond Market Association index) and 30-day LIBOR rates, the predominant interest rates to which our variable rate debt obligations are indexed, decreased, with the SIFMA rate decreasing from 3.06% to 1.25% and the 30-day LIBOR rate decreasing from 4.57% to 0.45%. Although base interest rates have decreased, the tightening of credit markets has affected the credit risk spreads charged over base interest rates on, and the availability of, mortgage loan financing. For future refinancing activities, our liquidity and cost of funds may be affected by increases in base interest rates or higher credit risk spreads. If timely property financing options are not available for maturing debt, we may consider alternative sources of liquidity, such as reductions in certain capital spending or proceeds from asset dispositions.
 
From time to time, we enter into total rate of return swaps on various fixed rate secured tax-exempt bonds payable and fixed rate notes payable to convert these borrowings from a fixed rate to a variable rate and provide an efficient financing product to lower our cost of borrowing. In exchange for our receipt of a fixed rate generally equal to the underlying borrowing’s interest rate, the total rate of return swaps require that we pay a variable rate, equivalent to the SIFMA rate for tax-exempt bonds payable and the 30-day LIBOR rate for notes payable, plus a credit risk spread. These swaps generally have a second or third lien on the property collateralized by the related borrowings and the obligations under certain of these swaps are cross-collateralized with certain of the other swaps with a particular counterparty. The total rate of return swaps require specified loan-to-value ratios. In the event the values of the real estate properties serving as collateral under these agreements decline, we may be required to provide additional collateral pursuant to the swap agreements, which would adversely affect our cash flows. The underlying borrowings are generally callable at our option, with no prepayment penalty, with 30 days advance notice, and the swaps generally have a term of less than five years. At December 31, 2008, we had total rate of return swap positions with two financial institutions totaling $422.1 million and had provided $3.2 million in cash collateral pursuant to the swap agreements to satisfy the loan-to-value ratio requirements.
 
The total rate of return swaps have a contractually defined termination value generally equal to the difference between the fair value and the counterparty’s purchased value of the underlying borrowings (which is typically par value or contract value), which may require payment by us if the fair value is less than the purchased value, or to us if the fair value exceeds the purchased value. In the event we are unable to extend the arrangements at their maturities, the counterparty, who is also the creditor on the related borrowings, may desire to sell the borrowings. If the counterparty’s purchased value of the underlying borrowings exceeds the fair value of the underlying borrowings at the date of the swap maturities, we may elect to purchase the borrowings at counterparty’s purchased value to avoid incurring a termination payment under the swap arrangements. In such event, we would be required to refinance the borrowings or find other sources of liquidity to repay the borrowings.
 
We periodically evaluate counterparty credit risk associated with these arrangements. At the current time, we have concluded we do not have material exposure. In the event a counterparty were to default under these arrangements, loss of the net interest benefit we generally receive under these arrangements, which is equal to the difference between the fixed rate we receive and the variable rate we pay, may adversely affect our operating cash flows. See Derivative Financial Instruments in Note 2 to the consolidated financial statements in Item 8 for additional discussion of these arrangements, including the current swap maturity dates.
 
As of December 31, 2008, the amount available under our revolving credit facility was $578.8 million. For the years ending December 31, 2009 and 2010, we have non-recourse property debt maturities of $288.0 million and $284.7 million, respectively, at an average estimated loan-to-value of approximately 52% and 51%, respectively. Our total outstanding unsecured term debt of $400.0 million at December 31, 2008, matures in March 2011. In January 2009, we prepaid $50.0 million of the balance outstanding on the unsecured term debt. Additionally, we have limited obligations to fund redevelopment commitments during the year ending December 31, 2009, and no development commitments.


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At December 31, 2008, we had $299.7 million in cash and cash equivalents, an increase of $89.2 million from December 31, 2007. At December 31, 2008, we had $258.3 million of restricted cash, primarily consisting of reserves and escrows held by lenders for bond sinking funds, capital expenditures, property taxes and insurance. In addition, cash, cash equivalents and restricted cash are held by partnerships that are not presented on a consolidated basis. The following discussion relates to changes in cash due to operating, investing and financing activities, which are presented in our consolidated statements of cash flows in Item 8.
 
Operating Activities
 
For the year ended December 31, 2008, our net cash provided by operating activities of $421.5 million was primarily from operating income from our consolidated properties, which is affected primarily by rental rates, occupancy levels and operating expenses related to our portfolio of properties. Cash provided by operating activities decreased $44.1 million compared with the year ended December 31, 2007, driven primarily by a $48.3 million decrease in operating income of our consolidated properties, including those classified in discontinued operations, which was attributable to property sales in 2008 and 2007.
 
Investing Activities
 
For the year ended December 31, 2008, our net cash provided by investing activities of $1.3 billion consisted primarily of proceeds from disposition of real estate and interests in unconsolidated real estate partnerships, partially offset by capital expenditures and purchases of real estate.
 
Although we hold all of our properties for investment, we sell properties when they do not meet our investment criteria or are located in areas that we believe do not justify our continued investment when compared to alternative uses for our capital. During the year ended December 31, 2008, we sold 151 consolidated properties. These properties were sold for an aggregate sales price of $2.4 billion and generated proceeds totaling $2.3 billion, after the payment of transaction costs and debt prepayment penalties. The $2.3 billion in proceeds is inclusive of promote income which is generated by the disposition of properties owned by our consolidated joint ventures, debt assumed by buyers and sales proceeds placed into escrows for tax-free exchanges and other purposes, all of which are excluded from proceeds from disposition of real estate in the consolidated statement of cash flows. Sales proceeds were used to repay property debt, repay borrowings under our revolving credit facility, repurchase shares of our Common Stock and preferred stock and for other corporate purposes.
 
Our portfolio management strategy includes property acquisitions and dispositions to concentrate our portfolio in our target markets. We are currently marketing for sale certain properties that are inconsistent with this long-term investment strategy. Additionally, from time to time, we may market certain properties that are consistent with this strategy but offer attractive returns. We plan to use our share of the net proceeds from such dispositions to reduce debt, fund capital expenditures on existing assets, fund acquisitions, and for other operating needs and corporate purposes.
 
Capital Expenditures
 
We classify all capital spending as Capital Replacements (which we refer to as CR), Capital Improvements (which we refer to as CI), casualties, redevelopment or entitlement. Expenditures other than casualty, redevelopment and entitlement capital expenditures are apportioned between CR and CI based on the useful life of the capital item under consideration and the period we have owned the property.
 
CR represents the share of capital expenditures that are deemed to replace the portion of acquired capital assets that was consumed during the period we have owned the asset. CI represents the share of expenditures that are made to enhance the value, profitability or useful life of an asset as compared to its original purchase condition. CR and CI exclude capital expenditures for casualties, redevelopment and entitlements. Casualty expenditures represent capitalized costs incurred in connection with casualty losses and are associated with the restoration of the asset. A portion of the restoration costs may be reimbursed by insurance carriers subject to deductibles associated with each loss. Redevelopment expenditures represent expenditures that substantially upgrade the property. Entitlement expenditures represent costs incurred in connection with obtaining local governmental approvals to increase density and add residential units to a site. For the year ended December 31, 2008, we spent a total of $101.4 million,


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$124.9 million, $22.8 million, $340.3 million and $24.2 million on CR, CI, casualties, redevelopment and entitlement, respectively.
 
The table below details our share of actual spending, on both consolidated and unconsolidated real estate partnerships, for CR, CI, casualties, redevelopment and entitlements for the year ended December 31, 2008, on a per unit and total dollar basis. Per unit numbers for CR and CI are based on approximately 126,834 average units for the year, including 109,956 conventional units and 16,879 affordable units. Average units are weighted for the portion of the period that we owned an interest in the property, represent ownership-adjusted effective units, and exclude non-managed units. Total capital expenditures are reconciled to our consolidated statement of cash flows for the same period (in thousands, except per unit amounts).
 
                 
    Aimco’s Share of
 		       
    Expenditures     Per Effective Unit  
 
Capital Replacements Detail:
               
Building and grounds
  $ 40,516     $ 319  
Turnover related
    45,724       361  
Capitalized site payroll and indirect costs
    15,128       119  
                 
Our share of Capital Replacements
  $ 101,368     $ 799  
                 
Capital Replacements:
               
Conventional
  $ 94,574     $ 860  
Affordable
    6,794     $ 403  
                 
Our share of Capital Replacements
    101,368     $ 799  
                 
Capital Improvements:
               
Conventional
    113,870     $ 1,036  
Affordable
    11,016     $ 653  
                 
Our share of Capital Improvements
    124,886     $ 985  
                 
Casualties(1):
               
Conventional
    21,228          
Affordable
    1,615          
                 
Our share of casualties
    22,843          
                 
Redevelopment:
               
Conventional projects
    226,307          
Tax credit projects
    113,945          
                 
Our share of redevelopment
    340,252          
                 
Entitlement
    24,156          
                 
Our share of capital expenditures
    613,505          
Plus minority partners’ share of consolidated spending
    52,504          
Less our share of unconsolidated spending
    (776 )        
                 
Total capital expenditures per consolidated statement of cash flows
  $ 665,233          
                 
 
 
(1) Casualties for the year ended December 31, 2008, reflect the portion of the anticipated spending related to Tropical Storm Fay and Hurricane Ike incurred as of December 31, 2008.
 
Included in the above spending for CI, casualties, redevelopment and entitlement, was approximately $63.1 million of our share of capitalized site payroll and indirect costs related to these activities for the year ended December 31, 2008.


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We funded all of the above capital expenditures with cash provided by operating activities, working capital and property sales as discussed below.
 
Financing Activities
 
For the year ended December 31, 2008, net cash used in financing activities of $1.7 billion was primarily attributed to debt principal payments, distributions to minority interests, payment of common and preferred dividends and repurchases of Common Stock and preferred stock. Proceeds from property loans and tax-exempt bond financing partially offset the cash outflows.
 
Mortgage Debt
 
At December 31, 2008 and 2007, we had $6.3 billion and $7.0 billion, respectively, in consolidated mortgage debt outstanding, which included $52.0 million and $1.1 billion, respectively, of mortgage debt classified within liabilities related to assets held for sale. During the year ended December 31, 2008, we refinanced or closed mortgage loans on 71 properties (including one unconsolidated property) generating $962.2 million of proceeds from borrowings with a weighted average interest rate of 5.51%. Our share of the net proceeds after repayment of existing debt, payment of transaction costs and distributions to limited partners, was $430.9 million. We used these total net proceeds for capital expenditures and other corporate purposes. We intend to continue to refinance mortgage debt primarily as a means of extending current and near term maturities.
 
Term Loans and Credit Facility
 
We have an Amended and Restated Senior Secured Credit Agreement with a syndicate of financial institutions, which we refer to as the Credit Agreement. In September 2008, we entered into a fifth amendment to the Credit Facility that modifies certain provisions related to letters of credit.
 
During the year ended December 31, 2008, we repaid in full our $75.0 million term loan which was due for payment in September 2009. Following this repayment, the aggregate amount of commitments and loans under the Credit Agreement is $1.035 billion, comprised of a $400.0 million term loan and $635.0 million of revolving loan commitments. The $635.0 million of revolving loan commitments is after the elimination of a $15.0 million commitment held by Lehman Commercial Paper Inc. The $400.0 million term loan bears interest at LIBOR plus 1.5%, or at our option, a base rate equal to the prime rate, and matures March 2011. Our revolving credit facility matures May 2009, and may be extended for an additional year, subject to a 20.0 basis point fee on the total commitments. Borrowings under the revolver bear interest based on a pricing grid determined by leverage (currently at LIBOR plus 1.125%).
 
At December 31, 2008, the term loan had an outstanding principal balance of $400.0 million and a weighted average interest rate of 2.94%. In January 2009, we prepaid $50.0 million of the outstanding balance on the term debt. The amount available under the revolving credit facility at December 31, 2008, was $578.8 million (after giving effect to $56.2 million outstanding for undrawn letters of credit issued under the revolving credit facility). The proceeds of revolving loans are generally permitted to be used to fund working capital and for other corporate purposes.
 
Fair Value Measurements
 
We enter into total rate of return swaps on various fixed rate secured tax-exempt bonds payable and fixed rate notes payable to convert these borrowings from a fixed rate to a variable rate and provide an efficient financing product to lower our cost of borrowing. In accordance with Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, or SFAS 133, we designate total rate of return swaps as hedges of the risk of overall changes in the fair value of the underlying borrowings. At each reporting period, we estimate the fair value of these borrowings and the total rate of return swaps and recognize any changes therein as an adjustment of interest expense.
 
Our method used to calculate the fair value of the total rate of return swaps generally results in changes in fair value that are equal to the changes in fair value of the related borrowings, which is consistent with our hedging strategy. We believe that these financial instruments are highly effective in offsetting the changes in fair value of the


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related borrowings during the hedging period, and accordingly, changes in the fair value of these instruments have no material impact on our liquidity, results of operations or capital resources.
 
During the year ended December 31, 2008, changes in the fair values of these financial instruments resulted in decreases of $20.1 million in the carrying amount of the hedged borrowings and equal increases in accrued liabilities and other for total rate of return swaps. At December 31, 2008, the cumulative recognized changes in the fair value of these financial instruments resulted in a $29.5 million reduction in the carrying amount of the hedged borrowings offset by an equal increase in accrued liabilities and other for total rate of return swaps. The current and cumulative decreases in the fair values of the hedged borrowings and related swaps reflect the recent uncertainty in the credit markets which has decreased demand and increased pricing for similar debt instruments.
 
During the year ended December 31, 2008, we received net cash receipts of $16.7 million under the total return swaps, which positively impacted our liquidity. To the extent interest rates increase above the fixed rates on the underlying borrowings, our obligations under the total return swaps will negatively affect our liquidity. During the year ended December 31, 2008, we provided $3.2 million of cash collateral to satisfy certain loan-to-value requirements under the total rate of return swap agreements, which negatively affected our liquidity. In the event the values of the real estate properties serving as collateral under these agreements decline, we may be required to provide additional collateral pursuant to the swap agreements, which would adversely affect our liquidity.
 
See Note 2 to the consolidated financial statements in Item 8 for more information on our total rate of return swaps and related borrowings.
 
Equity Transactions
 
During the year ended December 31, 2008, we paid cash dividends totaling $55.2 million and $212.3 million to preferred and common stockholders, respectively. Additionally, pursuant to the special dividends discussed in Note 1 to the consolidated financial statements in Item 8, during the year ended December 31, 2008, we paid dividends totaling $489.8 million to common stockholders through the issuance of approximately 22.9 million shares.
 
During September 2008, we repurchased 54 shares, or $27.0 million in liquidation preference, of our Series A Community Reinvestment Act Perpetual Preferred Stock, $0.01 par value per share, for cash totaling $24.8 million.
 
In April 2008, we and the Aimco Operating Partnership filed a new shelf registration statement to replace the existing shelf (which was due to expire later in 2008) that provides for the issuance of debt and equity securities by Aimco and debt securities by the Aimco Operating Partnership.
 
Our Board of Directors has, from time to time, authorized us to repurchase shares of our outstanding capital stock. During the year ended December 31, 2008, we repurchased approximately 13.9 million shares of Common Stock (19.3 million shares after the effect of the special dividend) for approximately $473.5 million. As of December 31, 2008, we were authorized to repurchase approximately 19.3 million additional shares of our Common Stock under an authorization that has no expiration date. Future repurchases may be made from time to time in the open market or in privately negotiated transactions.


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Contractual Obligations
 
This table summarizes information contained elsewhere in this Annual Report regarding payments due under contractual obligations and commitments as of December 31, 2008 (amounts in thousands):
 
                                         
          Less than
 		                More than
 		 
    Total     One Year     1-3 Years     3-5 Years     5 Years  
 
Scheduled long-term debt maturities
  $ 6,377,121     $ 407,893     $ 718,724     $ 1,094,021     $ 4,156,483  
Term loan(1)
    400,000       —       400,000       —       —  
Redevelopment and other construction commitments
    70,279       68,752       1,527       —       —  
Leases for space occupied(2)
    31,935       7,904       12,316       7,622       4,093  
Other obligations(3)
    5,595       5,595       —       —       —  
                                         
Total
  $ 6,884,930     $ 490,144     $ 1,132,567     $ 1,101,643     $ 4,160,576  
                                         
 
 
(1) After payment of $50.0 million in January 2009, the term loan had an outstanding balance of $350.0 million.
 
(2) Inclusive of leased space that has been abandoned as part of our organizational restructuring in 2008 (see Restructuring Costs in Note 3 to the consolidated financial statements in Item 8).
 
(3) Represents a commitment to fund $5.6 million in second mortgage loans on certain properties in West Harlem, New York City.
 
In addition, we may enter into commitments to purchase goods and services in connection with the operations of our properties. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.
 
Future Capital Needs
 
In addition to the items set forth in “Contractual Obligations” above, we expect to fund any future acquisitions, additional redevelopment projects, capital improvements and capital replacement principally with proceeds from property sales (including tax-free exchange proceeds), short-term borrowings, debt and equity financing (including tax credit equity) and operating cash flows.
 
In 2009, inclusive of the redevelopment commitments discussed in Contractual Obligations above, we expect to invest between $50.0 and $75.0 million in conventional redevelopment projects and between $30.0 and $45.0 million in affordable redevelopment projects, predominantly funded by third-party tax credit equity.
 
Off-Balance Sheet Arrangements
 
We own general and limited partner interests in unconsolidated real estate partnerships, in which our total ownership interests range typically from less than 1% up to 50%. However, based on the provisions of the relevant partnership agreements, we are not deemed to be the primary beneficiary or to have control of these partnerships sufficient to require or permit consolidation for accounting purposes (see Note 2 of the consolidated financial statements in Item 8). There are no lines of credit, side agreements, or any other derivative financial instruments related to or between our unconsolidated real estate partnerships and us and no material exposure to financial guarantees. Accordingly, our maximum risk of loss related to these unconsolidated real estate partnerships is limited to the aggregate carrying amount of our investment in the unconsolidated real estate partnerships and any outstanding notes receivable as reported in our consolidated financial statements (see Note 4 of the consolidated financial statements in Item 8 for additional information about our investments in unconsolidated real estate partnerships).
 
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk
 
Our primary market risk exposure relates to changes in base interest rates, mortgage spreads and availability of credit. We are not subject to any foreign currency exchange rate risk or commodity price risk, or any other material market rate or price risks. We use predominantly long-term, fixed-rate non-recourse mortgage debt in order to avoid


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the refunding and repricing risks of short-term borrowings. We use short-term debt financing and working capital primarily to fund short-term uses and acquisitions and generally expect to refinance such borrowings with cash from operating activities, property sales proceeds, long-term debt or equity financings. We use total rate-of-return swaps to obtain the benefit of variable rates on certain of our fixed rate debt instruments. We make limited use of other derivative financial instruments and we do not use them for trading or other speculative purposes.
 
We had $1,309.5 million of floating rate debt and $73.0 million of floating rate preferred stock outstanding at December 31, 2008. Of the total floating rate debt, the major components were floating rate tax-exempt bond financing ($563.4 million), floating rate secured notes ($335.6 million) and a term loan ($400.0 million). At December 31, 2008, we had approximately $717.2 million in cash and cash equivalents, restricted cash and notes receivable, the majority of which bear interest. We also had approximately $127.3 million of variable rate debt associated with our redevelopment activities, for which we capitalize a portion of the interest expense. The effect of our interest bearing assets and of capitalizing interest on variable rate debt associated with our redevelopment activities would partially reduce the effect of an increase in variable interest rates. Historically, changes in tax-exempt interest rates have been at a ratio of less than 1:1 with changes in taxable interest rates. Floating rate tax-exempt bond financing is benchmarked against the SIFMA rate (previously the Bond Market Association index), which since 1989 has averaged 69% of the 30-day LIBOR rate. If this historical relationship continues, on an annual basis, we estimate that an increase in 30-day LIBOR of 1.0% (0.69% in tax-exempt interest rates) with constant credit risk spreads would result in our income before minority interests being reduced by $3.1 million and our income attributable to common stockholders being reduced by $4.3 million.
 
We estimate the fair value for our debt instruments using present value techniques that include income and market valuation approaches with market rates for debt with the same or similar terms. Present value calculations vary depending on the assumptions used, including the discount rate and estimates of future cash flows. In many cases, the fair value estimates may not be realizable in immediate settlement of the instruments. The estimated aggregate fair value of our consolidated debt (including amounts reported in liabilities related to assets held for sale) was approximately $6.7 billion and $7.6 billion at December 31, 2008 and 2007, respectively. The combined carrying value of our consolidated debt (including amounts reported in liabilities related to assets held for sale) was approximately $6.8 billion and $7.5 billion at December 31, 2008 and 2007, respectively. See Note 6 and Note 7 to the consolidated financial statements in Item 8 for further details on our consolidated debt. Refer to Derivative Financial Instruments in Note 2 to the consolidated financial statements in Item 8 for further discussion regarding certain of our fixed rate debt that is subject to total rate of return swap instruments. If market rates for our fixed-rate debt were higher by 1.0% with constant credit risk spreads, the estimated fair value of our debt discussed above would have decreased from $6.7 billion to $6.4 billion. If market rates for our debt discussed above were lower by 1.0% with constant credit risk spreads, the estimated fair value of our fixed-rate debt would have increased from $6.7 billion to $6.9 billion.
 
At December 31, 2008, we had swap positions with two financial institutions totaling $422.1 million. The related swap agreements provide for collateral calls to maintain specified loan-to-value ratios, pursuant to which we had provided $3.2 million of collateral as of December 31, 2008. In the event the values of the real estate properties serving as collateral under these agreements decline, we may be required to provide additional collateral pursuant to the swap agreements, which would adversely affect our cash flows.
 
Item 8.   Financial Statements and Supplementary Data
 
The independent registered public accounting firm’s report, consolidated financial statements and schedule listed in the accompanying index are filed as part of this report and incorporated herein by this reference. See “Index to Financial Statements” on page F-1 of this Annual Report.
 
Item 9.   Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
 
None.


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Item 9A.   Controls and Procedures
 
Disclosure Controls and Procedures
 
Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our chief executive officer and chief financial officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.
 
Management’s Report on Internal Control Over Financial Reporting
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
 
  •  pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets;
 
  •  provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
 
  •  provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
 
Based on their assessment, management concluded that, as of December 31, 2008, our internal control over financial reporting is effective.
 
Our independent registered public accounting firm has issued an attestation report on our internal control over financial reporting.
 
Changes in Internal Control over Financial Reporting
 
There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


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Report of Independent Registered Public Accounting Firm
 
Stockholders and Board of Directors Apartment Investment and Management Company
 
We have audited Apartment Investment and Management Company’s (the “Company”) internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the COSO criteria.
 
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 31, 2008 and 2007, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2008, and our report dated February 26, 2009 expressed an unqualified opinion thereon.
 
/s/  Ernst & Young LLP
 
Denver, Colorado
February 26, 2009


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Item 9B.   Other Information
 
None.
 
PART III
 
Item 10.   Directors, Executive Officers and Corporate Governance
 
The information required by this item is presented under the captions “Board of Directors and Executive Officers,” “Corporate Governance Matters — Code of Ethics,” “Other Matters — Section 16(a) Beneficial Ownership Reporting Compliance,” “Corporate Governance Matters — Nominating and Corporate Governance Committee,” “Corporate Governance Matters — Audit Committee” and “Corporate Governance Matters — Audit Committee Financial Expert” in the proxy statement for our 2009 annual meeting of stockholders and is incorporated herein by reference.
 
Item 11.   Executive Compensation
 
The information required by this item is presented under the captions “Compensation Discussion & Analysis,” “Compensation and Human Resources Committee Report to Stockholders,” “Summary Compensation Table,” “Grants of Plan-Based Awards in 2008,” “Outstanding Equity Awards at Fiscal Year End 2008,” “Option Exercises and Stock Vested in 2008,” “Potential Payments Upon Termination or Change in Control” and “Corporate Governance Matters — Director Compensation” in the proxy statement for our 2009 annual meeting of stockholders and is incorporated herein by reference.
 
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
The information required by this item is presented under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance Under Equity Compensation Plans” in the proxy statement for our 2009 annual meeting of stockholders and is incorporated herein by reference.
 
Item 13.   Certain Relationships and Related Transactions, and Director Independence
 
The information required by this item is presented under the caption “Certain Relationships and Related Transactions” and “Corporate Governance Matters — Independence of Directors” in the proxy statement for our 2009 annual meeting of stockholders and is incorporated herein by reference.
 
Item 14.   Principal Accountant Fees and Services
 
The information required by this item is presented under the caption “Principal Accountant Fees and Services” in the proxy statement for our 2009 annual meeting of stockholders and is incorporated herein by reference.


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PART IV
 
Item 15.   Exhibits and Financial Statement Schedules
 
(a)(1) The financial statements listed in the Index to Financial Statements on Page F-1 of this report are filed as part of this report and incorporated herein by reference.
 
(a)(2) The financial statement schedule listed in the Index to Financial Statements on Page F-1 of this report is filed as part of this report and incorporated herein by reference.
 
(a)(3) The Exhibit Index is incorporated herein by reference.
 
INDEX TO EXHIBITS (1)(2)
 
         
Exhibit No.
 
Description
 
  3 .1   Charter
  3 .2   Bylaws (Exhibit 3.2 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007, is incorporated herein by this reference)
  10 .1   Fourth Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29, 1994, as amended and restated as of February 28, 2007 (Exhibit 10.1 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 2006, is incorporated herein by this reference)
  10 .2   First Amendment to Fourth Amended and Restated Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of December 31, 2007 (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated December 31, 2007, is incorporated herein by this reference)
  10 .3   Amended and Restated Secured Credit Agreement, dated as of November 2, 2004, by and among Aimco, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., and NHP Management Company as the borrowers and Bank of America, N.A., Keybank National Association, and the Lenders listed therein (Exhibit 4.1 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004, is incorporated herein by this reference)
  10 .4   First Amendment to Amended and Restated Secured Credit Agreement, dated as of June 16, 2005, by and among Aimco, AIMCO Properties, L.P., AIMCO/Bethesda Holdings, Inc., and NHP Management Company as the borrowers and Bank of America, N.A., Keybank National Association, and the Lenders listed therein (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated June 16, 2005, is incorporated herein by this reference)
  10 .5   Second Amendment to Amended and Restated Senior Secured Credit Agreement, dated as of March 22, 2006, by and among Aimco, AIMCO Properties, L.P., and AIMCO/Bethesda Holdings, Inc., as the borrowers, and Bank of America, N.A., Keybank National Association, and the lenders listed therein (Exhibit 10.1 to Aimco’s Current Report on Form 10-K, dated March 22, 2006, is incorporated herein by this reference)
  10 .6   Third Amendment to Senior Secured Credit Agreement, dated as of August 31, 2007, by and among Apartment Investment and Management Company, AIMCO Properties, L.P., and AIMCO/Bethesda Holdings, Inc., as the Borrowers, the pledgors and guarantors named therein, Bank of America, N.A., as administrative agent and Bank of America, N.A., Keybank National Association and the other lenders listed therein (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated August 31, 2007, is incorporated herein by this reference)
  10 .7   Fourth Amendment to Senior Secured Credit Agreement, dated as of September 14, 2007, by and among Apartment Investment and Management Company, AIMCO Properties, L.P., and AIMCO/Bethesda Holdings, Inc., as the Borrowers, the pledgors and guarantors named therein, Bank of America, N.A., as administrative agent and Bank of America, N.A., Keybank National Association and the other lenders listed therein (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated September 14, 2007, is incorporated herein by this reference)


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Exhibit No.
 
Description
 
  10 .8   Fifth Amendment to Senior Secured Credit Agreement, dated as of September 9, 2008, by and among Apartment Investment and Management Company, AIMCO Properties, L.P., and AIMCO/Bethesda Holdings, Inc., as the Borrowers, the pledgors and guarantors named therein, Bank of America, N.A., as administrative agent and Bank of America, N.A., Keybank National Association and the other lenders listed therein (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, dated September 11, 2008, is incorporated herein by this reference)
  10 .9   Master Indemnification Agreement, dated December 3, 2001, by and among Apartment Investment and Management Company, AIMCO Properties, L.P., XYZ Holdings LLC, and the other parties signatory thereto (Exhibit 2.3 to Aimco’s Current Report on Form 8-K, filed December 6, 2001, is incorporated herein by this reference)
  10 .10   Tax Indemnification and Contest Agreement, dated December 3, 2001, by and among Apartment Investment and Management Company, National Partnership Investments, Corp., and XYZ Holdings LLC and the other parties signatory thereto (Exhibit 2.4 to Aimco’s Current Report on Form 8-K, filed December 6, 2001, is incorporated herein by this reference)
  10 .11   Limited Liability Company Agreement of AIMCO JV Portfolio #1, LLC dated as of December 30, 2003 by and among AIMCO BRE I, LLC, AIMCO BRE II, LLC and SRV-AJVP#1, LLC (Exhibit 10.54 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 2003, is incorporated herein by this reference)
  10 .12   Employment Contract executed on December 29, 2008, by and between AIMCO Properties, L.P. and Terry Considine (Exhibit 10.1 to Aimco’s Current Report on Form 8-K, filed December 29, 2008, is incorporated herein by this reference)*
  10 .13   Apartment Investment and Management Company 1997 Stock Award and Incentive Plan (October 1999) (Exhibit 10.26 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 1999, is incorporated herein by this reference)*
  10 .14   Form of Restricted Stock Agreement (1997 Stock Award and Incentive Plan) (Exhibit 10.11 to Aimco’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1997, is incorporated herein by this reference)*
  10 .15   Form of Incentive Stock Option Agreement (1997 Stock Award and Incentive Plan) (Exhibit 10.42 to Aimco’s Annual Report on Form 10-K for the year ended December 31, 1998, is incorporated herein by this reference)*
  10 .16   2007 Stock Award and Incentive Plan (incorporated by reference to Appendix A to Aimco’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on March 20, 2007)*
  10 .17   Form of Restricted Stock Agreement (Exhibit 10.2 to Aimco’s Current Report on Form 8-K, dated April 30, 2007, is incorporated herein by this reference)*
  10 .18   Form of Non-Qualified Stock Option Agreement (Exhibit 10.3 to Aimco’s Current Report on Form 8-K, dated April 30, 2007, is incorporated herein by this reference)*
  10 .19   2007 Employee Stock Purchase Plan (incorporated by reference to Appendix B to Aimco’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on March 20, 2007)*
  21 .1   List of Subsidiaries
  23 .1   Consent of Independent Registered Public Accounting Firm
  31 .1   Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  31 .2   Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


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Exhibit No.
 
Description
 
  32 .1   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  32 .2   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  99 .1   Agreement re: disclosure of long-term debt instruments
 
 
(1) Schedule and supplemental materials to the exhibits have been omitted but will be provided to the Securities and Exchange Commission upon request.
 
(2) The file reference number for all exhibits is 001-13232, and all such exhibits remain available pursuant to the Records Control Schedule of the Securities and Exchange Commission.
 
*  Management contract or compensatory plan or arrangement


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SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Apartment Investment and
Management Company
 
   
/s/  Terry Considine
Terry Considine
Chairman of the Board and
Chief Executive Officer
 
Date: February 27, 2009
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
             
Signature
 
Title
 
Date
 
/s/  Terry Considine

Terry Considine 		  Chairman of the Board and
Chief Executive Officer
(principal executive officer) 		  February 27, 2009
         
/s/  Thomas M. Herzog

Thomas M. Herzog 		  Executive Vice President and
Chief Financial Officer
(principal financial officer) 		  February 27, 2009
         
/s/  Paul Beldin

Paul Beldin 		  Senior Vice President and
Chief Accounting Officer
(principal accounting officer) 		  February 27, 2009
         
/s/  James N. Bailey

James N. Bailey 		  Director   February 27, 2009
         
/s/  Richard S. Ellwood

Richard S. Ellwood 		  Director   February 27, 2009
         
/s/  Thomas L. Keltner

Thomas L. Keltner 		  Director   February 27, 2009
         
/s/  J. Landis Martin

J. Landis Martin 		  Director   February 27, 2009
         
/s/  Robert A. Miller

Robert A. Miller 		  Director   February 27, 2009
         
/s/  Thomas L. Rhodes

Thomas L. Rhodes 		  Director   February 27, 2009
         
/s/  Michael A. Stein

Michael A. Stein 		  Director   February 27, 2009


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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
 
INDEX TO FINANCIAL STATEMENTS
 
         
    Page
 
Financial Statements:
       
    F-2  
    F-3  
    F-4  
    F-5  
    F-6  
    F-8  
Financial Statement Schedule:
       
    F-54  
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto
       


F-1

Table of Contents

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
Stockholders and Board of Directors Apartment Investment and Management Company
 
We have audited the accompanying consolidated balance sheets of Apartment Investment and Management Company (the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedule listed in the accompanying Index to Financial Statements. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2008 and 2007, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with United States generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects the information set forth therein.
 
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2009 expressed an unqualified opinion thereon.
 
/s/  ERNST & YOUNG LLP
 
Denver, Colorado
February 26, 2009


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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
 
CONSOLIDATED BALANCE SHEETS
As of December 31, 2008 and 2007
(In thousands, except share data)
 
                 
    2008     2007  
 
ASSETS
Real estate:
               
Buildings and improvements
  $ 8,552,635     $ 7,893,171  
Land
    2,332,457       2,355,103  
                 
Total real estate
    10,885,092       10,248,274  
Less accumulated depreciation
    (2,782,724 )     (2,361,232 )
                 
Net real estate
    8,102,368       7,887,042  
Cash and cash equivalents
    299,676       210,461  
Restricted cash
    258,303       313,694  
Accounts receivable, net
    89,132       71,463  
Accounts receivable from affiliates, net
    33,536       34,958  
Deferred financing costs, net
    59,473       65,888  
Notes receivable from unconsolidated real estate partnerships, net
    22,567       35,186  
Notes receivable from non-affiliates, net
    136,633       143,054  
Investment in unconsolidated real estate partnerships
    109,312       117,217  
Other assets
    196,671       207,857  
Deferred income tax assets, net
    28,326       14,426  
Assets held for sale
    67,160       1,505,286  
                 
Total assets
  $ 9,403,157     $ 10,606,532  
                 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Property tax-exempt bond financing
  $ 721,971     $ 756,442  
Property loans payable
    5,559,169       5,096,473  
Term loans
    400,000       475,000  
Other borrowings
    95,981       75,057  
                 
Total indebtedness
    6,777,121       6,402,972  
                 
Accounts payable
    64,241       65,235  
Accrued liabilities and other
    411,114       441,042  
Deferred income
    195,997       200,199  
Security deposits
    43,277       41,141  
Liabilities related to assets held for sale
    56,341       1,151,198  
                 
Total liabilities
    7,548,091       8,301,787  
                 
Minority interest in consolidated real estate partnerships
    348,484       441,778  
Minority interest in Aimco Operating Partnership
    88,148       113,263  
Commitments and contingencies (Note 8)
               
Stockholders’ equity:
               
Perpetual Preferred Stock
    696,500       723,500  
Class A Common Stock, $.01 par value, 426,157,736 shares authorized, 116,180,877 and 135,210,365 shares issued and outstanding, at December 31, 2008 and 2007, respectively
    1,162       1,352  
Additional paid-in capital
    3,056,550       3,508,342  
Notes due on common stock purchases
    (3,607 )     (5,441 )
Distributions in excess of earnings
    (2,332,171 )     (2,478,049 )
                 
Total stockholders’ equity
    1,418,434       1,749,704  
                 
Total liabilities and stockholders’ equity
  $ 9,403,157     $ 10,606,532  
                 
 
See notes to consolidated financial statements.


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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
 
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2008, 2007 and 2006
(In thousands, except per share data)
 
                         
    2008     2007     2006  
 
REVENUES:
                       
Rental and other property revenues
  $ 1,350,950     $ 1,296,142     $ 1,212,958  
Property management revenues, primarily from affiliates
    6,345       6,923       12,312  
Asset management and tax credit revenues
    100,623       73,755       48,893  
                         
Total revenues
    1,457,918       1,376,820       1,274,163  
                         
OPERATING EXPENSES:
                       
Property operating expenses
    626,001       596,902       549,716  
Property management expenses
    5,385       6,678       6,289  
Investment management expenses
    21,389       20,514       14,742  
Depreciation and amortization
    458,595       403,786       368,783  
General and administrative expenses
    99,040       90,667       91,571  
Other expenses, net
    19,939       16,518       12,951  
Restructuring costs
    22,802       —       —  
                         
Total operating expenses
    1,253,151       1,135,065       1,044,052  
                         
Operating income
    204,767       241,755       230,111  
Interest income
    17,130       40,887       32,173  
Provision for losses on notes receivable, net
    (4,179 )     (3,951 )     (2,785 )
Interest expense
    (368,709 )     (355,440 )     (326,060 )
Deficit distributions to minority partners
    (43,013 )     (32,599 )     (15,519 )
Equity in losses of unconsolidated real estate partnerships
    (4,601 )     (277 )     (2,070 )
(Provision for) recoveries of operating real estate impairment losses
    (5,617 )     (1,637 )     813  
Provision for impairment losses on real estate development assets
    (107,459 )     —       —  
Gain on dispositions of unconsolidated real estate and other
    99,602       32,061       27,730  
                         
Loss before income taxes, minority interests and discontinued operations
    (212,079 )     (79,201 )     (55,607 )
Income tax benefit
    53,371       19,840       11,095  
Minority interests:
                       
Minority interest in consolidated real estate partnerships
    22,052       1,123       (12,464 )
Minority interest in Aimco Operating Partnership, preferred
    (7,646 )     (7,128 )     (7,153 )
Minority interest in Aimco Operating Partnership, common
    15,004       12,182       14,025  
                         
Total minority interests
    29,410       6,177       (5,592 )
                         
Loss from continuing operations
    (129,298 )     (53,184 )     (50,104 )
Income from discontinued operations, net
    544,761       83,095       226,891  
                         
Net income
    415,463       29,911       176,787  
Net income attributable to preferred stockholders
    53,708       66,016       81,132  
                         
Net income (loss) attributable to common stockholders
  $ 361,755     $ (36,105 )   $ 95,655  
                         
Earnings (loss) per common share — basic and diluted:
                       
Loss from continuing operations (net of preferred dividends)
  $ (1.51 )   $ (0.85 )   $ (0.93 )
Income from discontinued operations
    4.49       0.59       1.61  
                         
Net income (loss) attributable to common stockholders
  $ 2.98     $ (0.26 )   $ 0.68  
                         
Weighted average common shares outstanding — basic and diluted
    121,213       140,137       141,053  
                         
Dividends declared per common share
  $ 5.73     $ 2.92     $ 1.63  
                         
 
See notes to consolidated financial statements.


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Table of Contents

 
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Years Ended December 31, 2008, 2007 and 2006
(In thousands)
 
                                                                 
                                  Notes
 		             
                Class A
 		          Due on
 		             
    Preferred Stock     Common Stock     Additional
 		    Common
 		    Distributions
 		       
    Shares
 		          Shares
 		          Paid-in
 		    Stock
 		    in Excess of
 		       
    Issued     Amount     Issued     Amount     Capital     Purchases     Earnings     Total  
 
Balances at December 31, 2005 (before special dividends)
    38,325     $ 1,010,250       100,473     $ 1,004     $ 3,258,773     $ (25,911 )   $ (1,528,013 )   $ 2,716,103  
Common Stock issued pursuant to special dividends (Note 1)
    —       —       40,845       408       458,908       —       (459,316 )     —  
                                                                 
Balances at December 31, 2005
    38,325       1,010,250       141,318       1,412       3,717,681       (25,911 )     (1,987,329 )     2,716,103  
Cumulative effect of change in accounting principle — adoption of EITF 04-5
    —       —       —       —       —       —       (75,012 )     (75,012 )
Issuance of 200 shares of CRA Preferred Stock
    —       100,000       —       —       (2,509 )     —       —       97,491  
Redemption of Preferred Stock
    (11,470 )     (286,750 )     —       —       6,848       —       (6,848 )     (286,750 )
Redemption of Aimco Operating Partnership units for Common Stock
    —       —       146       1       4,560       —       —       4,561  
Repurchases of Common Stock
    —       —       (3,397 )     (34 )     (120,225 )     —       —       (120,259 )
Repayment of notes receivable from officers
    —       —       —       —       —       21,844       —       21,844  
Officer and employee stock awards and purchases, net
    —       —       674       7       676       (647 )     —       36  
Stock options exercised
    —       —       4,172       42       107,562       —       —       107,604  
Excess income tax benefits related to stock-based compensation and other
    —       —       —       —       454       —       —       454  
Common Stock issued as consideration for acquisition of interest in real estate
    —       —       11       —       479       —       —       479  
Amortization of stock option and restricted stock compensation cost
    —       —       —       —       15,874       —       —       15,874  
Net income
    —       —       —       —       —       —       176,787       176,787  
Cash dividends declared on Common Stock
    —       —       —       —       —       —       (232,185 )     (232,185 )
Preferred Stock dividends
    —       —       —       —       —       —       (87,135 )     (87,135 )
                                                                 
Balances at December 31, 2006
    26,855       823,500       142,924       1,428       3,731,400       (4,714 )     (2,211,722 )     2,339,892  
Redemption of Preferred Stock
    (1,905 )     (100,000 )     —       —       635       —       (2,635 )     (102,000 )
Cumulative effect of change in accounting principle — adoption of FIN 48
    —       —       —       —       —       —       (764 )     (764 )
Redemption of Aimco Operating Partnership units for Common Stock
    —       —       695       7       27,846       —       —       27,853  
Repayment of notes receivable from officers
    —       —       —       —       —       1,659       —       1,659  
Officer and employee stock awards and purchases, net
    —       —       466       5       2,553       (2,386 )     —       172  
Stock options exercised
    —       —       2,070       21       53,698       —       —       53,719  
Repurchases of Common Stock
    —       —       (10,945 )     (109 )     (325,713 )     —       —       (325,822 )
Amortization of stock option and restricted stock compensation cost
    —       —       —       —       19,224       —       —       19,224  
Reversal of excess income tax benefits related to stock-based compensation and other
    —       —       —       —       (1,301 )     —       —       (1,301 )
Net income
    —       —       —       —       —       —       29,911       29,911  
Cash dividends declared on Common Stock
    —       —       —       —       —       —       (228,022 )     (228,022 )
Preferred Stock dividends
    —       —       —       —       —       —       (64,817 )     (64,817 )
                                                                 
Balances at December 31, 2007
    24,950       723,500       135,210       1,352       3,508,342       (5,441 )     (2,478,049 )     1,749,704  
Repurchase of Preferred Stock
    —       (27,000 )     —       —       678       —       1,482       (24,840 )
Redemption of Aimco Operating Partnership units for Common Stock
    —       —       160       2       4,180       —       —       4,182  
Repayment of notes receivable from officers
    —       —       —       —       —       1,458       —       1,458  
Officer and employee stock awards and purchases, net
    —       —       348       3       824       (613 )     —       214  
Stock options exercised
    —       —       19       —       481       —       —       481  
Forfeitures of officer and employee stock awards
    —       —       (207 )     (2 )     (1,027 )     989       —       (40 )
Repurchases of Common Stock
    —       —       (19,349 )     (193 )     (473,319 )     —       —       (473,512 )
Amortization of stock option and restricted stock compensation cost
    —       —       —       —       17,603       —       —       17,603  
Other
    —       —       —       —       (1,212 )     —       —       (1,212 )
Net income
    —       —       —       —       —       —       415,463       415,463  
Cash dividends declared on Common Stock
    —       —       —       —       —       —       (215,853 )     (215,853 )
Preferred Stock dividends
    —       —       —       —       —       —       (55,214 )     (55,214 )
                                                                 
Balances at December 31, 2008
    24,950     $ 696,500       116,181     $ 1,162     $ 3,056,550     $ (3,607 )   $ (2,332,171 )   $ 1,418,434  
                                                                 
 
See notes to consolidated financial statements.


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Table of Contents

 
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2008, 2007 and 2006
(In thousands)
 
                         
    2008     2007     2006  
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                       
Net income
  $ 415,463     $ 29,911     $ 176,787  
                         
Adjustments to reconcile net income to net cash provided by operating activities:
                       
Depreciation and amortization
    458,595       403,786       368,783  
Deficit distributions to minority partners
    43,013       32,599       15,519  
Equity in losses of unconsolidated real estate partnerships
    4,601       277       2,070  
Provision for impairment losses on real estate development assets
    107,459       —       —  
Real estate impairment losses (recoveries), net
    5,617       1,637       (813 )
Gain on dispositions of unconsolidated real estate and other
    (99,602 )     (32,061 )     (27,730 )
Deferred income tax benefit
    (53,371 )     (19,840 )     (11,095 )
Minority interest in consolidated real estate partnerships
    (22,052 )     (1,123 )     12,464  
Minority interest in Aimco Operating Partnership
    (7,358 )     (5,054 )     (6,872 )
Stock-based compensation expense
    13,833       14,921       12,314  
Amortization of deferred loan costs and other
    10,694       9,827       14,893  
Distributions of earnings from unconsolidated entities
    14,619       4,239       3,578  
Distributions of earnings to minority interest in consolidated real estate partnerships
    (18,887 )     (17,406 )     (13,369 )
Discontinued operations:
                       
Depreciation and amortization
    57,288       96,554       129,994  
Gain on disposition of real estate, net of minority partners’ interest
    (618,168 )     (65,076 )     (258,970 )
Other adjustments to income from discontinued operations
    82,911       1,047       42,844  
Changes in operating assets and operating liabilities:
                       
Accounts receivable
    4,848       7,453       (3,178 )
Other assets
    53,699       (9,751 )     45,332  
Accounts payable, accrued liabilities and other
    (31,721 )     13,596       16,359  
                         
Total adjustments
    6,018       435,625       342,123  
                         
Net cash provided by operating activities
    421,481       465,536       518,910  
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Purchases of real estate
    (112,655 )     (201,434 )     (153,426 )
Capital expenditures
    (665,233 )     (689,719 )     (512,564 )
Proceeds from dispositions of real estate
    2,060,344       431,863       958,604  
Change in funds held in escrow from tax-free exchanges
    345       25,863       (19,021 )
Cash from newly consolidated properties
    241       7,549       23,269  
Proceeds from sale of interests and distributions from real estate partnerships
    94,277       198,998       45,662  
Purchases of partnership interests and other assets
    (28,121 )     (86,204 )     (37,570 )
Originations of notes receivable
    (6,911 )     (10,812 )     (94,640 )
Proceeds from repayment of notes receivable
    8,929       14,370       9,604  
Other investing activities
    (6,347 )     37,927       13,122  
                         
Net cash provided by (used in) investing activities
    1,344,869       (271,599 )     233,040  
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Proceeds from property loans
    949,549       1,552,048       1,185,670  
Principal repayments on property loans
    (1,291,543 )     (850,484 )     (1,004,142 )
Proceeds from tax-exempt bond financing
    50,100       82,350       75,568  
Principal repayments on tax-exempt bond financing
    (217,361 )     (70,029 )     (229,287 )
(Payments on) borrowings under term loans
    (75,000 )     75,000       —  
Net repayments on revolving credit facility
    —       (140,000 )     (77,000 )
Proceeds from (payments on) other borrowings
    21,367       (8,468 )     (22,838 )
Proceeds from issuance of preferred stock, net
    —       —       97,491  
Repurchases and redemptions of preferred stock
    (24,840 )     (102,000 )     (286,750 )
Repurchase of Class A Common Stock
    (502,296 )     (307,382 )     (109,937 )
Proceeds from Class A Common Stock option exercises
    481       53,719       107,603  
Principal repayments received on notes due on Class A Common Stock purchases
    1,458       1,659       21,844  
Payment of Class A Common Stock dividends
    (212,286 )     (230,806 )     (231,697 )
Payment of preferred stock dividends
    (55,215 )     (67,100 )     (74,700 )
Payment of distributions to minority interest
    (311,695 )     (180,684 )     (117,216 )
Other financing activities
    (9,854 )     (21,123 )     (18,465 )
                         
Net cash used in financing activities
    (1,677,135 )     (213,300 )     (683,856 )
                         
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    89,215       (19,363 )     68,094  
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    210,461       229,824       161,730  
                         
CASH AND CASH EQUIVALENTS AT END OF YEAR
  $ 299,676     $ 210,461     $ 229,824  
                         
 
See notes to consolidated financial statements.


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Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2008, 2007 and 2006
(In thousands)
 
                         
    2008     2007     2006  
 
SUPPLEMENTAL CASH FLOW INFORMATION:
                       
Interest paid
  $ 434,645     $ 452,324     $ 423,456  
Cash paid for income taxes
    13,780       2,994       9,807  
Non-cash transactions associated with the acquisition of real estate and interests in unconsolidated real estate partnerships:
                       
Secured debt assumed in connection with purchase of real estate
    —       16,000       47,112  
Issuance of OP Units for interests in unconsolidated real estate partnerships and acquisitions of real estate
    —       2,998       13  
Non-cash transactions associated with the disposition of real estate:
                       
Secured debt assumed in connection with the disposition of real estate
    157,394       27,929       —  
Issuance of notes receivable connection with the disposition of real estate
    10,372       —       —  
Non-cash transactions associated with consolidation of real estate partnerships:
                       
Real estate, net
    25,830       56,877       675,621  
Investments in and notes receivable primarily from affiliated entities
    4,497       84,545       (219,691 )
Restricted cash and other assets
    5,483       8,545       94,380  
Secured debt
    22,036       41,296       503,342  
Accounts payable, accrued and other liabilities
    14,020       48,602       41,580  
Other non-cash transactions:
                       
Redemption of common OP Units for Class A Common Stock
    4,182       27,810       4,362  
Conversion of preferred OP Units for Class A Common Stock
    —       43       199  
Origination of notes receivable from officers for Class A Common Stock purchases, net of cancellations
    (385 )     2,386       647  
 
See notes to consolidated financial statements.


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Table of Contents

APARTMENT INVESTMENT AND MANAGEMENT COMPANY
 
 
NOTE 1 — Organization
 
Apartment Investment and Management Company, or Aimco, is a Maryland corporation incorporated on January 10, 1994. We are a self-administered and self-managed real estate investment trust, or REIT, engaged in the acquisition, ownership, management and redevelopment of apartment properties. As of December 31, 2008, we owned or managed a real estate portfolio of 992 apartment properties containing 162,807 apartment units located in 44 states, the District of Columbia and Puerto Rico. We are one of the largest owners and operators of apartment properties in the United States.
 
As of December 31, 2008, we:
 
  •  owned an equity interest in and consolidated 117,719 units in 514 properties (which we refer to as “consolidated properties”), of which 114,966 units were also managed by us;
 
  •  owned an equity interest in and did not consolidate 9,613 units in 85 properties (which we refer to as “unconsolidated properties”), of which 4,546 units were also managed by us; and
 
  •  provided services for or managed 35,475 units in 393 properties, primarily pursuant to long-term agreements (including 32,223 units in 359 properties for which we provide asset management services only, and not also property management services). In certain cases, we may indirectly own generally less than one percent of the operations of such properties through a partnership syndication or other fund.
 
Through our wholly-owned subsidiaries, AIMCO-GP, Inc. and AIMCO-LP Trust, we own a majority of the ownership interests in AIMCO Properties, L.P., which we refer to as the Aimco Operating Partnership. As of December 31, 2008, we held an interest of approximately 91% in the common partnership units and equivalents of the Aimco Operating Partnership. We conduct substantially all of our business and own substantially all of our assets through the Aimco Operating Partnership. Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are referred to as “OP Units.” OP Units include common OP Units, partnership preferred units, or preferred OP Units, and high performance partnership units, or High Performance Units. The Aimco Operating Partnership’s income is allocated to holders of common OP Units based on the weighted average number of common OP Units outstanding during the period. The Aimco Operating Partnership records the issuance of common OP Units and the assets acquired in purchase transactions based on the market price of Aimco Class A Common Stock (which we refer to as Common Stock) at the date of closing of the transaction. The holders of the common OP Units and Class I High Performance Units receive distributions, prorated from the date of issuance, in an amount equivalent to the dividends paid to holders of Common Stock. Holders of common OP Units may redeem such units for cash or, at the Aimco Operating Partnership’s option, Common Stock. During 2008, 2007 and 2006, the weighted average ownership interest in the Aimco Operating Partnership held by the common OP Unit holders was approximately 8%, 9% and 10%, respectively. Preferred OP Units entitle the holders thereof to a preference with respect to distributions or upon liquidation. At December 31, 2008, 101,176,232 shares of our Common Stock were outstanding (before the effect of the January 29, 2009, special dividend discussed below) and the Aimco Operating Partnership had 9,484,191 common OP Units and equivalents outstanding for a combined total of 110,660,423 shares of Common Stock and OP Units outstanding (excluding preferred OP Units).
 
Except as the context otherwise requires, “we,” “our,” “us” and the “Company” refer to Aimco, the Aimco Operating Partnership and their consolidated entities, collectively.
 
In December 2007, July 2008, October 2008, and December 2008, the Aimco Operating Partnership declared special distributions payable on January 30, 2008, August 29, 2008, December 1, 2008, and January 29, 2009, respectively, to holders of record of common OP Units and High Performance Units on December 31, 2007, July 28, 2008, October 27, 2008, and December 29, 2008, respectively. The special distributions were paid on common OP Units and High Performance Units in the amounts listed below. The Aimco Operating Partnership distributed to us common OP Units equal to the number of shares we issued pursuant to our corresponding special dividends


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(discussed below) in addition to approximately $0.60 per unit in cash. Holders of common OP Units other than us and holders of High Performance Units received the distribution entirely in cash, in the amounts noted below.
 
                                 
    January 2008
 		    August 2008
 		    December 2008
 		    January 2009
 		 
    Special
 		    Special
 		    Special
 		    Special
 		 
Aimco Operating Partnership Special Distributions
  Distribution     Distribution     Distribution     Distribution  
 
Distribution per unit
  $ 2.51     $ 3.00     $ 1.80     $ 2.08  
Total distribution
  $ 257.2 million     $ 285.5 million     $ 176.6 million     $ 230.1 million  
Common OP Units and High Performance Units outstanding on record date
    102,478,510       95,151,333       98,136,520       110,654,142  
Common OP Units held by Aimco
    92,795,891       85,619,144       88,650,980       101,169,951  
Total distribution on Aimco common OP Units
  $ 232.9 million     $ 256.9 million     $ 159.6 million     $ 210.4 million  
Cash distribution to Aimco
  $ 55.0 million     $ 51.4 million     $ 53.2 million     $ 60.6 million  
Portion of distribution paid to Aimco through issuance of common OP Units
  $ 177.9 million     $ 205.5 million     $ 106.4 million     $ 149.8 million  
Common OP Units issued to Aimco pursuant to distributions
    4,594,074       5,731,310       12,572,267       15,627,330  
Cash distributed to common OP Units and High Performance Units other than Aimco
  $ 24.3 million     $ 28.6 million     $ 17.0 million     $ 19.7 million  
 
Also in December 2007, July 2008, October 2008, and December 2008, our Board of Directors declared corresponding special dividends payable on January 30, 2008, August 29, 2008, December 1, 2008, and January 29, 2009, respectively, to holders of record of our Common Stock on December 31, 2007, July 28, 2008, October 27, 2008, and December 29, 2008, respectively. A portion of the special dividends in the amount of $0.60 per share represents payment of the regular dividend for the quarters ended December 31, 2007, June 30, 2008, September 30, 2008, and December 31, 2008, and the remaining amount per share represents an additional dividend associated with taxable gains from property dispositions. The special dividends were paid in the amounts listed in the table below. Portions of the special dividends were paid through the issuance of shares of Common Stock.
 
                                 
    January 2008
 		    August 2008
 		    December 2008
 		    January 2009
 		 
    Special
 		    Special
 		    Special
 		    Special
 		 
Aimco Special Dividends
  Dividend     Dividend     Dividend     Dividend  
 
Dividend per share
  $ 2.51     $ 3.00     $ 1.80     $ 2.08  
Outstanding shares of Common Stock on the record date
    92,795,891       85,619,144       88,650,980       101,169,951  
Total dividend
  $ 232.9 million     $ 256.9 million     $ 159.6 million     $ 210.4 million  
Portion of dividend paid in cash
  $ 55.0 million     $ 51.4 million     $ 53.2 million     $ 60.6 million  
Portion of dividend paid through issuance of shares
  $ 177.9 million     $ 205.5 million     $ 106.4 million     $ 149.8 million  
Shares issued pursuant to dividend
    4,594,074       5,731,310       12,572,267       15,627,330  
Effective increase in outstanding shares on record date
    4.95 %     6.70 %     14.18 %     15.45 %
Average share price on determination date
  $ 38.71     $ 35.84     $ 8.46     $ 9.58  
Amounts after elimination of the effects of shares of Common Stock held by consolidated subsidiaries:
                               
Outstanding shares of Common Stock on the record date
    92,379,751       85,182,665       88,186,456       100,642,817  
Total dividend
  $ 231.9 million     $ 255.5 million     $ 158.7 million     $ 209.3 million  
Portion of dividend paid in cash
  $ 54.8 million     $ 51.1 million     $ 52.9 million     $ 60.3 million  
Portion of dividend paid through issuance of shares
  $ 177.1 million     $ 204.4 million     $ 105.8 million     $ 149.0 million  
Shares issued pursuant to dividend
    4,573,735       5,703,265       12,509,657       15,548,996  


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The effect of the issuance of additional shares of Common Stock pursuant to the special dividends has been retroactively reflected in each of the historical periods presented as if those shares were issued and outstanding at the beginning of the earliest period presented; accordingly, all activity prior to the ex-dividend date of the special dividends, including share issuances, repurchases and forfeitures, have been adjusted to reflect the effective increases in the number of shares, except in limited instances where noted otherwise.
 
The following table reconciles our shares issued and outstanding at December 31, 2008, to our shares outstanding at December 31, 2008, per the consolidated financial statements:
 
         
Common shares issued and outstanding
    101,176,232  
Shares issued January 29, 2009, pursuant to the special dividend
    15,627,330  
Elimination of shares owned by consolidated subsidiaries (prior to January 2009 special dividend)
    (527,134 )
Elimination of shares issued to consolidated subsidiaries pursuant to the January 2009 special dividend
    (78,334 )
Forfeitures and other activity not yet processed by transfer agent
    (17,217 )
         
Common shares outstanding at December 31, 2008, per consolidated financial statements
    116,180,877  
         
 
NOTE 2 — Basis of Presentation and Summary of Significant Accounting Policies
 
Principles of Consolidation
 
The accompanying consolidated financial statements include the accounts of Aimco, the Aimco Operating Partnership, and their consolidated entities. We consolidate all variable interest entities for which we are the primary beneficiary. Generally, we consolidate real estate partnerships and other entities that are not variable interest entities when we own, directly or indirectly, a majority voting interest in the entity or are otherwise able to control the entity. All significant intercompany balances and transactions have been eliminated in consolidation.
 
Interests in the Aimco Operating Partnership that are held by limited partners other than Aimco are reflected in the accompanying balance sheets as minority interest in Aimco Operating Partnership. Interests in partnerships consolidated into the Aimco Operating Partnership that are held by third parties are reflected in the accompanying balance sheets as minority interest in consolidated real estate partnerships. The assets of consolidated real estate partnerships owned or controlled by us generally are not available to pay creditors of Aimco or the Aimco Operating Partnership.
 
As used herein, and except where the context otherwise requires, “partnership” refers to a limited partnership or a limited liability company and “partner” refers to a partner in a limited partnership or a member in a limited liability company.
 
Variable Interest Entities
 
FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, or FIN 46, addresses the consolidation by business enterprises of variable interest entities. We consolidate all variable interest entities for which we are the primary beneficiary. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. FIN 46 requires a VIE to be consolidated in the financial statements of the entity that is determined to be the primary beneficiary of the VIE. The primary beneficiary generally is the entity that will receive a majority of the VIE’s expected losses, receive a majority of the VIE’s expected residual returns, or both.


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In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; our and the other investors’ ability to control or significantly influence key decisions for the VIE; and the similarity with and significance to the business activities of us and the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.
 
As of December 31, 2008, we were the primary beneficiary of, and therefore consolidated, 93 VIEs, which owned 70 apartment properties with 10,096 units. Real estate with a carrying value of $796.7 million collateralized $472.0 million of debt of those VIEs. The creditors of the consolidated VIEs do not have recourse to our general credit. As of December 31, 2008, we also held variable interests in 130 VIEs for which we were not the primary beneficiary. Those VIEs consist primarily of partnerships that are engaged, directly or indirectly, in the ownership and management of 181 apartment properties with 11,181 units. We are involved with those VIEs as an equity holder, lender, management agent, or through other contractual relationships. At December 31, 2008, our maximum exposure to loss as a result of our involvement with unconsolidated VIEs is limited to our recorded investments in and receivables from those VIEs totaling $117.2 million and our contractual obligation to advance funds to certain VIEs totaling $5.6 million. We may be subject to additional losses to the extent of any financial support that we voluntarily provide in the future. Additionally, the provision of financial support in the future may require us to consolidate a VIE.
 
Adoption of EITF 04-5
 
In June 2005, the Financial Accounting Standards Board, or FASB, ratified Emerging Issues Task Force Issue 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights, or EITF 04-5. EITF 04-5 provides an accounting model to be used by a general partner, or group of general partners, to determine whether the general partner(s) controls a limited partnership or similar entity in light of substantive kick-out rights and substantive participating rights held by the limited partners, and provides additional guidance on what constitutes those rights. EITF 04-5 was effective after June 29, 2005, for general partners of (a) all newly formed limited partnerships and (b) existing limited partnerships for which the partnership agreements have been modified. We consolidated four partnerships in the fourth quarter of 2005 based on EITF 04-5 requirements. The consolidation of those partnerships had an immaterial effect on our consolidated financial statements. EITF 04-5 was effective on January 1, 2006, for general partners of all limited partnerships and similar entities. We applied EITF 04-5 as of January 1, 2006, using a transition method that does not involve retrospective application to our financial statements for prior periods.
 
We consolidated 156 previously unconsolidated partnerships as a result of the application of EITF 04-5 in 2006. Those partnerships own, or control other entities that own, 149 apartment properties. Our direct and indirect interests in the profits and losses of those partnerships range from less than one percent to 50 percent, and average approximately 22 percent.
 
In prior periods, we used the equity method to account for our investments in the partnerships that we consolidated in 2006 in accordance with EITF 04-5. Under the equity method, we recognized partnership income or losses based generally on our percentage interest in the partnership. Consolidation of a partnership does not ordinarily result in a change to the net amount of partnership income or loss that is recognized using the equity method. However, when a partnership has a deficit in equity, accounting principles generally accepted in the United States of America, or GAAP, may require the controlling partner that consolidates the partnership to recognize any losses that would otherwise be allocated to noncontrolling partners, in addition to the controlling partner’s share of losses. Certain of the partnerships that we consolidated in accordance with EITF 04-5 had deficits in equity that resulted from losses or deficit distributions during prior periods when we accounted for our investment using the equity method. We would have been required to recognize the noncontrolling partners’ share of those losses had we applied EITF 04-5 in those prior periods. In accordance with our transition method for the adoption of EITF 04-5, we recorded a $75.0 million charge to retained earnings as of January 1, 2006, for the cumulative amount of additional losses that we would have recognized had we applied EITF 04-5 in prior periods. Substantially all of those losses were attributable to real estate depreciation expense. As a result of applying EITF 04-5 for the year


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ended December 31, 2006, our income from continuing operations includes partnership losses in addition to losses that would have resulted from continued application of the equity method of $24.4 million.
 
Adoption of SFAS 157
 
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements, or SFAS 157. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS 157 applies whenever other standards require assets or liabilities to be measured at fair value and does not expand the use of fair value in any new circumstances. SFAS 157 establishes a hierarchy that prioritizes the information used in developing fair value estimates and requires disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the reporting entity’s own data, and to nonrecurring fair value measurements of non-financial assets and non-financial liabilities for fiscal years beginning after November 15, 2008. The provisions of SFAS 157 are applicable to recurring and nonrecurring fair value measurements of financial assets and liabilities for fiscal years beginning after November 15, 2007, including interim periods within those fiscal years. We adopted the provisions of SFAS 157 that apply to recurring and nonrecurring fair value measurements of financial assets and liabilities effective January 1, 2008, and at that time determined no transition adjustment was required.
 
Basis of Fair Value Measurement (Valuation Hierarchy)
 
SFAS 157 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
 
     
Level 1 —
  Unadjusted quoted prices for identical and unrestricted assets or liabilities in active markets
Level 2 —
  Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument
Level 3 —
  Unobservable inputs that are significant to the fair value measurement
 
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
 
Following is a description of the valuation methodologies used for our significant financial instruments measured at fair value on a recurring or nonrecurring basis. Although some of the valuation methodologies use


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observable market inputs in limited instances, the majority of inputs we use are unobservable and are therefore classified within Level 3 of the valuation hierarchy.
 
     
Fair Value Measurement
  Valuation Methodologies
 
Notes receivable
  We assess the collectibility of notes receivable on a periodic basis, which assessment consists primarily of an evaluation of cash flow projections of the borrower to determine whether estimated cash flows are sufficient to repay principal and interest in accordance with the contractual terms of the note. We recognize impairments on notes receivable when it is probable that principal and interest will not be received in accordance with the contractual terms of the loan. The amount of the impairment to be recognized generally is based on the fair value of the real estate, the collateral for the loan, which represents the primary source of loan repayment. The fair value of the collateral, such as real estate or interests in real estate partnerships, is estimated through income and market valuation approaches using information such as broker estimates, purchase prices for recent transactions on comparable assets and net operating income capitalization analyses using observable and unobservable inputs such as capitalization rates, asset quality grading, geographic location analysis, and local supply and demand observations.
Total rate of return swaps
  Our total rate of return swaps have contractually-defined termination values generally equal to the difference between the fair value and the counterparty’s purchased value of the underlying borrowings. Upon termination, we are required to pay the counterparty the difference if the fair value is less than the purchased value, and the counterparty is required to pay us the difference if the fair value is greater than the purchased value. The underlying borrowings are generally callable, at our option, at face value prior to maturity and with no prepayment penalty. Due to our control of the call features in the underlying borrowings, we believe the inherent value of any differential between the fixed and variable cash payments due under the swaps would be significantly discounted by a market participant willing to purchase or assume any rights and obligations under these contracts.
    The swaps are generally cross-collateralized with other swap contracts with the same counterparty and do not allow transfer or assignment, thus there is no alternate or secondary market for these instruments. Accordingly, our assumptions of the fair value that a willing market participant would assign in valuing these instruments are based on a hypothetical market in which the highest and best use of these contracts is in-use in combination with the related borrowings, similar to how we use the contracts. Based on these assumptions, we believe the termination value, or exit value, of the swaps approximates the fair value that would be assigned by a willing market participant. We calculate the termination value using a market approach by reference to estimates of the fair value of the underlying borrowings, which are discussed below, and an evaluation of potential changes in the credit quality of the counterparties to these arrangements. We compare our estimates of fair value of the swaps and related borrowings to valuations provided by the counterparties on a quarterly basis.
    Our method for calculating fair value of the swaps generally results in changes in fair value equal to the changes in fair value of the related borrowings. We believe these instruments are highly effective in offsetting the changes in fair value of the borrowings during the hedging period.
Changes in fair value of borrowings subject to total rate of return swaps   We recognize changes in the fair value of certain borrowings subject to total rate of return swaps, which we have designated as fair value hedges in accordance with Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, or SFAS 133.


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Fair Value Measurement
  Valuation Methodologies
 
    We estimate the fair value of debt instruments using an income and market approach, including comparison of the contractual terms to observable and unobservable inputs such as market interest rate risk spreads, collateral quality and loan-to-value ratios on similarly encumbered assets within our portfolio. These borrowings are collateralized and non-recourse to us; therefore, we believe changes in our credit rating will not materially affect a market participant’s estimate of the borrowings’ fair value.
 
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
 
Amounts subject to SFAS 157 reported at fair value in our consolidated balance sheet at December 31, 2008, all of which are based on significant unobservable inputs classified within Level 3 of the fair value hierarchy, are summarized below (in thousands):
 
         
    Assets (Liabilities)  
 
Total rate of return swaps
  $ (29,495 )
Cumulative reduction of carrying amount of debt instruments subject to total rate of return swaps
  $ 29,495  
 
Changes in Level 3 Fair Value Measurements
 
The table below presents the balance sheet amounts at December 31, 2007 and 2008 (and the changes in fair value between such dates) for fair value measurements classified within Level 3 of the valuation hierarchy (in thousands). When a determination is made to classify a fair value measurement within Level 3 of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, Level 3 fair value measurements typically include, in addition to the unobservable or Level 3 components, observable components that can be validated to observable external sources; accordingly, the changes in fair value in the table below are due in part to observable factors that are part of the valuation methodology.
 
                                 
    Fair value at
 		    Unrealized Gains
 		    Realized gains
 		    Fair value at
 		 
    December 31,
 		    (Losses) included
 		    (losses) included
 		    December 31,
 		 
    2007     in earnings(1)     in earnings(2)     2008  
 
Total rate of return swaps
  $  (9,420 )   $ (20,075 )(3)   $       —     $ (29,495 )
Changes in fair value of debt instruments subject to total rate of return swaps
    9,420       20,075 (3)     —       29,495  
                                 
Total
  $ —     $ —     $ —     $ —  
                                 
 
 
(1) Unrealized gains (losses) relate to periodic revaluations of fair value and have not resulted from the settlement of a swap position.
 
(2) For total rate of return swaps, realized gains (losses) occur upon the settlement, resulting from the repayment of the underlying borrowings or the early termination of the swap, and include any net amounts paid or received upon such settlement. During the year ended December 31, 2008, we terminated total rate of return swaps with notional amounts totaling $90.3 million in connection with the sale of four properties and repayment of the related hedged debt. We repaid the debt at the swap counterparty’s purchased value, and accordingly we incurred no termination payments upon termination of the related swaps.
 
(3) Included in interest expense in the accompanying consolidated statements of income.

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Fair Value of Financial Instruments
 
We believe that the aggregate fair value of our cash and cash equivalents, receivables, payables and short-term secured debt approximates their aggregate carrying value at December 31, 2008, due to their relatively short-term nature and high probability of realization. We estimate fair value for our notes receivable and debt instruments using present value techniques that include income and market valuation approaches with market rates for debt with the same or similar terms. Present value calculations vary depending on the assumptions used, including the discount rate and estimates of future cash flows. In many cases, the fair value estimates may not be realizable in immediate settlement of the instruments. The estimated aggregate fair value of our notes receivable was approximately $161.6 million and $191.5 million at December 31, 2008 and 2007, respectively. See Note 5 for further information on notes receivable. The estimated aggregate fair value of our consolidated debt (including amounts reported in liabilities related to assets held for sale) was approximately $6.7 billion and $7.6 billion at December 31, 2008 and 2007, respectively. The combined carrying value of our consolidated debt (including amounts reported in liabilities related to assets held for sale) and our outstanding term loans was approximately $6.8 billion and $7.5 billion at December 31, 2008 and 2007, respectively. See Note 6 and Note 7 for further details on our consolidated debt. Refer to Derivative Financial Instruments for further discussion regarding certain of our fixed rate debt that is subject to total rate of return swap instruments.
 
Adoption of SFAS 159
 
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, or SFAS 159. SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We implemented SFAS 159 on January 1, 2008, and at that time did not elect the fair value option for any of our financial instruments or other items within the scope of SFAS 159.
 
Tax Credit Arrangements
 
We sponsor certain partnerships that own and operate apartment properties that qualify for tax credits under Section 42 of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, and for the U.S. Department of Housing and Urban Development, or HUD, subsidized rents under HUD’s Section 8 program. These partnerships acquire, develop and operate qualifying affordable housing properties and are structured to provide for the pass-through of tax credits and deductions to their partners. The tax credits are generally realized ratably over the first ten years of the tax credit arrangement and are subject to the partnership’s compliance with applicable laws and regulations for a period of 15 years. Typically, we are the general partner with a legal ownership interest of one percent or less. We market limited partner interests of at least 99 percent to unaffiliated institutional investors (which we refer to as tax credit investors or investors) and receive a syndication fee from each investor upon such investor’s admission to the partnership. At inception, each investor agrees to fund capital contributions to the partnerships. We agree to perform various services to the partnerships in exchange for fees over the expected duration of the tax credit service period. The related partnership agreements generally require adjustment of each tax credit investor’s required capital contributions if actual tax benefits to such investor differ from projected amounts.
 
We have determined that the partnerships in these arrangements are variable interest entities and, where we are general partner, we are the primary beneficiary that is required to consolidate the partnerships. Based on the contractual arrangements that obligate us to deliver tax benefits to the investors, and that entitle us through fee arrangements to receive substantially all available cash flow from the partnerships, we determined that these partnerships are most appropriately accounted for by us as wholly owned subsidiaries. We also determined that capital contributions received by the partnerships from tax credit investors represent, in substance, consideration that we receive in exchange for our obligation to deliver tax credits and other tax benefits to the investors, and these


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receipts are appropriately recognized as revenue in our consolidated financial statements when our obligation to the investors is relieved upon delivery of the expected tax benefits.
 
In summary, our accounting treatment recognizes the income or loss generated by the underlying real estate based on our economic interest in the partnerships. Proceeds received in exchange for the transfer of the tax credits are recognized as revenue proportionately as the tax benefits are delivered to the tax credit investors and our obligation is relieved. Syndication fees and related costs are recognized in income upon completion of the syndication effort. We recognize syndication fees in amounts determined based on a market rate analysis of fees for comparable services, which generally fell within a range of 10% to 15% of investor contributions during the periods presented. Other direct and incremental costs incurred in structuring these arrangements are deferred and amortized over the expected duration of the arrangement in proportion to the recognition of related income. Investor contributions in excess of recognized revenue are reported as deferred income in our consolidated balance sheets.
 
During the years ended December 31, 2008, 2007 and 2006, we recognized syndication fee income of $3.4 million, $13.8 million and $12.7 million, respectively, and revenue associated with the delivery of tax benefits of $29.4 million, $24.0 million and $16.0 million, respectively. At December 31, 2008 and 2007, $159.6 million and $149.2 million, respectively, of investor contributions in excess of the recognized revenue were included in deferred income in our consolidated balance sheets.
 
Acquisition of Real Estate Assets and Related Depreciation and Amortization
 
We capitalize the purchase price and incremental direct costs associated with the acquisition of properties as the cost of the assets acquired. In accordance with Statement of Financial Accounting Standards No. 141, Business Combinations, or SFAS 141, we allocate the cost of acquired properties to tangible assets and identified intangible assets based on their fair values. We determine the fair value of tangible assets, such as land, building, furniture, fixtures and equipment, on an “as-if vacant” basis, generally using internal valuation techniques that consider comparable market transactions, discounted cash flow techniques, replacement costs and other available information. We determine the fair value of identified intangible assets (or liabilities), which typically relate to in-place leases, using internal valuation techniques that consider the terms of the in-place leases, current market data for comparable leases, and our experience in leasing similar properties. The intangible assets or liabilities related to in-place leases are comprised of:
 
  1.  The value of the above- and below-market leases in-place. An asset or liability is recognized based on the difference between (a) the contractual amounts to be paid pursuant to the in-place leases and (b) our estimate of fair market lease rates for the corresponding in-place leases, measured over the period, including estimated lease renewals for below-market leases, that the leases are expected to remain in effect.
 
  2.  The estimated unamortized portion of avoided leasing commissions and other costs that ordinarily would be incurred to acquire the in-place leases.
 
  3.  The value associated with vacant units during the absorption period (estimates of lost rental revenue during the expected lease-up periods based on current market demand and stabilized occupancy levels).
 
The values of the above- and below-market leases are amortized to rental revenue over the expected remaining terms of the associated leases. Other intangible assets related to in-place leases are amortized to depreciation and amortization over the expected remaining terms of the associated leases. Amortization is adjusted, as necessary, to reflect any early lease terminations that were not anticipated in determining amortization periods.
 
Depreciation for all tangible real estate assets is calculated using the straight-line method over their estimated useful lives. Acquired buildings and improvements are depreciated over a composite life of 14 to 52 years, based on the age, condition and other physical characteristics of the property. As discussed under Impairment of Long Lived Assets below, we may adjust depreciation of properties that are expected to be disposed of or demolished prior to the end of their useful lives. Furniture, fixtures and equipment associated with acquired properties are depreciated over five years.
 
At December 31, 2008 and 2007, deferred income in our consolidated balance sheets includes below-market lease values totaling $36.2 million and $45.0 million, respectively which are net of accumulated amortization of


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$16.6 million and $12.2 million, respectively. Additions to below-market leases resulting from acquisitions during the year ended December 31, 2007 totaled $18.9 million, and there were no such additions during the years ended December 31, 2008 or 2006. During the years ended December 31, 2008, 2007 and 2006, we included amortization of below-market leases of $4.4 million, $4.6 million and $2.8 million, respectively, in rental and other property revenues in our consolidated statements of income. During the year ended December 31, 2008, we revised the estimated fair value of assets acquired and liabilities assumed in acquisitions completed in 2007, resulting in a $4.4 million reduction of below-market lease values and a corresponding reduction in buildings and improvements. At December 31, 2008, our below-market leases had a weighted average amortization period of 7.3 years and estimated aggregate amortization expense for each of the five succeeding years as follows:
 
         
2009
  $ 4.4  
2010
    3.9  
2011
    3.6  
2012
    3.2  
2013
    2.8  
 
Capital Expenditures and Related Depreciation
 
We capitalize costs, including certain indirect costs, incurred in connection with our capital expenditure activities, including redevelopment and construction projects, other tangible property improvements, and replacements of existing property components. Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with the planning, execution and control of all capital expenditure activities at the property level. We characterize as “indirect costs” an allocation of certain department costs, including payroll, at the area operations and corporate levels that clearly relate to capital expenditure activities. We capitalize interest, property taxes and insurance during periods in which redevelopment and construction projects are in progress. We charge to expense as incurred costs that do not relate to capital expenditure activities, including ordinary repairs, maintenance, resident turnover costs and general and administrative expenses.
 
We depreciate capitalized costs using the straight-line method over the estimated useful life of the related component or improvement, which is five, 15 or 30 years. All capitalized site payroll and indirect costs are allocated proportionately, based on direct costs, among capital projects and depreciated over the estimated useful lives of such projects.
 
Certain homogeneous items that are purchased in bulk on a recurring basis, such as carpeting and appliances, are depreciated using group methods that reflect the average estimated useful life of the items in each group. Except in the case of property casualties, where the net book value of lost property is written off in the determination of casualty gains or losses, we generally do not recognize any loss in connection with the replacement of an existing property component because normal replacements are considered in determining the estimated useful lives used in connection with our composite and group depreciation methods.
 
For the years ended December 31, 2008, 2007 and 2006, for continuing and discontinued operations, we capitalized $25.7 million, $30.8 million and $24.7 million, respectively, of interest costs, and $78.1 million, $78.1 million and $66.2 million, respectively, of site payroll and indirect costs, respectively.
 
Impairment of Long-Lived Assets
 
We apply the provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, or SFAS 144, to determine whether our real estate and other long-lived assets are impaired. Such assets to be held and used are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of a property may not be recoverable, we make an assessment of its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property. Based on periodic tests of recoverability of long-lived assets, for the years ended December 31, 2008 and 2007, we recorded operating real estate impairment losses of $5.6 million and $1.6 million, respectively, related to properties to be held and used. For


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the year ended December 31, 2006, we recorded net recoveries of previously recorded operating real estate impairment losses of $0.8 million.
 
In connection with the preparation of our annual financial statements, we assessed the recoverability of our investment in our Lincoln Place property, located in Venice, California. Based upon the recent decline in land values in Southern California and the expected timing of our redevelopment efforts, we determined that the total carrying amount of the property was no longer probable of full recovery and, accordingly, during the three months ended December 31, 2008, recognized an impairment loss of $85.4 million ($55.6 million net of tax).
 
Similarly, we assessed the recoverability of our investment in Pacific Bay Vistas (formerly Treetops), a vacant property located in San Bruno, California, and determined that the carrying value for the property exceeded its estimated fair value. Accordingly, we recognized an impairment loss of $5.7 million for this property during the three months ended December 31, 2008.
 
The impairment losses related to Lincoln Place, Pacific Bay Vistas and our investment in Casden Properties LLC (see Note 5), are included in provision for impairment losses on real estate development assets in our consolidated statement of income for the year ended December 31, 2008.
 
The amounts reported in continuing operations for real estate impairment (losses) recoveries, net include impairment losses related to consolidated properties to be held and used, as well as our share of all impairment losses or recoveries related to unconsolidated properties. We report impairment losses or recoveries related to properties sold or classified as held for sale in discontinued operations.
 
Our tests of recoverability address real estate assets that do not currently meet all conditions to be classified as held for sale, but are expected to be disposed of prior to the end of their estimated useful lives. If an impairment loss is not required to be recorded in accordance with SFAS 144, the recognition of depreciation is adjusted prospectively, as necessary, to reduce the carrying amount of the real estate to its estimated disposition value over the remaining period that the real estate is expected to be held and used. We also may adjust depreciation prospectively to reduce to zero the carrying amount of buildings that we plan to demolish in connection with a redevelopment project. These depreciation adjustments, after adjustments for minority interest in the Aimco Operating Partnership, decreased net income by $10.7 million, $33.8 million and $31.2 million, and resulted in decreases in basic and diluted earnings per share of $0.09, $0.24 and $0.22, for the years ended December 31, 2008, 2007 and 2006, respectively.
 
Cash Equivalents
 
In accordance with GAAP, highly liquid investments with an original maturity of three months or less are classified as cash equivalents.
 
Restricted Cash
 
Restricted cash includes capital replacement reserves, tax-free exchange funds, completion repair reserves, bond sinking fund amounts and tax and insurance escrow accounts held by lenders.
 
Accounts Receivable and Allowance for Doubtful Accounts
 
Accounts receivable are generally comprised of amounts receivable from residents, amounts receivable from non-affiliated real estate partnerships for which we provide property management and other services and other miscellaneous receivables from non-affiliated entities. We evaluate collectibility of accounts receivable from residents and establish an allowance, after the application of security deposits and other anticipated recoveries, for accounts greater than 30 days past due for current residents and all receivables due from former residents. Accounts receivable from residents are stated net of allowances for doubtful accounts of approximately $3.3 million and $3.1 million as of December 31, 2008 and 2007, respectively.
 
We evaluate collectibility of accounts receivable from non-affiliated entities and establish an allowance for amounts that are considered to be uncollectible. Accounts receivable relating to non-affiliated entities are stated net


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of allowances for doubtful accounts of approximately $5.0 million and $4.6 million as of December 31, 2008 and 2007, respectively.
 
Accounts Receivable and Allowance for Doubtful Accounts from Affiliates
 
Accounts receivable from affiliates are generally comprised of receivables related to property management and other services provided to unconsolidated real estate partnerships in which we have an ownership interest. We evaluate collectibility of accounts receivable balances from affiliates on a periodic basis, and establish an allowance for the amounts deemed to be uncollectible. Accounts receivable from affiliates are stated net of allowances for doubtful accounts of approximately $5.6 million and $5.3 million as of December 31, 2008 and 2007, respectively.
 
Deferred Costs
 
We defer lender fees and other direct costs incurred in obtaining new financing and amortize the amounts over the terms of the related loan agreements. Amortization of these costs is included in interest expense.
 
We defer leasing commissions and other direct costs incurred in connection with successful leasing efforts and amortize the costs over the terms of the related leases. Amortization of these costs is included in depreciation and amortization.
 
Advertising Costs
 
We generally expense all advertising costs as incurred to property operating expense. For the years ended December 31, 2008, 2007 and 2006, for both continuing and discontinued operations, total advertising expense was $36.0 million, $38.0 million and $34.7 million, respectively.
 
Notes Receivable from Unconsolidated Real Estate Partnerships and Non-Affiliates and Related Interest Income and Provision for Losses
 
Notes receivable from unconsolidated real estate partnerships consist primarily of notes receivable from partnerships in which we are the general partner but do not consolidate the partnership under FIN 46 or EITF 04-5. The ultimate repayment of these notes and those from non-affiliates is subject to a number of variables, including the performance and value of the underlying real estate property and the claims of unaffiliated mortgage lenders. Our notes receivable include loans extended by us that we carry at the face amount plus accrued interest, which we refer to as “par value notes,” and loans extended by predecessors whose positions we generally acquired at a discount, which we refer to as “discounted notes.”
 
We record interest income on par value notes as earned in accordance with the terms of the related loan agreements. We discontinue the accrual of interest on such notes when the notes are impaired, as discussed below, or when there is otherwise significant uncertainty as to the collection of interest. We record income on such nonaccrual loans using the cost recovery method, under which we apply cash receipts first to the recorded amount of the loan; thereafter, any additional receipts are recognized as income.
 
We recognize interest income on discounted notes receivable based upon whether the amount and timing of collections are both probable and reasonably estimable. We consider collections to be probable and reasonably estimable when the borrower has entered into certain closed or pending transactions (which include real estate sales, refinancings, foreclosures and rights offerings) that provide a reliable source of repayment. In such instances, we recognize accretion income, on a prospective basis using the effective interest method over the estimated remaining term of the loans, equal to the difference between the carrying amount of the discounted notes and the estimated collectible value. We record income on all other discounted notes using the cost recovery method.
 
We assess the collectibility of notes receivable on a periodic basis, which assessment consists primarily of an evaluation of cash flow projections of the borrower to determine whether estimated cash flows are sufficient to repay principal and interest in accordance with the contractual terms of the note. We recognize impairments on notes receivable when it is probable that principal and interest will not be received in accordance with the contractual terms of the loan. The amount of the impairment to be recognized generally is based on the fair value of the partnership’s real estate that represents the primary source of loan repayment. In certain instances where other


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sources of cash flow are available to repay the loan, the impairment is measured by discounting the estimated cash flows at the loan’s original effective interest rate. See Note 5 for further discussion of Notes Receivable.
 
Investments in Unconsolidated Real Estate Partnerships
 
We own general and limited partner interests in real estate partnerships that own apartment properties. We generally account for investments in real estate partnerships that we do not consolidate under the equity method. Under the equity method, our share of the earnings or losses of the entity for the periods being presented is included in equity in earnings (losses) from unconsolidated real estate partnerships, except for our share of impairments and property disposition gains related to such entities, which we report separately in the consolidated statements of income. Certain investments in real estate partnerships that were acquired in business combinations were determined to have insignificant value at the acquisition date and are accounted for under the cost method. Any distributions received from such partnerships are recognized as income when received.
 
The excess of the cost of the acquired partnership interests over the historical carrying amount of partners’ equity or deficit is ascribed generally to the fair values of land and buildings owned by the partnerships. We amortize the excess cost related to the buildings over the estimated useful lives of the buildings. Such amortization is recorded as a component of equity in earnings (losses) of unconsolidated real estate partnerships.
 
Intangible Assets
 
At December 31, 2008 and 2007, other assets included goodwill associated with our real estate segment of $81.9 million. We account for goodwill and other intangible assets in accordance with the requirements of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, or SFAS 142. SFAS 142 does not permit amortization of goodwill and other intangible assets with indefinite lives, but requires an annual impairment test of such assets. The impairment test compares the fair value of reporting units with their carrying amounts, including goodwill. Based on the application of the goodwill impairment test set forth in SFAS 142, we determined that our goodwill was not impaired in 2008, 2007 or 2006.
 
Other assets also includes intangible assets for purchased management contracts with finite lives that we amortize on a straight-line basis over terms ranging from five to twenty years and intangible assets for in-place leases as discussed under Acquisition of Real Estate Assets and Related Depreciation and Amortization.
 
Capitalized Software Costs
 
Purchased software and other costs related to software developed for internal use are capitalized during the application development stage and are amortized using the straight-line method over the estimated useful life of the software, generally five years. We write off the costs of software development projects when it is no longer probable that the software will be completed and placed in service. For the years ended December 31, 2008, 2007 and 2006, we capitalized software development costs totaling $20.9 million, $11.9 million and $6.5 million, respectively. At December 31, 2008 and 2007, other assets included $35.7 million and $29.0 million of net capitalized software, respectively. During the years ended December 31, 2008, 2007 and 2006, we recognized amortization of capitalized software of $10.0 million, $10.8 million and $14.5 million, respectively, which is included in depreciation and amortization in our consolidated statements of income.
 
During the year ended December 31, 2008, we reassessed our approach to communication technology needs at our properties, which resulted in the discontinuation of an infrastructure project and a $5.4 million write-off of related hardware and capitalized internal and consulting costs included in other assets. The write-off, which is net of sales proceeds, is included in other (income) expenses, net. During the year ended December 31, 2008, we additionally recorded a $1.6 million write-off of certain software and hardware assets that are no longer consistent with our information technology strategy. This write-off is included in depreciation and amortization. During the year ended December 31, 2007, we abandoned certain internal-use software development projects and recorded a $4.2 million write-off of the capitalized costs of such projects in depreciation and amortization. There were no similar write-offs during the year ended December 31, 2006.


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Minority Interest in Consolidated Real Estate Partnerships
 
We report unaffiliated partners’ interests in consolidated real estate partnerships as minority interest in consolidated real estate partnerships. Minority interest in consolidated real estate partnerships represents the minority partners’ share of the underlying net assets of our consolidated real estate partnerships. When these consolidated real estate partnerships make cash distributions to partners in excess of the carrying amount of the minority interest, we generally record a charge equal to the amount of such excess distribution, even though there is no economic effect or cost. We report this charge in the consolidated statements of income as deficit distributions to minority partners. We allocate the minority partners’ share of partnership losses to minority partners to the extent of the carrying amount of the minority interest. We generally record a charge when the minority partners’ share of partnership losses exceed the carrying amount of the minority interest, even though there is no economic effect or cost. We report this charge in the consolidated statements of income within minority interest in consolidated real estate partnerships. We do not record charges for distributions or losses in certain limited instances where the minority partner has a legal obligation and financial capacity to contribute additional capital to the partnership. For the years ended December 31, 2008, 2007 and 2006, we recorded charges for partnership losses resulting from depreciation of approximately $9.0 million, $12.2 million and $31.8 million respectively, that were not allocated to minority partners because the losses exceeded the carrying amount of the minority interest.
 
Minority interest in consolidated real estate partnerships consists primarily of equity interests held by limited partners in consolidated real estate partnerships that have finite lives. The terms of the related partnership agreements generally require the partnership to be liquidated following the sale of the partnership’s real estate. As the general partner in these partnerships, we ordinarily control the execution of real estate sales and other events that could lead to the liquidation, redemption or other settlement of minority interests. The aggregate carrying value of minority interests in consolidated real estate partnerships is approximately $348.5 million at December 31, 2008. The aggregate fair value of these interests varies based on the fair value of the real estate owned by the partnerships. Based on the number of classes of finite-life minority interests, the number of properties in which there is direct or indirect minority ownership, complexities in determining the allocation of liquidation proceeds among partners and other factors, we believe it is impracticable to determine the total required payments to the minority interests in an assumed liquidation at December 31, 2008. As a result of real estate depreciation that is recognized in our financial statements and appreciation in the fair value of real estate that is not recognized in our financial statements, we believe that the aggregate fair value of our minority interests exceeds their aggregate carrying value. As a result of our ability to control real estate sales and other events that require payment of minority interests and our expectation that proceeds from real estate sales will be sufficient to liquidate related minority interests, we anticipate that the eventual liquidation of these minority interests will not have an adverse impact on our financial condition.
 
Revenue Recognition
 
Our properties have operating leases with apartment residents with terms generally of twelve months or less. We recognize rental revenue related to these leases, net of any concessions, on a straight-line basis over the term of the lease. We recognize revenues from property management, asset management, syndication and other services when the related fees are earned and are realized or realizable.
 
Stock-Based Compensation
 
On January 1, 2006, we adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, or SFAS 123R (see Note 12).
 
Discontinued Operations
 
In accordance with SFAS 144, we classify certain properties and related liabilities as held for sale (see Note 13). The operating results of such properties as well as those properties sold during the periods presented are included in discontinued operations in both current periods and all comparable periods presented. Depreciation is not recorded on properties held for sale; however, depreciation expense recorded prior to classification as held for sale is included in discontinued operations. The net gain on sale and any impairment losses are presented in discontinued operations when recognized.


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Derivative Financial Instruments
 
We primarily use long-term, fixed-rate and self-amortizing non-recourse debt to avoid, among other things, risk related to fluctuating interest rates. For our variable rate debt, we are sometimes required by our lenders to limit our exposure to interest rate fluctuations by entering into interest rate swap or cap agreements. The interest rate swap agreements moderate our exposure to interest rate risk by effectively converting the interest on variable rate debt to a fixed rate. The interest rate cap agreements effectively limit our exposure to interest rate risk by providing a ceiling on the underlying variable interest rate. The fair values of these instruments are reflected as assets or liabilities in the balance sheet, and periodic changes in fair value are included in interest expense. These instruments are not material to our financial position and results of operations.
 
From time to time, we enter into total rate of return swaps on various fixed rate secured tax-exempt bonds payable and fixed rate notes payable to convert these borrowings from a fixed rate to a variable rate and provide an efficient financing product to lower our cost of borrowing. In exchange for our receipt of a fixed rate generally equal to the underlying borrowing’s interest rate, the total rate of return swaps require that we pay a variable rate, equivalent to the Securities Industry and Financial Markets Association Municipal Swap Index, or SIFMA, rate (previously the Bond Market Association index) for tax-exempt bonds payable and the 30-day LIBOR rate for notes payable, plus a risk spread. These swaps generally have a second or third lien on the property collateralized by the related borrowings and the obligations under certain of these swaps are cross-collateralized with certain of the other swaps with a particular counterparty. The underlying borrowings are generally callable at our option, with no prepayment penalty, with 30 days advance notice, and the swaps generally have a term of less than five years. The total rate of return swaps have a contractually defined termination value generally equal to the difference between the fair value and the counterparty’s purchased value of the underlying borrowings, which may require payment by us or to us for such difference. Accordingly, we believe fluctuations in the fair value of the borrowings from the inception of the hedging relationship generally will be offset by a corresponding fluctuation in the fair value of the total rate of return swaps.
 
In accordance with Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, or SFAS 133, we designate total rate of return swaps as hedges of the risk of overall changes in the fair value of the underlying borrowings. At each reporting period, we estimate the fair value of these borrowings and the total rate of return swaps and recognize any changes therein as an adjustment of interest expense. We evaluate the effectiveness of these fair value hedges at the end of each reporting period and recognize an adjustment of interest expense as a result of any ineffectiveness.
 
Borrowings payable subject to total rate of return swaps with aggregate outstanding principal balances of $421.7 million and $487.2 million at December 31, 2008 and 2007, respectively, are reflected as variable rate borrowings in Note 6. During the years ended December 31, 2008 and 2007, due to changes in the estimated fair values of certain of these debt instruments and corresponding total rate of return swaps, we reduced property loans payable by $20.1 million and $9.4 million respectively, and increased accrued liabilities and other by the same amount, with no net impact on net income. During 2006 there were no material adjustments for changes in fair value for the hedged debt or total rate of return swaps. See Adoption of SFAS 157 in Note 2 for further discussion of fair value measurements related to these arrangements. During 2008, 2007 and 2006, we determined these hedges were fully effective and accordingly we made no adjustments to interest expense for ineffectiveness.


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At December 31, 2008, the weighted average fixed receive rate under the total return swaps was 6.8% and the weighted average variable pay rate was 1.8%, based on the applicable SIFMA and 30-day LIBOR rates effective as of that date. Further information related to our total return swaps as of December 31, 2008 is as follows:
 
                                             
                                Weighted Average Swap
 		 
                Weighted
    Swap Notional
 		    Swap
  Variable Pay Rate at
 		 
Debt Principal
 		        Year of Debt
 		    Average Debt
    Amount
 		    Maturity
 		  December 31,
 		 
(millions)
        Maturity     Interest Rate     (millions)     Date   2008  
 
$ 26.1           2009       9.0 %   $ 26.3     2009     2.1 %
  60.0           2012       7.5 %     60.0     2012     2.7 %
  24.0           2015       6.9 %     24.0     2011     1.7 %
  14.2           2018       7.3 %     14.2     2011     1.7 %
  12.3           2021       6.2 %     12.3     2012     1.7 %
  12.0           2024       6.3 %     12.0     2011     1.7 %
  54.6           2025       5.5 %     54.4     2011     1.3 %
  47.9           2026       7.4 %     47.9     2011     1.7 %
  45.0           2031       7.4 %     45.0     2011     1.7 %
  100.6           2036       6.2 %     101.0     2010-2012     1.7 %
  12.5           2038       6.5 %     12.5     2011     1.9 %
  12.5           2048       5.5 %     12.5     2011     1.9 %
                                             
$ 421.7                         $ 422.1              
                                             
 
Insurance
 
We believe that our insurance coverages insure our properties adequately against the risk of loss attributable to fire, earthquake, hurricane, tornado, flood, and other perils. In addition, we have insurance coverage for substantial portions of our property, workers’ compensation, health, and general liability exposures. Losses are accrued based upon our estimates of the aggregate liability for uninsured losses incurred using certain actuarial assumptions followed in the insurance industry and based on our experience.
 
Income Taxes
 
We have elected to be taxed as a REIT under the Code commencing with our taxable year ended December 31, 1994, and intend to continue to operate in such a manner. Our current and continuing qualification as a REIT depends on our ability to meet the various requirements imposed by the Code, which are related to organizational structure, distribution levels, diversity of stock ownership and certain restrictions with regard to owned assets and categories of income. If we qualify for taxation as a REIT, we will generally not be subject to United States Federal corporate income tax on our taxable income that is currently distributed to stockholders. This treatment substantially eliminates the “double taxation” (at the corporate and stockholder levels) that generally results from an investment in a corporation.
 
Even if we qualify as a REIT, we may be subject to United States Federal income and excise taxes in various situations, such as on our undistributed income. We also will be required to pay a 100% tax on any net income on non-arms length transactions between us and a TRS (described below) and on any net income from sales of property that was property held for sale to customers in the ordinary course. We and our stockholders may be subject to state or local taxation in various state or local jurisdictions, including those in which we transact business or our stockholders reside. In addition, we could also be subject to the alternative minimum tax, or AMT, on our items of tax preference. The state and local tax laws may not conform to the United States Federal income tax treatment. Any taxes imposed on us reduce our operating cash flow and net income.
 
Certain of our operations (including property management, asset management and risk) are conducted through taxable REIT subsidiaries, which are subsidiaries of the Aimco Operating Partnership, and each of which we refer to as a TRS. A TRS is a C-corporation that has not elected REIT status and as such is subject to United States Federal


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corporate income tax. We use TRS entities to facilitate our ability to offer certain services and activities to our residents, as these services and activities generally cannot be offered directly by the REIT. We also use TRS entities to hold investments in certain properties.
 
For our taxable REIT subsidiaries, deferred income taxes result from temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for Federal income tax purposes, and are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse. We reduce deferred tax assets by recording a valuation allowance when we determine based on available evidence that it is more likely than not that the assets will not be realized. We recognize the tax consequences associated with intercompany transfers between the REIT and TRS entities when the related assets are sold to third parties, impaired or otherwise disposed of for financial reporting purposes.
 
In March 2008, we were notified by the Internal Revenue Service that it intended to examine the 2006 Federal tax return for the Aimco Operating Partnership. During June 2008, the IRS issued AIMCO-GP, Inc., the general and tax matters partner of the Aimco Operating Partnership, a summary report including the IRS’s proposed adjustments to the Aimco Operating Partnership’s 2006 Federal tax return. We do not expect the proposed adjustments to have any material effect on our unrecognized tax benefits, financial condition or results of operations.
 
Earnings per Share
 
We calculate earnings per share based on the weighted average number of shares of Common Stock, common stock equivalents, and other potentially dilutive securities outstanding during the period (see Note 14). As discussed in Note 1, weighted average shares of Common Stock, common stock equivalents and other potentially dilutive securities outstanding have been retroactively adjusted for the effect of shares of Common Stock issued January 30, 2008, August 29, 2008, December 1, 2008, and January 29, 2009, pursuant to the special dividends. Earnings per share amounts for each period presented reflect the retroactively adjusted weighted average share and equivalent counts.
 
Concentration of Credit Risk
 
Financial instruments that potentially could subject us to significant concentrations of credit risk consist principally of notes receivable and total rate of return swaps. As discussed in Note 5, a significant portion of our notes receivable at December 31, 2008, are collateralized by properties in the West Harlem area of New York City. There are no other significant concentrations of credit risk with respect to our notes receivable due to the large number of partnerships that are borrowers under the notes and the geographic diversity of the properties that collateralize the notes.
 
At December 31, 2008, we had total rate of return swap positions with two financial institutions totaling $422.1 million. The swap positions with one counterparty are comprised of $409.8 million of fixed rate debt effectively converted to variable rates using total rate of return swaps, including $349.8 million of tax-exempt bonds indexed to SIFMA and $60.0 million of taxable second mortgage notes indexed to LIBOR. Additionally, the swap agreements with this counterparty provide for collateral calls to maintain specified loan-to-value ratios. As of December 31, 2008, we had provided this counterparty $3.2 million in cash collateral, which is included in other assets in our consolidated balance sheet. We have one swap position with another counterparty that is comprised of $12.3 million of fixed rate tax-exempt bonds indexed to SIFMA. We periodically evaluate counterparty credit risk associated with these arrangements. At the current time, we have concluded we do not have material exposure. In the event either counterparty were to default under these arrangements, loss of the net interest benefit we generally receive under these arrangements, which is equal to the difference between the fixed rate we receive and the variable rate we pay, may adversely impact our results of operations and operating cash flows. In the event the values of the real estate properties serving as collateral under these agreements decline, we may be required to provide additional collateral pursuant to the swap agreements, which would adversely affect our cash flows.
 
Use of Estimates
 
The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes thereto. Actual results could differ from those estimates.


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Reclassifications
 
Certain items included in the 2007 and 2006 financial statements amounts have been reclassified to conform to the 2008 presentation.
 
NOTE 3 — Real Estate and Partnership Acquisitions and Other Significant Transactions
 
Real Estate Acquisitions
 
During the year ended December 31, 2008, we acquired three conventional properties with a total of 470 units, located in San Jose, California, Brighton, Massachusetts and Seattle, Washington. The aggregate purchase price of $111.5 million, excluding transaction costs, was funded using $39.0 million in proceeds from mortgage loans, $41.9 million in tax-free exchange proceeds (provided by 2008 real estate dispositions) and the remainder in cash.
 
During the year ended December 31, 2007, we completed the acquisition of 16 conventional properties with approximately 1,300 units for an aggregate purchase price of approximately $217.0 million, excluding transaction costs. Of the 16 properties acquired, ten are located in New York City, New York, two in Daytona Beach, Florida, one in Park Forest, Illinois, one in Poughkeepsie, New York, one in Redwood City, California, and one in North San Diego, California. The purchases were funded with cash, tax-free exchange proceeds, new debt and the assumption of existing debt.
 
During the year ended December 31, 2006, we completed acquisitions of nine properties (including one property acquired by an unconsolidated joint venture), containing approximately 1,700 residential units for an aggregate purchase price of approximately $177.0 million, excluding transaction costs. Of the nine properties acquired, three are located in Pacifica, California, one in Chico, California, three in metro Jacksonville, Florida, one in Tampa, Florida, and one in Greenville, North Carolina. The purchases were funded with cash, new debt and the assumption of existing debt.
 
Acquisitions of Partnership Interests
 
During the years ended December 31, 2008 and 2007, we acquired limited partnership interests in 22 and 50 partnerships respectively, in which our affiliates served as general partner. In connection with such acquisitions, we paid cash of approximately $2.0 million and $47.4 million, including transaction costs. The cost of the acquisitions was approximately $2.4 million and $43.6 million in excess of the carrying amount of minority interest in such limited partnerships, which excess we generally assigned to real estate.
 
Disposition of Unconsolidated Real Estate
 
During the year ended December 31, 2008, we disposed of our interest in unconsolidated real estate partnerships that owned two properties with 671 units. Our net gain on the disposition of these interests totaled $98.4 million and is included in gain on dispositions of unconsolidated real estate and other in the accompanying statements of income for the year ended December 31, 2008.
 
Casualty Loss Related to Tropical Storm Fay and Hurricane Ike
 
During 2008, Tropical Storm Fay and Hurricane Ike caused severe damage to certain of our properties located primarily in Florida and Texas, respectively. We estimated total losses of approximately $33.9 million, including property damage replacement cost and clean-up cost. After consideration of estimated third party insurance proceeds and the minority interest partners’ share of losses for consolidated real estate partnerships, the net effect of these casualties on net income, after the effect of minority interest in Aimco Operating Partnership, was a loss of approximately $5.0 million.
 
Restructuring Costs
 
In connection with 2008 property sales and an expected reduction in redevelopment and transactional activities, during the three months ended December 31, 2008, we initiated an organizational restructuring program that included reductions in workforce and related costs, reductions in leased corporate facilities and abandonment of


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certain redevelopment projects and business pursuits. As a result, during the three months ended December 31, 2008, we recognized a restructuring charge of $22.8 million, which consists primarily of: severance costs of $12.9 million; unrecoverable lease obligations of $6.4 million related to space that we will no longer use; and the write-off of deferred transaction costs totaling $3.5 million associated with certain acquisitions and redevelopment opportunities that we will no longer pursue. Of the amounts included in the restructuring charge, approximately $2.9 million of the severance costs and the $3.5 million of transaction costs had been paid as of December 31, 2008. We anticipate eliminating the remaining jobs associated with the severance amounts discussed above by March 1, 2009. The amounts related to this restructuring have not been allocated to our reportable segments based on the methods used to evaluate segment performance.
 
Transactions Involving VMS National Properties Joint Venture
 
In January 2007, VMS National Properties Joint Venture, or VMS, a consolidated real estate partnership in which we held a 22% equity interest, refinanced mortgage loans secured by its 15 apartment properties. The existing loans had an aggregate carrying amount of $110.0 million and an aggregate face amount of $152.2 million. The $42.2 million difference between the face amount and carrying amount resulted from a 1997 bankruptcy settlement in which the lender agreed to reduce the principal amount of the loans subject to VMS’s compliance with the terms of the restructured loans. Because the reduction in the loan amount was contingent on future compliance, recognition of the inherent debt extinguishment gain was deferred. Upon refinancing of the loans in January 2007, the existing lender accepted the reduced principal amount in full satisfaction of the loans, and VMS recognized the $42.2 million debt extinguishment gain in earnings.
 
During the six months ended June 30, 2007, VMS sold eight properties to third parties for an aggregate gain of $22.7 million. Additionally, VMS contributed its seven remaining properties to wholly-owned subsidiaries of Aimco in exchange for consideration totaling $230.1 million, consisting primarily of cash of $21.3 million, common OP Units with a fair value of $9.8 million, the assumption of $168.0 million in mortgage debt, and the assumption of $30.9 million in mortgage participation liabilities. This total consideration included $50.7 million related to our 22% equity interest in VMS. Exclusive of our share, the consideration paid for the seven properties exceeded the carrying amount of the minority interest in such properties by $44.9 million. This excess consideration is reflected in our consolidated balance sheet as an increase in the carrying amount of the seven properties.
 
Approximately $22.8 million of the $42.2 million debt extinguishment gain related to the mortgage loans that were secured by the eight properties sold to third parties and is reported in discontinued operations for the year ended December 31, 2007. The remaining $19.4 million portion of the debt extinguishment gain related to the mortgage loans that were secured by the seven VMS properties we purchased and is reported in our continuing operations as gain on dispositions of unconsolidated real estate and other. Although 78% of the equity interests in VMS were held by unrelated minority partners, no minority interest share of the gains on debt extinguishment and sale of the properties was recognized in our earnings. As required by GAAP, we had in prior years recognized the minority partners’ share of VMS losses in excess of the minority partners’ capital contributions. The amounts of those previously recognized losses exceeded the minority partners’ share of the gains on debt extinguishment and sale of the properties; accordingly, the minority interest in such gains recognized in our earnings was limited to the minority interest in the Aimco Operating Partnership. For the year ended December 31, 2007, the aggregate effect of the gains on extinguishment of VMS debt and sale of VMS properties was to decrease loss from continuing operations by $17.6 million ($0.13 per diluted share) and increase net income by $59.0 million ($0.42 per diluted share).
 
During the three months ended December 31, 2007, VMS distributed its remaining cash, consisting primarily of undistributed proceeds from the sale of its 15 properties (including properties sold to us). Of the $42.4 million of cash distributed to the unrelated limited partners, $21.3 million represents the cash consideration we contributed in exchange for the purchase of seven properties and is presented in purchases of partnership interests and other assets in the consolidated statement of cash flows for the year ended December 31, 2007. The remainder of the cash distributed to the unrelated limited partners is presented in payment of distributions to minority interest in the consolidated statement of cash flows.
 


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Flamingo South Beach Property
 
The Flamingo South Beach property consists of three towers. In connection with the sale of the South Tower in 2006, the buyer paid to us a $5.0 million non-refundable fee for the option to purchase the 614-unit North Tower between September 1, 2006, and February 28, 2007, and the 513-unit Central Tower between December 1, 2007, and May 31, 2008. Pursuant to the purchase and sale agreement, the buyer paid to us an additional $1.0 million non-refundable fee to extend the option period for the buyer’s purchase of the North Tower from February 28, 2007, to October 31, 2007. In accordance with Statement of Financial Accounting Standards No. 66, Accounting for Sales of Real Estate, or SFAS 66, we deferred the recognition of the non-refundable fees. In September 2007, the buyer terminated its rights under the option agreement and we recognized income of $6.0 million ($5.5 million net of tax) during the year ended December 31, 2007, which is presented in gain on dispositions of unconsolidated real estate and other in the accompanying consolidated statements of income.
 
Palazzo Joint Venture
 
In December 2007, we entered into a joint venture agreement with a third party investor which provides for the co-ownership of three multi-family properties with 1,382 units located in West Los Angeles. Under the agreement, we contributed three wholly-owned properties, The Palazzo at Park La Brea, The Palazzo East at Park La Brea and The Villas at Park La Brea to the partnership, which we refer to as Palazzo, at a value of $726.0 million, or approximately $525,000 per unit. Palazzo had existing property debt of approximately $296.0 million and an implied equity value of approximately $430.0 million. We received $202.0 million from the investor in exchange for an approximate 47% interest in Palazzo, of which approximately $7.9 million was used to fund escrows for capital improvements and various operating requirements. We own the remaining interests in Palazzo, including a managing interest, and will operate the properties in exchange for a property management fee and certain other fees over the term of the partnership.
 
We determined Palazzo is a VIE as defined by FIN 46 and that we are the primary beneficiary who should consolidate this partnership. In accordance with SFAS 66, we deferred recognition of a gain on this transaction and recognized the consideration received as an increase in minority interest in consolidated real estate partnerships.
 
NOTE 4 — Investments in Unconsolidated Real Estate Partnerships
 
We owned general and limited partner interests in unconsolidated real estate partnerships owning approximately 85, 94 and 102 properties at December 31, 2008, 2007 and 2006, respectively. We acquired these interests through various transactions, including large portfolio acquisitions and offers to individual limited partners. Our total ownership interests in these unconsolidated real estate partnerships ranges typically from less than 1% to 50%.
 
The following table provides selected combined financial information for the unconsolidated real estate partnerships in which we had investments accounted for under the equity method as of and for the years ended December 31, 2008, 2007 and 2006 (in thousands):
 
                         
    2008     2007     2006  
 
Real estate, net of accumulated depreciation
  $ 122,788     $ 133,544     $ 143,750  
Total assets
    155,444       165,567       169,061  
Secured and other notes payable
    122,859       124,406       132,076  
Total liabilities
    175,681       180,222       183,378  
Partners’ deficit
    (20,237 )     (14,655 )     (14,317 )
Rental and other property revenues
    69,392       73,672       102,241  
Property operating expenses
    (42,863 )     (45,998 )     (59,017 )
Depreciation expense
    (12,640 )     (13,965 )     (19,198 )
Interest expense
    (17,182 )     (17,194 )     (24,338 )
Gain on sale
    5,391       59       3,156  
Net income (loss)
    1,398       (4,845 )     2,369  


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As a result of our acquisition of interests in unconsolidated real estate partnerships at a cost in excess of the historical carrying amount of the partnerships’ net assets, our aggregate investment in these partnerships at December 31, 2008 and 2007 of $109.3 million and $117.2 million, respectively, exceeds our share of the underlying historical partners’ deficit of the partnerships by approximately $113.2 million and $120.4 million, respectively.
 
NOTE 5 — Notes Receivable
 
The following table summarizes our notes receivable at December 31, 2008 and 2007 (in thousands):
 
                                                 
    2008     2007  
    Unconsolidated
 		                Unconsolidated
 		             
    Real Estate
 		    Non-
 		          Real Estate
 		    Non-
 		       
    Partnerships     Affiliates     Total     Partnerships     Affiliates     Total  
 
Par value notes
  $ 18,855     $ 19,253     $ 38,108     $ 30,155     $ 17,053     $ 47,208  
Discounted notes
    8,575       135,123       143,698       10,045       127,422       137,467  
Allowance for loan losses
    (4,863 )     (17,743 )     (22,606 )     (5,014 )     (1,421 )     (6,435 )
                                                 
Total notes receivable
  $ 22,567     $ 136,633     $ 159,200     $ 35,186     $ 143,054     $ 178,240  
                                                 
Face value of discounted notes
  $ 39,333     $ 145,526     $ 184,859     $ 41,668     $ 142,062     $ 183,730  
 
Included in notes receivable from unconsolidated real estate partnerships at December 31, 2008 and 2007, are $4.2 million and $4.3 million, respectively, in notes that were secured by interests in real estate or interests in real estate partnerships. We earn interest on these secured notes receivable at various annual interest rates ranging between 9.0% and 12.0% and averaging 11.1%.
 
Included in the notes receivable from non-affiliates at December 31, 2008 and 2007, are $92.6 million and $87.6 million, respectively, in notes that were secured by interests in real estate or interests in real estate partnerships. We earn interest on these secured notes receivable at various annual interest rates ranging between 4.0% and 8.8% and averaging 6.0%.
 
Notes receivable from non-affiliates at December 31, 2008 and 2007, include notes receivable totaling $85.6 million and $84.3 million, respectively, from 31 entities (the “borrowers”) that are wholly owned by a single individual. We originated these notes in November 2006 pursuant to a loan agreement that provides for total funding of approximately $110.0 million, including $16.4 million for property improvements and an interest reserve, of which $5.6 million had not been funded as of December 31, 2008. The notes mature in November 2016, bear interest at LIBOR plus 2.0%, are partially guaranteed by the owner of the borrowers, and are collateralized by second mortgages on 87 buildings containing 1,597 residential units and 42 commercial spaces in West Harlem, New York City. In conjunction with the loan agreement, we entered into a purchase option and put agreement with the borrowers under which we may purchase some or all of the buildings and, subject to achieving specified increases in rental income, the borrowers may require us to purchase the buildings. Our potential purchase of the buildings pursuant to the purchase option and put agreement may ultimately require cash payments and/or assumption of first mortgage debt totaling approximately $149.0 million to $216.0 million, in addition to amounts funded and committed under the loan agreement, depending on rental income levels and real estate fair values. We determined that the stated interest rate on the notes was a below-market interest rate and recorded a $19.4 million discount to reflect the estimated fair value of the notes based on an estimated market interest rate of LIBOR plus 4.0%. The discount was determined to be attributable to our real estate purchase option, which we recorded separately in other assets. Accretion of this discount, which is included in interest income in our consolidated statements of income, totaled $0.7 million in 2008, and $1.9 million in 2007, inclusive of a $1.5 million adjustment of accretion recognized upon the repayment of a portion of the outstanding principal balance in 2007. No accretion of this discount was recorded in 2006. The value of the purchase option asset will be included in the cost of properties acquired pursuant to the option or otherwise be charged to expense. We determined that the borrowers are VIEs and, based on qualitative and quantitative analysis, determined that the individual who owns the borrowers and partially guarantees the notes is the primary beneficiary.


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In connection with the March 2002 acquisition of Casden Properties, Inc., we invested $50.0 million for a 20% passive interest in Casden Properties LLC, an entity organized to buy, re-entitle and develop land parcels in Southern California. Based upon the profit allocation agreement, we account for this investment as a note receivable and have been amortizing the discounted value of the investment to the $50.0 million previously estimated to be collectible through January 2, 2009, the initial dissolution date of the entity. The managing member is seeking to extend the dissolution date. In connection with the preparation of our annual financial statements and as a result of a recent decline in Southern California land values, we determined our investment was not fully recoverable and accordingly recognized an impairment loss of $16.3 million ($10.0 million net of tax) during the three months ended December 31, 2008. This impairment loss is included in provision for impairment losses on real estate development assets in the consolidated statement of income for the year ended December 31, 2008.
 
Interest income from total non-impaired par value and certain discounted notes for the years ended December 31, 2008, 2007 and 2006 totaled $7.8 million, $11.7 million and $5.8 million, respectively. For the year ended December 31, 2008, we recognized a net reduction of accretion income of $2.7 million, due primarily to revisions in estimates of the timing and amount of payment on certain discounted notes. For the years ended December 31, 2007 and 2006, we recognized accretion income on certain discounted notes of $3.4 million and $6.7 million, respectively.
 
The activity in the allowance for loan losses in total for both par value notes and discounted notes for the years ended December 31, 2008 and 2007, is as follows (in thousands):
 
                 
    2008     2007  
 
Balance at beginning of year
  $ (6,435 )   $ (5,478 )
Provisions for losses on notes receivable
    (4,608 )     (6,018 )
Recoveries of losses on notes receivable
    429       2,067  
Provision for impairment loss on investment in Casden Properties LLC
    (16,321 )     —  
Net reductions due to consolidation of real estate partnerships and property dispositions
    4,329       2,994  
                 
Balance at end of year
  $ (22,606 )   $ (6,435 )
                 
 
During the years ended December 31, 2008 and 2007, we determined that an allowance for loan losses of $3.6 million and $4.0 million, respectively, was required on certain of our par value notes that had carrying values of $11.4 million and $9.5 million, respectively. The average recorded investment in the impaired par value notes for the years ended December 31, 2008 and 2007 was $9.0 million and $8.3 million, respectively. The remaining $26.7 million in par value notes receivable at December 31, 2008, is estimated to be collectible and, therefore, interest income on these par value notes is recognized as it is earned.
 
As of December 31, 2008 and 2007, we determined that an allowance for loan losses of $2.7 million and $1.0 million, respectively, was required on certain of our discounted notes that had carrying values of $5.4 million and $3.4 million, respectively. The average recorded investment in the impaired discounted notes for the years ended December 31, 2008 and 2007 was $4.9 million and $3.4 million, respectively.
 
NOTE 6 — Property Tax-Exempt Bond Financings, Property Loans Payable and Other Borrowings
 
The following table summarizes our property tax-exempt bond financings at December 31, 2008 and 2007, the majority of which is non-recourse to us (in thousands):
 
                         
    Weighted Average
 		             
    Interest Rate
 		    Principal Outstanding  
    2008     2008     2007  
 
Fixed rate property tax-exempt bonds payable
    5.59 %   $ 158,620     $ 159,893  
Variable rate property tax-exempt bonds payable
    1.74 %     563,351       596,549  
                         
Total
          $ 721,971     $ 756,442  
                         


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Fixed rate property tax-exempt bonds payable mature at various dates through October 2045. Variable rate property tax-exempt bonds payable mature at various dates through June 2048. Principal and interest on these bonds are generally payable in semi-annual installments or in monthly interest-only payments with balloon payments due at maturity. Certain of our property tax-exempt bonds at December 31, 2008, are remarketed periodically by a remarketing agent to maintain a variable yield. If the remarketing agent is unable to remarket the bonds, then the remarketing agent can put the bonds to us. We believe that the likelihood of this occurring is remote. At December 31, 2008, our property tax-exempt bond financings were secured by 52 properties with a combined net book value of $1,081.0 million. As discussed in Note 2, certain fixed rate property tax-exempt bonds payable have been converted to variable rates using total rate of return swaps and are presented above as variable rate debt.
 
The following table summarizes our property loans payable at December 31, 2008 and 2007, the majority of which are non-recourse to us (in thousands):
 
                         
    Weighted Average
 		             
    Interest Rate
 		    Principal Outstanding  
    2008     2008     2007  
 
Fixed rate property notes payable
    6.06 %   $ 5,223,522     $ 4,757,536  
Variable rate property notes payable
    6.05 %     223,560       254,061  
Secured notes credit facility
    1.22 %     112,087       84,876  
                         
Total
          $ 5,559,169     $ 5,096,473  
                         
 
Fixed rate property notes payable mature at various dates through August 2053. Variable rate property notes payable mature at various dates through December 2031. Principal and interest are generally payable monthly or in monthly interest-only payments with balloon payments due at maturity. At December 31, 2008, our secured notes payable were secured by 445 properties with a combined net book value of $6,924.6 million. As discussed in Note 2, certain fixed rate secured notes payable have been converted to variable rates using total rate of return swaps and are presented above as variable rate debt.
 
We had a secured revolving credit facility that provided for borrowings of up to $250.0 million primarily to be used for financing properties that we generally intended to hold for the intermediate term, as well as properties that were designated for redevelopment. The interest rate on the notes provided through this facility was the Fannie Mae Discounted Mortgage-Backed Security index plus 0.85% (for those loans with debt coverage ratios greater than or equal to 1.70x) or 1.05% (for those loans with debt service coverage ratios less than 1.70x), which interest rates reset monthly. Each loan under this facility was treated as a separate borrowing and was collateralized by a specific property, and none of the loans were cross-collateralized or cross-defaulted. This facility matured in September 2007.
 
We entered into a new secured revolving credit facility in September 2007 with a major life company that provides for borrowings of up to $200.0 million. The primary function of the facility is to secure short-term fully pre-payable non-recourse loans for a period of less than three years. The interest rate on the notes provided through the facility is 30-day LIBOR plus 0.78%. Each loan under the facility is treated as a separate borrowing and is secured by a specific property. None of the facility loans are cross-collateralized or cross-defaulted. This facility matures in October 2010, and has two one-year extension options for a $500,000 fee per extension. At December 31, 2008, outstanding borrowings of $112.1 million related to properties classified as held for use are included in 2012 maturities below based on the extension options. At December 31, 2008, outstanding borrowings of $16.2 million related to properties classified as held for sale are included in liabilities related to assets held for sale in the consolidated balance sheet.
 
Our consolidated debt instruments generally contain covenants common to the type of facility or borrowing, including financial covenants establishing minimum debt service coverage ratios and maximum leverage ratios. At December 31, 2008, we were in compliance with all financial covenants pertaining to our consolidated debt instruments.
 
Other borrowings totaled $96.0 million and $75.1 million at December 31, 2008 and 2007, respectively, and consist primarily of unsecured notes payable and obligations under sale and leaseback arrangements accounted for as financings. At December 31, 2008, other borrowings includes $85.5 million in fixed rate obligations with interest


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rates ranging from zero to 10.0% and $10.5 million in variable rate obligations bearing interest at the prime rate plus 1.75% to 2.00%. The maturity dates for other borrowings range from 2008 to 2039, although certain amounts are due upon occurrence of specified events, such as property sales.
 
As of December 31, 2008, the scheduled principal amortization and maturity payments for our property tax-exempt bonds, property notes payable and other borrowings are as follows (in thousands):
 
                         
    Amortization     Maturities     Total  
 
2009
  $ 116,028     $ 291,865     $ 407,893  
2010
    121,746       285,492       407,238  
2011
    130,394       181,092       311,486  
2012
    134,248       353,811       488,059  
2013
    131,157       474,805       605,962  
Thereafter
                    4,156,483  
                         
                    $ 6,377,121  
                         
 
NOTE 7 — Term Loans and Credit Facility
 
We have an Amended and Restated Senior Secured Credit Agreement with a syndicate of financial institutions, which we refer to as the Credit Agreement. In addition to Aimco, the Aimco Operating Partnership and an Aimco subsidiary are also borrowers under the Credit Agreement.
 
During the year ended December 31, 2008, we repaid in full our $75.0 million term loan which was due for payment in September 2009. Following this repayment, the aggregate amount of commitments and loans under the Credit Agreement is $1,035.0 million, comprised of a $400.0 million term loan and $635.0 million of revolving loan commitments. The $400.0 million term loan bears interest at LIBOR plus 1.5%, or, at our option, a base rate equal to the prime rate and matures March 2011. Our revolving credit facility matures May 2009 and may be extended for an additional year, subject to a 20.0 basis point fee on the total commitments. Borrowings under the revolver bear interest based on a pricing grid determined by leverage (currently at LIBOR plus 1.125%).
 
The Credit Agreement includes customary financial covenants, including the maintenance of specified ratios with respect to total indebtedness to gross asset value, total secured indebtedness to gross asset value, aggregate recourse indebtedness to gross asset value, variable rate debt to total indebtedness, debt service coverage and fixed charge coverage; the maintenance of a minimum adjusted tangible net worth; and limitations regarding the amount of cross-collateralized debt. The Credit Agreement includes other customary covenants, including a restriction on distributions and other restricted payments, but permits distributions during any four consecutive fiscal quarters in an aggregate amount of up to 95% of our funds from operations for such period, subject to certain non-cash adjustments, or such amount as may be necessary to maintain our REIT status. We were in compliance with all such covenants as of December 31, 2008.
 
The lenders under the Credit Agreement may accelerate any outstanding loans if, among other things: we fail to make payments when due (subject to applicable grace periods); material defaults occur under other debt agreements; certain bankruptcy or insolvency events occur; material judgments are entered against us; we fail to comply with certain covenants, such as the requirement to deliver financial information or the requirement to provide notices regarding material events (subject to applicable grace periods in some cases); indebtedness is incurred in violation of the covenants; or prohibited liens arise.
 
At December 31, 2008, the term loan had an outstanding principal balance of $400.0 million and a weighted average interest rate of 2.94%. In January 2009, we prepaid $50.0 million of the balance outstanding on the term debt. The amount available under the revolving credit facility at December 31, 2008, was $578.8 million (after giving effect to $56.2 million outstanding for undrawn letters of credit issued under the revolving credit facility). The proceeds of revolving loans are generally permitted to be used to fund working capital and for other corporate purposes.


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NOTE 8 — Commitments and Contingencies
 
Commitments
 
In connection with our redevelopment and capital improvement activities, we have commitments of approximately $70.3 million related to construction projects, most of which we expect to incur in 2009. Additionally, we enter into certain commitments for future purchases of goods and services in connection with the operations of our properties. Those commitments generally have terms of one year or less and reflect expenditure levels comparable to our historical expenditures.
 
As discussed in Note 5, we have committed to fund an additional $5.6 million in second mortgage loans on certain properties in West Harlem in New York City. In certain circumstances, we also could be required to acquire the properties for cash and/or assumption of first mortgage debt totaling approximately $149.0 million to $216.0 million, in addition to amounts funded and committed under the related loan agreement.
 
Tax Credit Arrangements
 
We are required to manage certain consolidated real estate partnerships in compliance with various laws, regulations and contractual provisions that apply to our historic and low-income housing tax credit syndication arrangements. In some instances, noncompliance with applicable requirements could result in projected tax benefits not being realized and require a refund or reduction of investor capital contributions, which are reported as deferred income in our consolidated balance sheet, until such time as our obligation to deliver tax benefits is relieved. The remaining compliance periods for our tax credit syndication arrangements range from less than one year to 15 years. We do not anticipate that any material refunds or reductions of investor capital contributions will be required in connection with these arrangements.
 
Legal Matters
 
In addition to the matters described below, we are a party to various legal actions and administrative proceedings arising in the ordinary course of business, some of which are covered by our general liability insurance program, and none of which we expect to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
 
Limited Partnerships
 
In connection with our acquisitions of interests in real estate partnerships, we are sometimes subject to legal actions, including allegations that such activities may involve breaches of fiduciary duties to the partners of such real estate partnerships or violations of the relevant partnership agreements. We may incur costs in connection with the defense or settlement of such litigation. We believe that we comply with our fiduciary obligations and relevant partnership agreements. Although the outcome of any litigation is uncertain, we do not expect any such legal actions to have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
 
Environmental
 
Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property, including lead-based paint. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous 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


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connection with the ownership, operation and management of properties, we could potentially be liable for environmental liabilities or costs associated with our properties or properties we acquire or manage in the future.
 
We have determined that our legal obligations to remove or remediate hazardous substances may be conditional asset retirement obligations, as defined in FASB Interpretation No. 47, Conditional Asset Retirement Obligations. Except in limited circumstances where the asset retirement activities are expected to be performed in connection with a planned construction project or property casualty, we believe that the fair value of our asset retirement obligations cannot be reasonably estimated due to significant uncertainties in the timing and manner of settlement of those obligations. Asset retirement obligations that are reasonably estimable as of December 31, 2008, are immaterial to our consolidated financial condition, results of operations and cash flows.
 
Mold
 
We have been named as a defendant in lawsuits that have alleged personal injury and property damage as a result of the presence of mold. In addition, we are aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements. We have only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure. We have implemented policies, procedures, third-party audits and training, and include a detailed moisture intrusion and mold assessment during acquisition due diligence. We believe these measures will prevent or eliminate mold exposure from our properties and will minimize the effects that mold may have on our residents. To date, we have not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change, we can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
 
FLSA Litigation
 
As previously disclosed, the Aimco Operating Partnership and NHP Management Company (“NHPMN”), our subsidiary, were defendants in a lawsuit, filed as a collective action in August 2003 in the United States District Court for the District of Columbia, alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for time worked in excess of 40 hours per week (“overtime claims”). The plaintiffs also contended that the Aimco Operating Partnership and NHPMN failed to compensate maintenance workers for time that they were required to be “on-call” (“on-call claims”). In March 2007, the court in the District of Columbia decertified the collective action. In July 2007, plaintiffs’ counsel filed individual cases in Federal court in 22 different jurisdictions. In 2008, we settled the overtime cases involving 652 plaintiffs and established a framework for resolving the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel. As a result, the lawsuits asserted in the 22 Federal courts will be dismissed. We believe any remaining contingencies associated with these matters are immaterial.
 
Operating Leases
 
We are obligated under office space and equipment non-cancelable operating leases. In addition, we sublease certain of our office space to tenants under non-cancelable subleases. Approximate minimum annual rentals under


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operating leases and approximate minimum payments to be received under annual subleases are as follows (in thousands):
 
                 
    Operating Lease
 		    Sublease
 		 
    Obligations     Receivables  
 
2009
  $ 7,904     $ 597  
2010
    6,812       597  
2011
    5,504       —  
2012
    5,028       —  
2013
    2,594       —  
Thereafter
    4,093       —  
                 
Total
  $ 31,935     $ 1,194  
                 
 
Substantially all of the office space subject to the operating leases described above are for the use of our corporate offices and area operations. Rent expense recognized totaled $10.2 million, $9.8 million and $8.9 million for the years ended December 31, 2008, 2007 and 2006, respectively. Sublease receipts that offset rent expense totaled approximately $0.7 million, $1.3 million and $1.3 million for the years ended December 31, 2008, 2007 and 2006, respectively.
 
As discussed in Note 3, during the three months ended December 31, 2008, we initiated a restructuring program pursuant to which we vacated certain leased office space for which we remain obligated. In connection with the restructuring, we accrued $6.4 million representing the estimated fair value of certain lease obligations included above related to space we are no longer using, reduced by estimated sublease amounts.
 
NOTE 9 — Income Taxes
 
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities of the taxable REIT subsidiaries for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax liabilities and assets are as follows (in thousands):
 
                 
    2008     2007  
 
Deferred tax liabilities:
               
Partnership differences
  $ 47,635     $ 59,419  
Depreciation
    2,477       2,441  
Deferred revenue
    7,757       4,794  
Other
    11       40  
                 
Total deferred tax liabilities
  $ 57,880     $ 66,694  
                 
Deferred tax assets:
               
Net operating, capital and other loss carryforwards
  $ 7,183     $ 49,302  
Provision for impairments on real estate assets
    33,321       —  
Receivables
    5,530       6,321  
Accrued liabilities
    23,504       9,730  
Accrued interest expense
    2,220       917  
Intangibles — management contracts
    3,789       5,632  
Tax credit carryforwards
    8,521       7,011  
Equity compensation
    1,983       1,860  
Other
    155       347  
                 
Total deferred tax assets
    86,206       81,120  
                 
Net deferred income tax assets
  $ 28,326     $ 14,426  
                 
 
At December 31, 2006, we maintained a $1.9 million valuation allowance for deferred tax assets primarily related to previously unrecognized alternative minimum tax credits that were generated by predecessor entities. As


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a result of our implementation of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109, or FIN 48, on January 1, 2007, we reclassified the $1.9 million deferred tax asset as an unrecognized tax benefit and removed the corresponding valuation allowance. As of December 31, 2008, we determined a valuation allowance for our deferred tax assets was not necessary based on a determination that it was more likely than not that such assets will be realized prior to their expiration. This determination included the evaluation of prudent and feasible tax planning strategies that are available to us.
 
A reconciliation of the beginning and ending balance of our unrecognized tax benefits from January 1, 2007, the date on which we adopted FIN 48, is presented below:
 
                 
    2008     2007  
 
Balance at January 1
  $ 2,965     $ 3,118  
Reductions as a result of the lapse of applicable statutes
    —       (189 )
Additions based on tax positions related to the current year
    115       36  
                 
Balance at December 31
  $ 3,080     $ 2,965  
                 
 
We do not anticipate any material changes in existing unrecognized tax benefits during the next 12 months. Because the statute of limitations has not yet elapsed, our Federal income tax returns for the year ended December 31, 2005, and subsequent years and certain of our State income tax returns for the year ended December 31, 2003, and subsequent years are currently subject to examination by the Internal Revenue Service or other tax authorities. Our policy is to include interest and penalties related to income taxes in income taxes in our consolidated statements of income.
 
As a result of SFAS 123R, our deferred tax assets at December 31, 2008 and 2007 do not include $3.6 million and $4.2 million, respectively, of excess tax benefits from employee stock option exercises and vested restricted stock awards that are a component of our net operating loss carryforwards. Additional paid-in capital will be increased by $3.6 million if and when such excess tax benefits are ultimately realized.
 
Significant components of the provision (benefit) for income taxes are as follows and are classified within income tax benefit in continuing operations and income from discontinued operations, net in our statements of income for 2008, 2007 and 2006 (in thousands):
 
                         
    2008     2007     2006  
 
Current:
                       
Federal
  $ 8,678     $ 20     $ 5,380  
State
    2,415       1,938       1,272  
                         
Total current
    11,093       1,958       6,652  
                         
Deferred:
                       
Federal
    (22,115 )     (17,816 )     13,197  
State
    (2,386 )     (1,833 )     1,698  
                         
Total deferred
    (24,501 )     (19,649 )     14,895  
                         
Total provision (benefit)
  $ (13,408 )   $ (17,691 )   $ 21,547  
                         
Classification:
                       
Continuing operations
  $ (53,371 )   $ (19,840 )   $ (11,095 )
Discontinued operations
  $ 39,963     $ 2,149     $ 32,642  
 
Consolidated income (loss) subject to tax, consisting of pretax income of our taxable REIT subsidiaries and gains on certain property sales that are subject to income tax under section 1374 of the Internal Revenue Code, is $(81.8) million for 2008, $(41.5) million for 2007, and $53.3 million for 2006. The reconciliation of income tax


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attributable to continuing and discontinued operations computed at the U.S. statutory rate to income tax expense (benefit) is shown below (dollars in thousands):
 
                                                 
    2008     2007     2006  
    Amount     Percent     Amount     Percent     Amount     Percent  
 
Tax at U.S. statutory rates on consolidated income (loss) subject to tax
  $ (28,632 )     35.0 %   $ (14,508 )     35.0 %   $ 18,639       35.0 %
State income tax, net of Federal tax benefit
    29       —       106       (0.3 )%     3,038       5.7 %
Effect of permanent differences
    215       (0.3 )%     (306 )     0.7 %     (130 )     (0.2 )%
Tax effect of intercompany transfers of assets between the REIT and taxable REIT subsidiaries(1)
    15,059       (18.4 )%     —       —       —       —  
Write off of excess tax basis
    (79 )     0.1 %     (2,983 )     7.2 %     —       —  
                                                 
    $ (13,408 )     16.4 %   $ (17,691 )     42.6 %   $ 21,547       40.5 %
                                                 
 
 
(1) Includes the effect of assets contributed by the Aimco Operating Partnership to taxable REIT subsidiaries, for which deferred tax expense or benefit was recognized upon the sale or impairment of the asset by the taxable REIT subsidiary.
 
Income taxes paid totaled approximately $13.8 million, $3.0 million and $9.8 million in the years ended December 31, 2008, 2007 and 2006, respectively.
 
At December 31, 2008, we had net operating loss carryforwards, or NOLs, of approximately $22.3 million for income tax purposes that expire in years 2023 to 2028. Subject to certain separate return limitations, we may use these NOLs to offset all or a portion of taxable income generated by our taxable REIT subsidiaries. We used approximately $104.5 million of NOLs during the year ended December 31, 2008, to offset gains from the sale of assets by our taxable subsidiaries. Additionally, our low-income housing and rehabilitation tax credit carryforwards as of December 31, 2008, were approximately $7.2 million for income tax purposes that expire in years 2012 to 2028. We had approximately $1.8 million of alternative minimum tax (AMT) credit carryforwards available at December 31, 2008, subsequent to the application of a FIN 48 uncertain tax position discussed above. These AMT credit carryforwards do not expire and can be used to offset future regular tax liabilities.
 
For income tax purposes, dividends paid to holders of Common Stock primarily consist of ordinary income, return of capital, capital gains, qualified dividends and unrecaptured Sec. 1250 gains, or a combination thereof. For the years ended December 31, 2008, 2007 and 2006, dividends per share held for the entire year were estimated to be taxable as follows:
 
                                                 
    2008(1)(4)     2007(2)(4)     2006(3)(4)  
    Amount     Percentage     Amount     Percentage     Amount     Percentage  
 
Ordinary income
  $ —       —     $ 0.78       18 %   $ 0.05       2 %
Capital gains
    4.77       64 %     2.31       54 %     1.05       44 %
Qualified dividends
    0.03       —       0.10       2 %     0.05       2 %
Unrecaptured Sec.1250 gain
    2.68       36 %     1.12       26 %     1.25       52 %
                                                 
    $ 7.48       100 %   $ 4.31       100 %   $ 2.40       100 %
                                                 
 
 
(1) On December 18, 2008, our Board of Directors declared a special dividend of $2.08 per common share for the quarter ended December 31, 2008, that was paid on January 29, 2009, to stockholders of record on December 29, 2008. A portion of the special dividend represented an early payment of the regular quarterly dividend of $0.60 per share that would otherwise have been paid in February 2009. Pursuant to certain provisions in the Code, this dividend was deemed paid by us and received by our shareholders in 2008.
 
(2) On December 21, 2007, our Board of Directors declared a special dividend of $2.51 per common share for the quarter ended December 31, 2007, that was paid on January 30, 2008, to stockholders of record on December 31, 2007. A portion of the special dividend represented an early payment of the regular quarterly dividend of


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$0.60 per share that would otherwise have been paid in February 2008. Pursuant to certain provisions in the Code, this dividend was deemed paid by us and received by our shareholders in 2007.
 
(3) On December 19, 2006, our Board of Directors declared a quarterly cash dividend of $0.60 per common share for the quarter ended December 31, 2006, that was paid on January 31, 2007, to stockholders of record on December 31, 2006. Pursuant to certain provisions in the Code, this dividend was deemed paid by us and received by our shareholders in 2006.
 
(4) Per share amounts presented for income tax purposes above are based on the holders of record at the dates of the declarations and have not been retroactively adjusted for the effect of the special dividend discussed in Note 1.
 
NOTE 10 — Transactions Involving Minority Interest in Aimco Operating Partnership
 
In December 2007, July 2008, October 2008, and December 2008, the Aimco Operating Partnership declared special distributions payable on January 30, 2008, August 29, 2008, December 1, 2008, and January 29, 2009, respectively, to holders of record of common OP Units and High Performance Units on December 31, 2007, July 28, 2008, October 27, 2008, and December 29, 2008, respectively. The special distributions were paid on common OP Units and High Performance Units. The Aimco Operating Partnership distributed to us common OP Units equal to the number of shares we issued pursuant to our corresponding special dividends in addition to approximately $0.60 per unit in cash. Holders of common OP Units other than us and holders of High Performance Units received the distribution entirely in cash. See Note 1 for further discussion of these special distributions.
 
Preferred OP Units
 
Various classes of preferred OP Units of the Aimco Operating Partnership are outstanding. Depending on the terms of each class, these preferred OP Units are convertible into common OP Units or redeemable for cash, or at our option, Common Stock, and are paid distributions varying from 5.9% to 9.6% per annum per unit, or equal to the dividends paid on Common Stock based on the conversion terms. As of December 31, 2008 and 2007, a total of 3.2 million and 3.3 million preferred OP Units were outstanding with redemption values of $88.1 million and $89.1 million, respectively. At December 31, 2008 and 2007, a total of 3.1 million and 3.2 million of these preferred OP Units with redemption values of $85.2 million and $86.2 million, respectively, were redeemable into approximately 7.4 million and 2.5 million shares of Common Stock, respectively, or cash at Aimco’s option.
 
During the years ended December 31, 2008 and 2007, there were approximately 38,400 and 2,200 preferred OP Units tendered for redemption in exchange for cash, respectively. During the year ended December 31, 2008, no preferred OP units were tendered for redemption in exchange for shares of Common Stock and during the year ended December 31, 2007, approximately 1,800 preferred OP Units were tendered for redemption in exchange for approximately 1,300 shares of Common Stock. During 2008, we implemented a policy that establishes criteria for determining when requested redemptions of preferred OP Units will be settled in cash or Common Stock, and based on the criteria under this policy, as of December 31, 2008, redemption requests were to be settled in cash.
 
Common OP Units
 
In 2007, we completed tender offers for limited partnership interests resulting in the issuance of approximately 55,400 common OP Units. Approximately 55,100 of the common OP Units issued in 2007 were to unrelated limited partners in VMS in connection with our purchase of seven properties from the partnership, as discussed in Note 3. In 2008, we did not issue a significant number of common OP Units in connection with tender offers for limited partners.
 
During the years ended December 31, 2008 and 2007, approximately 50,000 and 39,000 common OP Units, respectively, were redeemed in exchange for cash, and approximately 114,000 and 470,000 common OP Units, respectively, were redeemed in exchange for shares of Common Stock.
 
High Performance Units
 
From 1998 through 2005, the Aimco Operating Partnership issued various classes of High Performance Units, or HPUs, as follows: 1998 — Class I HPUs; 2001 — Class II HPUs, Class III HPUs and Class IV HPUs; 2002 —


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Class V HPUs; 2003 — Class VI HPUs; 2004 — Class VII HPUs; 2005 — Class VIII HPUs; and 2006 — Class IX HPUs. These HPUs were issued to limited liability companies owned by certain members of our senior management (and independent directors in the case of Class I HPUs only) in exchange for cash in amounts that we determined, with the assistance of a nationally recognized independent valuation expert, to be the fair value of the HPUs. The terms of the HPUs provide for the issuance, following a measurement period of generally three years (one year in the case of Class II HPUs and two years in the case of Class III HPUs), of an increased number of HPUs depending on the degree, if any, to which certain financial performance benchmarks are achieved over the applicable measurement period. The holders of HPUs at the conclusion of the measurement period receive the same amount of distributions that are paid to holders of an equivalent number of the Aimco Operating Partnership’s outstanding common OP Units. Prior to the end of the measurement period, the limited liability company holders of HPUs receive only nominal distributions. If the specified minimum benchmarks are not achieved at the conclusion of the applicable measurement period, the HPUs have only nominal value and may be reacquired by the Aimco Operating Partnership for a nominal amount.
 
The following table sets forth information for HPUs outstanding as of December 31, 2008:
 
                                 
          Gross
 		    End of
 		    Outstanding Units
 		 
    Year of
 		    Proceeds
 		    Measurement
 		    at December 31,
 		 
Class of HPUs
  Issuance     (thousands)     Period     2008  
 
Class I
    1998     $ 2,070       12/31/2000       2,344,719  
 
The minimum performance benchmarks were not achieved for HPU Classes II through IX. Accordingly, those HPUs had only nominal value at the conclusion of the related measurement period and were reacquired by the Aimco Operating Partnership and cancelled.
 
In determining the value of the historical HPUs, we used a discounted cash flow valuation methodology supported by a nationally recognized independent valuation expert. This discounted cash flow methodology used a 24% discount rate applied to probability-adjusted cash flows reflecting possible distribution outcomes. Using that methodology, we determined the fair value of HPUs as follows: Class V HPUs $1,066,000, Class VI HPUs $985,000, Class VII HPUs $915,000, Class VIII HPUs $780,000 and Class IX HPUs $875,000. We have evaluated an alternative methodology that (1) assumes an investor receives shares of Aimco common stock in the event that the performance hurdles are met at the end of the measurement period, (2) uses a discount rate for the three year measurement period of approximately 30%, and (3) applies a liquidity discount of 25% to reflect that the HPUs are illiquid securities absent a change of control of Aimco. Applying this alternative methodology results in an effectively lower net discount rate than the rate used in the discounted cash flow methodology and, as a result, the value of those HPUs would have been as follows: Class V HPUs $1,696,000, Class VI HPUs $1,496,000, Class VII HPUs $1,867,000, Class VIII HPUs $1,772,000 and Class IX HPUs $2,042,000. Using the alternative methodology resulted in a higher valuation than the discounted cash flow methodology based on the use of assumed common stock prices in conjunction with the discount rate and liquidity discount discussed above. Accordingly, after taking into account the percentage of each program subscribed and the unamortized portion of the Class VIII and Class IX HPUs, we recorded a cumulative adjustment of $2.9 million in the year ended December 31, 2006, to reflect the difference between these two methodologies. The $2.9 million correction is also due to a change in the assumptions of the discount rates used to value Class V HPUs through Class IX HPUs.


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NOTE 11 — Stockholders’ Equity
 
Preferred Stock
 
At December 31, 2008 and 2007, we had the following classes of preferred stock outstanding:
 
                                         
                      Balance
 		 
                Annual Dividend
 		    December 31,  
    Redemption
 		    Conversion
 		    Rate Per Share
 		    2008
 		    2007
 		 
Perpetual:
  Date(1)     Price     (paid quarterly)     (thousands)     (thousands)  
 
Class G Cumulative Preferred Stock, $0.01 par value, 4,050,000 shares authorized, 4,050,000 shares issued and outstanding
    07/15/2008       —       9.3750 %   $ 101,000     $ 101,000  
Class T Cumulative Preferred Stock, $0.01 par value, 6,000,000 shares authorized, 6,000,000 shares issued and outstanding
    07/31/2008       —       8.000 %     150,000       150,000  
Class U Cumulative Preferred Stock, $0.01 par value, 8,000,000 shares authorized, 8,000,000 shares issued and outstanding
    03/24/2009       —       7.750 %     200,000       200,000  
Class V Cumulative Preferred Stock, $0.01 par value, 3,450,000 shares authorized, 3,450,000 shares issued and outstanding
    09/29/2009       —       8.000 %     86,250       86,250  
Class Y Cumulative Preferred Stock, $0.01 par value, 3,450,000 shares authorized, 3,450,000 shares issued and outstanding
    12/21/2009       —       7.875 %     86,250       86,250  
Series A Community Reinvestment Act Preferred Stock, $0.01 par value per share, 240 shares authorized, 146 and 200 shares issued and outstanding(2)
    06/30/2011       —       (2 )     73,000       100,000  
                                         
Total
                          $ 696,500     $ 723,500  
                                         
 
 
(1) All classes of preferred stock are redeemable at our option on and after the dates specified.
 
(2) On June 29, 2006, we sold 200 shares of our Series A Community Reinvestment Act Perpetual Preferred Stock, $0.01 par value per share, or the CRA Preferred Stock, with a liquidation preference of $500,000 per share, for net proceeds of $97.5 million. For the period from June 29, 2006, the date of original issuance, through March 31, 2015, the dividend rate is a variable rate per annum equal to the Three-Month LIBOR Rate (as defined in the articles supplementary designating the CRA Preferred Stock) plus 1.25%, calculated as of the beginning of each quarterly dividend period. The rate at December 31, 2008 and 2007 was 5.01% and 6.38%, respectively. Upon liquidation, holders of the CRA Preferred Stock are entitled to a preference of $500,000 per share, plus an amount equal to accumulated, accrued and unpaid dividends, whether or not earned or declared. The CRA Preferred Stock ranks prior to our Common Stock and on the same level as our outstanding shares of preferred stock, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up. The CRA Preferred Stock is not redeemable prior to June 30, 2011, except in limited circumstances related to REIT qualification. On and after June 30, 2011, the CRA Preferred Stock is redeemable for cash, in whole or from time to time in part, at our option, at a price per share equal to the liquidation preference, plus accumulated, accrued and unpaid dividends, if any, to the redemption date.
 
During 2008, we repurchased 54 shares, or $27.0 million in liquidation preference, of the CRA Preferred Stock, $0.01 par value per share, for cash totaling $24.8 million. In accordance with Emerging Issues Task Force Topic D-42, The Effect on the Calculation of Earnings Per Share for the Redemption or Induced Conversion of Preferred Stock, or EITF Topic D-42, the $2.2 million excess of the carrying value over the redemption price, offset by $0.7 million of issuance costs previously recorded as a reduction of additional paid-in capital, is reflected as a reduction of net income attributable to preferred stockholders for purposes of calculating earnings per share for the year ended December 31, 2008.
 
During 2007, we redeemed all 1,904,762 million shares outstanding of our convertible 8.1% Class W Preferred Stock for a total redemption price of $54.61 per share, which included a redemption price per share of $53.55 (which was 102% of the $52.50 per share liquidation preference) plus approximately $1.06 per share in respect of accumulated, accrued and unpaid dividends through September 30, 2007. In accordance with EITF Topic D-42, the $2.0 million excess of the redemption price over the carrying value (the 2% redemption premium) and $0.6 million of issuance costs previously recorded as a reduction of additional paid-in capital are reflected as an increase to net


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income attributable to preferred stockholders for purposes of calculating earnings per share for the year ended December 31, 2007.
 
During the year ended December 31, 2006, we redeemed for cash all 2.53 million shares outstanding of the 10.1% Class Q Cumulative Preferred Stock and all 6.94 million shares outstanding of the 10% Class R Cumulative Preferred Stock, which resulted in $2.5 million and $4.3 million, respectively, of related preferred stock issuance costs being deducted in determining 2006 net income attributable to common stockholders. During the year ended December 31, 2006, we also redeemed for cash all 2.0 million shares outstanding of the 8.5% Class X Cumulative Convertible Preferred Stock, which resulted in $0.1 million of related preferred stock issuance costs being deducted in determining 2006 net income attributable to common stockholders.
 
All classes of preferred stock are pari passu with each other and are senior to our Common Stock. The holders of each class of preferred stock are generally not entitled to vote on matters submitted to stockholders. Dividends on all shares of preferred stock are subject to declaration by our Board of Directors. All of the above outstanding classes of preferred stock have a liquidation preference per share of $25, with the exception of the CRA Preferred Stock, which has a liquidation preference per share of $500,000.
 
The dividends paid on each class of preferred stock classified as equity in the years ended December 31, 2008, 2007 and 2006 are as follows (in thousands, except per share data):
 
                                                 
    2008     2007     2006  
    Amount
 		    Total
 		    Amount
 		    Total
 		    Amount
 		    Total
 		 
    Per
 		    Amount
 		    Per
 		    Amount
 		    Per
 		    Amount
 		 
Class of Preferred Stock
  Share(1)     Paid     Share(1)     Paid     Share(1)     Paid  
 
Perpetual:
                                               
Class G
  $ 2.34     $ 9,492     $ 2.34     $ 9,492     $ 2.34     $ 9,492  
Class Q
    —       —       —       —       0.67 (2)     1,686  
Class R
    —       —       —       —       1.49 (2)     10,361  
Class T
    2.00       12,000       2.00       12,000       2.00       12,000  
Class U
    1.94       15,500       1.94       15,500       1.94       15,500  
Class V
    2.00       6,900       2.00       6,900       2.00       6,900  
Class Y
    1.97       6,792       1.97       6,792       1.97       6,792  
Series A CRA
    24,381 (3)     4,531       41,661       8,316       8,720 (4)     1,744  
                                                 
              55,215               59,000               64,475  
                                                 
Convertible:
                                               
Class W
    —       —       4.25 (5)     8,100       4.25       8,100  
Class X
    —       —       —       —       1.06 (2)     2,125  
                                                 
              —               8,100               10,225  
                                                 
Total
          $ 55,215             $ 67,100             $ 74,700  
                                                 
 
 
(1) Amounts per share are calculated based on the number of preferred shares outstanding either at the end of each year or as of conversion or redemption date, as noted.
 
(2) For the period from January 1, 2006, to the date of redemption.
 
(3) Amount per share is based on 146 shares outstanding for the entire period. 54 shares were repurchased in September 2008 and received $17,980 in dividends through the date of purchase.
 
(4) For the period from June 29, 2006, (date of issuance) to December 31, 2006.
 
(5) For the period from January 1, 2007, to the date of redemption.
 
Common Stock
 
In December 2007, July 2008, October 2008, and December 2008, in connection with the Aimco Operating Partnership’s special distributions discussed in Note 1, our Board of Directors declared corresponding special dividends payable on January 30, 2008, August 29, 2008, December 1, 2008, and January 29, 2009, respectively, to holders of record of our Common Stock on December 31, 2007, July 28, 2008, October 27, 2008, and December 29, 2008, respectively. A portion of the special dividends in the amounts of $0.60 per share represents payment of the regular dividend for the quarters ended December 31, 2007, June 30, 2008, September 30, 2008, and December 31,


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2008, respectively, and the remaining amount per share represents an additional dividend associated with taxable gains from property dispositions. Portions of the special dividends were paid through the issuance of shares of Common Stock. See Note 1 for further discussion of these special dividends.
 
During 2008 and 2007, we issued approximately 24,000 shares and 87,000 shares, respectively, of Common Stock to certain non-executive officers who purchased the shares at market prices. In exchange for the shares purchased, the officers executed notes payable totaling $0.6 million and $2.7 million, respectively. These notes, which are 25% recourse to the borrowers, have a 10-year maturity and bear interest either at a fixed rate of 6% annually or a floating rate based on the 30-day LIBOR plus 3.85%, which is subject to an annual interest rate cap of typically 7.25%. Total payments in 2008 and 2007 on all notes from officers were $1.5 million and $1.7 million, respectively. In 2008 and 2007, we reacquired approximately 31,000 and 9,000 shares of Common Stock from officers in exchange for the cancellation of related notes totaling $1.0 million and $0.3 million, respectively.
 
In addition, in 2008 and 2007, we issued approximately 316,000 and 455,000 restricted shares of Common Stock, respectively, to certain officers and employees. The restricted stock was recorded at the fair market value of the Common Stock on the date of issuance. These shares of restricted Common Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of and are subject to a risk of forfeiture prior to the expiration of the applicable vesting period (typically ratably over a period of four years). Certain shares of restricted stock issued during 2006 and 2005 are subject to accelerated vesting upon the achievement of a specified calendar year performance measure target.
 
In 2008, 2007 and 2006, we purchased in the open market approximately 13.9 million, 7.5 million and 2.3 million shares of Common Stock, respectively, at an average price per share of approximately $34.02, $43.70 and $52.27, respectively. After considering the effect of shares issued pursuant to our special dividends, the effective number of shares repurchased totaled 19.3 million, 10.9 million and 3.4 million in 2008, 2007 and 2006, respectively, at an effective average price per share of $24.48, $29.77 and $35.41, respectively.
 
Registration Statements
 
In April 2008, we and the Aimco Operating Partnership filed a new shelf registration statement to replace the existing shelf (which was due to expire later in 2008) that provides for the issuance of debt and equity securities by Aimco and debt securities by the Aimco Operating Partnership.
 
NOTE 12 — Share-Based Compensation and Employee Benefit Plans
 
Stock Award and Incentive Plan
 
We adopted the Apartment Investment and Management Company 1997 Stock Award and Incentive Plan, or the 1997 Plan, to attract and retain officers, key employees and independent directors. The 1997 Plan reserved for issuance a maximum of 20 million shares, which may be in the form of incentive stock options, non-qualified stock options and restricted stock, or other types of awards as authorized under the 1997 Plan. The 1997 Plan expired on April 24, 2007. On April 30, 2007, the 2007 Stock Award and Incentive Plan, or the 2007 Plan, was approved as successor to the 1997 Plan. The 2007 Plan reserves for issuance a maximum of three million shares, which may be in the form of incentive stock options, non-qualified stock options and restricted stock, or other types of awards as authorized under the 2007 Plan. Pursuant to the anti-dilution provisions of the 2007 Plan, the number of shares reserved for issuance has been adjusted to reflect the special dividends discussed in Note 1. At December 31, 2008, there were approximately 1.7 million shares available to be granted under the 2007 Plan. The 2007 Plan is administered by the Compensation and Human Resources Committee of the Board of Directors. In the case of stock options, the exercise price of the options granted may not be less than the fair market value of Common Stock at the date of grant. The term of the options is generally ten years from the date of grant. The options typically vest over a period of one to five years from the date of grant. We generally issue new shares upon exercise of options. Restricted stock awards typically vest over a period of three to five years.
 
For stock options granted prior to January 1, 2003, we applied Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, or APB 25, and related interpretations. Under APB 25, because the exercise price of our employee stock options equaled the market price of the underlying stock on the date of grant,


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no compensation expense related to such options was recognized. From January 1, 2003, through December 31, 2005, we applied the accounting provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, or SFAS 123, as amended by Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure — an amendment of FASB Statement No. 123, or SFAS 148, to all employee awards granted, modified, or settled on or after January 1, 2003, which resulted in recognition of compensation expense related to stock options based on the fair value of the stock options. We recognized compensation expense for stock options accounted for under SFAS 123 and restricted stock awards ratably over the period the awards vested. Compensation cost was reversed as forfeitures occurred.
 
Effective January 1, 2006, we adopted SFAS 123R, which superseded SFAS 123. SFAS 123R requires all share-based employee compensation, including grants of employee stock options, to be recognized in the financial statements based on fair value and provides for a modified prospective application method of adoption. Under this method, we are applying the provisions of SFAS 123R prospectively to new awards granted on or after January 1, 2006, and to existing awards that are modified after January 1, 2006, and are recognizing compensation cost over the remaining vesting period for the unvested portion of all outstanding awards granted prior to 2006. The measurement and recognition provisions of SFAS 123R that apply to our stock compensation arrangements are similar to those that we applied under SFAS 123 to awards granted on or after January 1, 2003. Under SFAS 123R, we continue to recognize the cost of stock-based compensation ratably over the vesting period. The primary change in our method of recognizing compensation cost relates to the treatment of forfeitures. Under SFAS 123R, expected forfeitures are required to be estimated in determining periodic compensation cost, whereas under SFAS 123 we recognized forfeitures as they occurred.
 
In connection with the adoption of SFAS 123R as of January 1, 2006, we estimated that forfeitures of unvested awards of stock options and restricted stock for which compensation expense was recognized prior to 2006 will total approximately $154,000. SFAS 123R provides that a cumulative effect of change in accounting principle be recognized for such estimated forfeitures as of the date of adoption. We believe the estimated forfeitures upon adoption of SFAS 123R are immaterial and have reported the cumulative effect adjustment in our general and administrative expenses for the year ended December 31, 2006. The adoption of SFAS 123R resulted in decreases of $1.2 million in 2006 income from continuing operations and net income and decreases of $0.01 in 2006 basic and diluted earnings per share. The adoption of SFAS 123R did not have a material effect on 2006 cash flows from operating or financing activities. After 2006, SFAS 123R is not expected to have any significant effect on our financial statements other than the timing of recognition of forfeitures.
 
We estimated the fair value of our options using a Black-Scholes closed-form valuation model using the assumptions set forth in the table below. For options granted in 2008, the expected term of the options was based on historical option exercises and post-vesting terminations. For options granted in 2007 and 2006, the expected term of the options reflects the average of the vesting period and the contractual term for the options, with the exception of a grant of approximately 0.6 million options to an executive during 2007, for which the expected term used was equal to the vesting period of five years. Expected volatility reflects the historical volatility of our Common Stock during the historical period commensurate with the expected term of the options that ended on the date of grant. The expected dividend yield reflects the actual cash dividend amount per share paid on our Common Stock after 2003 and the risk-free interest rate reflects the annualized yield of a zero coupon U.S. Treasury security with a term equal to the expected term of the option. The weighted average fair value of options and our valuation assumptions for the years ended December 31, 2008, 2007 and 2006 were as follows:
 
                         
    2008     2007     2006  
 
Weighted average grant-date fair value(1)
  $ 3.37     $ 4.63     $ 3.85  
Assumptions:
                       
Risk-free interest rate
    3.12 %     4.70 %     4.58 %
Expected dividend yield(1)
    4.67 %     3.64 %     4.11 %
Expected volatility
    24.02 %     21.66 %     20.15 %
Weighted average expected life of options
    6.5 years       5.6 years       6.5 years  


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(1) The weighted average grant-date fair value (per share) and expected dividend yield for each period presented has been retroactively adjusted for the effect of the special dividends discussed in Note 1. The weighted average grant-date fair values (per share) for options granted during 2008, 2007 and 2006, were $4.34, $6.28 and $5.23, respectively, before the effect of retroactive adjustments for the special dividends.
 
The following table summarizes activity for our outstanding stock options for the years ended December 31, 2008, 2007 and 2006 (numbers of options in thousands):
 
                                                 
    2008(1)     2007(1)     2006(1)  
          Weighted
 		          Weighted
 		          Weighted
 		 
          Average
 		          Average
 		          Average
 		 
    Number
 		    Exercise
 		    Number
 		    Exercise
 		    Number
 		    Exercise
 		 
    of Options     Price     of Options     Price     of Options     Price  
 
Outstanding at beginning of year
    11,033     $ 30.68       11,676     $ 28.98       15,011     $ 28.56  
Granted(2)
    1,264       30.84       1,297       42.17       940       31.78  
Exercised
    (19 )     29.13       (1,900 )     28.19       (3,825 )     28.01  
Forfeited
    (1,900 )     29.01       (40 )     27.85       (450 )     28.05  
                                                 
Outstanding at end of year
    10,378     $ 31.01       11,033     $ 30.68       11,676     $ 28.98  
Exercisable at end of year
    7,206     $ 29.51       8,276     $ 29.27       8,838     $ 29.13  
 
 
(1) In connection with the special dividends discussed in Note 1, the number of options and exercise prices of all outstanding awards were adjusted pursuant to the anti-dilution provisions of the applicable plans based on the market price of our stock on the ex-dividend dates of the related special dividends. The number of options and exercise prices in the table above have been retroactively adjusted using these factors, which may differ from the effective adjustments in outstanding shares for each of the special dividends discussed in Note 1. The adjustment of the awards pursuant to the special dividends is considered a modification under SFAS 123R, but did not result in a change in the fair value of any awards.
 
(2) Options granted during the years ended December 31, 2008, 2007 and 2006 totaled 980, 956 and 692 (in thousands), respectively, before the effect of retroactive adjustments for the special dividends discussed above.
 
The intrinsic value of a stock option represents the amount by which the current price of the underlying stock exceeds the exercise price of the option. Options outstanding at December 31, 2008, had no aggregate intrinsic value and a weighted average remaining contractual term of 5.7 years. Options exercisable at December 31, 2007, had no aggregate intrinsic value and a weighted average remaining contractual term of 4.0 years. The intrinsic value of stock options exercised during the year ended December 31, 2008, was less than $0.1 million, and was $28.9 million and $34.9 million in 2007 and 2006, respectively. We may realize tax benefits in connection with the exercise of options by employees of our taxable subsidiaries. We realized tax benefits of less than $0.1 million for the year ended December 31, 2008.
 
The following table summarizes activity for restricted stock awards for the years ended December 31, 2008, 2007 and 2006 (numbers of shares in thousands):
 
                                                 
    2008(1)     2007(1)     2006(1)  
          Weighted
 		          Weighted
 		          Weighted
 		 
          Average
 		          Average
 		          Average
 		 
    Number of
 		    Grant-Date
 		    Number of
 		    Grant-Date
 		    Number of
 		    Grant-Date
 		 
    Shares     Fair Value     Shares     Fair Value     Shares     Fair Value  
 
Unvested at beginning of year
    1,394     $ 31.73       1,580     $ 27.62       1,281     $ 24.15  
Granted(2)
    315       28.44       447       41.43       882       30.60  
Vested
    (519 )     31.58       (562 )     27.76       (349 )     24.62  
Forfeited
    (164 )     36.38       (71 )     32.73       (234 )     24.36  
                                                 
Unvested at end of year
    1,026     $ 30.07       1,394     $ 31.73       1,580     $ 27.62  
                                                 
 
 
(1) ln connection with the special dividends discussed in Note 1, holders of restricted shares received cash, additional shares of restricted stock, or a combination of cash and shares of restricted stock. The number of shares and


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weighted average grant-date fair values (per share) for the periods presented above have been retroactively adjusted for the effect shares received by the holders of the restricted shares in connection with the special dividends.
 
(2) Restricted shares granted during the years ended December 31, 2008, 2007 and 2006 totaled 220, 308 and 607 (in thousands), respectively, before the effect of retroactive adjustments for the special dividends discussed above.
 
The aggregate fair value of shares that vested during the years ended December 31, 2008, 2007 and 2006 was $16.5 million, $19.5 million and $12.1 million, respectively.
 
Total compensation cost recognized for restricted stock and stock option awards was $17.6 million, $19.2 million and $15.9 million for the years ended December 31, 2008, 2007 and 2006, respectively. Of these amounts, $3.8 million $4.3 million and $3.6 million, respectively, were capitalized. At December 31, 2008, total unvested compensation cost not yet recognized was $27.1 million. We expect to recognize this compensation over a weighted average period of approximately 1.7 years. Certain awards of restricted stock granted in 2006 and 2005 are subject to immediate vesting based on achievement of a specified annual financial performance target during the scheduled vesting period. Recognition of related compensation cost may be accelerated based on our ongoing assessment of whether the performance target is probable of being achieved. At this time, we do not believe that achievement of the performance target is probable.
 
Employee Stock Purchase Plan
 
Under the terms of our employee stock purchase plan, eligible employees may authorize payroll deductions up to 15% of their base compensation to purchase shares of our Common Stock at a five percent discount from its fair value on the last day of the calendar quarter during which payroll deductions are made. In 2008, 2007 and 2006, 8,926, 3,751 and 648 shares were purchased under this plan at an average price of $23.86, $44.67 and $55.84, respectively, or 11,340, 5,536 and 956 shares at an average price of $18.78, $30.27 and $37.85, respectively, after adjustments for the shares issued pursuant to the special dividends discussed in Note 1. No compensation cost is recognized in connection with this plan.
 
401(k) Plan
 
We provide a 401(k) defined-contribution employee savings plan. Employees who have completed 30 days of service and are age 18 or older are eligible to participate. During the years ended December 31, 2008, 2007 and 2006, our matching contributions were made in the following manner: (1) a 100% match on the first 3% of the participant’s compensation; and (2) a 50% match on the next 2% of the participant’s compensation. We incurred costs in connection with this plan of approximately $5.2 million, $5.2 million and $4.5 million in 2008, 2007 and 2006, respectively. On December 31, 2008, we suspended employer matching contributions effective January 29, 2009. We may reinstate employer matching contributions at any time.
 
NOTE 13 — Discontinued Operations and Assets Held for Sale
 
In accordance with SFAS 144 we report as discontinued operations real estate assets that meet the definition of a component of an entity and have been sold or meet the criteria to be classified as held for sale under SFAS 144. We include all results of these discontinued operations, less applicable income taxes, in a separate component of income on the consolidated statements of income under the heading “income from discontinued operations, net.” This treatment resulted in certain reclassifications of 2007 and 2006 financial statement amounts.
 
We are currently marketing for sale certain real estate properties that are inconsistent with our long-term investment strategy. At the end of each reporting period, we evaluate whether such properties meet the criteria to be classified as held for sale, including whether such properties are expected to be sold within twelve months. Additionally, certain properties that do not meet all of the criteria to be classified as held for sale at the balance sheet date may nevertheless be sold and included in discontinued operations in the subsequent twelve months; thus the number of properties that may be sold during the subsequent twelve months could exceed the number classified as held for sale. At December 31, 2008 and 2007, we had seven and 158 properties, with an aggregate of 1,668 and


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38,870 units, classified as held for sale, respectively. Amounts classified as held for sale in the accompanying consolidated balance sheets are as follows (in thousands):
 
                 
    December 31,
 		    December 31,
 		 
    2008     2007  
 
Real estate, net
  $ 65,576     $ 1,485,442  
Other assets
    1,584       19,844  
                 
Assets held for sale
  $ 67,160     $ 1,505,286  
                 
Property debt
  $ 52,010     $ 1,140,427  
Other liabilities
    4,331       10,771  
                 
Liabilities related to assets held for sale
  $ 56,341     $ 1,151,198  
                 
 
During the year ended December 31, 2008, we sold 151 properties with an aggregate of 37,202 units. During the year ended December 31, 2007, we sold 73 consolidated properties with an aggregate of 11,588 units. During the year ended December 31, 2006, we sold 77 consolidated properties with an aggregate of 17,307 units. For the years ended December 31, 2008, 2007 and 2006, discontinued operations includes the results of operations for the periods prior to the date of sale for all properties sold or classified as held for sale as of December 31, 2008.
 
The following is a summary of the components of income from discontinued operations for the years ended December 31, 2008, 2007 and 2006 (in thousands):
 
                         
    2008     2007     2006  
 
Rental and other property revenues
  $ 250,277     $ 396,822     $ 492,275  
Property operating expenses
    (128,661 )     (201,233 )     (245,983 )
Depreciation and amortization
    (57,288 )     (96,554 )     (129,994 )
Other expenses, net
    (10,610 )     (5,966 )     (11,228 )
                         
Operating income
    53,718       93,069       105,070  
Interest income
    1,249       2,645       3,996  
Interest expense
    (45,463 )     (76,648 )     (98,301 )
Gain on extinguishment of debt
    —       22,852       —  
Minority interest in consolidated real estate partnerships
    543       (2,232 )     3,136  
                         
Income before gain on dispositions of real estate, impairment losses, deficit distributions to minority partners, income tax and minority interest in Aimco Operating Partnership
    10,047       39,686       13,901  
Gain on dispositions of real estate, net of minority partners’ interest
    618,168       65,076       258,970  
Real estate impairment (losses) recoveries, net
    (24,021 )     (4,873 )     434  
Recovery of deficit distributions (deficit distributions) to minority partners
    30,127       (6,161 )     10,441  
Income tax
    (39,963 )     (2,149 )     (32,642 )
Minority interest in Aimco Operating Partnership
    (49,597 )     (8,484 )     (24,213 )
                         
Income from discontinued operations, net
  $ 544,761     $ 83,095     $ 226,891  
                         
 
Gain on dispositions of real estate is reported net of incremental direct costs incurred in connection with the transaction, including any prepayment penalties incurred upon repayment of mortgage loans collateralized by the property being sold. Such prepayment penalties totaled $64.9 million, $12.6 million and $53.8 million for the years ended December 31, 2008, 2007 and 2006, respectively. During the years ended December 31, 2008 and 2007, we recorded impairment losses totaling $24.0 million and $4.9 million on assets held for sale. During the year ended December 31, 2006, we recorded a net recovery of impairment losses totaling $0.4 million on assets held for sale. We classify interest expense related to property debt within discontinued operations when the related real estate asset is sold or classified as held for sale.


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NOTE 14 — Earnings per Share
 
We calculate earnings per share based on the weighted average number of shares of Common Stock, common stock equivalents and dilutive convertible securities outstanding during the period. The following table illustrates the calculation of basic and diluted earnings per share for the years ended December 31, 2008, 2007 and 2006 (in thousands, except per share data):
 
                         
    2008     2007     2006  
 
Numerator:
                       
Loss from continuing operations
  $ (129,298 )   $ (53,184 )   $ (50,104 )
Less net income attributable to preferred stockholders
    (53,708 )     (66,016 )     (81,132 )
                         
Numerator for basic and diluted earnings per share — Loss from continuing operations (net of income attributable to preferred stockholders)
  $ (183,006 )   $ (119,200 )   $ (131,236 )
                         
Income from discontinued operations
  $ 544,761     $ 83,095     $ 226,891  
                         
Net income
  $ 415,463     $ 29,911     $ 176,787  
Less net income attributable to preferred stockholders
    (53,708 )     (66,016 )     (81,132 )
                         
Numerator for basic and diluted earnings per share — Net income (loss) attributable to common stockholders
  $ 361,755     $ (36,105 )   $ 95,655  
                         
Denominator:
                       
Denominator for basic earnings per share — weighted average number of shares of Common Stock outstanding
    121,213       140,137       141,053  
Effect of dilutive securities:
                       
Dilutive potential common shares
    —       —       —  
                         
Denominator for diluted earnings per share
    121,213       140,137       141,053  
                         
Earnings (loss) per common share — basic and diluted:
                       
Loss from continuing operations (net of income attributable to preferred stockholders)
  $ (1.51 )   $ (0.85 )   $ (0.93 )
Income from discontinued operations
    4.49       0.59       1.61  
                         
Net income (loss) attributable to common stockholders
  $ 2.98     $ (0.26 )   $ 0.68  
                         
 
Weighted average shares of Common Stock outstanding, dilutive potential common shares and earnings (loss) per common share for each of the periods presented have been retroactively adjusted for the effect of the special dividends discussed in Note 1.
 
Prior to its redemption on September 30, 2007, our Class W Preferred Stock that was convertible into Common Stock (see Note 11) was anti-dilutive on an “if converted” basis. Therefore, we deducted all of the dividends payable on the convertible preferred stock to arrive at the numerator and no additional shares are included in the denominator when calculating basic and diluted earnings per common share. As of December 31, 2008, 2007 and 2006, the common share equivalents that could potentially dilute basic earnings per share in future periods totaled 11.5 million, 12.8 million and 13.6 million, respectively. These securities, including stock options, restricted stock awards and officer loan shares, have been excluded from the earnings per share computations for the years ended December 31, 2008, 2007 and 2006 because their effect would have been anti-dilutive.
 
As discussed in Note 10, the Aimco Operating Partnership has various classes of preferred OP units, which may be redeemed at the holders’ option. Aimco may redeem these units for cash or shares of common stock. During the periods presented, no common share equivalents related to these preferred OP units have been included in earnings per share computations because their effect was antidilutive.
 
We consider the Aimco Operating Partnership’s High Performance Units for which the applicable measurement period has not ended to be potential share equivalents. No potential share equivalents related to the High


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Performance Units have been included in diluted earnings per share for the periods presented because the performance benchmarks were not met or their effect was antidilutive.
 
NOTE 15 — Unaudited Summarized Consolidated Quarterly Information
 
Summarized unaudited consolidated quarterly information for 2008 and 2007 is provided below (amounts in thousands, except per share amounts).
 
                                 
    Quarter(1)  
2008
  First     Second     Third     Fourth  
 
Total revenues
  $ 349,245     $ 374,022     $ 375,081     $ 359,570  
Total operating expenses
    (299,995 )     (304,590 )     (312,932 )     (335,634 )
Operating income
    49,250       69,432       62,149       23,936  
Income (loss) from continuing operations(2)
    (29,240 )     (26,903 )     62,589       (135,744 )
Income from discontinued operations, net
    4,694       282,942       113,210       143,915  
Net income (loss)
    (24,546 )     256,039       175,799       8,171  
Earnings (loss) per common share — basic(3):
                               
Income (loss) from continuing operations (net of income attributable to preferred stockholders)
  $ (0.34 )   $ (0.33 )   $ 0.43     $ (1.30 )
Net income (loss) attributable to common stockholders
  $ (0.30 )   $ 1.96     $ 1.38     $ (0.05 )
Earnings (loss) per common share — diluted(3):
                               
Income (loss) from continuing operations (net of income attributable to preferred stockholders)
  $ (0.34 )   $ (0.33 )   $ 0.42     $ (1.30 )
Net income (loss) attributable to common stockholders
  $ (0.30 )   $ 1.96     $ 1.38     $ (0.05 )
Weighted average common shares outstanding(3)
    127,961       123,484       118,182       115,225  
Weighted average common shares and common share equivalents outstanding(3)
    127,961       123,484       118,961       115,225  
 


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    Quarter(1)  
2007
  First     Second     Third     Fourth  
 
Total revenues
  $ 329,154     $ 340,859     $ 340,454     $ 366,353  
Total operating expenses
    (281,623 )     (277,212 )     (287,305 )     (288,925 )
Operating income
    47,531       63,647       53,149       77,428  
Loss from continuing operations
    (7,436 )     (7,999 )     (21,665 )     (16,084 )
Income from discontinued operations, net
    32,644       27,328       19,324       3,799  
Net income (loss)
    25,208       19,329       (2,341 )     (12,285 )
Earnings (loss) per common share — basic(3):
                               
Loss from continuing operations (net of income attributable to preferred stockholders)
  $ (0.17 )   $ (0.17 )   $ (0.29 )   $ (0.22 )
Net income (loss) attributable to common stockholders
  $ 0.06     $ 0.02     $ (0.15 )   $ (0.19 )
Earnings (loss) per common share — diluted(3):
                               
Loss from continuing operations (net of income attributable to preferred stockholders)
  $ (0.17 )   $ (0.17 )   $ (0.29 )   $ (0.22 )
Net income (loss) attributable to common stockholders
  $ 0.06     $ 0.02     $ (0.15 )   $ (0.19 )
Weighted average common shares outstanding(3)
    141,353       141,354       140,010       137,825  
Weighted average common shares and common share equivalents outstanding(3)
    141,353       141,354       140,010       137,825  
 
 
(1) Certain reclassifications have been made to 2008 and 2007 quarterly amounts to conform to the full year 2008 presentation, primarily related to treatment of discontinued operations.
 
(2) Loss from continuing operations for the quarter ended December 31, 2008, includes a $107.5 million provision for impairment losses on real estate development assets, which is discussed further in Note 2.
 
(3) Weighted average share, common share equivalents and earnings per share amounts for each of the periods presented have been retroactively adjusted for the effect of shares issued pursuant to the special dividends discussed in Note 1.
 
NOTE 16 — Transactions with Affiliates
 
We earn revenue from affiliated real estate partnerships. These revenues include fees for property management services, partnership and asset management services, risk management services and transactional services such as syndication, refinancing, construction supervisory and disposition. In addition, we are reimbursed for our costs in connection with the management of the unconsolidated real estate partnerships. These fees and reimbursements for the years ended December 31, 2008, 2007 and 2006 totaled $74.3 million, $42.1 million and $17.4 million, respectively. The total accounts receivable due from affiliates was $33.5 million, net of allowance for doubtful accounts of $5.6 million, at December 31, 2008, and $35.0 million, net of allowance for doubtful accounts of $5.3 million, at December 31, 2007.
 
Additionally, we earn interest income on notes from real estate partnerships in which we are the general partner and hold either par value or discounted notes. During the year ended December 31, 2008, we did not recognize a significant amount of interest income on par value notes from unconsolidated real estate partnerships. Interest income earned on par value notes from unconsolidated real estate partnerships totaled $8.1 million and $4.0 million for the years ended December 31, 2007 and 2006, respectively. For the year ended December 31, 2008, we recognized a net reduction of accretion income of $2.7 million, due primarily to revisions in estimates of the timing and amount of payment on certain discounted notes from affiliated real estate partnerships. Accretion income earned on discounted notes from affiliated real estate partnerships totaled $3.4 million and $6.7 million for the years ended December 31, 2007 and 2006, respectively. See Note 5 for additional information on notes receivable from unconsolidated real estate partnerships.

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NOTE 17 — Recent Accounting Developments
 
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R), Business Combinations — a replacement of FASB Statement No. 141, or SFAS 141(R). SFAS 141(R) applies to all transactions or events in which an entity obtains control of one or more businesses, including those effected without the transfer of consideration, for example by contract or through a lapse of minority veto rights. SFAS 141(R) requires the acquiring entity in a business combination to recognize the full fair value of assets acquired and liabilities assumed in the transaction (whether a full or partial acquisition); establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; requires expensing of most transaction and restructuring costs; and requires the acquirer to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial effect of the business combination. SFAS 141(R) is effective for fiscal years beginning after December 15, 2008, and early adoption is not permitted.
 
We believe most operating real estate assets meet the revised definition of a business under SFAS 141(R). Accordingly, beginning in 2009, we will expense transaction costs associated with acquisitions of operating real estate or interests therein when we consolidate the asset. SFAS 141(R) does not provide implementation guidance regarding the treatment of acquisition costs incurred prior to December 31, 2008, for acquisitions that do not close until 2009 when SFAS 141(R) is effective. The SEC has indicated any of the following three transition methods are acceptable, provided that the method chosen is disclosed and applied consistently:
 
  1)  expense acquisition costs in 2008 when it is probable that the acquisition will not close in 2008;
 
  2)  expense acquisition costs January 1, 2009, upon adoption of SFAS 141(R); or
 
  3)  give retroactive treatment to the acquisition costs January 1, 2009, upon adoption of SFAS 141(R), by retroactively adjusting prior periods to record acquisition costs in the prior periods in which they were incurred, in accordance with Statement of Financial Accounting Standards No. 154, Accounting Changes and Error Corrections.
 
We elected to apply the third method and accordingly expect to retroactively adjust our 2008 results of operations by approximately $3.5 million in our 2009 financial statements. We do not anticipate that the remaining provisions of SFAS 141(R) will have a material effect on our financial statements.
 
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51, or SFAS 160. SFAS 160 clarifies that a noncontrolling interest in a subsidiary is an ownership interest in a consolidated entity which should be reported as equity in the parent’s consolidated financial statements. SFAS 160 requires a reconciliation of the beginning and ending balances of equity attributable to noncontrolling interests and disclosure, on the face of the consolidated income statements, of those amounts of consolidated net income attributable to the noncontrolling interests, eliminating the past practice of reporting these amounts as an adjustment in arriving at consolidated net income. SFAS 160 requires a parent to recognize a gain or loss in net income when a subsidiary is deconsolidated and requires the parent to attribute to noncontrolling interest their share of losses even if such attribution results in a deficit noncontrolling interest balance within the parent’s equity accounts. SFAS 160 is effective for fiscal years beginning after December 15, 2008, and requires retroactive application of the presentation and disclosure requirements for all periods presented. Early adoption is not permitted.
 
Upon adoption of SFAS 160, we will reclassify the balances related to minority interest in consolidated real estate partnerships and the portion of minority interest in the Aimco Operating Partnership related to the Aimco Operating Partnership’s common OP Units and High Performance Units into our consolidated equity accounts. At December 31, 2008, the carrying amount of minority interest in consolidated real estate partnerships was $348.5 million and the carrying amount for minority interest in the Aimco Operating Partnership attributable to common OP Units and High Performance Units was zero, due to cash distributions in excess of the positive balances in those minority partners’ accounts. The minority interest in Aimco Operating Partnership attributable to the Aimco Operating Partnership’s Preferred Partnership Units of $88.1 million at December 31, 2008, will remain classified between liabilities and equity pursuant to the SEC’s Accounting Series Release No. 268 Presentation in Financial Statements of “Redeemable Preferred Stock.” Additionally, beginning in 2009, we will no longer record a charge related to cash distributions to minority interests in excess of the carrying amount of such minority interests.


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Historically these charges have been reported in our consolidated statements of income as deficit distributions and recoveries of deficit distributions to minority partners (included within income from discontinued operations) and totaled $43.0 million and $30.1 million, respectively, during the year ended December 31, 2008. Additionally, we will attribute losses to noncontrolling interests even if such attribution results in a deficit noncontrolling interest balance within our equity accounts. During the year ended December 31, 2008, we did not allocate $9.0 million in losses to minority interests in consolidated real estate partnerships with deficit balances.
 
In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133, or SFAS 161. SFAS 161 expands the disclosure requirements of SFAS 133 to require qualitative disclosures about the objectives and strategies for using derivatives, quantitative disclosures about the fair value of gains and losses on derivative instruments and disclosures on credit-risk-related contingent features in derivative contracts. SFAS 161 is effective for fiscal years beginning after November 15, 2008, with early adoption encouraged. At initial adoption, SFAS 161 also encourages, but does not require, comparative disclosures for earlier periods. We do not anticipate SFAS 161 will have a material effect on our financial statements.
 
In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities, or the FSP. The FSP clarifies that unvested share-based payment awards that participate in dividends similar to shares of common stock or common partnership units should be treated as participating securities. The FSP may affect the computation of basic earnings per share for unvested restricted stock awards and shares purchased pursuant to officer stock loans, which serve as collateral for such loans, both of which entitle the holders to dividends. The FSP is effective for fiscal years beginning after December 15, 2008, and quarters within those years. We do not anticipate the FSP will have a material effect on our financial statements.
 
NOTE 18 — Business Segments
 
Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information, or SFAS 131, requires that segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing such segments’ performance. Several members of our executive management team comprise our chief operating decision maker, as defined by SFAS 131, and use various generally accepted industry financial measures to assess the performance of the business, including: Net Asset Value, which is the estimated fair value of our assets, net of debt, or NAV; Funds From Operations, or FFO; Adjusted Funds From Operations, or AFFO, which is FFO less spending for Capital Replacements; same store property operating results; net operating income; net operating income less spending for capital replacements, or Free Cash Flow; changes in NAV plus cash dividends, or Economic Income; financial coverage ratios; and leverage as shown on our balance sheet. The chief operating decision maker emphasizes net operating income as a key measurement of segment profit or loss. Segment net operating income is generally defined as segment revenues less direct segment operating expenses.
 
We have two reportable segments: real estate and investment management.
 
Real Estate Segment
 
Our real estate segment owns and operates properties that generate rental and other property-related income through the leasing of apartment units to a diverse base of residents. Our real estate segment’s net operating income also includes income from property management services performed for unconsolidated partnerships and unrelated parties.
 
Investment Management Segment
 
Our investment management segment includes portfolio strategy, capital allocation, joint ventures, tax credit syndication, acquisitions, dispositions and other transaction activities. Within our owned portfolio, we refer to these activities as “Portfolio Management,” and their benefit is seen in property operating results and in investment gains. For affiliated partnerships, we refer to these activities as “Asset Management,” for which we are separately compensated through fees paid by third party investors. The expenses of this segment consist primarily of the costs


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of departments that perform these activities. These activities are conducted in part by our taxable subsidiaries, and the related net operating income may be subject to income taxes. Our investment management segment’s operating results also include gains on dispositions of non-depreciable assets, accretion of loan discounts resulting from transactional activities and certain other income in arriving at income (loss) from continuing operations for the segment.
 
The following tables present the revenues, net operating income (loss) and income (loss) from continuing operations of our real estate and investment management segments for the years ended December 31, 2008, 2007 and 2006 (in thousands):
 
                                 
                Corporate
 		       
                Not Allocated
 		       
          Investment
 		    to Segments
 		       
    Real Estate
 		    Management
 		    and Certain
 		       
    Segment     Segment     Eliminations     Total  
 
Year Ended December 31, 2008:
                               
Rental and other property revenues
  $ 1,350,950     $ —     $ —     $ 1,350,950  
Property management revenues, primarily from affiliates
    6,345       —       —       6,345  
Asset management and tax credit revenues
    —       101,225       (602 )     100,623  
                                 
Total revenues
    1,357,295       101,225       (602 )     1,457,918  
                                 
Property operating expenses
    626,001       —       —       626,001  
Property management expenses
    5,385       —       —       5,385  
Investment management expenses
    —       21,389       —       21,389  
Depreciation and amortization(1)
    —       —       458,595       458,595  
General and administrative expenses
    —       —       99,040       99,040  
Other expenses, net
    —       —       19,939       19,939  
Restructuring costs
    —       —       22,802       22,802  
                                 
Total operating expenses
    631,386       21,389       600,376       1,253,151  
                                 
Net operating income (loss)
    725,909       79,836       (600,978 )     204,767  
Other items included in continuing operations(2)
    —       (2,653 )     (331,412 )     (334,065 )
                                 
Income (loss) from continuing operations
  $ 725,909     $ 77,183     $ (932,390 )   $ (129,298 )
                                 
 


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          Investment
 		    Corporate
 		       
    Real Estate
 		    Management
 		    Not Allocated
 		       
    Segment     Segment     to Segments     Total  
 
Year Ended December 31, 2007:
                               
Rental and other property revenues
  $ 1,296,142     $ —     $ —     $ 1,296,142  
Property management revenues, primarily from affiliates
    6,923       —       —       6,923  
Asset management and tax credit revenues
    —       73,755       —       73,755  
                                 
Total revenues
    1,303,065       73,755       —       1,376,820  
                                 
Property operating expenses
    596,902       —       —       596,902  
Property management expenses
    6,678       —       —       6,678  
Investment management expenses
    —       20,514       —       20,514  
Depreciation and amortization(1)
    —       —       403,786       403,786  
General and administrative expenses
    —       —       90,667       90,667  
Other expenses, net
    —       —       16,518       16,518  
                                 
Total operating expenses
    603,580       20,514       510,971       1,135,065  
                                 
Net operating income (loss)
    699,485       53,241       (510,971 )     241,755  
Other items included in continuing operations(2)
    —       7,312       (302,251 )     (294,939 )
                                 
Income (loss) from continuing operations
  $ 699,485     $ 60,553     $ (813,222 )   $ (53,184 )
                                 
 
                                 
          Investment
 		    Corporate
 		       
    Real Estate
 		    Management
 		    Not Allocated
 		       
    Segment     Segment     to Segments     Total  
 
Year Ended December 31, 2006:
                               
Rental and other property revenues
  $ 1,212,958     $ —     $ —     $ 1,212,958  
Property management revenues, primarily from affiliates
    12,312       —       —       12,312  
Asset management and tax credit revenues
    —       48,893       —       48,893  
                                 
Total revenues
    1,225,270       48,893       —       1,274,163  
                                 
Property operating expenses
    549,716       —       —       549,716  
Property management expenses
    6,289       —       —       6,289  
Investment management expenses
    —       14,742       —       14,742  
Depreciation and amortization(1)
    —       —       368,783       368,783  
General and administrative expenses
    —       —       91,571       91,571  
Other expenses, net
    —       —       12,951       12,951  
                                 
Total operating expenses
    556,005       14,742       473,305       1,044,052  
                                 
Net operating income (loss)
    669,265       34,151       (473,305 )     230,111  
Other items included in continuing operations(2)
    —       9,220       (289,435 )     (280,215 )
                                 
Income (loss) from continuing operations
  $ 669,265     $ 43,371     $ (762,740 )   $ (50,104 )
                                 
 
 
(1) Our chief operating decision maker assesses the performance of real estate using, among other measures, net operating income, excluding depreciation and amortization. Accordingly, we do not allocate depreciation and amortization to the real estate segment.
 
(2) Other items in continuing operations for the investment management segment include accretion income recognized on discounted notes receivable, other income items and income taxes associated with transactional activities. Other items in continuing operations not allocated to segments include: (i) interest income and

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expense; (ii) recoveries of, or provisions for, losses on notes receivable, provision for operating real estate impairment losses and provision for impairment losses on real estate development assets; (iii) deficit distributions to minority partners; (iv) equity in losses of unconsolidated real estate partnerships; (v) gain (losses) on dispositions of unconsolidated real estate and other; and (vi) minority interests.
 
The assets of our reportable segments are as follows (in thousands):
 
                 
    2008     2007  
 
Total assets for reportable segments(1)
  $ 9,030,086     $ 10,307,246  
Corporate and other assets
    373,071       299,286  
                 
Total consolidated assets
  $ 9,403,157     $ 10,606,532  
                 
 
 
(1) Total assets for reportable segments primarily relate to the real estate segment.
 
Our capital expenditures primarily relate to the real estate segment and totaled $665.2 million, $689.7 million and $512.6 million for the years ended December 31, 2008, 2007 and 2006, respectively.


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                                              December 31, 2008        
                            (2)
 		    (3)
 		                            Total
 		       
        (1)
 		                  Initial Cost     Cost Capitalized
 		                      Accumulated
 		    Cost
 		       
    Property
 		  Date
 		      Year
 		    Number
 		          Buildings and
 		    Subsequent to
 		          Buildings and
 		          Depreciation
 		    Net of
 		       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Conventional Properties:
                                                                                                   
100 Forest Place
  High Rise   Dec-97   OakPark, IL     1987       234       2,664       18,815       4,071       2,664       22,886       25,550       (7,928 )     17,622       28,152  
1582 First Avenue
  High Rise   Mar-05   New York, NY     1900       17       4,250       752       207       4,281       928       5,209       (183 )     5,026       2,701  
173 E. 90th Street
  High Rise   May-04   New York, NY     1910       72       11,773       4,535       1,761       12,067       6,002       18,069       (1,078 )     16,991       9,049  
182-188 Columbus Avenue
  Mid Rise   Feb-07   New York, NY     1910       32       17,187       3,300       2,953       19,123       4,316       23,439       (469 )     22,970       13,471  
204-206 West 133rd Street
  Mid Rise   Jun-07   New York, NY     1910       44       3,291       1,450       1,898       4,352       2,287       6,639       (175 )     6,464       3,132  
2232-2240 Seventh Avenue
  Mid Rise   Jun-07   New York, NY     1910       24       2,863       3,785       886       3,106       4,429       7,535       (289 )     7,246       2,972  
2247-2253 Seventh Avenue
  Mid Rise   Jun-07   New York, NY     1910       35       6,787       3,335       1,345       7,287       4,180       11,467       (349 )     11,118       5,483  
2252-2258 Seventh Avenue
  Mid Rise   Jun-07   New York, NY     1910       35       3,623       4,504       1,118       4,012       5,233       9,245       (344 )     8,901       5,125  
2300-2310 Seventh Avenue
  Mid Rise   Jun-07   New York, NY     1910       63       8,623       6,964       4,907       10,417       10,076       20,493       (682 )     19,811       9,896  
236 — 238 East 88th Street
  High Rise   Jan-04   New York, NY     1900       43       8,751       2,914       1,192       8,820       4,036       12,856       (911 )     11,945       7,014  
237-239 Ninth Avenue
  High Rise   Mar-05   New York, NY     1900       36       8,430       1,866       586       8,494       2,388       10,882       (450 )     10,432       5,286  
240 West 73rd Street, LLC
  High Rise   Sep-04   New York, NY     1900       200       68,006       12,140       3,009       68,109       15,045       83,154       (2,075 )     81,079       30,874  
2484 Seventh Avenue
  Mid Rise   Jun-07   New York, NY     1921       23       2,384       1,726       500       2,601       2,009       4,610       (150 )     4,460       2,472  
2900 on First Apartments
  Mid Rise   Oct-08   Seattle, WA     1989       135       5,480       31,053       —       5,535       30,998       36,533       (129 )     36,404       21,019  
306 East 89th Street
  High Rise   Jul-04   New York, NY     1930       20       2,659       1,006       160       2,681       1,144       3,825       (276 )     3,549       1,929  
311 & 313 East 73rd Street
  Mid Rise   Mar-03   New York, NY     1904       34       5,635       1,609       539       5,678       2,104       7,782       (760 )     7,022       2,815  
322-324 East 61st Street
  High Rise   Mar-05   New York, NY     1900       40       6,319       2,224       666       6,372       2,837       9,209       (518 )     8,691       3,752  
3400 Avenue of the Arts
  Mid Rise   Mar-02   Costa Mesa, CA     1987       770       55,223       65,506       69,101       57,240       132,590       189,830       (20,739 )     169,091       125,000  
452 East 78th Street
  High Rise   Jan-04   New York, NY     1900       12       1,966       608       274       1,982       866       2,848       (187 )     2,661       1,632  
464-466 Amsterdam & 200-210 W. 83rd Street
  Mid Rise   Feb-07   New York, NY     1910       72       23,677       7,101       3,321       25,552       8,547       34,099       (807 )     33,292       19,679  
510 East 88th Street
  High Rise   Jan-04   New York, NY     1900       20       3,137       1,002       262       3,163       1,238       4,401       (246 )     4,155       2,685  
514-516 East 88th Street
  High Rise   Mar-05   New York, NY     1900       36       6,230       2,168       483       6,282       2,599       8,881       (454 )     8,427       4,659  
656 St. Nicholas Avenue
  Mid Rise   Jun-07   New York, NY     1920       30       2,731       1,636       2,623       3,576       3,415       6,991       (220 )     6,771       2,374  
759 St. Nicholas Avenue
  Mid Rise   Oct-07   New York, NY     1920       9       682       535       519       988       749       1,737       (38 )     1,699       545  
865 Bellevue
  Garden   Jul-00   Nashville, TN     1972       326       1,526       10,158       27,549       1,526       37,707       39,233       (9,959 )     29,274       11,078  
Anchorage Apartments
  Garden   Nov-96   League City, TX     1985       264       1,155       7,172       3,606       1,155       10,779       11,934       (3,639 )     8,295       7,512  
Arbors (Grovetree), The
  Garden   Oct-97   Tempe, AZ     1967       200       1,092       6,208       2,651       1,092       8,860       9,952       (3,597 )     6,355       2,397  
Arbours Of Hermitage, The
  Garden   Jul-00   Hermitage, TN     1972       350       1,627       12,455       6,557       1,627       19,012       20,639       (9,148 )     11,491       10,447  
Ashford, The
  Garden   Dec-95   Atlanta, GA     1968       221       2,771       8,366       25,126       2,771       33,492       36,263       (10,406 )     25,857       7,997  
Atriums of Plantation
  Mid Rise   Aug-98   Plantation, FL     1979       210       1,807       10,385       2,435       1,807       12,820       14,627       (4,603 )     10,024       6,090  
Auburn Glen
  Garden   Dec-06   Jacksonville, FL     1974       251       7,483       8,191       2,909       7,670       10,913       18,583       (1,134 )     17,449       10,051  
Autumn Run (IL)
  Garden   Oct-02   Naperville, IL     1984       320       2,048       16,889       3,673       2,048       20,562       22,610       (8,854 )     13,756       18,139  
BaLaye
  Garden   Apr-06   Tampa, FL     2002       324       10,329       28,800       760       10,608       29,282       39,890       (2,682 )     37,208       23,344  
Bank Lofts
  High Rise   Apr-01   Denver, CO     1920       117       3,525       9,045       1,574       3,525       10,618       14,143       (3,992 )     10,151       7,339  
Barcelona
  Garden   Oct-99   Houston ,TX     1963       127       770       4,250       1,526       770       5,776       6,546       (2,331 )     4,215       2,394  
Bay Parc Plaza
  High Rise   Sep-04   Miami, FL     2000       471       22,680       41,847       3,261       22,680       45,108       67,788       (5,155 )     62,633       46,723  
Bay Ridge at Nashua
  Garden   Jan-03   Nashua, NH     1984       412       3,352       40,713       6,056       3,262       46,858       50,120       (8,466 )     41,654       40,800  
Bayberry Hill Estates
  Garden   Aug-02   Framingham, MA     1971       424       18,915       35,945       8,348       18,916       44,292       63,208       (11,968 )     51,240       26,314  
Bayhead Village
  Garden   Oct-00   Indianapolis, IN     1978       202       1,411       5,139       3,305       1,411       8,444       9,855       (2,939 )     6,916       2,901  
Beech Lake
  Garden   May-99   Durham, NC     1986       345       2,222       12,641       4,605       2,222       17,246       19,468       (6,605 )     12,863       10,500  
Boston Lofts
  High Rise   Apr-01   Denver, CO     1890       158       3,447       20,589       3,002       3,447       23,591       27,038       (8,320 )     18,718       14,744  
Boulder Creek
  Garden   Jul-94   Boulder, CO     1972       221       755       7,730       16,934       755       24,664       25,419       (11,036 )     14,383       12,696  

F-54

Table of Contents

                                                                                                     
                                              December 31, 2008        
                            (2)
 		    (3)
 		                            Total
 		       
        (1)
 		                  Initial Cost     Cost Capitalized
 		                      Accumulated
 		    Cost
 		       
    Property
 		  Date
 		      Year
 		    Number
 		          Buildings and
 		    Subsequent to
 		          Buildings and
 		          Depreciation
 		    Net of
 		       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Brandywine
  Garden   Jul-94   St. Petersburg, FL     1971       477       1,437       12,725       8,312       1,437       21,037       22,474       (12,673 )     9,801       21,393  
Breakers, The
  Garden   Oct-98   Daytona Beach, FL     1985       208       1,008       5,507       2,974       1,008       8,481       9,489       (3,446 )     6,043       6,540  
Briarwest
  Garden   Oct-99   Houston, TX     1970       380       2,459       13,868       5,218       2,459       19,086       21,545       (6,551 )     14,994       8,516  
Briarwood
  Garden   Oct-99   Houston, TX     1970       351       2,033       11,857       4,047       2,033       15,904       17,937       (5,459 )     12,478       7,087  
Bridgeview
  Garden   Sep-00   Tampa, FL     1988       348       7,976       13,499       7,432       7,976       20,931       28,907       (6,098 )     22,809       13,500  
Broadcast Center
  Garden   Mar-02   Los Angeles, CA     1990       279       27,603       41,244       28,054       29,407       67,495       96,902       (10,998 )     85,904       55,875  
Broadmoor Ridge
  Garden   Dec-97   Colorado Springs, CO     1974       200       460       2,917       11,807       460       14,725       15,185       (4,329 )     10,856       6,832  
Brook Run
  Garden   May-98   Arlington Heights, IL     1985       182       2,245       12,936       2,232       2,245       15,168       17,413       (6,746 )     10,667       11,600  
Brookdale Lakes
  Garden   May-98   Naperville, IL     1990       200       2,709       15,346       2,222       2,709       17,567       20,276       (7,013 )     13,263       9,530  
Buena Vista
  Mid Rise   Jan-06   Pasadena, CA     1973       92       9,693       6,818       1,016       9,693       7,834       17,527       (341 )     17,186       13,300  
Burke Shire Commons
  Garden   Mar-01   Burke, VA     1986       360       4,867       23,617       3,531       4,867       27,148       32,015       (9,222 )     22,793       45,303  
Calhoun Beach Club
  High Rise   Dec-98   Minneapolis, MN     1928/1998       332       11,708       73,334       45,046       11,708       118,380       130,088       (35,485 )     94,603       49,610  
Canterbury Green Apartments
  Garden   Dec-99   Fort Wayne, IN     1979       1,988       13,659       73,115       24,363       13,659       97,478       111,137       (40,955 )     70,182       53,599  
Canyon Terrace
  Garden   Mar-02   Saugus, CA     1984       130       7,300       6,602       5,513       7,508       11,907       19,415       (2,811 )     16,604       14,750  
Carriage Hill
  Garden   Jul-00   East Lansing, MI     1972       143       876       9,123       1,868       875       10,991       11,866       (5,156 )     6,710       5,360  
Casa del Mar at Baymeadows
  Garden   Oct-06   Jacksonville, FL     1984       144       4,902       10,562       1,318       5,039       11,743       16,782       (1,054 )     15,728       9,566  
Castle Court
  High Rise   May-04   Fall River, MA     1974       240       15,239       7,850       3,453       15,244       11,298       26,542       (3,266 )     23,276       9,910  
Cedar Rim
  Garden   Apr-00   New Castle, WA     1980       104       751       5,043       17,109       751       22,152       22,903       (6,396 )     16,507       3,944  
Center Square
  High Rise   Oct-99   Doylestown, PA     1975       350       582       4,190       2,625       582       6,815       7,397       (2,750 )     4,647       15,645  
Central Park Townhomes
  Town Home   Feb-07   Park Forest, IL     1947       220       3,699       12,384       2,175       3,747       14,511       18,258       (1,098 )     17,160       —  
Charleston Landing
  Garden   Sep-00   Brandon, FL     1985       300       7,488       8,656       7,546       7,488       16,203       23,691       (4,435 )     19,256       10,750  
Chatham Harbor
  Garden   Oct-99   Altamonte Springs, FL     1985       324       2,288       13,068       3,522       2,288       16,590       18,878       (5,343 )     13,535       7,314  
Chelsea Ridge Apartments
  Garden   Apr-01   Wappingers Falls, NY     1966       835       10,403       33,000       46,331       10,403       79,331       89,734       (28,540 )     61,194       32,955  
Chesapeake Landing I
  Garden   Sep-00   Aurora, IL     1986       416       15,800       16,875       4,650       15,800       21,524       37,324       (6,774 )     30,550       24,570  
Chesapeake Landing II
  Garden   Mar-01   Aurora, IL     1987       184       1,969       7,980       3,104       1,969       11,084       13,053       (4,190 )     8,863       6,237  
Chestnut Hall
  High Rise   Oct-06   Philadelphia, PA     1923       315       12,047       14,299       2,567       12,338       16,576       28,914       (3,648 )     25,266       19,006  
Chestnut Hill (PA)
  Garden   Apr-00   Philadelphia, PA     1963       821       6,463       49,315       44,995       6,463       94,310       100,773       (29,647 )     71,126       51,500  
Chimneys of Cradle Rock
  Garden   Jun-04   Columbia, MD     1979       198       2,234       8,107       188       2,040       8,489       10,529       (1,902 )     8,627       16,966  
Citrus Grove
  Garden   Jun-98   Redlands, CA     1985       198       1,118       6,642       2,028       1,118       8,670       9,788       (3,612 )     6,176       3,502  
Colonnade Gardens (Ferntree)
  Garden   Oct-97   Phoenix, AZ     1973       196       766       4,346       2,762       766       7,108       7,874       (3,156 )     4,718       1,776  
Colony at Kenilworth
  Garden   Oct-99   Towson, MD     1966       383       2,403       18,798       9,099       2,570       27,730       30,300       (13,182 )     17,118       24,738  
Columbus Avenue
  Mid Rise   Sep-03   New York, NY     1880       59       35,472       9,450       3,172       35,527       12,567       48,094       (3,682 )     44,412       26,274  
Country Lakes I
  Garden   Apr-01   Naperville, IL     1982       240       8,512       10,832       3,050       8,512       13,882       22,394       (4,528 )     17,866       14,736  
Country Lakes II
  Garden   May-97   Naperville, IL     1986       400       5,165       29,430       5,198       5,165       34,627       39,792       (12,864 )     26,928       25,225  
Covington Pointe
  Garden   Oct-05   Dallas, TX     1984       180       1,373       9,500       1,332       1,373       10,832       12,205       (6,274 )     5,931       4,796  
Creekside
  Garden   Jan-00   Denver, CO     1974       328       1,743       14,072       2,725       1,980       16,560       18,540       (7,222 )     11,318       14,549  
Creekside (CA)
  Garden   Mar-02   Simi Valley, CA     1985       397       24,595       18,818       6,268       25,245       24,435       49,680       (6,897 )     42,783       40,670  
Crescent at West Hollywood, The
  Mid Rise   Mar-02   West Hollywood, CA     1982       130       15,382       10,215       12,831       15,765       22,663       38,428       (5,960 )     32,468       24,195  
Crossroads
  Garden   May-98   Phoenix, AZ     1982       316       2,180       12,661       3,267       2,180       15,928       18,108       (7,474 )     10,634       4,940  
Crosswood
  Garden   Jan-06   Citrus Heights, CA     1976       180       6,944       8,169       732       6,944       8,901       15,845       (510 )     15,335       13,000  
Deer Creek
  Garden   Apr-00   Plainsboro, NJ     1975       288       2,404       17,096       5,012       2,404       22,108       24,512       (9,655 )     14,857       23,235  
Deercross (IN)
  Garden   Oct-00   Indianapolis, IN     1979       372       3,175       10,426       6,155       3,175       16,582       19,757       (6,040 )     13,717       10,700  
Defoors Crossing
  Garden   Jan-06   Atlanta, GA     1987       60       348       957       300       348       1,258       1,606       (1,134 )     472       —  
Doral Oaks
  Garden   Dec-97   Temple Terrace, FL     1967       252       2,095       3,943       14,471       2,095       18,414       20,509       (7,066 )     13,443       3,705  
Douglaston Villas and Townhomes
  Garden   Aug-99   Altamonte Springs, FL     1979       234       1,666       9,353       6,498       1,666       15,851       17,517       (5,121 )     12,396       10,632  
Dunes Apartment Homes, The
  Garden   Oct-99   Indian Harbour Beach, FL     1963       200       1,211       5,901       3,071       1,211       8,972       10,183       (4,396 )     5,787       3,152  
Elm Creek
  Mid Rise   Dec-97   Elmhurst, IL     1986       372       5,534       30,830       17,156       5,628       47,892       53,520       (15,471 )     38,049       30,548  
Evanston Place
  High Rise   Dec-97   Evanston, IL     1988       189       3,232       25,546       4,237       3,232       29,783       33,015       (9,116 )     23,899       21,700  
Fairlane East
  Garden   Jan-01   Dearborn, MI     1973       244       6,550       11,711       4,837       6,550       16,548       23,098       (7,549 )     15,549       10,200  


F-55

Table of Contents

                                                                                                     
                                              December 31, 2008        
                            (2)
 		    (3)
 		                            Total
 		       
        (1)
 		                  Initial Cost     Cost Capitalized
 		                      Accumulated
 		    Cost
 		       
    Property
 		  Date
 		      Year
 		    Number
 		          Buildings and
 		    Subsequent to
 		          Buildings and
 		          Depreciation
 		    Net of
 		       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Fairway
  Garden   Jan-00   Plano, TX     1978       256       2,961       5,137       5,342       2,961       10,479       13,440       (4,951 )     8,489       8,982  
Farmingdale
  Mid Rise   Oct-00   Darien, IL     1975       240       11,763       15,174       9,098       11,763       24,272       36,035       (7,561 )     28,474       18,090  
Ferntree
  Garden   Mar-01   Phoenix, AZ     1968       219       2,078       13,752       2,846       2,079       16,598       18,677       (5,463 )     13,214       7,133  
Fisherman’s Landing
  Garden   Dec-97   Bradenton, FL     1984       200       1,276       7,170       6,915       1,276       14,085       15,361       (4,370 )     10,991       7,966  
Fisherman’s Landing
  Garden   Sep-98   Temple Terrace, FL     1986       256       1,643       9,446       3,506       1,643       12,952       14,595       (5,020 )     9,575       11,937  
Fisherman’s Village
  Garden   Jan-06   Indianapolis, IN     1982       328       964       11,129       2,424       964       13,553       14,517       (6,489 )     8,028       6,350  
Fisherman’s Wharf Apartments
  Garden   Nov-96   Clute, TX     1981       360       1,257       7,584       4,471       1,257       12,055       13,312       (5,115 )     8,197       2,195  
Flamingo Towers
  High Rise   Sep-97   Miami, FL     1960/2005       1,127       32,191       38,399       216,641       32,239       254,993       287,232       (76,989 )     210,243       158,000  
Forestlake Apartments
  Garden   Mar-07   Daytona Beach, FL     1982       120       3,691       4,320       361       3,860       4,512       8,372       (369 )     8,003       4,807  
Four Quarters Habitat
  Garden   Jan-06   Miami, FL     1976       336       1,532       23,615       12,385       1,528       36,004       37,532       (15,182 )     22,350       12,317  
Fox Run (NJ)
  Garden   Jan-00   Plainsboro, NJ     1973       776       8,029       51,843       15,513       8,022       67,363       75,385       (22,981 )     52,404       27,596  
Foxchase
  Garden   Dec-97   Alexandria, VA     1947       2,113       15,419       96,062       29,828       15,496       125,813       141,309       (50,071 )     91,238       188,012  
Franklin Oaks
  Garden   May-98   Franklin, TN     1987       468       3,936       22,832       8,664       3,936       31,497       35,433       (12,308 )     23,125       12,620  
Georgetown (MA)
  Garden   Aug-02   Framingham, MA     1964       207       12,351       13,168       1,991       12,351       15,159       27,510       (3,920 )     23,590       13,442  
Glen at Forestlake, The
  Garden   Mar-07   Daytona Beach, FL     1982       26       897       862       138       933       963       1,896       (81 )     1,815       1,055  
Glenbridge Manors
  Garden   Sep-03   Cincinnati, OH     1978       273       1,030       17,447       11,402       1,031       28,849       29,880       (6,557 )     23,323       19,283  
Granada
  Mid Rise   Aug-02   Framingham, MA     1958       72       4,577       4,058       840       4,577       4,897       9,474       (1,711 )     7,763       4,497  
Grand Pointe
  Garden   Dec-99   Columbia, MD     1974       325       2,715       16,771       4,912       2,715       21,683       24,398       (7,159 )     17,239       17,267  
Greens (AZ)
  Garden   Jul-94   Chandler, AZ     2000       324       2,303       713       27,043       2,303       27,755       30,058       (10,169 )     19,889       13,564  
Greenspoint Apartments
  Garden   Jan-00   Phoenix, AZ     1985       336       2,176       14,881       12,188       2,176       27,069       29,245       (10,058 )     19,187       16,668  
Greentree
  Garden   Dec-96   Carrollton, TX     1983       365       1,774       9,440       5,449       1,774       14,889       16,663       (6,284 )     10,379       7,166  
Hampden Heights
  Garden   Jan-00   Denver, CO     1973       376       2,023       14,298       4,040       2,251       18,110       20,361       (8,047 )     12,314       14,010  
Harbor Town at Jacaranda
  Garden   Sep-00   Plantation, FL     1988       280       9,776       10,643       6,257       9,776       16,900       26,676       (4,529 )     22,147       11,800  
Harbour, The
  Garden   Mar-01   Melbourne, FL     1987       162       4,108       3,563       2,700       4,108       6,263       10,371       (2,502 )     7,869       —  
Heritage Park at Alta Loma
  Garden   Jan-01   Alta Loma, CA     1986       232       1,200       6,428       3,301       1,200       9,730       10,930       (3,271 )     7,659       7,264  
Heritage Park Escondido
  Garden   Oct-00   Escondido, CA     1986       196       1,055       7,578       1,242       1,055       8,820       9,875       (3,764 )     6,111       7,299  
Heritage Park Livermore
  Garden   Oct-00   Livermore, CA     1988       167       1,039       9,185       1,177       1,039       10,361       11,400       (4,260 )     7,140       7,432  
Heritage Park Montclair
  Garden   Mar-01   Montclair, CA     1985       144       690       4,149       865       690       5,014       5,704       (1,620 )     4,084       4,620  
Heritage Village Anaheim
  Garden   Oct-00   Anaheim, CA     1986       196       1,835       8,554       1,471       1,835       10,025       11,860       (4,361 )     7,499       8,858  
Hidden Cove (CA)
  Garden   Jul-98   Escondido, CA     1985       334       3,043       17,615       6,606       3,043       24,222       27,265       (9,016 )     18,249       14,966  
Hidden Cove II
  Garden   Jul-07   Escondido, CA     1986       118       12,730       6,530       5,092       12,849       11,504       24,353       (733 )     23,620       12,809  
Hidden Harbour
  Garden   Oct-02   Melbourne, FL     1985       216       984       8,050       1,892       984       9,942       10,926       (2,888 )     8,038       6,748  
Highcrest Townhomes
  Town Home   Jan-03   Woodridge, IL     1968       176       3,045       13,452       1,118       3,045       14,571       17,616       (5,487 )     12,129       11,019  
Highland Ridge
  Garden   Sep-04   Atlanta, GA     1984       219       1,162       6,997       4,879       1,179       11,859       13,038       (4,597 )     8,441       6,100  
Hillcreste (CA)
  Garden   Mar-02   Los Angeles, CA     1989       315       33,755       47,216       24,452       35,862       69,561       105,423       (16,335 )     89,088       58,559  
Hillmeade
  Garden   Nov-94   Nashville, TN     1985       288       2,872       16,069       12,479       2,872       28,549       31,421       (15,814 )     15,607       18,660  
Hills at the Arboretum, The
  Garden   Oct-97   Austin, TX     1983       327       1,367       7,764       14,358       1,367       22,122       23,489       (7,102 )     16,387       —  
Homestead
  Garden   Apr-05   East Lansing, MI     1986       168       825       9,252       512       825       9,763       10,588       (3,823 )     6,765       3,549  
Horizons West Apartments
  Mid Rise   Dec-06   Pacifica, CA     1970       78       8,763       6,376       1,105       8,887       7,357       16,244       (658 )     15,586       5,494  
Hudson Harbour
  Garden   Apr-07   Poughkeepsie, NY     1980       352       17,640       18,679       851       17,714       19,455       37,169       (1,607 )     35,562       23,318  
Hunt Club (MD)
  Garden   Sep-00   Gaithersburg, MD     1986       336       17,859       13,149       3,426       17,859       16,575       34,434       (5,652 )     28,782       32,160  
Hunt Club (TX)
  Garden   Mar-01   Austin, TX     1987       384       10,342       11,920       7,872       10,342       19,792       30,134       (8,238 )     21,896       18,361  
Hunter’s Chase (VA)
  Garden   Jan-01   Midlothian, VA     1985       320       7,987       7,863       3,007       7,987       10,871       18,858       (2,870 )     15,988       16,630  
Hunter’s Crossing (VA)
  Garden   Apr-01   Leesburg, VA     1967       164       2,244       7,763       3,782       2,244       11,544       13,788       (5,352 )     8,436       7,000  
Hunters Glen IV
  Garden   Oct-99   Plainsboro, NJ     1976       264       2,264       15,036       4,552       2,264       19,588       21,852       (8,798 )     13,054       20,501  
Hunters Glen V
  Garden   Oct-99   Plainsboro, NJ     1977       304       2,735       18,079       4,915       2,735       22,994       25,729       (10,270 )     15,459       24,504  
Hunters Glen VI
  Garden   Oct-99   Plainsboro, NJ     1977       328       2,418       16,083       5,744       2,418       21,827       24,245       (10,554 )     13,691       25,504  
Huntington Athletic Club
  Garden   Oct-99   Morrisville, NC     1986       212       1,650       11,265       3,315       1,650       14,580       16,230       (7,165 )     9,065       7,549  
Hyde Park Tower
  High Rise   Oct-04   Chicago, IL     1990       155       4,683       14,928       1,839       4,731       16,719       21,450       (2,207 )     19,243       13,569  
Independence Green
  Garden   Jan-06   Farmington Hills, MI     1960       981       10,293       24,830       19,287       10,156       44,254       54,410       (10,525 )     43,885       28,121  


F-56

Table of Contents

                                                                                                     
                                              December 31, 2008        
                            (2)
 		    (3)
 		                            Total
 		       
        (1)
 		                  Initial Cost     Cost Capitalized
 		                      Accumulated
 		    Cost
 		       
    Property
 		  Date
 		      Year
 		    Number
 		          Buildings and
 		    Subsequent to
 		          Buildings and
 		          Depreciation
 		    Net of
 		       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Indian Oaks
  Garden   Mar-02   Simi Valley, CA     1986       254       23,927       15,801       3,037       24,523       18,242       42,765       (5,029 )     37,736       33,600  
Island Club (Beville)
  Garden   Oct-00   Daytona Beach, FL     1986       204       6,086       8,571       1,833       6,087       10,404       16,491       (3,595 )     12,896       8,440  
Island Club (CA)
  Garden   Oct-00   Oceanside, CA     1986       592       18,027       28,654       10,560       18,027       39,214       57,241       (13,272 )     43,969       37,664  
Island Club (Palm Aire)
  Garden   Oct-00   Pomano Beach, FL     1988       260       7,615       7,652       7,292       8,336       14,224       22,560       (4,323 )     18,237       11,835  
Key Towers
  High Rise   Apr-01   Alexandria, VA     1964       140       1,526       7,050       3,070       1,526       10,121       11,647       (4,130 )     7,517       10,900  
Knolls, The
  Garden   Jul-02   Colorado Springs, CO     1972       262       3,122       13,178       10,457       3,122       23,635       26,757       (12,367 )     14,390       7,617  
Lake Castleton
  Garden   May-99   Indianapolis, IN     1997       1,261       5,183       29,888       11,574       5,183       41,462       46,645       (16,467 )     30,178       28,746  
Lake Johnson Mews
  Garden   Oct-99   Raleigh, NC     1972       201       1,358       10,022       4,973       1,358       14,996       16,354       (7,753 )     8,601       8,061  
Lakeside (IL)
  Garden   Oct-99   Lisle, IL     1972       568       4,358       29,419       27,070       4,358       56,488       60,846       (17,419 )     43,427       29,608  
Lakeside at Vinings Mountain
  Garden   Jan-00   Atlanta, GA     1983       220       1,459       13,250       14,415       1,459       27,665       29,124       (9,215 )     19,909       6,070  
Lakeside Place
  Garden   Oct-99   Houston, TX     1976       734       4,837       35,474       12,616       4,837       48,090       52,927       (19,984 )     32,943       27,219  
Lakewood
  Garden   Jul-02   Tomball, TX     1979       256       801       8,328       2,920       801       11,248       12,049       (4,982 )     7,067       4,238  
Lamplighter Park
  Garden   Apr-00   Bellevue, WA     1967       174       2,262       9,282       3,811       2,262       13,093       15,355       (5,836 )     9,519       10,700  
Landmark
  Garden   Apr-00   Raleigh, NC     1970       292       1,845       13,621       3,815       2,189       17,093       19,282       (8,811 )     10,471       8,535  
Latrobe
  High Rise   Jan-03   Washington, DC     1980       176       1,305       11,257       15,038       1,305       26,296       27,601       (8,250 )     19,351       22,372  
Lazy Hollow
  Garden   Apr-05   Columbia, MD     1979       178       1,248       13,867       874       1,248       14,741       15,989       (5,519 )     10,470       8,243  
Leahy Square
  Garden   Apr-07   Redwood City, CA     1973       110       15,352       7,909       1,292       15,444       9,109       24,553       (686 )     23,867       15,250  
Lewis Park
  Garden   Jan-06   Carbondale, IL     1972       269       1,420       12,180       2,409       1,417       14,592       16,009       (8,434 )     7,575       4,205  
Lighthouse at Twin Lakes
  Garden   Apr-00   Beltsville, MD     1969       700       3,695       25,543       11,114       3,695       36,657       40,352       (10,346 )     30,006       48,329  
Lincoln Place Garden
  Garden   Oct-04   Venice, CA     1951       755       43,979       10,439       67,108       42,894       78,632       121,526       (1,527 )     119,999       72,500  
Lodge at Chattahoochee, The
  Garden   Oct-99   Atlanta, GA     1970       312       2,320       16,370       21,022       2,320       37,392       39,712       (11,604 )     28,108       9,320  
Los Arboles
  Garden   Sep-97   Chandler, AZ     1985       232       1,662       9,504       2,966       1,662       12,470       14,132       (5,236 )     8,896       4,868  
Malibu Canyon
  Garden   Mar-02   Calabasas, CA     1986       698       66,257       53,438       32,749       69,834       82,609       152,443       (24,659 )     127,784       98,900  
Maple Bay
  Garden   Dec-99   Virginia Beach, VA     1971       414       2,598       16,141       29,594       2,598       45,735       48,333       (11,216 )     37,117       33,973  
Mariners Cove
  Garden   Mar-02   San Diego, CA     1984       500       —       66,861       6,930       1,000       72,792       73,792       (15,980 )     57,812       6,661  
Meadow Creek
  Garden   Jul-94   Boulder, CO     1972       332       1,435       24,532       6,066       1,435       30,598       32,033       (11,967 )     20,066       24,378  
Merrill House
  High Rise   Jan-00   Falls Church, VA     1962       159       1,836       10,831       2,306       1,836       13,137       14,973       (3,837 )     11,136       15,600  
Montecito
  Garden   Jul-94   Austin, TX     1985       268       1,268       6,896       4,700       1,268       11,596       12,864       (5,710 )     7,154       1,052  
Monterey Grove
  Garden   Jun-08   San Jose, CA     1999       224       34,175       21,939       747       34,270       22,590       56,860       (655 )     56,205       35,000  
Mountain View
  Garden   May-98   Colorado Springs, CO     1985       252       2,546       14,841       2,668       2,546       17,509       20,055       (7,185 )     12,870       6,288  
Mountain View (CA)
  Garden   Jan-06   San Dimas, CA     1978       168       8,500       16,656       2,231       8,500       18,886       27,386       (1,084 )     26,302       23,300  
Newport
  Garden   Jul-94   Avondale, AZ     1986       204       800       4,354       3,387       800       7,742       8,542       (3,612 )     4,930       1,801  
Oak Falls Condominiums
  Garden   Nov-96   Spring, TX     1983       144       1,017       5,420       2,590       1,017       8,010       9,027       (2,459 )     6,568       3,441  
Oak Park Village I
  Garden   Oct-00   Lansing, MI     1973       618       10,048       16,771       6,930       10,048       23,701       33,749       (11,512 )     22,237       23,487  
Ocean Oaks
  Garden   May-98   Port Orange, FL     1988       296       2,132       12,855       3,045       2,132       15,900       18,032       (5,849 )     12,183       10,295  
Ocean View Apartment
  Garden   Oct-06   Pacifica, CA     1963       63       7,975       4,131       1,257       8,108       5,255       13,363       (432 )     12,931       6,526  
One Lytle Place
  High Rise   Jan-00   Cincinnati ,OH     1980       231       2,662       21,800       12,058       2,662       33,858       36,520       (10,058 )     26,462       15,450  
Pacific Bay Vistas
  Garden   Mar-01   San Bruno, CA     1987       308       3,703       62,460       19,987       22,993       63,157       86,150       (55,442 )     30,708       26,060  
Pacifica Park
  Garden   Jul-06   Pacifica, CA     1977       104       12,770       6,579       3,119       12,970       9,498       22,468       (1,524 )     20,944       11,456  
Palazzo at Park La Brea
  Mid Rise   Feb-04   Los Angeles, CA     2002       521       47,822       125,464       7,878       48,362       132,803       181,165       (24,119 )     157,046       127,068  
Palazzo East at Park La Brea
  Mid Rise   Mar-05   Los Angeles, CA     2005       611       61,004       136,503       19,904       72,615       144,796       217,411       (20,299 )     197,112       150,000  
Palencia
  Garden   May-98   Tampa, FL     1985       420       2,804       16,262       10,921       2,804       27,183       29,987       (10,229 )     19,758       11,598  
Paradise Palms
  Garden   Jul-94   Phoenix, AZ     1985       129       647       3,515       6,438       647       9,954       10,601       (4,661 )     5,940       6,481  
Park at Cedar Lawn, The
  Garden   Nov-96   Galveston, TX     1985       192       1,025       2,521       2,257       1,025       4,779       5,804       (3,382 )     2,422       3,752  
Park Towne
  High Rise   Apr-00   Philadelphia, PA     1959       958       10,451       47,301       51,905       10,451       99,206       109,657       (18,221 )     91,436       87,000  
Parktown Townhouses
  Garden   Oct-99   Deer Park, TX     1968       309       1,772       13,725       9,819       1,772       23,545       25,317       (8,268 )     17,049       5,938  
Parkway (VA)
  Garden   Mar-00   Willamsburg, VA     1971       148       386       2,834       2,579       386       5,413       5,799       (2,951 )     2,848       9,409  
Pathfinder Village
  Garden   Jan-06   Fremont, CA     1973       246       19,595       14,838       5,628       19,595       20,466       40,061       (887 )     39,174       23,800  
Peachtree Park
  Garden   Jan-96   Atlanta, GA     1962/1995       303       4,683       11,713       9,862       4,683       21,575       26,258       (8,805 )     17,453       9,834  
Peakview Place
  Garden   Jan-00   Englewood, CO     1975       296       2,067       20,438       4,362       2,067       24,800       26,867       (14,026 )     12,841       12,844  


F-57

Table of Contents

                                                                                                     
                                              December 31, 2008        
                            (2)
 		    (3)
 		                            Total
 		       
        (1)
 		                  Initial Cost     Cost Capitalized
 		                      Accumulated
 		    Cost
 		       
    Property
 		  Date
 		      Year
 		    Number
 		          Buildings and
 		    Subsequent to
 		          Buildings and
 		          Depreciation
 		    Net of
 		       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Pebble Point
  Garden   Oct-02   Indianapolis, IN     1980       220       1,790       6,883       2,339       1,790       9,222       11,012       (4,013 )     6,999       5,430  
Peppertree
  Garden   Mar-02   Cypress, CA     1971       136       7,835       5,224       1,873       8,030       6,902       14,932       (2,367 )     12,565       15,750  
Pine Lake Terrace
  Garden   Mar-02   Garden Grove, CA     1971       111       3,975       6,035       1,872       4,125       7,758       11,883       (2,134 )     9,749       12,000  
Pine Shadows
  Garden   May-98   Phoenix, AZ     1983       272       2,095       11,899       3,534       2,095       15,433       17,528       (6,572 )     10,956       7,500  
Pines, The
  Garden   Oct-98   Palm Bay, FL     1984       216       603       3,318       2,277       603       5,595       6,198       (2,117 )     4,081       1,975  
Plantation Gardens
  Garden   Oct-99   Plantation ,FL     1971       372       3,793       19,601       5,386       3,793       24,987       28,780       (9,958 )     18,822       24,463  
Pointe At Stone Canyon, The
  Garden   Jan-06   Dallas, TX     1978       164       878       4,401       1,816       878       6,217       7,095       (3,545 )     3,550       2,431  
Post Ridge
  Garden   Jul-00   Nashville, TN     1972       150       943       6,680       2,616       943       9,296       10,239       (4,634 )     5,605       6,119  
Presidential House
  Mid Rise   Sep-05   North Miami Beach, FL     1963       203       1,379       10,635       3,051       1,379       13,686       15,065       (5,092 )     9,973       10,044  
Preston Creek
  Garden   Oct-99   Dallas, TX     1979       228       1,543       8,667       5,586       1,543       14,253       15,796       (7,465 )     8,331       8,784  
Quail Run
  Garden   Oct-99   Zionsville, IN     1972       166       1,222       6,803       1,512       1,222       8,316       9,538       (3,628 )     5,910       4,533  
Ramblewood Apartments (MI)
  Garden   Dec-99   Wyoming, MI     1973       1,708       8,607       61,082       —       8,607       61,082       69,689       (9,266 )     60,423       28,676  
Ravensworth Towers
  High Rise   Jun-04   Annandale, VA     1974       219       2,172       18,607       2,108       2,172       20,714       22,886       (8,931 )     13,955       21,163  
Reflections (Casselberry)
  Garden   Oct-02   Casselberry, FL     1984       336       3,906       10,491       3,706       3,906       14,197       18,103       (3,831 )     14,272       10,700  
Reflections (Virginia Beach)
  Garden   Sep-00   Virginia Beach, VA     1987       480       15,988       13,684       4,761       15,988       18,444       34,432       (6,736 )     27,696       38,932  
Reflections (West Palm Beach)
  Garden   Oct-00   West Palm Beach, FL     1986       300       5,504       9,984       3,813       5,504       13,797       19,301       (4,562 )     14,739       8,344  
Regency Oaks
  Garden   Oct-99   Fern Park, FL     1965       343       1,842       10,029       7,836       1,842       17,866       19,708       (9,128 )     10,580       11,280  
Remington at Ponte Vedra Lakes
  Garden   Dec-06   Ponte Vedra Beach, FL     1986       344       18,576       18,650       1,917       18,795       20,348       39,143       (2,076 )     37,067       25,000  
River Club
  Garden   Apr-05   Edgewater, NJ     1998       266       30,578       30,638       1,479       30,579       32,116       62,695       (4,790 )     57,905       40,749  
River Reach
  Garden   Sep-00   Naples, FL     1986       556       17,728       18,337       5,688       17,728       24,025       41,753       (8,755 )     32,998       36,254  
Riverbend Village
  Garden   Jul-01   Arlington, TX     1983       201       893       4,128       4,649       893       8,777       9,670       (3,285 )     6,385       5,164  
Riverloft Apartments
  High Rise   Oct-99   Philadelphia, PA     1910       184       2,120       11,287       31,053       2,120       42,340       44,460       (14,165 )     30,295       20,962  
Riverside Park
  High Rise   Apr-00   Alexandria ,VA     1973       1,222       9,286       71,911       74,603       9,285       146,514       155,799       (51,669 )     104,130       96,440  
Rosewood
  Garden   Mar-02   Camarillo, CA     1976       152       12,128       8,060       2,400       12,430       10,157       22,587       (2,871 )     19,716       17,900  
Royal Crest Estates (Fall River)
  Garden   Aug-02   Fall River, MA     1974       216       5,832       12,044       1,841       5,832       13,885       19,717       (5,046 )     14,671       12,610  
Royal Crest Estates (Marlboro)
  Garden   Aug-02   Marlborough, MA     1970       473       25,178       28,786       3,231       25,178       32,017       57,195       (11,943 )     45,252       27,792  
Royal Crest Estates (Nashua)
  Garden   Aug-02   Nashua, MA     1970       902       68,231       45,562       9,164       68,231       54,725       122,956       (19,321 )     103,635       53,076  
Royal Crest Estates (North Andover)
  Garden   Aug-02   North Andover, MA     1970       588       51,292       36,808       9,130       51,292       45,938       97,230       (16,568 )     80,662       60,800  
Royal Crest Estates (Warwick)
  Garden   Aug-02   Warwick, RI     1972       492       22,433       24,095       5,097       22,433       29,192       51,625       (10,425 )     41,200       38,000  
Royal Palms
  Garden   Jul-94   Mesa, AZ     1985       152       832       4,569       9,425       832       13,994       14,826       (3,979 )     10,847       —  
Runaway Bay
  Garden   Jul-02   Pinellas Park, FL     1986       192       1,884       7,045       1,625       1,884       8,670       10,554       (1,982 )     8,572       9,153  
Runaway Bay (FL)
  Garden   Oct-00   Lantana, FL     1987       404       5,934       16,052       6,895       5,934       22,947       28,881       (6,610 )     22,271       21,458  
Runaway Bay (MI)
  Garden   Oct-00   Lansing, MI     1987       288       2,106       6,559       3,370       2,106       9,929       12,035       (4,603 )     7,432       8,279  
Sandpiper Cove
  Garden   Dec-97   Boynton Beach, FL     1987       416       3,511       21,396       6,662       3,511       28,058       31,569       (9,887 )     21,682       29,851  
Savannah Trace
  Garden   Mar-01   Shaumburg, IL     1986       368       13,960       20,731       3,769       13,960       24,501       38,461       (7,485 )     30,976       21,976  
Scandia
  Garden   Oct-00   Indianapolis, IN     1977       444       10,540       9,852       11,225       10,540       21,078       31,618       (9,307 )     22,311       19,318  
Scotchollow
  Garden   Jan-06   San Mateo, CA     1971       418       49,474       17,756       3,807       49,474       21,564       71,038       (835 )     70,203       49,000  
Scottsdale Gateway I
  Garden   Oct-97   Tempe, AZ     1965       124       591       3,359       7,930       591       11,289       11,880       (3,017 )     8,863       5,800  
Scottsdale Gateway II
  Garden   Oct-97   Tempe, AZ     1976       487       2,458       13,927       21,490       2,458       35,416       37,874       (11,879 )     25,995       5,557  
Shadow Creek (AZ)
  Garden   May-98   Mesa, AZ     1984       266       2,016       11,886       3,549       2,016       15,435       17,451       (6,947 )     10,504       4,895  
Shenandoah Crossing
  Garden   Sep-00   Fairfax, VA     1984       640       18,492       57,197       6,957       18,492       64,154       82,646       (24,753 )     57,893       70,783  
Sienna Bay
  Garden   Apr-00   St. Petersburg, FL     1984       276       1,766       9,739       10,541       1,766       20,280       22,046       (8,555 )     13,491       10,799  
Signal Pointe
  Garden   Oct-99   Winter Park, FL     1971       368       1,573       12,510       14,975       1,573       27,486       29,059       (8,468 )     20,591       18,596  
Signature Point Apartments
  Garden   Nov-96   League City, TX     1994       304       2,810       17,579       1,587       2,810       19,166       21,976       (6,140 )     15,836       11,336  
Somerset Lakes
  Garden   May-99   Indianapolis, IN     1974       360       3,436       19,668       6,438       3,436       26,106       29,542       (8,820 )     20,722       18,142  
Springhouse (KY)
  Garden   Mar-04   Lexington, KY     1986       224       1,843       7,161       1,109       1,843       8,270       10,113       (2,969 )     7,144       7,150  
Springhouse at Newport
  Garden   Jul-02   Newport News, VA     1986       432       9,479       11,425       3,223       9,479       14,648       24,127       (3,490 )     20,637       16,600  
Springwoods at Lake Ridge
  Garden   Jul-02   Lake Ridge, VA     1984       180       5,587       7,284       1,104       5,587       8,388       13,975       (1,530 )     12,445       14,741  
Spyglass at Cedar Cove
  Garden   Sep-00   Lexington Park, MD     1985       152       3,241       5,094       2,436       3,241       7,530       10,771       (2,885 )     7,886       9,519  
Stafford
  High Rise   Oct-02   Baltimore, MD     1889       96       706       4,032       3,053       562       7,230       7,792       (2,742 )     5,050       4,372  


F-58

Table of Contents

                                                                                                     
                                              December 31, 2008        
                            (2)
 		    (3)
 		                            Total
 		       
        (1)
 		                  Initial Cost     Cost Capitalized
 		                      Accumulated
 		    Cost
 		       
    Property
 		  Date
 		      Year
 		    Number
 		          Buildings and
 		    Subsequent to
 		          Buildings and
 		          Depreciation
 		    Net of
 		       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Steeplechase (MD)
  Garden   Sep-00   Largo, MD     1986       240       3,675       16,111       2,890       3,675       19,001       22,676       (6,176 )     16,500       23,587  
Steeplechase (TX)
  Garden   Jul-02   Plano, TX     1985       368       7,056       10,510       6,162       7,056       16,672       23,728       (3,955 )     19,773       13,649  
Sterling Apartment Homes, The
  Garden   Oct-99   Philadelphia, PA     1962       535       8,884       56,250       16,734       8,884       72,984       81,868       (28,474 )     53,394       78,988  
Stone Creek Club
  Garden   Sep-00   Germantown, MD     1984       240       13,593       9,347       2,740       13,593       12,086       25,679       (6,093 )     19,586       24,900  
Stonebrook
  Garden   Jun-97   Sanford, FL     1991       244       1,583       8,587       4,061       1,583       12,647       14,230       (5,085 )     9,145       5,207  
Stonebrook II
  Garden   Mar-99   Sanford, FL     1998       112       488       8,736       565       488       9,300       9,788       (2,449 )     7,339       3,101  
Stoney Brook Apartments
  Garden   Nov-96   Houston, TX     1972       113       275       1,865       1,781       275       3,646       3,921       (1,078 )     2,843       1,927  
Summit Creek
  Garden   May-98   Austin, TX     1985       164       1,211       6,037       1,784       1,211       7,822       9,033       (2,876 )     6,157       5,670  
Sun Lake
  Garden   May-98   Lake Mary, FL     1986       600       4,551       25,543       25,842       4,551       51,385       55,936       (15,496 )     40,440       36,294  
Sun River Village
  Garden   Oct-99   Tempe ,AZ     1981       334       2,091       14,056       3,453       2,091       17,509       19,600       (8,281 )     11,319       7,813  
Talbot Woods
  Garden   Sep-04   Middleboro, MA     1972       121       5,852       4,719       1,972       5,852       6,691       12,543       (1,547 )     10,996       6,288  
Tamarac Village
  Garden   Apr-00   Denver, CO     1979       564       4,021       23,495       7,625       4,316       30,825       35,141       (14,527 )     20,614       16,484  
Tamarind Bay
  Garden   Jan-00   St. Petersburg, FL     1980       200       766       7,090       4,812       766       11,902       12,668       (4,969 )     7,699       6,987  
Tar River Estates
  Garden   Oct-99   Greenville, NC     1969       220       1,379       14,849       3,493       1,379       18,342       19,721       (7,260 )     12,461       4,159  
Tatum Gardens
  Garden   May-98   Phoenix, AZ     1985       128       1,323       7,155       1,783       1,323       8,938       10,261       (4,265 )     5,996       7,403  
Tierra Palms
  Garden   Jan-06   Norwalk, CA     1970       144       6,441       6,807       467       6,441       7,274       13,715       (481 )     13,234       13,800  
Timbertree
  Garden   Oct-97   Phoenix, AZ     1979       387       2,292       13,000       5,481       2,292       18,480       20,772       (8,948 )     11,824       4,927  
Towers Of Westchester Park, The
  High Rise   Jan-06   College Park, MD     1972       303       15,198       22,029       4,110       15,198       26,139       41,337       (1,472 )     39,865       31,800  
Township At Highlands
  Town Home   Nov-96   Littleton, CO     1985       161       1,615       9,773       4,948       1,536       14,801       16,337       (6,116 )     10,221       16,900  
Trails
  Garden   Apr-02   Nashville, TN     1985       248       485       8,336       1,598       485       9,935       10,420       (5,977 )     4,443       8,440  
Twin Lake Towers
  High Rise   Oct-99   Westmont, IL     1969       399       2,691       19,592       20,365       2,691       39,957       42,648       (13,287 )     29,361       9,737  
Twin Lakes Apartments
  Garden   Apr-00   Palm Harbor, FL     1986       262       2,034       12,878       4,243       2,034       17,122       19,156       (6,618 )     12,538       10,727  
Vantage Pointe
  Mid Rise   Aug-02   Swampscott, MA     1987       96       4,749       10,089       1,273       4,749       11,362       16,111       (3,139 )     12,972       7,769  
Verandahs at Hunt Club
  Garden   Jul-02   Apopka, FL     1985       210       2,271       7,724       2,298       2,271       10,022       12,293       (2,052 )     10,241       11,239  
Views at Vinings Mountain, The
  Garden   Jan-06   Atlanta, GA     1983       180       610       5,026       11,897       610       16,924       17,534       (5,425 )     12,109       13,800  
Villa Del Sol
  Garden   Mar-02   Norwalk, CA     1972       120       7,294       4,861       2,238       7,476       6,917       14,393       (2,221 )     12,172       13,500  
Village Creek at Brookhill
  Garden   Jul-94   Westminster, CO     1987       324       2,446       13,261       4,607       2,446       17,868       20,314       (8,425 )     11,889       12,357  
Village Crossing
  Garden   May-98   W. Palm Beach, FL     1986       189       1,618       9,757       2,874       1,618       12,631       14,249       (4,948 )     9,301       7,000  
Village Green Altamonte Springs
  Garden   Oct-02   Altamonte Springs, FL     1970       164       608       6,618       2,201       608       8,819       9,427       (3,934 )     5,493       6,590  
Village in the Woods
  Garden   Jan-00   Cypress, TX     1983       530       2,248       17,241       9,861       2,248       27,102       29,350       (11,470 )     17,880       19,637  
Village of Pennbrook
  Garden   Oct-98   Levittown, PA     1969       722       5,800       43,710       12,256       5,800       55,966       61,766       (20,616 )     41,150       48,909  
Villages of Baymeadows
  Garden   Oct-99   Jacksonville, FL     1972       904       5,006       33,960       52,905       5,006       86,865       91,871       (33,317 )     58,554       38,943  
Villas at Park La Brea, The
  Garden   Mar-02   Los Angeles, CA     2002       250       8,621       48,871       3,289       8,630       52,150       60,780       (10,531 )     50,249       32,085  
Vinings Peak
  Garden   Jan-00   Atlanta, GA     1980       280       1,866       15,039       17,111       1,866       32,151       34,017       (10,370 )     23,647       6,855  
Vista Del Lagos
  Garden   Dec-97   Chandler, AZ     1986       200       804       4,952       2,443       804       7,394       8,198       (3,117 )     5,081       11,938  
Waterford Village
  Garden   Aug-02   Bridgewater, MA     1971       588       28,585       28,102       5,295       29,083       32,899       61,982       (13,493 )     48,489       30,156  
Waterways Village
  Garden   Jun-97   Aventura, FL     1991       180       4,504       11,064       3,495       4,504       14,559       19,063       (5,842 )     13,221       7,797  
Waverly Apartments
  Garden   Aug-08   Brighton, MA     1970       104       7,696       11,347       —       7,920       11,712       19,632       (208 )     19,424       12,000  
West Winds
  Garden   Oct-02   Orlando, FL     1985       272       1,892       11,913       2,741       1,892       14,654       16,546       (4,090 )     12,456       12,970  
Westgate
  Garden   Oct-99   Houston, TX     1971       313       1,920       11,224       4,617       1,920       15,841       17,761       (5,838 )     11,923       6,771  
Westway Village Apartments
  Garden   May-98   Houston, TX     1979       326       2,921       11,384       2,663       2,921       14,047       16,968       (6,122 )     10,846       7,677  
Wexford Village
  Garden   Aug-02   Worcester, MA     1974       264       6,339       17,939       1,971       6,339       19,909       26,248       (6,322 )     19,926       14,542  
Wickertree
  Garden   Oct-97   Phoenix, AZ     1983       226       1,225       6,923       2,603       1,225       9,526       10,751       (3,919 )     6,832       2,590  
Williamsburg Manor
  Garden   Apr-00   Cary, NC     1972       183       1,669       8,971       1,912       1,669       10,883       12,552       (5,120 )     7,432       4,938  
Willow Bend (IL)
  Garden   May-98   Rolling Meadows, IL     1985       328       2,717       15,437       22,680       2,717       38,117       40,834       (10,023 )     30,811       20,000  
Willow Park on Lake Adelaide
  Garden   Oct-99   Altamonte Springs, FL     1972       185       918       7,663       2,979       918       10,642       11,560       (5,180 )     6,380       6,887  
Wilson Acres
  Garden   Apr-06   Greenville, NC     1979       146       1,175       3,943       799       1,485       4,432       5,917       (513 )     5,404       2,876  
Windemere
  Garden   Jan-03   Houston, TX     1982       257       2,118       10,889       1,909       2,118       12,798       14,916       (5,171 )     9,745       4,697  
Windrift (CA)
  Garden   Mar-01   Oceanside, CA     1987       404       24,960       17,590       18,162       24,960       35,753       60,713       (12,088 )     48,625       28,834  
Windrift (FL)
  Garden   Oct-00   Orlando, FL     1987       288       3,696       10,029       4,776       3,696       14,805       18,501       (5,006 )     13,495       17,333  


F-59

Table of Contents

                                                                                                     
                                              December 31, 2008        
                            (2)
 		    (3)
 		                            Total
 		       
        (1)
 		                  Initial Cost     Cost Capitalized
 		                      Accumulated
 		    Cost
 		       
    Property
 		  Date
 		      Year
 		    Number
 		          Buildings and
 		    Subsequent to
 		          Buildings and
 		          Depreciation
 		    Net of
 		       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Windsor Crossing
  Garden   Mar-00   Newport News, VA     1978       156       307       2,110       1,865       131       4,150       4,281       (1,863 )     2,418       2,401  
Windsor Park
  Garden   Mar-01   Woodbridge, VA     1987       220       4,279       15,970       2,093       4,279       18,063       22,342       (5,663 )     16,679       13,561  
Windward at the Villages
  Garden   Oct-97   W. Palm Beach, FL     1988       196       1,595       9,079       3,722       1,595       12,802       14,397       (4,299 )     10,098       1,739  
Woodcreek
  Garden   Oct-02   Mesa, AZ     1985       432       2,367       16,051       4,074       2,367       20,125       22,492       (9,334 )     13,158       19,716  
Woods of Burnsville
  Garden   Nov-04   Burnsville, MN     1984       400       2,622       19,457       2,182       2,622       21,639       24,261       (6,635 )     17,626       16,580  
Woods of Inverness
  Garden   Oct-99   Houston, TX     1983       272       1,427       11,698       2,900       1,427       14,598       16,025       (6,974 )     9,051       5,878  
Woods Of Williamsburg
  Garden   Jan-06   Williamsburg, VA     1976       125       430       4,024       742       430       4,766       5,196       (3,069 )     2,127       1,281  
Woodshire
  Garden   Mar-00   Virginia Beach, VA     1972       288       961       5,549       3,367       961       8,916       9,877       (3,475 )     6,402       5,860  
Yacht Club at Brickell
  High Rise   Dec-03   Miami, FL     1998       357       31,363       32,214       3,031       31,363       35,245       66,608       (4,705 )     61,903       43,024  
Yorktown II Apartments
  High Rise   Dec-99   Lombard, IL     1973       364       2,971       18,163       15,723       2,971       33,886       36,857       (7,912 )     28,945       13,991  
                         
                         
Total Conventional Properties:
                        91,044       2,154,058       4,751,342       2,382,924       2,212,328       7,076,598       9,288,926       (2,259,828 )     7,029,098       5,485,381  
                         
                         
Affordable Properties:
                                                                                                   
Adams Court
  Garden   Jan-06   Hempstead, NY     1981       84       95       6,046       514       95       6,561       6,656       (3,833 )     2,823       2,450  
All Hallows
  Garden   Jan-06   San Francisco, CA     1976       157       1,348       29,770       18,171       1,350       47,938       49,288       (12,979 )     36,309       20,654  
Alliance Towers
  High Rise   Mar-02   Alliance, OH     1971       101       530       1,934       747       530       2,681       3,211       (644 )     2,567       2,248  
Arvada House
  High Rise   Nov-04   Arvada, CO     1977       88       641       3,314       1,734       405       5,284       5,689       (1,091 )     4,598       4,185  
Ashland Manor
  High Rise   Mar-02   Toledo, OH     1977       189       205       455       343       205       798       1,003       (523 )     480       757  
Baldwin Oaks
  Mid Rise   Oct-99   Parsippany ,NJ     1980       251       746       8,516       1,819       746       10,335       11,081       (5,816 )     5,265       13,131  
Baldwin Towers
  High Rise   Jan-06   Pittsburgh, PA     1983       99       237       5,417       163       237       5,580       5,817       (3,681 )     2,136       1,760  
Bangor House
  High Rise   Mar-02   Bangor, ME     1979       121       1,140       4,595       887       1,140       5,481       6,621       (1,290 )     5,331       2,645  
Bannock Arms
  Garden   Mar-02   Boise, ID     1978       66       275       1,139       497       275       1,636       1,911       (485 )     1,426       1,418  
Bayview
  Garden   Jun-05   San Francisco, CA     1976       146       1,023       15,265       16,165       574       31,879       32,453       (6,131 )     26,322       13,481  
Beacon Hill
  High Rise   Mar-02   Hillsdale, MI     1980       198       1,380       7,044       4,053       1,380       11,097       12,477       (2,353 )     10,124       4,873  
Bedford House
  Mid Rise   Mar-02   Falmouth, KY     1979       48       230       919       264       230       1,183       1,413       (374 )     1,039       1,088  
Benjamin Banneker Plaza
  Mid Rise   Jan-06   Chester, PA     1976       70       79       3,862       595       79       4,457       4,536       (2,652 )     1,884       1,576  
Berger Apartments
  Mid Rise   Mar-02   New Haven, CT     1981       144       1,152       4,657       1,582       1,152       6,238       7,390       (1,847 )     5,543       1,490  
Biltmore Towers
  High Rise   Mar-02   Dayton, OH     1980       230       1,813       6,411       13,075       1,813       19,486       21,299       (7,089 )     14,210       10,702  
Blakewood
  Garden   Oct-05   Statesboro, GA     1973       42       271       927       353       271       1,280       1,551       (1,002 )     549       719  
Bloomsburg Towers
  Mid Rise   Jan-06   Bloomsburg, PA     1981       75       1       4,128       287       1       4,415       4,416       (2,615 )     1,801       1,571  
Bolton North
  High Rise   Jan-06   Baltimore, MD     1977       209       1,184       7,068       475       1,163       7,564       8,727       (2,108 )     6,619       2,638  
Brightwood Manor
  Garden   Jan-06   New Brighton, PA     1975       152       143       5,160       557       143       5,716       5,859       (3,606 )     2,253       1,501  
Burchwood
  Garden   Oct-07   Berea, KY     1999       24       253       1,173       477       253       1,650       1,903       (922 )     981       981  
Butternut Creek
  Mid Rise   Jan-06   Charlotte, MI     1980       100       505       3,617       3,510       505       7,127       7,632       (1,371 )     6,261       —  
Cache Creek Apartment Homes
  Mid Rise   Jun-04   Clearlake, CA     1986       80       1,545       9,405       531       1,545       9,936       11,481       (2,934 )     8,547       2,321  
California Square I
  High Rise   Jan-06   Louisville, KY     1982       101       154       5,704       517       154       6,221       6,375       (3,367 )     3,008       3,530  
Campbell Heights
  High Rise   Oct-02   Washington, D.C.     1978       171       750       6,719       763       750       7,482       8,232       (2,728 )     5,504       7,654  
Canterbury Towers
  High Rise   Jan-06   Worcester, MA     1976       157       400       4,724       853       400       5,577       5,977       (3,364 )     2,613       4,611  
Carriage House (VA)
  Mid Rise   Dec-06   Petersburg, VA     1885       118       847       2,886       3,382       852       6,263       7,115       (860 )     6,255       2,466  
Casa de Las Hermanitas
  Garden   Mar-02   Los Angeles, CA     1982       88       1,775       4,606       3,190       1,775       7,796       9,571       (1,170 )     8,401       5,431  
Castlewood
  Garden   Mar-02   Davenport, IA     1980       96       585       2,351       1,348       585       3,699       4,284       (1,217 )     3,067       3,519  
Cherry Ridge Terrace
  Garden   Mar-02   Northern Cambria, PA     1983       62       372       1,490       844       372       2,333       2,705       (715 )     1,990       957  
Cimarron
  Garden   Oct-07   Wichita, KS     1973       132       1,558       1,536       1,538       1,558       3,073       4,631       (2,034 )     2,597       1,608  
City Line
  Garden   Mar-02   Newport News, VA     1976       200       500       2,014       6,995       500       9,009       9,509       (777 )     8,732       4,936  
Clisby Towers
  Mid Rise   Jan-06   Macon, GA     1980       52       161       2,333       108       161       2,441       2,602       (1,627 )     975       992  
Club, The
  Garden   Jan-06   Lexington, NC     1972       87       66       2,560       601       66       3,162       3,228       (1,794 )     1,434       367  
Coatesville Towers
  High Rise   Mar-02   Coatesville, PA     1979       90       500       2,011       553       500       2,563       3,063       (770 )     2,293       2,155  
Cold Spring Homes
  Garden   Oct-07   Cold Springs, KY     2000       30       187       917       1,121       187       2,039       2,226       (1,441 )     785       790  
Community Circle II
  Garden   Jan-06   Cleveland, OH     1975       129       213       4,749       476       213       5,225       5,438       (3,050 )     2,388       3,275  
Copperwood I Apartments
  Garden   Apr-06   The Woodlands, TX     1980       150       390       8,373       4,786       363       13,186       13,549       (6,361 )     7,188       5,649  
Copperwood II Apartments
  Garden   Oct-05   The Woodlands, TX     1981       150       452       5,552       3,319       459       8,865       9,324       (2,360 )     6,964       5,828  


F-60

Table of Contents

                                                                                                     
                                              December 31, 2008        
                            (2)
 		    (3)
 		                            Total
 		       
        (1)
 		                  Initial Cost     Cost Capitalized
 		                      Accumulated
 		    Cost
 		       
    Property
 		  Date
 		      Year
 		    Number
 		          Buildings and
 		    Subsequent to
 		          Buildings and
 		          Depreciation
 		    Net of
 		       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Country Club Heights
  Garden   Mar-04   Quincy, IL     1976       200       676       5,715       4,803       675       10,518       11,193       (3,192 )     8,001       7,591  
Country Commons
  Garden   Jan-06   Bensalem, PA     1972       352       1,314       18,196       1,739       1,314       19,935       21,249       (9,731 )     11,518       5,453  
Courtyard
  Mid Rise   Jan-06   Cincinnati, OH     1980       137       642       5,597       266       642       5,863       6,505       (2,941 )     3,564       3,870  
Creekview
  Garden   Mar-02   Stroudsburg, PA     1982       80       400       1,610       914       400       2,523       2,923       (640 )     2,283       2,670  
Crevenna Oaks
  Town Home   Jan-06   Burke, VA     1979       50       355       4,849       —       355       4,849       5,204       (461 )     4,743       3,171  
Crockett Manor
  Garden   Mar-04   Trenton, TN     1982       38       42       1,395       39       42       1,433       1,475       (71 )     1,404       978  
Cumberland Court
  Garden   Jan-06   Harrisburg, PA     1975       108       176       4,242       542       176       4,784       4,960       (3,075 )     1,885       1,394  
Daugette Tower
  High Rise   Mar-02   Gadsden, AL     1979       100       540       2,178       1,300       540       3,478       4,018       (1,168 )     2,850       346  
Delhaven Manor
  Mid Rise   Mar-02   Jackson, MS     1983       104       575       2,304       1,779       575       4,083       4,658       (1,298 )     3,360       3,776  
Denny Place
  Garden   Mar-02   North Hollywood, CA     1984       17       394       1,579       132       394       1,711       2,105       (415 )     1,690       1,131  
Douglas Landing
  Garden   Oct-07   Austin, TX     1999       96       11       4,989       —       11       4,989       5,000       —       5,000       4,013  
Echo Valley
  Mid Rise   Mar-02   West Warwick, RI     1978       100       550       2,294       2,043       550       4,337       4,887       (1,573 )     3,314       4,164  
Elmwood
  Garden   Jan-06   Athens, AL     1981       80       185       2,804       277       185       3,081       3,266       (1,558 )     1,708       1,878  
Fairburn And Gordon II
  Garden   Jan-06   Atlanta, GA     1969       58       86       2,000       168       86       2,168       2,254       (1,379 )     875       147  
Fairwood
  Garden   Jan-06   Carmichael, CA     1979       86       166       5,275       260       166       5,535       5,701       (3,299 )     2,402       2,575  
Fountain Place
  Mid Rise   Jan-06   Connersville, IN     1980       102       440       2,091       2,519       447       4,603       5,050       (291 )     4,759       —  
Fox Run (TX)
  Garden   Mar-02   Orange, TX     1983       70       420       1,992       966       420       2,958       3,378       (687 )     2,691       2,575  
Foxfire (MI)
  Garden   Jan-06   Jackson, MI     1975       160       856       6,853       1,072       856       7,925       8,781       (4,814 )     3,967       1,995  
Franklin Square School Apts
  Mid Rise   Jan-06   Baltimore, MD     1888       65       46       4,100       180       46       4,280       4,326       (2,022 )     2,304       2,164  
Friendset Apartments
  High Rise   Jan-06   Brooklyn, NY     1979       259       550       16,825       1,613       550       18,437       18,987       (9,807 )     9,180       14,700  
Friendship Arms
  Mid Rise   Mar-02   Hyattsville, MD     1979       151       970       3,887       1,631       970       5,518       6,488       (1,736 )     4,752       4,647  
Frio
  Garden   Jan-06   Pearsall, TX     1980       63       109       2,425       358       109       2,783       2,892       (1,588 )     1,304       1,109  
Gates Manor
  Garden   Mar-04   Clinton, TN     1981       80       266       2,225       777       266       3,002       3,268       (1,033 )     2,235       2,421  
Gateway Village
  Garden   Mar-04   Hillsborough, NC     1980       64       433       1,666       572       444       2,227       2,671       (467 )     2,204       2,377  
Glendale Terrace
  Garden   Jan-06   Aiken, SC     1972       60       41       1,552       157       41       1,708       1,749       (1,194 )     555       146  
Glens, The
  Garden   Jan-06   Rock Hill, SC     1982       88       93       4,882       845       93       5,727       5,820       (3,337 )     2,483       3,886  
Greenbriar
  Garden   Jan-06   Indianapolis, IN     1980       121       812       3,272       308       812       3,580       4,392       (2,394 )     1,998       1,228  
Hamlin Estates
  Garden   Mar-02   North Hollywood, CA     1983       30       1,010       1,691       230       1,010       1,921       2,931       (498 )     2,433       1,621  
Hanover Square
  High Rise   Jan-06   Baltimore, MD     1980       199       369       10,862       340       369       11,201       11,570       (5,934 )     5,636       5,780  
Harris Park Apartments
  Garden   Dec-97   Rochester, NY     1968       114       475       2,786       1,049       475       3,835       4,310       (1,689 )     2,621       345  
Hatillo Housing
  Mid Rise   Jan-06   Hatillo, PR     1982       64       184       2,893       159       184       3,053       3,237       (1,706 )     1,531       1,381  
Hemet Estates
  Garden   Mar-02   Hemet, CA     1983       80       700       2,802       2,997       1,263       5,235       6,498       (926 )     5,572       4,328  
Henna Townhomes
  Garden   Oct-07   Round Rock, TX     1999       160       1,047       12,893       —       1,047       12,893       13,940       (2,641 )     11,299       6,201  
Heritage House
  Mid Rise   Jan-06   Lewisburg, PA     1982       80       178       3,251       109       178       3,360       3,538       (1,930 )     1,608       2,106  
Hickory Heights
  Garden   Jan-06   Abbeville, SC     1974       80       27       2,477       697       27       3,174       3,201       (1,698 )     1,503       357  
Highlawn Place
  High Rise   Mar-02   Huntington, WV     1977       133       550       2,204       1,091       550       3,296       3,846       (800 )     3,046       1,800  
Hillside Village
  Town Home   Jan-06   Catawissa, PA     1981       50       31       2,643       132       31       2,775       2,806       (1,643 )     1,163       1,144  
Hilltop
  Garden   Jan-06   Duquesne, PA     1975       152       166       7,298       539       166       7,837       8,003       (4,959 )     3,044       2,234  
Hopkins Village
  Mid Rise   Sep-03   Baltimore, MD     1979       165       438       5,973       —       438       5,973       6,411       (744 )     5,667       9,100  
Hudson Gardens
  Garden   Mar-02   Pasadena, CA     1983       41       914       1,548       272       914       1,820       2,734       (507 )     2,227       659  
Hudson Terrace
  Garden   Jan-06   Hudson, NY     1973       168       248       5,424       494       248       5,917       6,165       (3,574 )     2,591       1,198  
Indio Gardens
  Mid Rise   Oct-06   Indio, CA     1980       151       —       9,534       4,135       —       13,669       13,669       (544 )     13,125       4,368  
Ingram Square
  Garden   Jan-06   San Antonio, TX     1980       120       630       3,137       —       630       3,137       3,767       (782 )     2,985       3,275  
Jenny Lind Hall
  High Rise   Mar-04   Springfield, MO     1977       78       142       3,684       238       142       3,922       4,064       (303 )     3,761       1,028  
JFK Towers
  Mid Rise   Jan-06   Durham, NC     1983       177       335       8,386       607       335       8,993       9,328       (4,342 )     4,986       5,854  
Kephart Plaza
  High Rise   Jan-06   Lock Haven, PA     1978       101       52       4,353       417       52       4,770       4,822       (2,815 )     2,007       1,592  
King Bell Apartments
  Garden   Jan-06   Milwaukie, OR     1982       62       204       2,497       154       204       2,651       2,855       (1,352 )     1,503       1,661  
Kirkwood House
  High Rise   Sep-04   Baltimore, MD     1979       262       1,281       9,358       —       1,281       9,358       10,639       (1,167 )     9,472       16,000  
Kubasek Trinity Manor (The Hollows)
  High Rise   Jan-06   Yonkers, NY     1981       130       54       8,308       1,748       54       10,055       10,109       (4,706 )     5,403       4,823  
La Salle
  Garden   Oct-00   San Francisco, CA     1976       145       1,841       19,568       16,634       1,839       36,203       38,042       (9,102 )     28,940       15,462  


F-61

Table of Contents

                                                                                                     
                                              December 31, 2008        
                            (2)
 		    (3)
 		                            Total
 		       
        (1)
 		                  Initial Cost     Cost Capitalized
 		                      Accumulated
 		    Cost
 		       
    Property
 		  Date
 		      Year
 		    Number
 		          Buildings and
 		    Subsequent to
 		          Buildings and
 		          Depreciation
 		    Net of
 		       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Lafayette Commons
  Garden   Mar-04   West Lafayette, OH     1979       49       166       512       271       166       783       949       (105 )     844       843  
Lafayette Square
  Garden   Jan-06   Camden, SC     1978       72       69       1,948       65       69       2,013       2,082       (1,590 )     492       303  
Lakeview Arms
  Mid Rise   Jan-06   Poughkeepsie, NY     1981       72       111       3,256       254       111       3,511       3,622       (2,048 )     1,574       1,872  
Landau
  Garden   Oct-05   Clinton, SC     1970       80       1,088       1,635       198       1,088       1,833       2,921       (1,779 )     1,142       335  
Laurelwood
  Garden   Jan-06   Morristown, TN     1981       65       75       1,870       110       75       1,980       2,055       (1,195 )     860       1,320  
Lavista
  Garden   Jan-06   Concord, CA     1981       75       565       4,448       3,522       567       7,968       8,535       (398 )     8,137       5,545  
Lock Haven Gardens
  Garden   Jan-06   Lock Haven, PA     1979       150       169       7,040       471       169       7,511       7,680       (4,312 )     3,368       3,092  
Locust House
  High Rise   Mar-02   Westminster, MD     1979       99       650       2,604       735       650       3,339       3,989       (998 )     2,991       2,433  
Lodge Run
  Mid Rise   Jan-06   Portage, PA     1983       31       18       1,467       364       18       1,831       1,849       (1,167 )     682       443  
Long Meadow
  Garden   Jan-06   Cheraw, SC     1973       56       30       1,470       124       30       1,594       1,624       (1,103 )     521       230  
Loring Towers (MN)
  High Rise   Oct-02   Minneapolis, MN     1975       230       1,297       7,445       7,554       886       15,410       16,296       (3,607 )     12,689       7,683  
Loring Towers Apartments
  High Rise   Sep-03   Salem, MA     1973       250       129       14,050       5,520       140       19,560       19,700       (2,608 )     17,092       —  
Lynnhaven
  Garden   Mar-04   Durham, NC     1980       75       539       2,159       703       543       2,859       3,402       (601 )     2,801       2,814  
Michigan Beach
  Garden   Oct-07   Chicago, IL     1958       239       2,225       10,797       341       2,225       11,138       13,363       (2,603 )     10,760       5,550  
Midview Crossing
  Garden   Mar-02   Elyria, OH     1970       138       200       —       2,120       200       2,120       2,320       (1,115 )     1,205       589  
Mill Pond
  Mid Rise   Jan-06   Taunton, MA     1982       49       80       2,704       287       80       2,991       3,071       (1,505 )     1,566       1,524  
Miramar Housing
  High Rise   Jan-06   Ponce, PR     1983       96       290       5,162       156       290       5,318       5,608       (2,813 )     2,795       2,960  
Montblanc Gardens
  Town Home   Dec-03   Yauco, PR     1982       128       391       3,859       879       391       4,738       5,129       (2,298 )     2,831       3,311  
Morrisania II
  High Rise   Jan-06   Bronx, NY     1979       203       404       16,038       1,367       404       17,404       17,808       (10,100 )     7,708       8,207  
Moss Gardens
  Mid Rise   Jan-06   Lafayette, LA     1980       114       125       4,218       117       125       4,335       4,460       (2,983 )     1,477       2,057  
New Baltimore
  Mid Rise   Mar-02   New Baltimore, MI     1980       101       888       2,360       5,380       896       7,732       8,628       (1,013 )     7,615       2,244  
New Vistas I
  Garden   Jan-06   Chicago, IL     1925       148       200       7,368       374       200       7,742       7,942       (5,411 )     2,531       1,560  
Newberry Park
  Garden   Dec-97   Chicago, IL     1985       84       1,150       7,862       423       1,150       8,285       9,435       (2,505 )     6,930       7,496  
Northlake Village
  Garden   Oct-00   Lima, OH     1971       150       487       1,317       1,716       487       3,033       3,520       (1,486 )     2,034       752  
Northpoint
  Garden   Jan-00   Chicago, IL     1921       304       2,280       14,334       15,486       2,510       29,589       32,099       (12,009 )     20,090       20,021  
Northwinds, The
  Garden   Mar-02   Wytheville, VA     1978       144       500       2,012       476       500       2,489       2,989       (1,032 )     1,957       1,723  
Oakbrook
  Garden   Jan-08   Topeka, KS     1979       170       240       6,200       —       240       6,200       6,440       (2,773 )     3,667       2,770  
Oakwood Manor
  Garden   Mar-04   Milan, TN     1984       34       95       498       27       95       525       620       (105 )     515       433  
Ocala Place
  Garden   Jan-06   Ocala, FL     1980       40       96       1,417       288       96       1,705       1,801       (981 )     820       569  
Olde Towne West I
  Mid Rise   Jan-06   Alexandria, VA     1976       172       337       5,457       2,454       337       7,911       8,248       (4,253 )     3,995       8,035  
Olde Towne West II
  Garden   Oct-02   Alexandria, VA     1977       72       214       2,865       624       214       3,488       3,702       (1,725 )     1,977       2,522  
Olde Towne West III
  Garden   Apr-00   Alexandria, VA     1978       75       581       3,463       1,732       581       5,194       5,775       (1,911 )     3,864       3,182  
O’Neil
  High Rise   Jan-06   Troy, NY     1978       115       88       4,067       695       88       4,762       4,850       (3,118 )     1,732       1,454  
Orange Village
  Garden   Jan-06   Hermitage, PA     1979       81       53       3,432       311       53       3,743       3,796       (2,223 )     1,573       1,850  
Overbrook Park
  Garden   Jan-06   Chillicothe, OH     1981       50       109       2,309       120       109       2,429       2,538       (1,293 )     1,245       1,462  
Oxford House
  Mid Rise   Mar-02   Deactur, IL     1979       156       993       4,164       429       993       4,593       5,586       (1,615 )     3,971       3,145  
Oxford Terrace IV
  Town Home   Oct-07   Indianapolis, IN     1994       48       247       1,410       607       247       2,016       2,263       (1,057 )     1,206       1,261  
Palm Springs Senior
  Garden   Mar-02   Palm Springs, CA     1981       116       —       8,745       3,003       —       11,748       11,748       (1,526 )     10,222       7,277  
Panorama Park
  Garden   Mar-02   Bakersfield, CA     1982       66       621       5,520       —       621       5,520       6,141       (854 )     5,287       —  
Parc Chateau I
  Garden   Jan-06   Lithonia, GA     1973       86       124       1,910       168       124       2,078       2,202       (2,078 )     124       504  
Parc Chateau II
  Garden   Jan-06   Lithonia, GA     1974       88       169       3,392       155       169       3,547       3,716       (2,421 )     1,295       507  
Park — Joplin Apartments
  Garden   Oct-07   Joplin, MO     1974       192       996       8,847       —       996       8,847       9,843       (2,816 )     7,027       3,431  
Park Apts, The
  Garden   Oct-07   Overland Park, KS     1984       280       365       8,723       4,001       365       12,724       13,089       (5,029 )     8,060       5,050  
Park Place
  Mid Rise   Jun-05   St Louis, MO     1977       242       742       6,327       9,719       705       16,084       16,789       (5,834 )     10,955       9,713  
Park Vista
  Garden   Oct-05   Anaheim, CA     1958       392       6,155       25,929       4,090       6,155       30,019       36,174       (7,812 )     28,362       37,851  
Parkview
  Garden   Mar-02   Sacramento, CA     1980       97       1,041       2,880       8,111       1,097       10,936       12,033       (2,781 )     9,252       6,938  
Parkways, The
  Garden   Jun-04   Chicago, IL     1925       446       3,684       23,257       17,218       3,427       40,733       44,160       (9,406 )     34,754       22,608  
Patman Switch
  Garden   Jan-06   Hughes Springs, TX     1978       82       202       1,906       570       202       2,477       2,679       (1,473 )     1,206       1,229  
Pavillion
  High Rise   Mar-04   Philadelphia, PA     1976       296       —       15,416       1,128       —       16,543       16,543       (3,265 )     13,278       9,405  
Peachwood Place
  Garden   Oct-07   Waycross, GA     1999       72       163       2,893       —       163       2,893       3,056       (1,317 )     1,739       737  


F-62

Table of Contents

                                                                                                     
                                              December 31, 2008        
                            (2)
 		    (3)
 		                            Total
 		       
        (1)
 		                  Initial Cost     Cost Capitalized
 		                      Accumulated
 		    Cost
 		       
    Property
 		  Date
 		      Year
 		    Number
 		          Buildings and
 		    Subsequent to
 		          Buildings and
 		          Depreciation
 		    Net of
 		       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Pinebluff Village
  Mid Rise   Jan-06   Salisbury, MD     1980       151       354       7,935       496       354       8,431       8,785       (5,431 )     3,354       2,196  
Pinewood Place
  Garden   Mar-02   Toledo, OH     1979       99       420       1,698       1,048       420       2,746       3,166       (1,050 )     2,116       2,009  
Pleasant Hills
  Garden   Apr-05   Austin, TX     1982       100       1,188       2,631       3,496       1,229       6,085       7,314       (1,398 )     5,916       3,240  
Plummer Village
  Mid Rise   Mar-02   North Hills, CA     1983       75       624       2,647       1,587       667       4,191       4,858       (1,377 )     3,481       2,634  
Portner Place
  Town Home   Jan-06   Washington, DC     1980       48       601       6,100       67       601       6,167       6,768       (2,383 )     4,385       1,346  
Post Street Apartments
  High Rise   Jan-06   Yonkers, NY     1930       56       148       3,315       367       148       3,682       3,830       (2,165 )     1,665       1,673  
Pride Gardens
  Garden   Dec-97   Flora, MS     1975       76       102       1,071       1,573       102       2,644       2,746       (1,329 )     1,417       1,094  
Quivira Place
  Garden   Oct-07   Lenexa, KS     1978       289       374       12,158       —       374       12,158       12,532       (6,941 )     5,591       6,125  
Rancho California
  Garden   Jan-06   Temecula, CA     1984       55       399       5,550       231       399       5,781       6,180       (2,560 )     3,620       4,589  
Ridgewood (La Loma)
  Garden   Mar-02   Sacramento, CA     1980       75       684       227       6,225       683       6,454       7,137       (874 )     6,263       4,277  
Ridgewood Towers
  High Rise   Mar-02   East Moline, IL     1977       140       698       2,803       585       698       3,388       4,086       (1,158 )     2,928       1,677  
River Village
  High Rise   Jan-06   Flint, MI     1980       340       1,756       13,877       928       1,756       14,805       16,561       (9,145 )     7,416       7,777  
River’s Edge
  Town Home   Jan-06   Greenville, MI     1983       49       206       2,202       224       205       2,426       2,631       (1,557 )     1,074       788  
Riverwoods
  High Rise   Jan-06   Kankakee, IL     1983       125       590       4,932       2,749       597       7,673       8,270       (819 )     7,451       5,576  
Rosedale Court Apartments
  Garden   Mar-04   Dawson Springs, KY     1981       40       194       1,177       170       194       1,347       1,541       (493 )     1,048       891  
Round Barn
  Garden   Mar-02   Champaign, IL     1979       156       947       5,134       5,627       934       10,774       11,708       (2,049 )     9,659       —  
Rutherford Park
  Town Home   Jan-06   Hummelstown, PA     1981       85       376       4,814       206       376       5,019       5,395       (2,825 )     2,570       2,865  
San Jose Apartments
  Garden   Sep-05   San Antonio, TX     1970       220       404       5,770       11,344       238       17,279       17,517       (2,092 )     15,425       5,464  
San Juan Del Centro
  Mid Rise   Sep-05   Boulder, CO     1971       150       243       7,110       12,522       438       19,437       19,875       (2,403 )     17,472       12,218  
Sandy Hill Terrace
  High Rise   Mar-02   Norristown, PA     1980       175       1,650       6,599       2,842       1,650       9,441       11,091       (2,287 )     8,804       3,829  
Sandy Springs
  Garden   Mar-05   Macon, GA     1979       74       153       1,736       1,358       153       3,094       3,247       (1,527 )     1,720       1,935  
School Street
  Mid Rise   Jan-06   Taunton, MA     1920       75       219       4,335       561       219       4,896       5,115       (2,581 )     2,534       3,080  
Sharp-Leadenhall I
  Town Home   Mar-04   Baltimore, MD     1981       155       1,445       5,484       919       1,445       6,403       7,848       (1,829 )     6,019       5,414  
Sharp-Leadenhall II
  Town Home   Sep-03   Baltimore, MD     1981       37       171       1,636       330       171       1,966       2,137       (972 )     1,165       1,073  
Sherman Hills
  High Rise   Jan-06   Wilkes-Barre, PA     1976       344       1,137       16,451       875       1,137       17,326       18,463       (13,083 )     5,380       3,348  
Shoreview
  Garden   Oct-99   San Francisco, CA     1976       156       1,498       19,071       17,002       1,498       36,072       37,570       (9,804 )     27,766       16,703  
South Bay Villa
  Garden   Mar-02   Los Angeles, CA     1981       80       663       2,770       4,231       659       7,004       7,663       (2,512 )     5,151       3,105  
Spring Manor
  Mid Rise   Jan-06   Holidaysburg, PA     1983       51       117       2,574       388       117       2,962       3,079       (2,047 )     1,032       773  
Springfield Villas
  Garden   Oct-07   Lockhart, TX     1999       32       —       1,153       —       —       1,153       1,153       —       1,153       860  
St. George Villas
  Garden   Jan-06   St. George, SC     1984       40       86       1,025       90       86       1,115       1,201       (749 )     452       526  
Sterling Village
  Town Home   Mar-02   San Bernadino, CA     1983       80       549       3,459       2,793       1,246       5,555       6,801       (1,155 )     5,646       4,393  
Stonegate Village
  Garden   Oct-00   New Castle, IN     1970       122       313       1,895       1,209       308       3,110       3,418       (1,091 )     2,327       386  
Strawbridge Square
  Garden   Oct-99   Alexandria, VA     1979       128       662       3,508       3,142       662       6,650       7,312       (2,354 )     4,958       6,624  
Sumler Terrace
  Garden   Jan-06   Norfolk, VA     1976       126       215       4,400       319       215       4,719       4,934       (3,446 )     1,488       1,406  
Summit Oaks
  Town Home   Jan-06   Burke, VA     1980       50       382       4,930       —       382       4,930       5,312       (710 )     4,602       3,094  
Suntree
  Garden   Jan-06   St. Johns, MI     1980       121       403       6,488       468       403       6,955       7,358       (4,155 )     3,203       1,358  
Tabor Towers
  Mid Rise   Jan-06   Lewisburg, WV     1979       84       155       3,369       196       155       3,564       3,719       (2,008 )     1,711       1,986  
Tamarac Apartments I
  Garden   Nov-04   Woodlands, TX     1980       144       140       2,775       3,479       363       6,030       6,393       (1,642 )     4,751       4,254  
Tamarac Apartments II
  Garden   Nov-04   Woodlands, TX     1980       156       142       3,195       3,874       266       6,944       7,210       (1,859 )     5,351       4,609  
Terraces
  Mid Rise   Jan-06   Kettering, OH     1979       102       521       3,855       416       521       4,271       4,792       (2,374 )     2,418       2,491  
Terry Manor
  Mid Rise   Oct-05   Los Angeles, CA     1977       170       1,775       5,848       6,631       1,996       12,258       14,254       (2,947 )     11,307       7,057  
Tompkins Terrace
  Garden   Oct-02   Beacon, NY     1974       193       872       6,827       11,211       872       18,038       18,910       (1,962 )     16,948       8,837  
Trestletree Village
  Garden   Mar-02   Atlanta, GA     1981       188       1,150       4,655       1,177       1,150       5,832       6,982       (1,867 )     5,115       3,509  
University Square
  High Rise   Mar-05   Philadelphia, PA     1978       442       702       22,040       11,195       702       33,235       33,937       (16,426 )     17,511       13,778  
Van Nuys Apartments
  High Rise   Mar-02   Los Angeles, CA     1981       299       4,253       21,226       3,988       4,253       25,214       29,467       (4,121 )     25,346       20,531  
Victory Square
  Garden   Mar-02   Canton, OH     1975       81       215       889       449       215       1,338       1,553       (533 )     1,020       867  
Village Oaks
  Mid Rise   Jan-06   Catonsville, MD     1980       181       1,187       6,128       1,722       1,187       7,850       9,037       (4,484 )     4,553       4,693  
Village of Kaufman
  Garden   Mar-05   Kaufman, TX     1981       68       370       1,606       571       370       2,177       2,547       (610 )     1,937       1,858  
Vintage Crossing
  Town Home   Mar-04   Cuthbert, GA     1982       50       188       1,058       533       188       1,591       1,779       (774 )     1,005       1,655  
Vista Park Chino
  Garden   Mar-02   Chino, CA     1983       40       380       1,521       361       380       1,883       2,263       (611 )     1,652       1,505  


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Table of Contents

                                                                                                     
                                              December 31, 2008        
                            (2)
 		    (3)
 		                            Total
 		       
        (1)
 		                  Initial Cost     Cost Capitalized
 		                      Accumulated
 		    Cost
 		       
    Property
 		  Date
 		      Year
 		    Number
 		          Buildings and
 		    Subsequent to
 		          Buildings and
 		          Depreciation
 		    Net of
 		       
Property Name
  Type   Consolidated   Location   Built     of Units     Land     Improvements     Acquisition     Land     Improvements     Total     (AD)     AD     Encumbrances  
 
Vistula Heritage Village
  Garden   Oct-08   Toledo, OH     1930       250       261       15,091       —       261       15,091       15,352       (3,495 )     11,857       12,814  
Wah Luck House
  High Rise   Jan-06   Washington, DC     1982       153       1,001       11,874       416       1,001       12,290       13,291       (6,265 )     7,026       9,653  
Walnut Hills
  High Rise   Jan-06   Cincinnati, OH     1983       198       888       5,608       4,962       888       10,569       11,457       (973 )     10,484       6,194  
Wasco Arms
  Garden   Mar-02   Wasco, CA     1982       78       625       2,519       947       625       3,466       4,091       (1,165 )     2,926       3,115  
Washington Square West
  Mid Rise   Sep-04   Philadelphia, PA     1982       132       555       11,169       5,691       582       16,832       17,414       (5,764 )     11,650       3,943  
Westminster Oaks
  Town Home   Jan-06   Springfield, VA     1982       50       —       3,517       351       —       3,868       3,868       (2,026 )     1,842       828  
Westwood Terrace
  Mid Rise   Mar-02   Moline, IL     1976       97       720       3,242       401       720       3,643       4,363       (897 )     3,466       1,806  
White Cliff
  Garden   Mar-02   Lincoln Heights, OH     1977       72       215       938       398       215       1,336       1,551       (491 )     1,060       1,008  
Whitefield Place
  Garden   Apr-05   San Antonio, TX     1980       80       223       3,151       2,598       219       5,753       5,972       (1,634 )     4,338       2,291  
Wickford
  Garden   Mar-04   Henderson, NC     1983       44       247       946       117       247       1,062       1,309       (387 )     922       686  
Wilderness Trail
  High Rise   Mar-02   Pineville, KY     1983       124       1,010       4,048       633       1,010       4,680       5,690       (1,053 )     4,637       4,546  
Wilkes Towers
  High Rise   Mar-02   North Wilkesboro, NC     1981       72       410       1,680       466       410       2,146       2,556       (587 )     1,969       1,880  
Willowwood
  Garden   Mar-02   North Hollywood, CA     1984       19       1,051       840       185       1,051       1,025       2,076       (264 )     1,812       1,079  
Winnsboro Arms
  Garden   Jan-06   Winnsboro, SC     1978       60       80       1,889       181       80       2,070       2,150       (1,451 )     699       246  
Winter Gardens
  High Rise   Mar-04   St Louis, MO     1920       112       300       3,072       4,419       300       7,492       7,792       (1,097 )     6,695       3,856  
Woodcrest
  Garden   Dec-97   Odessa, TX     1972       80       41       229       573       41       802       843       (629 )     214       444  
Woodland
  Garden   Jan-06   Spartanburg, SC     1972       100       182       663       1,324       182       1,987       2,169       (381 )     1,788       186  
Woodland Hills
  Garden   Oct-05   Jackson, MI     1980       125       541       3,875       4,243       321       8,339       8,660       (1,874 )     6,786       3,689  
                         
                         
Total Affordable Properties:
                        25,007       117,542       1,056,684       418,638       118,171       1,474,674       1,592,845       (520,566 )     1,072,279       795,759  
                         
                         
Other(4)
                        —       929       2,472       (80 )     1,958       1,363       3,321       (2,330 )     991       —  
                         
                         
                          116,051       2,272,529       5,810,498       2,801,482       2,332,457       8,552,635       10,885,092       (2,782,724 )     8,102,368       6,281,140  
                         
                         
 
 
(1) Date we acquired the property or first consolidated the partnership which owns the property.
 
(2) Initial cost includes the tendering costs to acquire the minority interest share of our consolidated real estate partnerships.
 
(3) Costs capitalized subsequent to acquisition includes costs capitalized since acquisition or first consolidation of the partnership/property.
 
(4) Other includes land parcels and commercial properties.


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Table of Contents

 
APARTMENT INVESTMENT AND MANAGEMENT COMPANY

SCHEDULE III: REAL ESTATE AND ACCUMULATED DEPRECIATION
For the Years Ended December 31, 2008, 2007 and 2006
(In Thousands)
 
                         
    2008     2007     2006  
 
Real Estate
                       
Balance at beginning of year
  $ 10,248,274     $ 9,426,924     $ 7,978,988  
Additions during the year:
                       
Newly consolidated assets and acquisition of limited partnership interests(1)
    17,557       32,080       1,146,086  
Acquisitions
    107,445       233,059       184,986  
Capital expenditures
    665,233       689,719       485,758  
Deductions during the year:
                       
Casualty and other write-offs(2)
    (114,678 )     (24,016 )     (21,192 )
Assets held for sale reclassification(3)
    (38,739 )     (109,492 )     (347,702 )
                         
Balance at end of year
  $ 10,885,092     $ 10,248,274     $ 9,426,924  
                         
Accumulated Depreciation
                       
Balance at beginning of year
  $ 2,361,232     $ 2,101,707     $ 1,432,686  
Additions during the year:
                       
Depreciation
    497,395       477,725       468,186  
Newly consolidated assets and acquisition of limited partnership interests(1)
    (7,733 )     (115,465 )     452,824  
Deductions during the year:
                       
Casualty and other write-offs
    (1,865 )     (5,280 )     (5,604 )
Assets held for sale reclassification(3)
    (66,305 )     (97,455 )     (246,385 )
                         
Balance at end of year
  $ 2,782,724     $ 2,361,232     $ 2,101,707  
                         
 
 
(1) Includes the effect of newly consolidated assets, acquisition of limited partnership interests and related activity. As discussed in Note 2, during 2006, we adopted EITF 04-5, which resulted in the consolidation, at historical carrying amounts, of 156 partnerships owning 149 properties. As discussed in Note 3, during 2007, we acquired seven properties from VMS, a consolidated partnership in which we held a 22% interest. We allocated the excess of the consideration exchanged over the carrying amount of the minority interest in these properties to real estate, which resulted in an increase in real estate primarily due to a reduction in the historical accumulated depreciation on these assets.
 
(2) Casualty and other write offs in 2008 includes impairments totaling $91.1 million related to our Lincoln Place and Pacific Bay Vistas properties.
 
(3) Represents activity on properties that have been sold or classified as held for sale that is included in the line items above.


F-65

EX-3.1 2 d66458exv3w1.txt EX-3.1 EXHIBIT 3.1 APARTMENT INVESTMENT AND MANAGEMENT COMPANY ARTICLES OF RESTATEMENT APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation, having its principal office in Baltimore City, Maryland (hereinafter referred to as the "CORPORATION" or "AIMCO"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: The Corporation desires to and does hereby restate its Charter as currently in effect. The Charter as currently in effect is found in the following charter documents filed with the State Department of Assessments and Taxation of Maryland (the "SDAT"): (1) Articles of Amendment and Restatement as filed with the SDAT on July 15, 1994 (as corrected by Certificates of Correction as filed with the SDAT on November 6, 1997 at 1:35 p.m., on November 30, 1998 at 1:22 p.m., on May 24, 1999 at 1:38 p.m. and on May 24, 1999 at 1:47 p.m., respectively); (2) Articles of Amendment as filed with the SDAT on July 28, 1994 at 11:33 a.m. (as corrected by Certificate of Correction as filed with the SDAT on November 6, 1997 at 1:37 p.m. and on May 24, 1999 at 1:43 p.m.); (3) Articles Supplementary as filed with the SDAT on August 4, 1997 (Class B Preferred Stock); (4) Articles Supplementary as filed with the SDAT on December 22, 1997 (as corrected by Certificates of Correction as filed with the SDAT on February 18, 1998 and on November 30, 1998 at 1:24 p.m., respectively) (Class C Preferred Stock); (5) Articles Supplementary as filed with the SDAT on February 18, 1998 (as corrected by Certificate of Correction as filed with the SDAT on November 30, 1998 at 1:26 p.m.) (Class D Preferred Stock); (6) Articles of Amendment as filed with the SDAT on June 19, 1998; (7) Articles Supplementary as filed with the SDAT on July 13, 1998 (Class G Preferred Stock); (8) Articles Supplementary as filed with the SDAT on August 13, 1998 (Class H Preferred Stock); (9) Articles of Merger as filed with the SDAT on October 1, 1998 (as corrected by Certificate of Correction as filed with the SDAT on May 24, 1999 at 1:33 p.m.); (10) Articles Supplementary as filed with the SDAT on November 6, 1998 (Class J Preferred Stock); (11) Articles Supplementary as filed with the SDAT on February 17, 1999 (Class K Preferred Stock); 2 (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 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 1.2 CHANGES IN CLASSIFICATION AND PREFERENCES. The Board of Directors by resolution or resolutions from time to time may classify and reclassify any unissued shares of capital stock by setting or changing in any one or more respects the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such shares of capital stock, including, but not limited to, ownership restrictions consistent with the Ownership Restrictions with respect to each such class or subclass of capital stock, and the number of shares constituting each such class or subclass, and to increase or decrease the number of shares of any such class or subclass. SECTION 2. NO PREEMPTIVE RIGHTS. No holder of shares of stock of the Corporation shall, as such holder, have any preemptive right to purchase or subscribe for any additional shares of the stock of the Corporation or any other security of the Corporation that it may issue or sell. SECTION 3. COMMON STOCK. 3.1 DIVIDEND RIGHTS. The holders of shares of Common Stock shall be entitled to receive such dividends as may be declared by the Board of Directors of the Corporation out of funds legally available therefor. 3.2 RIGHTS UPON LIQUIDATION. Subject to the preferential rights of Preferred Stock, if any, as may be determined by the Board of Directors pursuant to Section l of this Article IV, in the event of any voluntary or involuntary liquidation, dissolution or winding up of, or any distribution of the assets of the Corporation, each holder of shares of Common Stock shall be entitled to receive, ratably with each other holder of Common Stock, that portion of the assets of the Corporation available for distribution to its shareholders as the number of shares of the Common Stock held by such holder bears to the total number of shares of Common Stock then outstanding. - ----------------------- (1) (...continued) capital stock of the Corporation for those shares of Class B Common Stock that were cancelled, and (iv) to adjust the number of shares of authorized Class A Common Stock, Class C Preferred Stock, Class D Preferred Stock, Class H Preferred Stock, Class I Preferred Stock, and Class K Preferred Stock for shares reclassified into or from Class A Common Stock. Class E Preferred Stock was authorized, issued, converted and reclassified into Class A Common Stock. Class F Preferred Stock has not heretofore been used as class a designations. 5 3.3 VOTING RIGHTS. The holders of shares of Common Stock shall be entitled to vote on all matters (on which a holder of shares of Common Stock shall be entitled to vote) at the meetings of the shareholders of the Corporation, and shall be entitled to one vote for each share of Common Stock entitled to vote at such meeting. 3.4 RESTRICTION ON OWNERSHIP AND TRANSFERS. The Beneficial Ownership and Transfer of Common Stock shall be subject to the restrictions set forth in this Section 3.4 of this Article IV. 3.4.1 RESTRICTIONS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 3.4.8 of this Article IV, from and after the date of the Initial Public Offering, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Common Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Common Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Common Stock in excess of the Look-Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 3.4.8 of this Article IV, from and after the date of the Initial Public Offering (and subject to Section 3.4.12 of this Article IV), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Common Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Common Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Common Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 3.4.8 of this Article IV, from and after the date of the Initial Public Offering (and subject to Section 3.4.12 of this Article IV), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Common Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Common Stock that would be otherwise 6 Beneficially Owned by the Initial Holder in excess of the Initial Holder Limit, and the Initial Holder shall acquire no rights in such shares of Common Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 3.4.8 of this Article IV, from and after the date of the Initial Public Offering (and subject to Section 3.4.12 of this Article IV), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Common Stock in excess of the Look-Through Ownership Limit shall be void ab initio as to the Transfer of such shares of Common Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look- Through Ownership Limit, and such Look-Through Entity shall acquire no rights in such shares of Common Stock. (E) TRANSFERS RESULTING IN OWNERSHIP BY FEWER THAN 100 PERSONS. Except as provided in Section 3.4.8 of this Article IV, from and after the date of the Initial Public Offering (and subject to Section 3.4.12 of this Article IV), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Common Stock being Beneficially Owned by less than 100 Persons (determined without reference to any rules of attribution) shall be void ab initio as to the Transfer of such shares of Common Stock that would be otherwise Beneficially Owned by the transferee, and the intended transferee shall acquire no rights in such shares of Common Stock. (F) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the date of the Initial Public Offering, any Transfer that, if effective, would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Common Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Common Stock. 7 (G) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Common Stock that is null and void under Sections 3.4.1(B), (C), (D), (E) or (F) of this Article IV because it would, if effective, result in (i) the ownership of Common Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Common Stock being Beneficially Owned by less than 100 Persons (determined without reference to any rules of attribution), (iii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iv) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Common Stock in the same or any other related transaction. 3.4.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 3.4.1 of this Article IV or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Common Stock in violation of Section 3.4.1 of this Article IV (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Common Stock acquired in violation of Section 3.4.1 of this Article IV or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 3.4.1 of this Article IV, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 3.4.3 of this Article IV; provided, further, that the provisions of this Section 3.4.2 shall be subject to the provisions of Section 3.4.12 of this Article IV; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Common Stock that is expressly authorized pursuant to Section 3.4.8(D) of this Article IV. 8 3.4.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article IV, at any time after the date of the Initial Public Offering there is a purported Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Preferred Stock) or other event such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Common Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Common Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Common Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Common Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit is referred to as a "PROHIBITED TRANSFEREE"), then, except as otherwise provided in Section 3.4.8 of this Article IV, such shares of Common Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the business day prior to the date of the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Common Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the event provided in Section 3.4.3(E), the Prohibited Transferee shall have no rights in the Common Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. 9 (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Common Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Common Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Common Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Common Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Common Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may transfer the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a transfer is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 3.4.3(E). The Prohibited Transferee shall receive the lesser of (l) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. if any of the transfer restrictions set forth in this Section 3.4.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Common Stock as to which such restrictions would, by their terms, apply, and to hold such Common Stock on behalf of the Corporation. 10 (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Common Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Common Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 3.4.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Common Stock in violation of Section 3.4.1 of this Article IV, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 3.4.3 of this Article IV, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 3.4.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the date of the Initial Public Offering certain record and Beneficial Owners and transferees of shares of Common Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Common Stock shall, within 30 days after January l of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Common Stock Beneficially Owned, and a full 11 description of how such shares are held. Each such record or Beneficial Owner of Common Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Common Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as applicable. Each shareholder of record, including without limitation any Person that holds shares of Common Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 3.4.5 from the Beneficial Owner. (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Common Stock and any Person (including the shareholder of record) that is holding shares of Common Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Common Stock already Beneficially Owned by such shareholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 3.4.6 REMEDIES NOT LIMITED. Nothing contained in this Article IV shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 3.4.12 of this Article IV) (i) to protect the Corporation and the interests of its shareholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 3.4.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 3.4 of this Article IV, or in the case of an ambiguity in any definition contained in Section 4 of this Article IV, the Board of Directors shall have the power to determine the application of the provisions of this Article IV with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 12 3.4.8 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 3.4.1 of this Article IV. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purpose of Section 542(a) of the Code and is a corporation, partnership, estate or trust; provided, however, that in no event may any such exception cause such Person's ownership, direct or indirect (without taking into account such Person's ownership of interests in any partnership of which the Corporation is a partner), to exceed 9.8% of the number of Outstanding shares of Common Stock. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article IV, the pledge by the Initial Holder of all or any portion of the Common Stock directly owned at any time or from time to time shall not constitute a violation of Section 3.4.1 of this Article IV and the pledgee shall not be subject to the Ownership Limit with respect to the Common Stock so pledged to it either as a result of the pledge or upon foreclosure. (C) UNDERWRITERS. For a period of 270 days following the purchase of Common Stock by an underwriter that (i) is a corporation or a partnership and (ii) participates in an offering of the Common Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Common Stock purchased by it as a part of or in connection with such offering and with respect to any Common Stock purchased in connection with market making activities. (D) OWNERSHIP AND TRANSFERS BY THE CMO TRUSTEE. The Ownership Limit shall not apply to the initial holding of Common Stock by the "CMO TRUSTEE" (as that term is defined in the "Glossary" to the Prospectus) for the benefit of "HF FUNDING TRUST" (as that term is defined in the "Glossary" to the Prospectus), to any subsequent acquisition of Common Stock by the CMO Trustee in connection with any conversion of Preferred Stock or to any transfer or assignment of all or any part of the legal or beneficial interest in the Common Stock to the CMO Trustee, "FSA" (as that term is defined in the "Glossary" to the Prospectus), any entity 13 controlled by FSA, or any direct or indirect creditor of HF Funding Trust (including without limitation any reinsurer of any obligation of HF Funding Trust) or any acquisition of Common Stock by any such person in connection with any conversion of Preferred Stock. 3.4.9 LEGEND. Each certificate for Common Stock shall bear the following legend: "The shares of Class A Common Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class A Common Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter. Any Person that attempts to Beneficially Own shares of Class A Common Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter, as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated, (i) the transfer of shares of Class A Common Stock represented hereby will be void in accordance with the Charter or (ii) the shares of Class A Common Stock represented hereby automatically be will transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 3.4.10 SEVERABILITY. If any provision of this Article IV or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 3.4.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article IV to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look- Through Ownership Limit in the event of a change in law. 3.4.12 SETTLEMENT. Nothing in this Section 3.4 of this Article IV shall be interpreted to preclude the settlement of any transaction entered into through the 14 facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. SECTION 4. DEFINITIONS. The terms set forth below shall have the meanings specified below when used in this Article IV or in Article V of the Charter.(2) 4.1 BENEFICIAL OWNERSHIP. The term "BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership of shares of Common Stock equal to the sum of (i) the shares of Common Stock directly owned by such Person, (ii) the number of shares of Common Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Common Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (b) of the definition of "Person" shall be disregarded. The terms "BENEFICIAL OWNER," "BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the correlative meanings. 4.2 CHARITABLE BENEFICIARY. The term "CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 3.4.3 of this Article IV, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 4.3 CODE. The term "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. 4.4 COMMON STOCK. The term "COMMON STOCK" shall mean all shares now or hereafter authorized of any class of Common Stock of the Corporation and any other capital stock of the Corporation, however designated, authorized after the Issue Date, that has the right (subject always to prior rights of any class of Preferred Stock) - ------------------------ (2) This section has been revised to replace the term "these Articles of Amendment and Restatement" with "the Charter." 15 to participate in the distribution of the assets and earnings of the Corporation without limit as to per share amount. 4.5 EXCESS TRANSFER. The term "EXCESS TRANSFER" has the meaning set forth in Section 3.4.3(A) of this Article IV. 4.6 EXCHANGE ACT. The term "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. 4.7 INITIAL HOLDER. The term "INITIAL HOLDER" shall mean Terry Considine. 4.8 INITIAL HOLDER LIMIT. The term "INITIAL HOLDER LIMIT" shall mean 15% of the number of Outstanding shares of Common Stock applied, in the aggregate, to the Initial Holder. From the date of the Initial Public Offering, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. 4.9 INITIAL PUBLIC OFFERING. The term "INITIAL PUBLIC OFFERING" shall mean the first underwritten public offering of Class A Common Stock registered under the Securities Act of 1933, as amended, on a registration statement on Form S-11 filed with the Securities and Exchange Commission. 4.10 LOOK-THROUGH ENTITY. The term "LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. 4.11 LOOK-THROUGH OWNERSHIP LIMIT. The term "LOOK-THROUGH OWNERSHIP LIMIT" shall mean 15% of the number of Outstanding shares of Common Stock. 4.12 MARKET PRICE. The term "MARKET PRICE" on any date shall mean the Closing Price on the Trading Day immediately preceding such date. The term "CLOSING PRICE" on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting 16 system with respect to securities listed or admitted to trading on the NYSE or, if the Common Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if the Common Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Common Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Stock selected by the Board of Directors of the Company. The term "TRADING DAY" shall mean a day on which the principal national securities exchange on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common Stock is not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. 4.13 NYSE. The term "NYSE" shall mean the New York Stock Exchange, Inc. 4.14 OUTSTANDING. The term "OUTSTANDING" shall mean issued and outstanding shares of Common Stock of the Corporation, provided that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "OUTSTANDING" shall be deemed to include the number of shares of Common Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. 4.15 OWNERSHIP LIMIT. The term "OWNERSHIP LIMIT" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, 8.7% of the number of the Outstanding shares of Common Stock of the Corporation. 4.16 OWNERSHIP RESTRICTIONS. The term "OWNERSHIP RESTRICTIONS" shall mean collectively the Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to the Initial Holder and the Look-Through Ownership Limit as applied to Look-Through Entities. 17 4.17 PERSON. The term "PERSON" shall mean (A) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (B) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act. 4.18 PROHIBITED TRANSFEREE. The term "PROHIBITED TRANSFEREE" has the meaning set forth in Section 3.4.3(A) of this Article IV. 4.19 REIT. The term "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. 4.20 TRANSFER. The term "TRANSFER" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Common Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Common Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Common Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Common Stock). The term "TRANSFERS" and "TRANSFERRED" shall have correlative meanings. 4.21 TRUST. The term "TRUST" shall mean the trust created pursuant to Section 3.4.3 of this Article IV. 4.22 TRUSTEE. The term "TRUSTEE" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. 4.23 PROSPECTUS. The term "PROSPECTUS" shall mean the prospectus that forms a part of the registration statement filed with the Securities and Exchange Commission in connection with the initial Public Offering, in the form included in the registration statement at the time the registration statement becomes effective; provided, however, that, if such prospectus is subsequently supplemented or amended for use in connection with the Initial Public Offering, "PROSPECTUS" shall refer to such prospectus as so supplemented or amended. 18 ARTICLE V GENERAL REIT PROVISIONS SECTION 1. TERMINATION OF REIT STATUS. The Board of Directors shall take no action to terminate the Corporation's status as a REIT until such time as (i) the Board of Directors adopts a resolution recommending that the Corporation terminate its status as a REIT, (ii) the Board of Directors presents the resolution at an annual or special meeting of the shareholders and (iii) such resolution is approved by the vote of a majority of the shares entitled to be cast on the resolution. SECTION 2. EXCHANGE OR MARKET TRANSACTIONS. Nothing in Article IV or this Article V shall preclude the settlement of any transaction entered into through the facilities of the NYSE or other national securities exchange or an automated inter-dealer quotation system. The fact that the settlement of any transaction is permitted shall not negate the effect of any other provision of this Article V or any provision of Article IV, and the transferee, including but not limited to any Prohibited Transferee, in such a transaction shall remain subject to all the provisions and limitations of Article IV and this Article V. SECTION 3. SEVERABILITY. If any provision of Article IV or this Article V or any application of any such provision is determined to be invalid by any federal or state court having jurisdiction over the issues, the validity of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. SECTION 4. WAIVER. The Corporation shall have authority at any time to waive the requirement that the Corporation redeem shares of Preferred Stock if, in the sole discretion of the Board of Directors, any such redemption would jeopardize the status of the Corporation as a REIT for federal income tax purposes. ARTICLE VI BOARD OF DIRECTORS SECTION 1. MANAGEMENT. The business and the affairs of the Corporation shall managed under the direction of its Board of Directors. SECTION 2. NUMBER. The number of directors that will constitute the entire Board of Directors shall be fixed by, or in the manner provided in, the Bylaws but shall 19 in no event be less than three. Any increases or decreases in the size of the board shall be apportioned equally among the classes of directors to prevent stacking in any one class of directors. There are currently six directors in office whose names are as follows: Terry Considine, Peter K. Kompaniez, Richard S. Ellwood, J. Landis Martin, Thomas L. Rhodes and John D. Smith.(3) SECTION 3. Intentionally deleted. SECTION 4. VACANCIES. Except as otherwise provided in the Charter,(4) newly created directorships resulting from any increase in the number of directors may be filled by the majority vote of the Board of Directors, and any vacancies on the Board of Directors resulting from death, resignation, removal or other cause shall be filled by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum of the Board of Directors, or, if applicable, by a sole remaining director. Any director elected in accordance with the preceding sentence shall hold office until the next annual meeting of the Corporation at which time a successor shall be elected to fill the remaining term of the position filled by such director. SECTION 5. REMOVAL. Except as otherwise provided in the Charter,(5) any director may be removed from office only for cause and only by the affirmative vote of two-thirds of the aggregate number of votes then entitled to be cast generally in the election of directors. For purposes of this Section 5, "CAUSE" shall mean the willful and continuous failure of a director to substantially perform the duties to the Corporation of such director (other than any such failure resulting from temporary incapacity due to physical or mental illness) or the willful engaging by a director in gross misconduct materially and demonstrably injurious to the Corporation. SECTION 6. BYLAWS. The Board of Directors shall have power to adopt, amend, alter, change and repeal any Bylaws of the Corporation by vote of the majority of the Board of Directors then in office. Any adoption, amendment, alteration, change or repeal of any Bylaws by the shareholders of the Corporation shall require the affirmative vote - ------------------------ (3) See Article FORTH. (4) This section has been revised to replace the term "these Articles of Amendment and Restatement" with "the Charter." (5) This section has been revised to replace the term "these Articles of Amendment and Restatement" with "the Charter." 20 of a majority of the aggregate number of votes then entitled to be cast generally in the election of directors. Notwithstanding anything in this Section 6 to the contrary, no amendment, alteration, change or repeal of any provision of the Bylaws relating to the removal of directors or repeal of the Bylaws shall be effected without the vote of two-thirds of the aggregate number of votes entitled be cast generally in the election of Directors. SECTION 7. POWERS. The enumeration and definition of particular powers of the Board of Directors included elsewhere in the Charter(6) shall in no way be limited or restricted by reference to or inference from the terms of any other clause of this or any other Article of the Charter,(7) or construed as excluding or limiting, or deemed by inference or otherwise in any manner to exclude or limit, the powers conferred upon the Board of Directors under the Maryland General Corporation Law ("MGCL") as now or hereafter in force. ARTICLE VII LIMITATION OF LIABILITY No director or officer of the Corporation shall be liable to the Corporation or its shareholders for money damages to the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers. Neither the amendment nor repeal of this Article VII, nor the adoption or amendment of any other provision of the charter or Bylaws of the Corporation inconsistent with this Article VII, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act that occurred prior to such amendment, repeal or adoption. - ------------------------ (6) This section has been revised to replace the term "these Articles of Amendment and Restatement" with "the Charter." (7) This section has been revised to replace the term "these Articles of Amendment and Restatement" with "the Charter." 21 ARTICLE VIII INDEMNIFICATION The Corporation shall indemnify, to the fullest extent permitted by Maryland law, as applicable from time to time, all persons who at any time were or are directors or officers of the Corporation for any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) relating to any action alleged to have been taken or omitted in such capacity as a director or an officer. The Corporation shall pay or reimburse all reasonable expenses incurred by a present or former director or officer of the Corporation in connection with any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) in which the present or former director or officer is a party, in advance of the final disposition of the proceeding, to the fullest extent permitted by, and in accordance with the applicable requirements of, Maryland law, as applicable from time to time. The Corporation may indemnify any other persons permitted but not required to be indemnified by Maryland law, as applicable from time to time, if and to extent indemnification is authorized and determined to be appropriate, in each case in accordance with applicable law, by the Board of Directors, the majority of the shareholders of the Corporation entitled to vote thereon or special legal counsel appointed by the Board of Directors. No amendment of the Charter(8) of the Corporation or repeal of any of its provisions shall limit or eliminate any of the benefits provided to directors and officers under this Article VIII in respect of any act or omission that occurred prior to such amendment or repeal. ARTICLE IX WRITTEN CONSENT OF SHAREHOLDERS Any corporate action upon which a vote of shareholders is required or permitted may be taken without a meeting or vote of shareholders with the unanimous written consent of shareholders entitled to vote thereon. - ------------------------ (8) This section has been revised to replace the term "these Articles of Amendment and Restatement" with "the Charter." 22 ARTICLE X AMENDMENT The Corporation reserves the right to amend, alter or repeal any provision contained in this charter upon (i) adoption by the Board of Directors of a resolution recommending such amendment, alteration, or repeal, (ii) presentation by the Board of Directors to the shareholders of a resolution at an annual or special meeting of the shareholders and (iii) approval of such resolution by the affirmative vote of the holders of a majority (or, as applicable, a two-thirds vote) of the aggregate number of votes entitled to be case generally in the election of directors. All rights conferred upon shareholders herein are subject to this reservation. ARTICLE XI EXISTENCE The Corporation is to have a perpetual existence. ARTICLE XII [Reserved.] ARTICLE XIII CLASS B PREFERRED STOCK The terms of the Class B Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class B Preferred Stock, as filed with the SDAT on August 4, 1997. 23 ARTICLE XIV CLASS C PREFERRED STOCK The terms of the Class C Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class C Preferred Stock, as filed with the SDAT on December 22, 1997 (as corrected by Certificates of Correction as filed with the SDAT on February 18, 1998 and on November 30, 1998 at 1:24 p.m., respectively). ARTICLE XV CLASS D PREFERRED STOCK The terms of the Class D Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class D Preferred Stock, as filed with the SDAT on February 18, 1998 (as corrected by Certificate of Correction as filed with the SDAT on November 30, 1998 at 1:26 p.m.). ARTICLE XVI CLASS G PREFERRED STOCK The terms of the Class G Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class G Preferred Stock, as filed with the SDAT on July 13, 1998. ARTICLE XVII CLASS H PREFERRED STOCK The terms of the Class H Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class G Preferred Stock, as filed with the SDAT on July 13, 1998. 24 ARTICLE XVIII [Reserved.] ARTICLE XIX In accordance with Section 15.4 of the Indenture, dated as of November 1, 1996. by and between Insignia Financial Group, Inc. ("INSIGNIA"), a Delaware corporation (as Issuer) and First Union National Bank of South Carolina (as Trustee)(the "INDENTURE"), upon effectiveness of the Merger (as defined in the Amended and Restated Agreement and Plan of Merger, dated as of May 26, 1998, by and among the Corporation, Insignia, Insignia/ESG Holdings, Inc., a Delaware corporation, and AIMCO Properties, L.P., a Delaware limited partnership (the "MERGER AGREEMENT")), the 6 1/2% Convertible Subordinated Debentures due 2016 issued by Insignia (the "CONVERTIBLE DEBENTURES") will become convertible into the same consideration received by holders of Class A Common Stock, par value $.01 per share, of Insignia, pursuant to the Merger (i.e., shares of Class E Cumulative Preferred Stock, par value $.01 per share, of AIMCO (the "AIMCO CLASS E PREFERRED STOCK"), (or shares of Class A Common Stock, par value $.01 per share, of the Corporation (the "AIMCO COMMON STOCK"), if such Convertible Debentures are converted after the AIMCO Class E Preferred Stock has been converted into AIMCO Common Stock), the Cash Amount (as defined in the Merger Agreement), if any, and cash in lieu of fractional shares). Furthermore, the consideration to be received by holders of Convertible Debentures who convert such Convertible Debentures subsequent to the effectiveness of the Merger shall be adjusted as required by Article XV of the Indenture.(9) - ------------------------ (9) All of the outstanding shares of AIMCO Class E Preferred Stock were converted into shares of AIMCO Common Stock on January 15, 1999 and all of the authorized shares of AIMCO Class E Preferred Stock have been reclassified into Class A Common Stock. 25 ARTICLE XX CLASS J PREFERRED STOCK The terms of the Class J Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class J Preferred Stock, as filed with the SDAT on November 6, 1998. ARTICLE XXI CLASS K PREFERRED STOCK The terms of the Class K Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class K Preferred Stock, as filed with the SDAT on February 17, 1999. ARTICLE XXII CLASS I PREFERRED STOCK The terms of the Class I Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, forth in the Articles Supplementary relating to the Class K Preferred Stock, as filed with the SDAT on February 17, 1999. ARTICLE XXII CLASS I PREFERRED STOCK The terms of the Class I Preferred Stock (including the preferences, conversion or other rights, voting powers restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as set forth in the Articles Supplementary relating to the Class I Preferred Stock, as filed with the SDAT on May 25, 1999 at 1:24 p.m. 26 * * * * * * * 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. FOURTH: The Charter of the Corporation is not amended by these Articles of Amendment and Restatement; provided, however, consistent with Section 2-608(b)(7) of the Maryland General Corporation Law, the current number and names of directors are provided in the last sentence of Section 2 of Article VI of the restated Charter of the Corporation. 27 IN WITNESS WHEREOF, APARTMENT INVESTMENT AND MANAGEMENT COMPANY has caused these presents to be signed in its name and on its behalf by its Vice Chairman and President and witnessed by its Secretary on April 21, 1999. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ - -------------------------------- ---------------------------------- Joel F. Bonder, Peter K. Kompaniez, Secretary Vice Chairman and President THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the foregoing Articles of Restatement of which this certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles of Restatement to be the corporate act of said Corporation and hereby certifies that to the best of his knowledge, information, and belief the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ PETER K. KOMPANIEZ ---------------------------------- Peter K. Kompaniez, Vice Chairman and President 28 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS B CUMULATIVE CONVERTIBLE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, the Board of Directors has duly divided and classified 750,000 authorized but unissued shares of the capital stock of the Corporation into a class designated as Class B Cumulative Convertible Preferred Stock and has provided for the issuance of such class. SECOND: The reclassification increases the number of shares classified as Class B Cumulative Convertible Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 750,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Preferred Stock, par value $.01 per share, from 10,000,000 shares immediately prior to the reclassification to 9,250,000 shares immediately after the reclassification. The number of shares classified as Class B Cumulative Convertible Preferred Stock may be decreased pursuant to Section 6 of Article Third of these Articles Supplementary upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class B Cumulative Convertible Preferred Stock (including the preferences, conversions or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as follows: 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred Stock shall be designated as Class B Cumulative Convertible Preferred Stock (the "Class B Preferred Stock") and Seven Hundred Fifty Thousand (750,000) shall be the authorized number of shares of such Class B Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class B Preferred Stock, the following terms shall have the meanings indicated: -1- "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Aggregate Value" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "Base Common Stock Dividend" shall have the meaning set forth in paragraph (a) of Section 9 of this Article. "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (ii) of the definition of "Person" shall be disregarded. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings. "Board of Directors" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class B Preferred Stock. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Call Date" shall have the meaning set forth in paragraph (b) of Section 5 of this Article. "Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 11.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "Class B Preferred Stock" shall have the meaning set forth in Section 1 of this Article. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or -2- any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "Common Stock" shall mean the Class A Common Stock, $.01 par value per share, of the Corporation or such shares of the Corporation's capital stock into which outstanding shares of Common Stock shall be reclassified. "Conversion Price" shall mean the conversion price per share of Common Stock for which each share of Class B Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to paragraph (d) of Section 7 of this Article. The initial Conversion Price shall be $30.45 (equivalent to an initial conversion rate of 3.28407 shares of Common Stock for each share of Class B Preferred Stock). "Current Market Price" of publicly traded shares of Common Stock or any other class or series of capital stock or other security of the Corporation or of any similar security of any other issuer for any day shall mean the closing price, regular way on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices regular way on such day, in either case as reported on the principal national securities exchange on which such securities are listed or admitted for trading, or, if such security is not quoted on any national securities exchange, on the National Market of the National Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or, if such security is not quoted on the NASDAQ National Market, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for such security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any New York Stock Exchange or National Association of Securities Dealers, Inc. member firm regularly making a market in such security selected for such purpose by the Chief Executive Officer or the Board of Directors or if any class or series of securities are not publicly traded, the fair value of the shares of such class as determined reasonably and in good faith by the Board of Directors of the Corporation. "distribution" shall have the meaning set forth in paragraph (d)(iii) of Section 7 of this Article. "Dividend Payment Date" shall mean, with respect to each Dividend Period, (a) the date that cash dividends are paid on the Common Stock with respect to such Dividend Period; or (b) if such dividends have not been paid on the Common Stock by 9:00 a.m., New York City time, on the sixtieth day from and including the last day of such Dividend Period, then on such day; provided, further, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date. -3- "Dividend Periods" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 1, April 1, July 1 and October 1 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class B Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Call Date with respect to the Class B Preferred Stock being redeemed. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" has the meaning set forth in Section 11.3(A) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Fair Market Value" shall mean the average of the daily Current Market Prices of a share of Common Stock during five (5) consecutive Trading Days selected by the Corporation commencing not more than twenty (20) Trading Days before, and ending not later than, the earlier of the day in question and the day before the "ex" date with respect to the issuance or distribution requiring such computation. The term "'ex' date," when used with respect to any issuance or distribution, means the first day on which the share of Common Stock trades regular way, without the right to receive such issuance or distribution, on the exchange or in the market, as the case may be, used to determine that day's Current Market Price. "Issue Date" shall mean August 4, 1997. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including September 30, 1997. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class B Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class B Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. -4- "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class B Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) by the Aggregate Value of all shares of Equity Stock other than Class B Preferred Stock that are Beneficially Owned by the Look-Through Entity. "Market Price" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of a share of that class of Equity Stock on the Trading Day immediately preceding such date. The term "Closing Price" on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Company. "NYSE" shall mean the New York Stock Exchange, Inc. "Outstanding" shall mean issued and outstanding shares of Equity Stock of the Corporation, provided that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "Outstanding" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "Ownership Limit" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class B Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value -5- of all shares of Equity Stock other than Class B Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean collectively the Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to the Initial Holder and the Look-Through Ownership Limit as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8 of this Article. "Person" shall mean (a) for purposes of Section 11 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity and shall include any successor (by merger or otherwise) of such entity. "Prohibited Transferee" has the meaning set forth in Section 11.3(A) of this Article. "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 8 of this Article. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class B Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day", as to any securities, shall mean any day on which such securities are traded on the principal national securities exchange on which such securities are listed or admitted or, if such securities are not listed or admitted for trading on any national securities exchange, the NASDAQ National Market or, if such securities are not listed or admitted for trading on the NASDAQ National Market, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. -6- "Transaction" shall have the meaning set forth in paragraph (e) of Section 7 of this Article. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class B Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class B Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class B Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class B Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class B Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class B Preferred Stock. "Trust" shall mean the trust created pursuant to Section 11.3 of this Article. "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "Voting Preferred Stock" shall have the meaning set forth in Section 9 of this Article. 3. DIVIDENDS. (a) The holders of Class B Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available for that purpose, cumulative dividends payable in cash in an amount per share of Class B Preferred Stock equal to the greater of (i) the base dividend of $1.78125 per quarter (the "Base Rate") or (ii) the cash dividends declared on the number of shares of Common Stock, or portion thereof, into which a share of Class B Preferred Stock is convertible. The dividends payable with respect to the Initial Dividend Period shall be determined solely by reference to the Base Rate. The amount referred to in clause (ii) of this paragraph (a) with respect to each succeeding Dividend Period shall be determined as of the applicable Dividend Payment Date by multiplying the number of shares of Common Stock, or portion thereof calculated to the fourth decimal point, into which a share of Class B Preferred Stock would be convertible at the opening of business on such Dividend Payment Date (based on the Conversion Price then in effect) by the aggregate cash dividends payable or paid for such Dividend Period in respect of a share of Common Stock outstanding as of the record date for the payment of dividends on the Common Stock with respect to such Dividend Period. If (A) the Corporation pays a cash dividend on the Common Stock after the -7- Dividend Payment Date for the corresponding Dividend Period and (B) the dividend on the Class B Preferred Stock for such Dividend Period calculated pursuant to clause (ii) of this paragraph (a), taking into account the Common Stock dividend referenced in clause (A), exceeds the dividend previously declared on the Class B Preferred Stock for such Dividend Period, the Corporation shall pay an additional dividend to the holders of the Class B Preferred Stock on the date that the Common Stock dividend referenced in clause (A) is paid, in an amount equal to the difference between the dividend calculated pursuant to clause (B) and the dividends previously declared on the Class B Preferred Stock with respect to such Dividend Period. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on the Dividend Payment Dates, commencing on the first Dividend Payment Date after the Issue Date. Each such dividend shall be payable in arrears to the holders of record of the Class B Preferred Stock, as they appear on the stock records of the Corporation at the close of business on a record date fixed by the Board of Directors which shall be not more than 60 days prior to the applicable Dividend Payment Date and, within such 60 day period, shall be the same date as the record date for the regular quarterly dividend payable with respect to the Common Stock for the Dividend Period to which such Dividend Payment Date relates (or, if there is no such record date for Common Stock, then such date as the Board of Directors may fix). Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. Upon a final administrative determination by the Internal Revenue Service that the Corporation does not qualify as a real estate investment trust in accordance with Section 856 of the Code, the Base Rate set forth in (a)(i) will be increased to $3.03125 until such time as the Corporation regains its status as a real estate investment trust; provided, however, that if the Corporation contests its loss of real estate investment trust status in Federal Court, following its receipt of an opinion of nationally recognized tax counsel to the effect that there is a reasonable basis to contest such loss of status, the Base Rate shall not be increased during the pendency of such judicial proceeding; provided further, however, that upon a final judicial determination in Federal Tax Court, Federal District Court or the Federal Claims Court that the Corporation does not qualify as a real estate investment trust, the Base Rate will be increased as stated above from the date of such judicial determination. (b) The amount of dividends payable per share of Class B Preferred Stock for the Initial Dividend Period, or any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class B Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Class B Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class B Preferred Stock that may be in arrears. -8- (c) So long as any of the shares of Class B Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made directly or indirectly by the Corporation with respect to any class or series of Parity Stock for any period unless dividends equal to the full amount of accumulated, accrued and unpaid dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for such payment on the Class B Preferred Stock for all Dividend Periods terminating on or prior to the Dividend Payment Date with respect to such class or series of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class B Preferred Stock and all dividends declared upon any other class or series of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class B Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class B Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of or options, warrants or rights to subscribe for or purchase shares of Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made directly or indirectly by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) directly or indirectly by the Corporation (except by conversion into or exchange for Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless in each case (i) the full cumulative dividends (including all accumulated, accrued and unpaid dividends) on all outstanding shares of Class B Preferred Stock and any other Parity Stock of the Corporation shall have been paid or such dividends have been declared and set apart for payment for all past Dividend Periods with respect to the Class B Preferred Stock and all past dividend periods with respect to such Parity Stock and (ii) sufficient funds shall have been paid or set apart for the payment of the full dividend for the current Dividend Period with respect to the Class B Preferred Stock and the current dividend period with respect to such Parity Stock. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class B Preferred Stock shall be entitled to receive One Hundred Dollars ($100) per share of Class B Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class B Preferred Stock have been paid the Liquidation Preference in full, plus an -9- amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class B Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class B Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class B Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class B Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class B Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class B Preferred Stock shall not be redeemable by the Corporation prior to August 4, 2002. On and after August 4, 2002, the Corporation, at its option, may redeem shares of Class B Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to 100% of the Liquidation Preference thereof, plus all accrued and unpaid dividends to the Call Date. (b) Shares of Class B Preferred Stock shall be redeemed by the Corporation on the date specified in the notice to holders required under paragraph (d) of this Section 5 (the "Call Date"). The Call Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class B Preferred Stock and any other class or series of Parity Stock of the Corporation have not been paid or declared and set apart for payment, no shares of Class B Preferred Stock may be redeemed unless -10- all outstanding shares of Class B Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class B Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class B Preferred Stock. (d) If the Corporation shall redeem shares of Class B Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (1) the Call Date; (2) the number of shares of Class B Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the place or places at which certificates for such shares are to be surrendered for cash; and (4) the then-current Conversion Price. Notice having been mailed as aforesaid, from and after the Call Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) except as otherwise provided herein, dividends on the shares of Class B Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class B Preferred Stock called for redemption (except that, in the case of a Call Date after a dividend record date and prior to the related Dividend Payment Date, holders of Class B Preferred Stock on the dividend record date will be entitled on such Dividend Payment Date to receive the dividend payable on such shares), (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class B Preferred Stock of the Corporation shall cease (except the rights to receive the cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required and to receive any dividends payable thereon). The Corporation's obligation to make available the redemption price in accordance with the preceding sentence shall be deemed fulfilled if, on or before the Call Date, the Corporation shall deposit with a bank or trust company (which may be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption, in trust, with irrevocable instructions that such cash be applied to the redemption of the shares of Class B Preferred Stock so called for redemption. No interest shall accrue for the benefit of the holders of shares of Class B Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Call Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class B Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the -11- certificates for any such shares of Class B Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class B Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class B Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class B Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class B Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class B Preferred Stock which shall have been issued and reacquired in any manner by the Corporation (including shares of Class B Preferred Stock which have been surrendered for conversion into Common Stock) shall be returned to the status of authorized, but unissued shares of Class B Preferred Stock. 7. CONVERSION. At any time on or after August 4, 1998. Holders of shares of Class B Preferred Stock shall have the right to convert all or a portion of such shares into shares of Common Stock, as follows: (a) Subject to and upon compliance with the provisions of this Section 7, a holder of shares of Class B Preferred Stock shall have the right, at such holder's option, at any time on or after August 4, 1998 to convert such shares, in whole or in part, into the number of fully paid and non-assessable shares of authorized but previously unissued shares of Common Stock per each share of Class B Preferred Stock obtained by dividing the Liquidation Preference (excluding any accumulated, accrued and unpaid dividends) per share of Class B Preferred Stock by the Conversion Price (as in effect at the time and on the date provided for in the last subparagraph of paragraph (b) of this Section 7) and by surrendering such shares to be converted, such surrender to be made in the manner provided in paragraph (b) of this Section 7; provided, however, that the right to convert shares of Class B Preferred Stock called for redemption pursuant to Section 5 shall terminate at the close of business on the Call Date fixed for such redemption, unless the Corporation shall default in making payment of cash payable upon such redemption under Section 5 of this Article. (b) In order to exercise the conversion right, the holder of each share of Class B Preferred Stock to be converted shall surrender the certificate representing such share, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent, accompanied by written notice to the Corporation that the holder thereof elects to convert such -12- share of Class B Preferred Stock. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Class B Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid). Holders of shares of Class B Preferred Stock at the close of business on a dividend payment record date shall be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion thereof following such dividend payment record date and prior to such Dividend Payment Date. Except as provided above, the Corporation shall make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends on the shares of Common Stock issued upon such conversion. As promptly as practicable after the surrender of certificates for shares of Class B Preferred Stock as aforesaid, the Corporation shall issue and shall deliver at such office to such holder, or send on such holder's written order, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such shares of Class B Preferred Stock in accordance with provisions of this Section 7, and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in paragraph (c) of this Section 7. Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of Class B Preferred Stock shall have been surrendered and such notice received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Price in effect at such time on such date unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. If the dividend payment record date for the Class B Preferred Stock and Common Stock do not coincide, and the preceding sentence does not operate to ensure that a holder of shares of Class B Preferred Stock whose shares are converted into Common Stock does not receive dividends on both the shares of Class B Preferred Stock and the Common Stock into which such shares are converted for the same Dividend Period, then notwithstanding anything herein to the contrary, it is the intent, and the Transfer Agent is authorized to ensure that no conversion after the earlier of such record dates will be accepted until after the latter of such record dates. -13- (c) No fractional share of Common Stock or scrip representing fractions of a share of Common Stock shall be issued upon conversion of the shares of Class B Preferred Stock. Instead of any fractional interest in a share of Common Stock that would otherwise be deliverable upon the conversion of shares of Class B Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of the Common Stock on the Trading Day immediately preceding the date of conversion. If more than one share shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class B Preferred Stock so surrendered. (d) The Conversion Price shall be adjusted from time to time as follows: (i) If the Corporation shall after the Issue Date (A) pay a dividend or make a distribution on its capital stock in shares of Common Stock, (B) subdivide its outstanding Common Stock into a greater number of shares, (C) combine its outstanding Common Stock into a smaller number of shares or (D) issue any shares of capital stock by reclassification of its outstanding Common Stock, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or distribution or at the opening of business on the day following the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any share of Class B Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock (or fraction of a share of Common Stock) that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such share of Class B Preferred Stock been converted immediately prior to the record date in the case of a dividend or distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this paragraph (d)(i) of this Section 7 shall become effective immediately after the opening of business on the day next following the record date (except as provided in paragraph (h) below) in the case of a dividend or distribution and shall become effective immediately after the opening of business on the day next following the effective date in the case of a subdivision, combination or reclassification. (ii) If the Corporation shall issue after the Issue Date rights, options or warrants to all holders of Common Stock entitling them (for a period expiring within 45 days after the record date described below in this paragraph (d)(ii) of this Section 7) to subscribe for or purchase Common Stock at a price per share less than the Fair Market Value per share of the Common Stock on the record date for the determination of stockholders entitled to receive such rights, options or warrants, then the Conversion Price in effect at the opening of business on the day next following such record date shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the opening of business on the day following the date fixed for such determination by (B) a fraction, the numerator of which shall be the sum of (X) the number of shares of Common Stock outstanding on the close of business on the date fixed for such determination and (Y) the number of shares that could be -14- purchased at such Fair Market Value from the aggregate proceeds to the Corporation from the exercise of such rights, options or warrants for Common Stock, and the denominator of which shall be the sum of (XX) the number of shares of Common Stock outstanding on the close of business on the date fixed for such determination and (YY) the number of additional shares of Common Stock offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided in paragraph (h) below). In determining whether any rights, options or warrants entitle the holders of Common Stock to subscribe for or purchase Common Stock at less than such Fair Market Value, there shall be taken into account any consideration received by the Corporation upon issuance and upon exercise of such rights, options or warrants, the value of such consideration, if other than cash, to be determined in good faith by the Board of Directors. (iii) If the Corporation shall after the Issue Date make a distribution on its Common Stock other than in cash or shares of Common Stock (including any distribution in securities (other than rights, options or warrants referred to in paragraph (d)(ii) of this Section 7)) (each of the foregoing being referred to herein as a "distribution"), then the Conversion Price in effect at the opening of business on the next day following the record date for determination of stockholders entitled to receive such distribution shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the opening of business on the day following the record date by (B) a fraction, the numerator of which shall be the difference between (X) the number of shares of Common Stock outstanding on the close of business on the record date and (Y) the number of shares determined by dividing (aa) the aggregate value of the property being distributed by (bb) the Fair Market Value per share of Common Stock on the record date, and the denominator of which shall be the number of shares of Common Stock outstanding on the close of business on the record date. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided below). The value of the property being distributed shall be as determined in good faith by the Board of Directors; provided, however, if the property being distributed is a publicly traded security, its value shall be calculated in accordance with the procedure for calculating the Fair Market Value of a share of Common Stock (calculated for a period of five consecutive Trading Days commencing on the twentieth Trading Day after the distribution). Neither the issuance by the Corporation of rights, options or warrants to subscribe for or purchase securities of the Corporation nor the exercise thereof shall be deemed a distribution under this paragraph. (iv) If after the Issue Date the Corporation shall acquire, pursuant to an issuer or self tender offer, all or any portion of the outstanding Common Stock and such tender offer involves the payment of consideration per share of Common Stock having a fair market value (as determined in good faith by the Board of Directors), at the last time (the "Expiration Time") tenders may be made pursuant to such offer, that exceeds the Current Market Price per share of Common Stock on the Trading Day next succeeding the Expiration Time, then the Conversion Price in effect on the opening of business on the day next succeeding the Expiration -15- Time shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the Expiration Time by (B) a fraction, the numerator of which shall be (X) the number of shares of Common Stock outstanding (including the shares acquired in the tender offer (the "Acquired Shares")) immediately prior to the Expiration Time, multiplied by (Y) the Current Market Price per share of Common Stock on the Trading Day next succeeding the Expiration Time, and the denominator of which shall be the sum of (XX) the fair market value (determined as aforesaid) of the aggregate consideration paid to acquire the Acquired Shares and (YY) the product of (I) the number of shares of Common Stock outstanding (less any Acquired Shares) at the Expiration Time, multiplied by (II) the Current Market Price per share of Common Stock on the Trading Day next succeeding the Expiration Time. (v) No adjustment in the Conversion Price shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in such price; provided, however, that any adjustments that by reason of this paragraph (d)(v) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided, further, that any adjustment shall be required and made in accordance with the provisions of this Section 7 (other than this paragraph (d)(v)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of shares of Common Stock. Notwithstanding any other provisions of this Section 7, the Corporation shall not be required to make any adjustment of the Conversion Price for the issuance of (A) any shares of Common Stock pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of optional amounts in shares of Common Stock under such plan or (B) any options, rights or shares of Common Stock pursuant to any stock option, stock purchase or other stock-based plan maintained by the Corporation. All calculations under this Section 7 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a share (with .05 of a share being rounded upward), as the case may be. Anything in this paragraph (d) of this Section 7 to the contrary notwithstanding, the Corporation shall be entitled, to the extent permitted by law, to make such reductions in the Conversion Price, in addition to those required by this paragraph (d), as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, reclassification or combination of shares, distribution of rights or warrants to purchase stock or securities, or a distribution of other assets (other than cash dividends) hereafter made by the Corporation to its stockholders shall not be taxable, or if that is not possible, to diminish any income taxes that are otherwise payable because of such event. (e) If the Corporation shall be a party to any transaction (including without limitation a merger, consolidation, statutory share exchange, issuer or self tender offer for at least 30% of the shares of Common Stock outstanding, sale of all or substantially all of the Corporation's assets or recapitalization of the Common Stock, but excluding any transaction as to which paragraph (d)(i) of this Section 7 applies) (each of the foregoing being referred to herein as a "Transaction"), in each case as a result of which shares of Common Stock shall be converted into the right to receive stock, securities or other property (including cash or any combination thereof), each share of Class B Preferred Stock which is not converted into the right to receive -16- stock, securities or other property in connection with such Transaction shall thereupon be convertible into the kind and amount of shares of stock, securities and other property (including cash or any combination thereof) receivable upon such consummation by a holder of that number of shares of Common Stock into which one share of Class B Preferred Stock was convertible immediately prior to such Transaction (without giving effect to any Conversion Price adjustment pursuant to Section 7(d)(iv) of this Article). The Corporation shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this paragraph (e), and it shall not consent or agree to the occurrence of any Transaction until the Corporation has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Class B Preferred Stock that will contain provisions enabling the holders of the Class B Preferred Stock that remain outstanding after such Transaction to convert into the consideration received by holders of Common Stock at the Conversion Price in effect immediately prior to such Transaction. The provisions of this paragraph (e) shall similarly apply to successive Transactions. (f) If: (i) the Corporation shall declare a dividend (or any other distribution) on the Common Stock (other than cash dividends and cash distributions); or (ii) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of any class or series of capital stock or any other rights or warrants; or (iii) there shall be any reclassification of the outstanding Common Stock or any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation is required, or a statutory share exchange, an issuer or self tender offer shall have been commenced for at least 30% of the outstanding shares of Common Stock (or an amendment thereto changing the maximum number of shares sought or the amount or type of consideration being offered therefor shall have been adopted), or the sale or transfer of all or substantially all of the assets of the Corporation as an entirety; or (iv) there shall occur the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, then the Corporation shall cause to be filed with the Transfer Agent and shall cause to be mailed to each holder of shares of Class B Preferred Stock at such holder's address as shown on the stock records of the Corporation, as promptly as possible, a notice stating (A) the record date for the payment of such dividend, distribution or rights or warrants, or, if a record date is not established, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights or warrants are to be determined or (B) the date on which such reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up is expected to become effective, and the date as of which it is expected -17- that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up or (C) the date on which such tender offer commenced, the date on which such tender offer is scheduled to expire unless extended, the consideration offered and the other material terms thereof (or the material terms of any amendment thereto). Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7. (g) Whenever the Conversion Price is adjusted as herein provided, the Corporation shall promptly file with the Transfer Agent an officer's certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after delivery of such certificate, the Corporation shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the effective date such adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to each holder of shares of Class B Preferred Stock at such holder's last address as shown on the stock records of the Corporation. (h) In any case in which paragraph (d) of this Section 7 provides that an adjustment shall become effective on the day next following the record date for an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any share of Class B Preferred Stock converted after such record date and before the occurrence of such event the additional Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount of cash in lieu of any fraction pursuant to paragraph (c) of this Section 7. (i) There shall be no adjustment of the Conversion Price in case of the issuance of any capital stock of the Corporation in a reorganization, acquisition or other similar transaction except as specifically set forth in this Section 7. (j) If the Corporation shall take any action affecting the Common Stock, other than action described in this Section 7, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of Class B Preferred Stock, the Conversion Price for the Class B Preferred Stock may be adjusted, to the extent permitted by law, in such manner, if any, and at such time as the Board of Directors, in its sole discretion, may determine to be equitable under the circumstances. (k) The Corporation shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Common Stock solely for the purpose of effecting conversion of the Class B Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Class B Preferred -18- Stock not theretofore converted into Common Stock. For purposes of this paragraph (k), the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of Class B Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder (and without regard to the Ownership Limit set forth in the Charter of the Corporation). The Corporation covenants that any shares of Common Stock issued upon conversion of the shares of Class B Preferred Stock shall be validly issued, fully paid and nonassessable. The Corporation shall use its best efforts to list the shares of Common Stock required to be delivered upon conversion of the shares of Class B Preferred Stock, prior to such delivery, upon each national securities exchange, if any, upon which the outstanding shares of Common Stock are listed at the time of such delivery. (l) The Corporation will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock or other securities or property on conversion or redemption of shares of Class B Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock or other securities or property in a name other than that of the holder of the shares of Class B Preferred Stock to be converted or redeemed, and no such issue or delivery shall be made unless and until the Person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid. (m) In addition to any other adjustment required hereby, to the extent permitted by law, the Corporation from time to time may decrease the Conversion Price by any amount, permanently or for a period of at least twenty Business Days, if the decrease is irrevocable during the period. (n) Notwithstanding anything to the contrary contained in this Section 7, conversion of Class B Preferred Stock pursuant to this Section 7 shall be permitted only to the extent that such conversion would not result in a violation of the Ownership Restrictions (as defined in the Charter), after taking into account any waiver of such limitation granted to any holder of the shares of Class B Preferred Stock. 8. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class B Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class B Preferred Stock ("Senior Stock"); -19- (b) on a parity with the Class B Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class B Preferred Stock, if the holders of such class of stock or series and the Class B Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other ("Parity Stock"); and (c) junior to the Class B Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such stock or series shall be Common Stock or if the holders of Class B Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series ("Junior Stock"). 9. VOTING. (a) If and whenever (i) six quarterly dividends (whether or not consecutive) payable on the Class B Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, or (ii) for two consecutive quarterly dividend periods the Corporation fails to pay dividends on the Common Stock in an amount per share at least equal to $0.4625 (subject to adjustment consistent with any adjustment of the Conversion Price pursuant to Section 7(d) of this Article) (the "Base Common Stock Dividend") the number of directors then constituting the Board of Directors shall be increased by two (in the case of an arrearage in dividends described in clause (i)) or one additional director (in the case of an arrearage in dividends described in clause (ii)) (in each case if not already increased by reason of similar types of provisions with respect to Voting Preferred Stock (as defined below)) and the holders of shares of Class B Preferred Stock, together with the holders of shares of every other series or class of Parity Stock (any other such series, the "Voting Preferred Stock"), voting as a single class regardless of series, shall be entitled to elect the two additional directors (in the case of an arrearage in dividends described in clause (i)) or one (in the case of an arrearage in dividends described in clause (ii)) to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class B Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever (1) in the case of an arrearage in dividends described in clause (i), all arrears in dividends on the Class B Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been paid or declared and set apart for payment, or (2) in the case of an arrearage in dividends described in clause (ii), the Corporation makes a quarterly dividend payment on the Common Stock in an amount per share equal to or exceeding the Base Common Stock Dividend, then the -20- right of the holders of the Class B Preferred Stock and the Voting Preferred Stock to elect such additional two directors (in the case of an arrearage in dividends described in clause (i)) or one additional director (in the case of an arrearage in dividends described in clause (ii)) shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all Persons elected as directors by the holders of the Class B Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class B Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class B Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class B Preferred Stock and of the Voting Preferred Stock for the election of the two directors (in the case of an arrearage in dividends described in clause (i)) or one director (in the case of an arrearage in dividends described in clause (ii)) to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class B Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors or director elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class B Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class B Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class B Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the holders of the Class B Preferred Stock, given in Person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class B Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class B Preferred Stock; or -21- (ii) The authorization, creation of, the increase in the authorized amount of, or issuance of , any shares of any class of Senior Stock or any security convertible into shares of any class of Senior Stock (whether or not such class of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class B Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such prior shares or convertible security is to be made, as the case may be, provision is made for the redemption of all shares of Class B Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class B Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock shall have the right to vote with the Class B Preferred Stock as a single class on any matter, then the Class B Preferred Stock and such other class or series shall have with respect to such matters one (1) vote per $100 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein, the Class B Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 10. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class B Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 11.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class B Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class B Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class B Preferred Stock in excess of the Look-Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class B Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class B Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class B Preferred Stock. -22- (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class B Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class B Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class B Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 11.8 from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class B Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class B Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look-Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class B Preferred Stock. (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class B Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class B Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class B Preferred Stock that is null and void under Sections 11.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class B Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class B Preferred Stock in the same or any other related transaction. 11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section -23- 11.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class B Preferred Stock in violation of Section 11.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class B Preferred Stock acquired in violation of Section 11.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 11.3 of this Article; provided, further, that the provisions of this Section 11.2 shall be subject to the provisions of Section 11.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class B Preferred Stock that is expressly authorized pursuant to Section 11.8(d) of this Article. 11.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Preferred Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class B Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class B Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class B Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class B Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 11.8 of this Article, such shares of Class B Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the business day prior to the Excess -24- Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class B Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 11.3(E), the Prohibited Transferee shall have no rights in the Class B Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class B Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class B Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class B Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class B Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class B Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited -25- Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 11.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class B Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class B Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class B Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class B Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class B Preferred Stock in violation of Section 11.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 11.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class B Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class B Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class B Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record -26- or Beneficial Owner of Class B Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class B Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class B Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 11.5 from the Beneficial Owner. (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class B Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class B Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class B Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 11.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 11.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 11 of this Article, or in the case of an ambiguity in any definition contained in Section 11 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 11.8 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 11.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection -27- with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class B Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 11.1 of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class B Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. (C) UNDERWRITERS. For a period of 270 days following the purchase of Class B Preferred Stock by an underwriter that (i) is a corporation or a partnership and (ii) participates in an offering of the Class B Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class B Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class B Preferred Stock purchased in connection with market making activities. 11.9 LEGEND. Each certificate for Class B Preferred Stock shall bear the following legend: "The shares of Class B Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class B Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class B Preferred Stock). Any Person that attempts to Beneficially Own shares of Class B Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class B Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated, the shares of Class B Preferred Stock represented hereby will be either (i) void in accordance with the Certificate or (ii) automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 11.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. -28- 11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. 11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. FOURTH: The terms of the Class B Cumulative Convertible Preferred Stock set forth in Article Third hereof shall become Article XIII of the Charter. -29- IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Vice President and witnessed by its Secretary on August 1, 1997. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Leeann Morein /s/ Patricia K. Heath Leeann Morein, Patricia K. Heath, Secretary Vice President THE UNDERSIGNED, Vice President of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ Patricia K. Heath Patricia K. Heath, Vice President -30- ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS C CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, the Board of Directors has duly divided and classified 2,760,000 authorized but unissued shares of the capital stock of the Corporation into a class designated as Class C Cumulative Preferred Stock and has provided for the issuance of such class. SECOND: The reclassification increases the number of shares classified as Class C Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 2,760,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Preferred Stock, par value $.01 per share, from 9,250,000 shares immediately prior to the reclassification to 6,490,000 shares immediately after the reclassification. The number of shares classified as Class C Cumulative Preferred Stock may be decreased pursuant to Section 6 of Article Third of these Articles Supplementary upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class C Cumulative Preferred Stock (including the preferences, conversions or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as follows: 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred Stock shall be designated as Class C Cumulative Preferred Stock (the "Class C Preferred Stock") and Two Million Seven Hundred Sixty Thousand (2,760,000) shall be the authorized number of shares of such Class C Preferred Stock constituting such class. 5 2. DEFINITIONS. For purposes of the Class C Preferred Stock, the following terms shall have the meanings indicated: "ACT" shall mean the Securities Act of 1933, as amended. "AFFILIATE" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "AGGREGATE VALUE" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, PROVIDED that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (ii) of the definition of "Person" shall be disregarded. The terms "BENEFICIAL OWNER," "BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the correlative meanings. "BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class C Preferred Stock. "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 10.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "CLASS C PREFERRED STOCK" shall have the meaning set forth in Section 1 of this Article. "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable 6 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 then current Initial Holder Limit applicable to the Initial Holder. 7 "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 "OWNERSHIP LIMIT" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class C Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class C Preferred Stock that are Beneficially Owned by the Person. "OWNERSHIP RESTRICTIONS" shall mean collectively the Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to the Initial Holder and the Look-Through Ownership Limit as applied to Look-Through Entities. "PARITY STOCK" shall have the meaning set forth in paragraph (b) of Section 7 of this Article. The Class B Preferred Stock shall be a Parity Stock. "PERSON" shall mean (a) for purposes of Section 10 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity and shall include any successor (by merger or otherwise) of such entity. "PROHIBITED TRANSFEREE" has the meaning set forth in Section 10.3(A) of this Article. "REDEMPTION DATE" shall have the meaning set forth in paragraph (b) of Section 5 of this Article. "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. "SENIOR STOCK" shall have the meaning set forth in paragraph (a) of Section 7 of this Article. "SET APART FOR PAYMENT" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class C Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "TRADING DAY", as to any securities, shall mean any day on which such securities are traded on the principal national securities exchange on which such securities are listed or admitted or, if such securities are not listed or admitted for trading on any national securities exchange, the NASDAQ 9 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 360 day 10 year. Holders of Class C Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Class C Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class C Preferred Stock that may be in arrears. (c) So long as any of the shares of Class C Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made directly or indirectly by the Corporation with respect to any class or series of Parity Stock for any period unless dividends equal to the full amount of accumulated, accrued and unpaid dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for such payment on the Class C Preferred Stock for all Dividend Periods terminating on or prior to the Dividend Payment Date with respect to such class or series of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class C Preferred Stock and all dividends declared upon any other class or series of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class C Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class C Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless in each case the full cumulative dividends (including all accumulated, accrued and unpaid dividends) on all outstanding shares of Class C Preferred Stock shall have been paid or such dividends have been declared and set apart for payment for all past Dividend Periods with respect to the Class C Preferred Stock. Notwithstanding the provisions of this Section 3(d), the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 11 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital or surplus) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class C Preferred Stock shall be entitled to receive TwentyFive Dollars ($25) per share of Class C Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class C Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class C Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class C Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class C Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class C Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class C Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class C Preferred Stock shall not be redeemable by the Corporation prior to December 23, 2002(2) except as set forth in Section 10.2 of this Article. On and after December 23, 2002(3), the Corporation, at its option, may redeem shares of Class C Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to 100% of the Liquidation Preference thereof, plus all accrued and unpaid dividends to the date fixed for redemption (the "Redemption Date"). In connection with any redemption pursuant to this Section 5(a), the redemption price of the Class C Preferred Stock (other than any portion thereof consisting of accrued and unpaid dividends) shall be payable solely with the proceeds from the sale by the Corporation or AIMCO Properties, L.P., a Delaware limited partnership (the "Operating Partnership") of other capital shares of the Corporation or the Operating Partnership (whether or not such sale occurs concurrently with such redemption). For purposes of the preceding sentence, 'capital shares' means any common stock, preferred stock, depositary shares, partnership or other interests, participations or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable at the option of the holder for equity securities (unless and to the extent such debt securities are subsequently converted into capital shares)) or options to purchase any of the foregoing of or in the Corporation or the Operating Partnership. 12 (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class C Preferred Stock have not been paid or declared and set apart for payment, no shares of Class C Preferred Stock may be redeemed unless all outstanding shares of Class C Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class C Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class C Preferred Stock. (d) If the Corporation shall redeem shares of Class C Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (1) the Redemption Date; (2) the number of shares of Class C Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; and (3) the place or places at which certificates for such shares are to be surrendered for cash. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) except as otherwise provided herein, dividends on the shares of Class C Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class C Preferred Stock called for redemption (except that, in the case of a Redemption Date after a dividend record date and prior to the related Dividend Payment Date, holders of Class C Preferred Stock on the dividend record date will be entitled on such Dividend Payment Date to receive the dividend payable on such shares), (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class C Preferred Stock of the Corporation shall cease (except the rights to receive the cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required and to receive any dividends payable thereon). The Corporation's obligation to make available the redemption price in accordance with the preceding sentence shall be deemed fulfilled if, on or before the Call Date, the Corporation shall deposit with a bank or trust company (which may be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption, in trust, with irrevocable instructions that such cash be applied to the redemption of the shares of Class C Preferred Stock so called for redemption. No interest shall accrue for the benefit of the holders of shares of Class C Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class C Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. 13 As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class C Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class C Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class C Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class C Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class C Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class C Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized, but unissued shares of Class C Preferred Stock. 7. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class C Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class C Preferred Stock ("Senior Stock"); (b) on a parity with the Class C Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class C Preferred Stock, if the holders of such class of stock or series and the Class C Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other ("Parity Stock"); and (c) junior to the Class C Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such stock or series shall be Common Stock or if the holders of Class C Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series ("Junior Stock"). 14 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 then remaining director elected by the holders of the Class C Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class C Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 662/3% of the votes entitled to be cast by the holders of the Class C Preferred Stock voting as a single class 15 with the holders of all other classes or series of Preferred Stock entitled to vote on such matters, given in Person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of these Articles Supplementary, the Charter or the ByLaws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class C Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class C Preferred Stock; or (ii) The authorization, creation of, the increase in the authorized amount of, or issuance of any shares of any class of Senior Stock or any security convertible into shares of any class of Senior Stock (whether or not such class of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class C Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such prior shares or convertible security is to be made, as the case may be, provision is made for the redemption of all shares of Class C Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class C Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock shall have the right to vote with the Class C Preferred Stock as a single class on any matter, then the Class C Preferred Stock and such other class or series shall have with respect to such matters one quarter of one (.25) vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein, the Class C Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 9. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class C Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 16 10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 10.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class C Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class C Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class C Preferred Stock in excess of the Look-Through Ownership Limit. 17 (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class C Preferred Stock in excess of the Ownership Limit shall be void AB INITIO as to the Transfer of such shares of Class C Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class C Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class C Preferred Stock in excess of the Initial Holder Limit shall be void AB INITIO as to the Transfer of such shares of Class C Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class C Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 10.8 from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class C Preferred Stock in excess of the Look-Through Ownership limit shall be void AB INITIO as to the Transfer of such shares of Class C Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look-Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class C Preferred Stock. (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void AB INITIO as to the Transfer of shares of Class C Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class C Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class C Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class C Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the 18 meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class C Preferred Stock in the same or any other related transaction. 10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 10.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class C Preferred Stock in violation of Section 10.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of longterm indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class C Preferred Stock acquired in violation of Section 10.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; PROVIDED, HOWEVER, that any Transfers or attempted Transfers (or in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article, regardless of any action (or nonaction) by the Board of Directors or such committee, (a) shall be void AB INITIO or (b) shall automatically result in the transfer described in Section 10.3 of this Article; PROVIDED, FURTHER, that the provisions of this Section 10.2 shall be subject to the provisions of Section 10.12 of this Article; PROVIDED, FURTHER, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class C Preferred Stock that is expressly authorized pursuant to Section 10.8(d) of this Article. 10.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Preferred Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class C Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class C Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class C Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class C Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "PROHIBITED TRANSFEREE"), then, except as otherwise provided in Section 10.8 of this Article, such shares of Class C Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the 19 exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the business day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class C Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 10.3(E), the Prohibited Transferee shall have no rights in the Class C Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class C Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class C Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void AB INITIO with respect to such shares of Class C Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class C Preferred Stock have been transferred to the Trustee will be rescinded as void AB INITIO and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class C Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 10.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court 20 having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class C Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class C Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class C Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class C Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class C Preferred Stock in violation of Section 10.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 10.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class C Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class C Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class C Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class C Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class C Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as applicable. Each stockholder of record, including 21 without limitation any Person that holds shares of Class C Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 10.5 from the Beneficial Owner. (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class C Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class C Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class C Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 10.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 10.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 10 of this Article, or in the case of an ambiguity in any definition contained in Section 10 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 10.8 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 10.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class C Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 10.1 of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class C Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. 22 (C) UNDERWRITERS. For a period of 270 days following the purchase of Class C Preferred Stock by an underwriter that (i) is a corporation or a partnership and (ii) participates in an offering of the Class C Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class C Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class C Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class C Preferred Stock shall bear the following legend: "The shares of Class C Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class C Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class C Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class C Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Corporation's Charter (including the Articles Supplementary setting forth the terms of the Class C Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated, the shares of Class C Cumulative Preferred Stock represented hereby will be either (i) void in accordance with the Certificate or (ii) automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 10.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. 10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system. FOURTH: The terms of the Class C Cumulative Preferred Stock set forth in Article Third hereof shall become Article XIV of the Charter. 23 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Chairman and witnessed by its Secretary on December 19, 1997. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Leeann Morein /s/ Terry Considine - ----------------------- -------------------------- Leeann Morein, Terry Considine Secretary Chairman THE UNDERSIGNED, Chairman of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ Terry Considine Terry Considine ----------------------- Chairman 24 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. FIFTH: ARTICLE SECOND of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: SECOND: The reclassification increases the number of shares classified as Class C Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 2,300,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Preferred Stock, par value $.01 per share, from 9,250,000 shares immediately prior to the reclassification to 6,950,000 shares immediately after the reclassification. The number of shares classified as Class C Cumulative Preferred Stock may be decreased pursuant to Section 6 of Article Third of these Articles Supplementary upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. SIXTH: ARTICLE SECOND of the Articles Supplementary as corrected hereby is as follows: SECOND: The reclassification increases the number of shares classified as Class C Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 2,760,00 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Preferred Stock, par value $.01 per share, from 9,250,000 shares immediately prior to the reclassification to 6,490,000 shares immediately after the reclassification. The number of shares classified as Class C Cumulative Preferred Stock may be decreases pursuant to Section 6 of Article Third of these Articles Supplementary upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. SEVENTH: The inaccuracies or defects in ARTICLE SECOND of the Articles Supplementary as previously filed are that ARTICLE SECOND contained the wrong number of shares classified as Class C Cumulative Preferred Stock immediately after the reclassification and the wrong number of shares classified as Preferred Stock, par value $.01 per share, immediately after the reclassification. EIGHTH: Section 1 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: 1. Number of Shares and Designation. This class of Preferred Stock shall be designated as Class C Cumulative Preferred Stock (the "Class C Preferred Stock") and Two Million Three Hundred Thousand (2,300,000) shall be the authorized number of shares of such Class C Preferred Stock constituting such class. -2- NINTH: The first paragraph of Section 1 of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as follows: 1. Number of Shares and Designation. This class of Preferred Stock shall be designated as Class C Cumulative Preferred Stock (the "Class C Preferred Stock") and Two Million Seven Hundred Sixty Thousand (2,760,000) shall be the authorized number of shares of such Class C Preferred Stock constituting such class. TENTH: The inaccuracy or defect in Section 1 of ARTICLE THIRD of the Articles Supplementary as previously filed is that Section 1 of ARTICLE FIRST contained the wrong number of shares classified as Class C Cumulative Preferred Stock. ELEVENTH: The definition of "Dividend Periods" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: "DIVIDEND PERIODS" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 15, April 15, July 15 and October 15 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class B Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class C Preferred Stock being redeemed. TWELFTH: The definition of "Dividend Periods" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as follows: "DIVIDEND PERIODS" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 15, April 15, July 15 and October 15 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class C Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class C Preferred Stock being redeemed. THIRTEENTH: The inaccuracy or defect in the definition of "Dividend Periods" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed is that the reference to "Class B Preferred Stock" in the fifth line thereof should be to "Class C Preferred Stock." FOURTEENTH: The definition of "Initial Holder Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: -3- "INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of Class C Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class B Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors' a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. FIFTEENTH: The definition of "Initial Holder Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as follows: "INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of Class C Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class C Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. SIXTEENTH: The inaccuracy or defect in the definition of "Initial Holder Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed is that the reference to "Class B Preferred Stock" in the fourth and fifth lines thereof should be to "Class C Preferred Stock." SEVENTEENTH: The definition of "Look-Through Ownership Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: "LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class C Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) by the Aggregate Value of all shares of Equity Stock other than Class B Preferred Stock that are Beneficially Owned by the Look-Through Entity. EIGHTEENTH: The definition of "Look-Through Ownership Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as follows: "LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class C Preferred Stock of the Corporation -4- having an Aggregate Value not in excess of the (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) by the Aggregate Value of all shares of Equity Stock other than Class C Preferred Stock that are Beneficially Owned by the Look-Through Entity. NINETEENTH: The inaccuracy or defect in the definition of "Look-Through Ownership Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed is that the reference to "Class B Preferred Stock" in the fifth line thereof should be to "Class C Preferred Stock." TWENTIETH: The provision in the Articles Supplementary as previously filed and to be corrected hereby reads as follows: IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Chairman and witnessed by its Secretary on December ____, 1997. TWENTY-FIRST: The provision in the Articles Supplementary as corrected hereby is as follows: IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Chairman and witnessed by its Secretary on December 22, 1997. TWENTY-SECOND: The inaccuracy or defect in the provision of the Articles Supplementary as previously filed is that such statement failed to state correctly the date such Articles were signed. -5- IN WITNESS WHEREOF, Apartment Investment and Management Company has caused this Certificate of Correction to be signed in its name and on its behalf by its Chairman and witnessed by its Secretary on February 17, 1998. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ LEEANN MOREIN By: TERRY CONSIDINE - ----------------------------- ----------------------------- Leeann Morein, Secretary Terry Considine, Chairman The undersigned, Chairman of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, with respect to the foregoing Certificate of Correction of which this certificate is made a part, hereby acknowledges, in the name and on behalf of said Corporation, the foregoing Certificate of Correction to be the act of said Corporation and further certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects, under the penalties of perjury. /s/ TERRY CONSIDINE ----------------------------- Terry Considine, Chairman -6- 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. 2. DEFINITIONS. For purposes of the Class D Preferred Stock, the following terms shall have the meanings indicated: "ACT" shall mean the Securities Act of 1933, as amended. "AFFILIATE" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "AGGREGATE VALUE" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, PROVIDED that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (ii) of the definition of "Person" shall be disregarded. The terms "BENEFICIAL OWNER," "BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the correlative meanings. "BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class D Preferred Stock. "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 10.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 2 "CLASS D PREFERRED STOCK" shall have the meaning set forth in Section 1 of this Article. "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "COMMON STOCK" shall mean the Class A Common Stock, $.01 par value per share, of the Corporation or such shares of the Corporation's capital stock into which outstanding shares of Common Stock shall be reclassified. "DIVIDEND PAYMENT DATE" shall mean January 15, April 15, July 15 and October 15 of each year; provided, further, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date and no interest shall accrue on such dividend from such date to such Dividend Payment Date. "DIVIDEND PERIODS" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 15, April 15, July 15 and October 15 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class D Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class D Preferred Stock being redeemed. "EQUITY STOCK" shall mean one or more shares of any class of capital stock of the Corporation. "EXCESS TRANSFER" has the meaning set forth in Section 10.3(A) of this Article. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. "ISSUE DATE" shall mean February 19, 1998. "INITIAL DIVIDEND PERIOD" shall mean the period commencing on and including the Issue Date and ending on and including April 14, 1998. "INITIAL HOLDER" shall mean Terry Considine. "INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of Class D Preferred Stock of the Corporation having an Aggregate Value not in excess 3 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 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 D Preferred Stock have preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Corporation. "LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class D Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) by the Aggregate Value of all shares of Equity Stock other than Class D Preferred Stock that are Beneficially Owned by the Look-Through Entity. "MARKET PRICE" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of share of that class of Equity Stock on the Trading Day immediately preceding such date. The term "CLOSING PRICE" on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the overthecounter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of 4 Directors of the Company. The term "TRADING DAY" shall mean a day on which the principal national securities exchange on which the Equity Stock is listed or admitted to trading is open for the transaction of business or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "NYSE" shall mean the New York Stock Exchange, Inc. "OUTSTANDING" shall mean issued and outstanding shares of Equity Stock of the Corporation, PROVIDED that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "OUTSTANDING" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "OWNERSHIP LIMIT" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class D Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class D Preferred Stock that are Beneficially Owned by the Person. "OWNERSHIP RESTRICTIONS" shall mean collectively the Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to the Initial Holder and the Look-Through Ownership Limit as applied to Look-Through Entities. "PARITY STOCK" shall have the meaning set forth in paragraph (b) of Section 7 of this Article. The Class B Preferred Stock and the Class C Preferred Stock shall each be a Parity Stock. "PERSON" shall mean (a) for purposes of Section 10 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity and shall include any successor (by merger or otherwise) of such entity. "PROHIBITED TRANSFEREE" has the meaning set forth in Section 10.3(A) of this Article. 5 "REDEMPTION DATE" shall have the meaning set forth in paragraph (b) of Section 5 of this Article. "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. "SENIOR STOCK" shall have the meaning set forth in paragraph (a) of Section 7 of this Article. "SET APART FOR PAYMENT" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class D Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "TRADING DAY", as to any securities, shall mean any day on which such securities are traded on the principal national securities exchange on which such securities are listed or admitted or, if such securities are not listed or admitted for trading on any national securities exchange, the NASDAQ National Market or, if such securities are not listed or admitted for trading on the NASDAQ National Market, in the securities market in which such securities are traded. "TRANSFER" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class D Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class D Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class D Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class D Preferred Stock). The term "TRANSFERS" and "TRANSFERRED" shall have correlative meanings. "TRANSFER AGENT" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class D Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class D Preferred Stock. 6 "TRUST" shall mean the trust created pursuant to Section 10.3 of this Article. "TRUSTEE" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "VOTING PREFERRED STOCK" shall have the meaning set forth in Section 8 of this Article. 3. DIVIDENDS. (a) The holders of Class D Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available for that purpose, cumulative dividends payable in cash in an amount per share of Class D Preferred Stock equal to $2.1875 per annum. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on April 15, 1998. Each such dividend shall be payable in arrears to the holders of record of the Class D Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the January 1, April 1, July 1 or October 1, as the case may be, immediately preceding such Dividend Payment Date. Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) The amount of dividends payable per share of Class D Preferred Stock for the Initial Dividend Period, or any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30day months and a 360day year. Holders of Class D Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Class D Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class D Preferred Stock that may be in arrears. (c) So long as any of the shares of Class D Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made directly or indirectly by the Corporation with respect to any class or series of Parity Stock for any period unless dividends equal to the full amount of accumulated, accrued and unpaid dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for 7 such payment on the Class D Preferred Stock for all Dividend Periods terminating on or prior to the Dividend Payment Date with respect to such class or series of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class D Preferred Stock and all dividends declared upon any other class or series of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class D Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class D Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless in each case the full cumulative dividends (including all accumulated, accrued and unpaid dividends) on all outstanding shares of Class D Preferred Stock shall have been paid or such dividends have been declared and set apart for payment for all past Dividend Periods with respect to the Class D Preferred Stock. Notwithstanding the provisions of this Section 3(d), the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital or surplus) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class D Preferred Stock shall be entitled to receive TwentyFive Dollars ($25) per share of Class D Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final 8 distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class D Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class D Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class D Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class D Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class D Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class D Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class D Preferred Stock shall not be redeemable by the Corporation prior to February 19, 2003, except as set forth in Section 10.2 of this Article. On and after February 19, 2003, the Corporation, at its option, may redeem shares of Class D Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to 100% of the Liquidation Preference thereof, plus all accrued and unpaid dividends to the date fixed for redemption (the "Redemption Date"). In connection with any redemption pursuant to this Section 5(a), the redemption price of the Class D Preferred Stock (other than any portion thereof consisting of accrued and unpaid dividends) shall be payable solely with the proceeds from the sale by the Corporation or AIMCO Properties, L.P., a Delaware limited Partnership (the "Operating Partnership"), of other capital shares of the Corporation or the Operating Partnership (whether or not such sale occurs concurrently with such redemption). For purposes of the preceding sentence, 'capital shares' means any common stock, preferred stock, depositary shares, partnership or other interests, participations or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable at the option of the holder for equity securities (unless 9 and to the extent such debt securities are subsequently converted into capital shares)) or options to purchase any of the foregoing of or in the Corporation or the Operating Partnership. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class D Preferred Stock have not been paid or declared and set apart for payment, no shares of Class D Preferred Stock may be redeemed unless all outstanding shares of Class D Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class D Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class D Preferred Stock. (d) If the Corporation shall redeem shares of Class D Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (1) the Redemption Date; (2) the number of shares of Class D Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; and (3) the place or places at which certificates for such shares are to be surrendered for cash. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) except as otherwise provided herein, dividends on the shares of Class D Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class D Preferred Stock called for redemption (except that, in the case of a Redemption Date after a dividend record date and prior to the related Dividend Payment Date, holders of Class D Preferred Stock on the dividend record date will be entitled on such Dividend Payment Date to receive the dividend payable on such shares), (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class D Preferred Stock of the Corporation shall cease (except the rights to receive the cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required and to receive any dividends payable thereon). The Corporation's obligation to make available the redemption price in accordance with the preceding sentence shall be deemed fulfilled if, on or before the Call Date, the 10 Corporation shall deposit with a bank or trust company (which may be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption, in trust, with irrevocable instructions that such cash be applied to the redemption of the shares of Class D Preferred Stock so called for redemption. No interest shall accrue for the benefit of the holders of shares of Class D Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class D Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class D Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class D Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class D Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class D Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class D Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class D Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized, but unissued shares of Class D Preferred Stock. 7. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class D Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class D Preferred Stock ("Senior Stock"); 11 (b) on a parity with the Class D Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class D Preferred Stock, if the holders of such class of stock or series and the Class D Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other ("Parity Stock"); and (c) junior to the Class D Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such stock or series shall be Common Stock or if the holders of Class D Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series ("Junior Stock"). 8. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class D Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class D Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class D Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class D Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been paid or declared and set apart for payment, then the right of the holders of the Class D Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all Persons elected as directors by the holders of the Class D Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class D Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class D Preferred 12 Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class D Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class D Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class D Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then remaining director elected by the holders of the Class D Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class D Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 662/3% of the votes entitled to be cast by the holders of the Class D Preferred Stock voting as a single class with the holders of all other classes or series of Preferred Stock entitled to vote on such matters, given in Person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of these Articles Supplementary, the Charter or the ByLaws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class D Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class D Preferred Stock; or (ii) The authorization, creation of, the increase in the authorized amount of, or issuance of any shares of any class of Senior Stock or any security convertible into shares of any class of Senior Stock (whether or not such class of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class D Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such prior shares or convertible security is to be made, as the case may be, provision 13 is made for the redemption of all shares of Class D Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class D Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock shall have the right to vote with the Class D Preferred Stock as a single class on any matter, then the Class D Preferred Stock and such other class or series shall have with respect to such matters one quarter of one (.25) vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein, the Class D Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 9. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class D Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 10.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class D Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class D Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class D Preferred Stock in excess of the Look-Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class D Preferred Stock in excess of the Ownership Limit shall be void AB INITIO as to the Transfer of such shares of Class D Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class D Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into 14 through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class D Preferred Stock in excess of the Initial Holder Limit shall be void AB INITIO as to the Transfer of such shares of Class D Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class D Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 10.8 from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class D Preferred Stock in excess of the Look-Through Ownership limit shall be void AB INITIO as to the Transfer of such shares of Class D Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look-Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class D Preferred Stock. (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void AB INITIO as to the Transfer of shares of Class D Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class D Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class D Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class D Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class D Preferred Stock in the same or any other related transaction. 10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 10.1 of this Article or that a Person intends to acquire or has 15 attempted to acquire Beneficial Ownership of any shares of Class D Preferred Stock in violation of Section 10.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of longterm indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class D Preferred Stock acquired in violation of Section 10.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; PROVIDED, HOWEVER, that any Transfers or attempted Transfers (or in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article, regardless of any action (or nonaction) by the Board of Directors or such committee, (a) shall be void AB INITIO or (b) shall automatically result in the transfer described in Section 10.3 of this Article; PROVIDED, FURTHER, that the provisions of this Section 10.2 shall be subject to the provisions of Section 10.12 of this Article; PROVIDED, FURTHER, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class D Preferred Stock that is expressly authorized pursuant to Section 10.8(d) of this Article. 10.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Preferred Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class D Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class D Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class D Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class D Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "PROHIBITED TRANSFEREE"), then, except as otherwise provided in Section 10.8 of this Article, such shares of Class D Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the 16 exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the business day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class D Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 10.3(E), the Prohibited Transferee shall have no rights in the Class D Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class D Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class D Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void AB INITIO with respect to such shares of Class D Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class D Preferred Stock have been transferred to the Trustee will be rescinded as void AB INITIO and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class D Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall receive the lesser of (1) the price 17 paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 10.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class D Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class D Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class D Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class D Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class D Preferred Stock in violation of Section 10.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 10.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class D Preferred Stock will be required to provide certain information as set out below. 18 (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 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 without charge to each stockholder that so requests. If the restrictions on transfer are violated, the shares of Class D Cumulative Preferred Stock represented hereby will be either (i) void in accordance with the Certificate or (ii) automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 10.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. 10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system. FOURTH: The terms of the Class D Cumulative Preferred Stock set forth in Article Third hereof shall become Article XV of the Charter. 21 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 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. 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 "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 Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class G Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Junior Stock" shall mean the Common Stock and any other class or series of capital stock of the Corporation over which the shares of Class G Preferred Stock have preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Corporation. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class G Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) by the Aggregate Value of all shares of Equity Stock other than Class G Preferred Stock that are Beneficially Owned by the Look-Through Entity. "Market Price" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of share of that class of Equity Stock on the Trading Day immediately preceding such date. The term "Closing Price" on any date shall mean that last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Company. The term "Trading Day" shall mean a day on which the principal national securities exchange on which 4 the Equity Stock is listed or admitted to trading is open for the transaction of business or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "NYSE" shall mean the New York Stock Exchange, Inc. "Outstanding" shall mean issued and outstanding shares of Equity Stock of the Corporation, provided that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "Outstanding" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "Ownership Limit" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class G Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class G Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean collectively the Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to the Initial Holder and the Look-Through Ownership Limit as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 7 of this Article. The Class B Preferred Stock, the Class C Preferred Stock and the Class D Preferred Stock shall each be a Parity Stock. "Person" shall mean (a) for purposes of Section 10 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity and shall include any successor (by merger or otherwise) of such entity. "Prohibited Transferee" has the meaning set forth in Section 10.3(A) of this Article. "Redemption Date" shall have the meaning set forth in paragraph (b) of Section 5 of this Article. 5 "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 7 of this Article. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class G Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day", as to any securities, shall mean any day on which such securities are traded on the principal national securities exchange on which such securities are listed or admitted or, if such securities are not listed or admitted for trading on any national securities exchange, the NASDAQ National Market or, if such securities are not listed or admitted for trading on the NASDAQ National Market, in the securities market in which such securities are traded. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class G Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class G Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class G Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class G Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class G Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class G Preferred Stock. "Trust" shall mean the trust created pursuant to Section 10.3 of this Article. 6 "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "Voting Preferred Stock" shall have the meaning set forth in Section 8 of this Article. 3. DIVIDENDS. (a) The holders of Class G Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available for that purpose, cumulative dividends payable in cash in an amount per share of Class G Preferred Stock equal to $2.34375 per annum. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on October 15, 1998. Each such dividend shall be payable in arrears to the holders of record of the Class G Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the January 1, April 1, July 1 or October 1, as the case may be, immediately preceding such Dividend Payment Date. Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) Any dividend payable on the Class G Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class G Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Class G Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class G Preferred Stock that may be in arrears. (c) So long as any of the shares of Class G Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made directly or indirectly by the Corporation with respect to any class or series of Parity Stock for any period unless dividends equal to the full amount of accumulated, accrued and unpaid dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for such payment on the Class G Preferred Stock for all Dividend Periods terminating on or prior to the Dividend Payment Date with respect to such class or series of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class G Preferred Stock and all dividends declared upon any 7 other class or series of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class G Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class G Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless in each case the full cumulative dividends (including all accumulated, accrued and unpaid dividends) on all outstanding shares of Class G Preferred Stock shall have been paid or such dividends have been declared and set apart for payment for all past Dividend Periods with respect to the Class G Preferred Stock. Notwithstanding the provisions of this Section 3(d), the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital or surplus) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class G Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class G Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class G Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the 8 Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class G Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class G Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class G Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class G Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class G Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class G Preferred Stock shall not be redeemable by the Corporation prior to July 15, 2008, except as set forth in Section 10.2 of this Article. On and after July 15, 2008, the Corporation, at its option, may redeem shares of Class G Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to 100% of the Liquidation Preference thereof, plus all accrued and unpaid dividends to the date fixed for redemption (the "Redemption Date"). In connection with any redemption pursuant to this Section 5(a), the redemption price of the Class G Preferred Stock (other than any portion thereof consisting of accrued and unpaid dividends) shall be payable solely with the proceeds from the sale by the Corporation or AIMCO Properties, L.P., a Delaware limited Partnership (the "Operating Partnership"), of other capital shares of the Corporation or the Operating Partnership (whether or not such sale occurs concurrently with such redemption). For purposes of the preceding sentence, "capital shares" means any common stock, preferred stock, depositary shares, partnership or other interests, participations or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable at the option of the holder for equity securities (unless and to the extent such debt securities are subsequently converted into capital shares)) or options to purchase any of the foregoing of or in the Corporation or the Operating Partnership. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. 9 (c) If full cumulative dividends on all outstanding shares of Class G Preferred Stock have not been paid or declared and set apart for payment, no shares of Class G Preferred Stock may be redeemed unless all outstanding shares of Class G Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class G Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class G Preferred Stock. (d) If the Corporation shall redeem shares of Class G Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice of the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (1) the Redemption Date; (2) the number of shares of Class G Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; and (3) the place or places at which certificates for such shares are to be surrendered for cash. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) except as otherwise provided herein, dividends on the shares of Class G Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class G Preferred Stock called for redemption(except that, in the case of a Redemption Date after a dividend record date and prior to the related Dividend Payment Date, holders of Class G Preferred Stock on the dividend record date will be entitled to such Dividend Payment Date to receive the dividend payable on such shares), (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class G Preferred Stock of the Corporation shall cease (except the rights to receive the cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required and to receive any dividends payable thereon). The Corporation's obligation to make available the redemption price in accordance with the preceding sentence shall be deemed fulfilled if, on or before the Call Date, the Corporation shall deposit with a bank or trust company (which may be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption, in trust, with irrevocable instructions that such cash be applied to the redemption of the shares of Class G Preferred Stock so called for redemption. No interest shall accrue for the benefit of the holders of shares of Class G Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class G Preferred 10 Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class G Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class G Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class G Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class G Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class G Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. Status of Reacquired Stock. All shares of Class G Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized, but unissued shares of Class G Preferred Stock. 7. Ranking. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class G Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class G Preferred Stock ("Senior Stock"); (b) on a parity with the Class G Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class G Preferred Stock, if the holders of such class of stock or series and the Class G Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other ("Parity Stock"); and 11 (c) junior to the Class G Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such stock or series shall be Common Stock or if the holders of Class G Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series ("Junior Stock"). 8. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class G Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class G Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class G Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class G Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been paid or declared and set apart for payment, then the right of the holders of the Class G Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all Persons elected as directors by the holders of the Class G Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class G Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class G Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class G Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class G Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have 12 previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class G Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class G Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class G Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the holders of the Class G Preferred Stock voting as a single class with the holders of all other classes or series of Preferred Stock entitled to vote on such matters, given in Person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class G Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class G Preferred Stock; or (ii) The authorization, creation of, the increase in the authorized amount of, or issuance of any shares of any class of Senior Stock or any security convertible into shares of any class of Senior Stock (whether or not such class of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class G Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such prior shares or convertible security is to be made, as the case may be, provision is made for the redemption of all shares of Class G Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class G Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock shall have the right to vote with the Class G Preferred Stock as a single class on any matter, then the Class G Preferred Stock and such other class or series shall have with respect to such matters one quarter of one(.25) vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein, the Class G Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 13 9. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class G Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 10.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class G Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class G Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class G Preferred Stock in excess of the Look-Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class G Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class G Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class G Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class G Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class G Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class G Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 10.8 from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class G Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class G 14 Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look-Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class G Preferred Stock. (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class G Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class G Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class G Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class G Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class G Preferred Stock in the same or any other related transaction. 10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 10.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class G Preferred Stock in violation of Section 10.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class G Preferred Stock acquired in violation of Section 10.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 10.3 of this 15 Article; provided, further, that the provisions of this Section 10.2 shall be subject to the provisions of Section 10.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class G Preferred Stock that is expressly authorized pursuant to Section 10.8(d) of this Article. 10.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated interdealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Preferred Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class G Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class G Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class G Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class G Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 10.8 of this Article, such shares of Class G Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the business day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class G Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 10.3(E), the Prohibited Transferee shall have no rights in the Class G Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. 16 (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class G Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class G Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class G Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class G Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class G Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 10.3(E) or any application thereof is determined in a final judgement to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class G Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class G Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class G Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and 17 (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class G Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class G Preferred Stock in violation of Section 10.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 10.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporations's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class G Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class G Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class G Preferred Stock Beneficially Owned, and a full description of how such shared are held. Each such record or Beneficial Owner of Class G Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class G Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class G Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 10.5 from the Beneficial Owner. (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class G Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class G Preferred Stock for a Beneficial 18 Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class G Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 10.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 10.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 10 of this Article, or in the case of an ambiguity in any definition contained in Section 10 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 10.8 EXPECTATIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 10.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class G Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 10.1 of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class G Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. 19 (C) UNDERWRITERS. For a period of 270 days following the purchase of Class G Preferred Stock by an underwriter that (i) is a corporation or a partnership and (ii) participates in an offering of the Class G Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class G Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class G Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class G Preferred Stock shall bear the following legend: "The shares of Class G Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class G Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class G Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class G Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class G Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of the shares of Class G Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class G Cumulative Preferred Stock) or (ii) the shares of Class G Cumulative Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 10.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. 20 10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. FOURTH: The terms of the Class G Cumulative Preferred Stock set forth in Article Third hereof shall become Article XVI of the Charter. 21 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Senior Vice President and Chief Financial Officer and witnessed by its Secretary on July 13, 1998. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ JOEL BONDER /s/ TROY D. BUTTS - ------------------------------ ----------------------------- Joel Bonder Troy D. Butts Secretary Senior Vice President and Chief Financial Officer THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ TROY D. BUTTS ----------------------------- Troy D. Butts Senior Vice President and Chief Financial Officer 22 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: "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Aggregate Value" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (a) (ii) of the definition of "Person" shall be disregarded. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings. "Board of Directors" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class H Preferred Stock; provided that, for purposes of paragraph (a) of Section 8 of this Article, the term "Board of Directors" shall not include any such committee. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 10.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "Class H Preferred Stock" shall have the meaning set forth in Section 1 of this Article. 2 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "Common Stock" shall mean the Class A Common Stock, $.01 par value per share, of the Corporation, and the Class B Common Stock, $.01 par value per share, of the Corporation and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock or Class B Common Stock shall be reclassified. "Dividend Payment Date" shall mean January 15, April 15, July 15 and October 15 of each year; provided, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date and no interest shall accrue on such dividend from such date to such Dividend Payment Date. "Dividend Periods" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 15, April 15, July 15 and October 15 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class H Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class H Preferred Stock being redeemed. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" has the meaning set forth in Section 10.3(A) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Issue Date" shall mean August 14, 1998. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including October 14, 1998. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class H Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of 3 Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class H Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 7 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class H Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class H Preferred Stock that are Beneficially Owned by the Look-Through Entity. "Market Price" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of a share of that class of Equity Stock on the Trading Day immediately preceding such date. The term "Closing Price," when used with respect to a share of any Equity Stock and for any date, shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Corporation. The term "Trading Day," when used with respect to the Closing Price of a share of any Equity Stock, shall mean (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the 4 transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "NYSE" shall mean the New York Stock Exchange, Inc. "Operating Partnership" shall mean AIMCO Properties, L.P., a Delaware limited partnership. "Outstanding" shall mean issued and outstanding shares of Equity Stock of the Corporation, provided that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "Outstanding" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "Ownership Limit" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class H Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class H Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean collectively the Ownership Limit as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to the Initial Holder and the Look-Through Ownership Limit as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 7 of this Article. "Person" shall mean (a) for purposes of Section 10 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the remaining 5 Sections of this Article, any individual, firm, partnership, corporation or other entity and shall include any successor (by merger or otherwise) of such entity. "Prohibited Transferee" has the meaning set forth in Section 10.3(A) of this Article. "Redemption Date" shall have the meaning set forth in paragraph (a) of Section 5 of this Article. "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 7 of this Article. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class H Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class H Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class H Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class H Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class H Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class H Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class H Preferred Stock. "Trust" shall mean the trust created pursuant to Section 10.3 of this Article. 6 "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "Voting Preferred Stock" shall have the meaning set forth in Section 8 of this Article. 3. DIVIDENDS. (a) The holders of Class H Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available for that purpose, cumulative dividends payable in cash in an amount per share of Class H Preferred Stock equal to $2.375 per annum (equivalent to 9 1/2% per annum of the per share Liquidation Preference (as hereinafter defined)). Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on October 15, 1998. Each such dividend shall be payable in arrears to the holders of record of the Class H Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the January 1, April 1, July 1 or October 1, as the case may be, immediately preceding such Dividend Payment Date. Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) Any dividend payable on the Class H Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class H Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Class H Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class H Preferred Stock that may be in arrears. (c) So long as any of the shares of Class H Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Parity Stock unless, in each case, dividends equal to the full amount of accumulated, accrued and unpaid dividends on all outstanding shares of Class H Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for payment of such dividends on the Class H Preferred Stock for all Dividend Periods ending on or prior to the date such dividend 7 or distribution is declared, paid, set apart for payment or made, as the case may be, with respect to such shares of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class H Preferred Stock and all dividends declared upon any shares of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class H Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class H Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless, in each case, dividends equal to the full amount of all accumulated, accrued and unpaid dividends on all outstanding shares of Class H Preferred Stock have been declared and paid, or such dividends have been declared and a sum sufficient for the payment thereof has been set apart for such payment, on all outstanding shares of Class H Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made with respect to such shares of Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or otherwise acquired or monies paid to or made available for any sinking fund for such redemption, or the date any such cash or other property is paid or distributed to or for the benefit of any holders of Junior Stock in respect thereof, as the case may be. Notwithstanding the provisions of this Section 3, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by 8 the Corporation (whether of capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class H Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class H Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class H Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class H Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class H Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class H Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class H Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class H Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class H Preferred Stock shall not be redeemable by the Corporation prior to August 14, 2003, except as set forth in Section 10.2 of this Article. On and after August 14, 2003, the Corporation, at its option, may redeem shares of Class H Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to 100% of the Liquidation Preference thereof, plus all accumulated, accrued and unpaid dividends to the date fixed for redemption (the "Redemption Date"); provided, however, that in the event of a redemption of shares of Class H Preferred Stock, if the Redemption Date occurs after a dividend record date and on or prior to the related Dividend Payment Date, the dividend payable on such Dividend Payment Date in respect of such shares called for redemption shall be payable on such Dividend Payment Date to the holders of record at the close of 9 business on such dividend record date, and shall not be payable as part of the redemption price for such shares. In connection with any redemption pursuant to this Section 5(a), the redemption price of the Class H Preferred Stock (other than any portion thereof consisting of accumulated, accrued and unpaid dividends) shall be payable solely with the proceeds from the sale by the Corporation or the Operating Partnership, of other capital shares of the Corporation or the Operating Partnership (whether or not such sale occurs concurrently with such redemption). For purposes of the preceding sentence, "capital shares" means any common stock, preferred stock, depositary shares, partnership or other interests, participations or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable at the option of the holder for equity securities (unless and to the extent such debt securities are subsequently converted into capital shares)) or options to purchase any of the foregoing of or in the Corporation or the Operating Partnership. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class H Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class H Preferred Stock may be redeemed unless all outstanding shares of Class H Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class H Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class H Preferred Stock. (d) If the Corporation shall redeem shares of Class H Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (1) the Redemption Date; (2) the number of shares of Class H Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the place or places at which certificates for such shares are to be surrendered for cash; and (4) the redemption price payable on such Redemption Date, including, without limitation, a statement as to whether or not accumulated, accrued and unpaid dividends will be (x) payable as part of the redemption price, or (y) payable on the next Dividend Payment Date to the record holder at the close of business on the relevant record date as described in the next succeeding sentence. 10 Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) dividends on the shares of Class H Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class H Preferred Stock called for redemption, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class H Preferred Stock of the Corporation shall cease except the rights to receive the cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required; provided, however, that if the Redemption Date for any shares of Class H Preferred Stock occurs after any dividend record date and on or prior to the related Dividend Payment Date, the full dividend payable on such Dividend Payment Date in respect of such shares of Class H Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the redemption price in accordance with the preceding sentence shall be deemed fulfilled if, on or before the applicable Redemption Date, the Corporation shall irrevocably deposit in trust with a bank or trust company (which may not be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption plus, if such Redemption Date occurs after any dividend record date and on or prior to the related Dividend Payment Date, such amount of cash as is necessary to pay the dividend payable on such Dividend Payment Date in respect of such shares of Class H Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class H Preferred Stock so called for redemption and, if applicable, the payment of such dividend. No interest shall accrue for the benefit of the holders of shares of Class H Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class H Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class H Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class H Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class H Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class H Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class H Preferred Stock represented by any certificate are redeemed, 11 then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class H Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized, but unissued shares of Class H Preferred Stock. 7. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class H Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class H Preferred Stock ("Senior Stock"); (b) on a parity with the Class H Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class H Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, or Class G Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class H Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority of one over the other (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Stock"); and (c) junior to the Class H Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such capital stock or series shall be Common Stock or (ii) the holders of Class H Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Junior Stock"). 12 8. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class H Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class H Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class H Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class H Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been declared and paid, or declared and set apart for payment, then the right of the holders of the Class H Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all persons elected as directors by the holders of the Class H Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class H Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class H Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class H Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class H Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class H Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class H Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. 13 (b) So long as any shares of Class H Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66- 2/3% of the votes entitled to be cast by the holders of the Class H Preferred Stock voting as a single class with the holders of all other classes or series of Parity Stock entitled to vote on such matters, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class H Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class H Preferred Stock; or (ii) The authorization, creation of, increase in the authorized amount of, or issuance of any shares of any class or series of Senior Stock or any security convertible into shares of any class or series of Senior Stock (whether or not such class or series of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class H Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such Senior Stock or convertible or exchangeable security is to be made, as the case may be, provision is made for the redemption of all shares of Class H Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class H Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock of the Corporation shall have the right to vote with the Class H Preferred Stock as a single class on any matter, then the Class H Preferred Stock and such other class or series shall have with respect to such matters one quarter of one (.25) vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Class H Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 9. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class H Preferred Stock as the true and lawful owner thereof for all 14 purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 10.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class H Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class H Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class H Preferred Stock in excess of the Look-Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class H Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class H Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class H Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 10.8, from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class H Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class H Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class H Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 10.8 from and after the Issue Date (and subject to Section 10.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class H Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class H Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look- Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class H Preferred Stock. 15 (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class H Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class H Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class H Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class H Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class H Preferred Stock in the same or any other related transaction. 10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 10.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class H Preferred Stock in violation of Section 10.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class H Preferred Stock acquired in violation of Section 10.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or, in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 10.3 of this Article; provided, further, that the provisions of this Section 10.2 shall be subject to the provisions of Section 10.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may 16 exercise such authority in a manner that interferes with any ownership or transfer of Class H Preferred Stock that is expressly authorized pursuant to Section 10.8(C) of this Article. 10.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Equity Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class H Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class H Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class H Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class H Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 10.8 of this Article, such shares of Class H Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class H Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 10.3(E), the Prohibited Transferee shall have no rights in the Class H Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. 17 (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class H Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class H Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class H Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class H Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class H Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a Person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 10.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class H Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class H Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class H Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 18 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class H Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class H Preferred Stock in violation of Section 10.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 10.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class H Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class H Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class H Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class H Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class H Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class H Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 10.5 from the Beneficial Owner. 19 (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class H Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class H Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class H Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 10.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 10.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 10 of this Article, or in the case of an ambiguity in any definition contained in Section 10 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 10.8 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 10.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class H Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 10.1 of this Article and the pledgee shall not be subject to the 20 Ownership Limit with respect to the Class H Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. (C) UNDERWRITERS. For a period of 270 days (or such longer period of time as any underwriter described below shall hold an unsold allotment of Class H Preferred Stock) following the purchase of Class H Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class H Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class H Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class H Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class H Preferred Stock shall bear substantially the following legend: "The shares of Class H Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class H Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class H Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class H Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class H Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of the shares of Class H Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class H Cumulative Preferred Stock) or (ii) the shares of Class H Cumulative Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 10.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 21 10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. 10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter- dealer quotation system. FOURTH: The terms of the Class H Cumulative Preferred Stock set forth in Article Third hereof shall become Article XVII of the Charter. 22 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 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. 2. DEFINITIONS. For purposes of the Class J Preferred Stock, the following terms shall have the meanings indicated: "ABP Subscription Agreement" shall mean the Subscription Agreement dated as of November 6, 1998 between the Corporation and Stichting Pensioenfonds ABP. "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Aggregate Value" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (a) (ii) of the definition of "Person" shall be disregarded. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings. "Board of Directors" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class J Preferred Stock; provided that, for purposes of paragraph (a) of Section 8 of this Article, the term "Board of Directors" shall not include any such committee. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. 2 "Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 11.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "Class E Articles Supplementary" shall have the meaning set forth in Section 7.3 of this Article. "Class J Preferred Stock" shall have the meaning set forth in Section 1 of this Article. "Closing Price" shall mean, when used with respect to a share of any Equity Stock and for any date, the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Corporation. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "Common Stock" shall mean the Class A Common Stock, $.01 par value per share, of the Corporation, and the Class B Common Stock, $.01 par value per share, of the Corporation and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock or Class B Common Stock shall be reclassified. "Conversion Price" shall mean the conversion price per share of Class A Common Stock for which each share of Class J Preferred Stock is convertible, 3 as such Conversion Price may be adjusted pursuant to Section 7 of this Article. The initial Conversion Price shall be $40 (equivalent to a conversion rate of 2.50 shares of Class A Common Stock for each share of Class J Preferred Stock). "Current Market Price" of a share of any Equity Stock shall mean the closing price, regular way on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices, regular way, on such day, in either case as reported on the principal national securities exchange on which such securities are listed or admitted for trading, or, if such security is not quoted on any national securities exchange, on the NASDAQ National Market or if such security is not quoted on the NASDAQ National Market, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for each security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any New York Stock Exchange or National Association of Securities Dealers, Inc. member firm regularly making a market in such security selected for such purpose by the Chief Executive Officer of the Corporation or the Board of Directors of the Corporation or if any class or series of securities are not publicly traded, the fair value of the shares of such class as determined reasonably and in good faith by the Board of Directors of the Corporation. "distribution" shall have the meaning set forth in paragraph (a)(iii) of Section 7.3 of this Article. "Dividend Payment Date" shall mean, with respect to each Dividend Period, (a) the date that cash dividends are paid on the Class A Common Stock with respect to such Dividend Period; or (b) if such dividends have not been paid on the Class A Common Stock by 9:00 a.m., New York City time, on the sixtieth day from and including the last day of such Dividend Period, then on such day; provided, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date and no interest shall accrue on such dividend from such date to such Dividend Payment Date. "Dividend Periods" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including February 15, May 15, August 15 and November 15 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. 4 "Excess Transfer" has the meaning set forth in Section 11.3(a) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Fair Market Value" shall mean the average of the daily Current Market Prices of a share of Class A Common Stock during five (5) consecutive Trading Days selected by the Corporation commencing not more than twenty (20) Trading Days before, and ending not later than, the earlier of the day in question and the day before the "ex" date, if any, with respect to any issuance or distribution requiring such computation. The term "'ex' date," when used with respect to any issuance or distribution, means the first day on which the share of Class A Common Stock trades regular way, without the right to receive such issuance or distribution, on the exchange or in the market, as the case may be, used to determine that day's Current Market Price. "Issue Date" shall mean the date on which shares of Class J Preferred Stock are issued pursuant to the ABP Subscription Agreement and the OP Subscription Agreement. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including November 14, 1998. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class J Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class J Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Internal Rate of Return" shall mean, as of any determination date, the effective discount rate under which the present value of the Inflows associated with an outstanding share of Class J Preferred Stock equals the Outflow on the Issue Date associated with such share. For purposes of calculation of Internal Rate of Return: (i) "Inflows" shall mean (a) all dividends (whether paid in cash, property or stock) that have been received on such share, (b) any other distributions that have been received on such share, and (c) as of the determination date, the average of the daily Current Market Prices of a share 5 of the Corporation's Class A Common Stock during the five most recent Trading Days, such average multiplied by the Liquidation Preference (excluding any accumulated, accrued and unpaid dividends) per share of Class J Preferred Stock, and such product divided by the Conversion Price. For purposes of calculating the amounts of any Inflows, all dividends or distributions received in property or stock shall be deemed to have a value equal to the fair market value of such dividends or distributions as of the date such dividend or distribution is received, as determined in good faith by the Board of Directors. All Inflows shall be deemed to have taken place on the date on which payment was actually received by the holder. (ii) "Outflow" shall mean $100 plus an amount equal to one one-millionth of any and all out-of-pocket costs of Stichting Pensioenfonds ABP relating to the acquisition of 1,000,000 shares of the Corporation's Class J Preferred Stock on the Issue Date. Outflow shall be deemed to have taken place on the Closing Date of the ABP Subscription Agreement and the OP Subscription Agreement, and (iii) Neither the fact of any transfer of Class J Preferred Stock nor the amount of any consideration received by the holder thereof or paid by any successor holder in connection with any transfer shall affect the calculation of Internal Rate of Return. Schedule A attached hereto shows the calculation of Internal Rate of Return at certain hypothetical dates of determination and given a certain hypothetical aggregate purchase price, certain hypothetical Inflows and certain hypothetical levels of the Current Market Price of the Corporation's Class A Common Stock. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Market Price" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of a share of that class of Equity Stock on the Trading Day immediately preceding such date. "NYSE" shall mean the New York Stock Exchange, Inc. "OP Subscription Agreement" shall mean the Stock Purchase Agreement dated as of November 6, 1998 between the Corporation and AIMCO Properties, L.P. 6 "Outstanding" shall mean issued and outstanding shares of Equity Stock of the Corporation, provided that for purposes of the application of the Ownership Limit or the Initial Holder Limit to any Person, the term "Outstanding" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "Ownership Limit" shall mean, for any Person other than the Initial Holder, a number of the Outstanding shares of Class J Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class J Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean, collectively, the Ownership Limit as applied to Persons other than the Initial Holder and the Initial Holder Limit as applied to the Initial Holder. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8 of this Article. "Person" shall mean (a) for purposes of Section 11 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity and shall include any successor (by merger or otherwise) of such entity. "Prohibited Transferee" has the meaning set forth in Section 11.3(a) of this Article. "REIT" shall mean a "real estate investment trust" as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 8 of this Article. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of 7 Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class J Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, when used with respect to the Closing Price of a share of any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transaction" shall have the meaning set forth in Section 7.3 of this Article. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class J Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class J Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class J Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class J Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class J Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class J Preferred Stock. "Trust" shall mean the trust created pursuant to Section 11.3 of this Article. "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. 8 "Voting Preferred Stock" shall have the meaning set forth in Section 9 of this Article. 3. DIVIDENDS. (a) The holders of Class J Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of funds legally available for that purpose, cumulative dividends payable in cash in an amount per share of Class J Preferred Stock equal to (i) 7% per annum of the per share Liquidation Preference (as hereinafter defined) for the period beginning on and including the Issue Date and lasting until November 15, 1998; (ii) 8% per annum of the per share Liquidation Preference for the period beginning on and including November 15, 1998 and lasting until November 15, 1999; (iii) 9% per annum of the per share Liquidation Preference for the period beginning on and including November 15, 1999 and lasting until November 15, 2000; and (iv) 9.5% per annum of the per share Liquidation Preference thereafter. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on November 15, 1998. Each such dividend shall be payable in arrears to the holders of record of the Class J Preferred Stock, as they appear on the stock records of the Corporation at the close of business on a record date fixed by the Board of Directors which shall not be more than 60 days prior to the applicable Dividend Payment Date and, within such 60 day period, shall be the same date as the record date for the regular quarterly dividend payable with respect to the Class A Common Stock for the Dividend Period to which such Dividend Payment Date relates (or if there is no such record date for Class A Common Stock, then such date as the Board of Directors may fix). Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) Any dividend payable on the Class J Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class J Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Class J Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class J Preferred Stock that may be in arrears. (c) So long as any of the shares of Class J Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other 9 distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Parity Stock unless, in each case, dividends equal to the full amount of accumulated, accrued and unpaid dividends on all outstanding shares of Class J Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for payment of such dividends on the Class J Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made, as the case may be, with respect to such shares of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class J Preferred Stock and all dividends declared upon any shares of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class J Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class J Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless, in each case, dividends equal to the full amount of all accumulated, accrued and unpaid dividends on all outstanding shares of Class J Preferred Stock have been declared and paid, or such dividends have been declared and a sum sufficient for the payment thereof has been set apart for such payment, on all outstanding shares of Class J Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made with respect to such shares of Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or otherwise acquired or monies paid to or made available for any sinking fund for such redemption, or the date any such cash or other property is paid or distributed to or for the benefit of any holders of Junior Stock in respect thereof, as the case may be. Notwithstanding the provisions of this Section 3, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) redeeming, purchasing 10 or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, setting apart for payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class J Preferred Stock shall be entitled to receive One Hundred Dollars ($100) per share of Class J Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class J Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class J Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class J Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class J Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class J Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class J Preferred Stock and any Parity Stock shall not be entitled to share therein. 11 5. REDEMPTION. The Class J Preferred Stock is not redeemable, other than as specified in Section 11.2 hereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class J Preferred Stock which shall have been issued and reacquired in any manner by the Corporation (including without limitation shares of Class J Preferred Stock which have been surrendered for conversion into Class A Common Stock) shall be returned to the status of authorized, but unissued shares of Class J Preferred Stock. 7. CONVERSION. 7.1 CONVERSION AT HOLDERS' OPTION. At any time on or after the Issue Date, holders of shares of Class J Preferred Stock shall have the right to convert all or a portion of such shares into shares of Class A Common Stock, as follows: (a) Subject to and upon compliance with the provisions of this Section 7, a holder of shares of Class J Preferred Stock shall have the right, at such holder's option, at any time on or after the Issue Date to convert such shares, in whole or in part, into the number of fully paid and non-assessable shares of authorized but previously unissued shares of Class A Common Stock per each share of Class J Preferred Stock obtained by dividing the Liquidation Preference (excluding any accumulated accrued and unpaid dividends) per share of Class J Preferred Stock by the Conversion Price (as in effect at the time and on the date provided for in subparagraph (b)(iv) of this Section 7.1) and by surrendering such shares to be converted, such surrender to be made in the manner provided in paragraph (b) of this Section 7.1. (b) (i) In order to exercise the conversion right, the holder of each share of Class J Preferred Stock to be converted shall surrender the certificate representing such share, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent, accompanied by written notice to the Corporation that the holder thereof elects to convert such share of Class J Preferred Stock. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Class J Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or 12 evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid). (ii) A holder of shares of Class J Preferred Stock shall, as of the date of the conversion of such shares to shares of Class A Common Stock, be entitled to receive cash payment in respect of any dividends (whether or not earned or declared) that are accumulated, accrued and unpaid thereon as of the time of such conversion, provided, however, that payment in respect of any dividend on such shares that has been declared but for which the Dividend Payment Date has not yet been reached shall be payable as of such Dividend Payment Date. Except as provided above, the Corporation shall make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares. (iii) As promptly as practicable after the surrender of certificates for shares of Class J Preferred Stock as aforesaid, the Corporation shall issue and shall deliver at such office to such holder, or send on such holder's written order, a certificate or certificates for the number of full shares of Class A Common Stock issuable upon the conversion of such shares of Class J Preferred Stock in accordance with provisions of this Section 7, and any fractional interest in respect of a share of Class A Common Stock arising upon such conversion shall be settled as provided in paragraph (c) of this Section 7.1. (iv) Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of Class J Preferred Stock shall have been surrendered and such notice received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Price in effect at such time on such date unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. If the dividend payment record date for the Class J Preferred Stock and Class A Common Stock do not coincide, and the preceding sentence does not operate to ensure that a holder of shares of Class J Preferred Stock whose shares are converted into Class A Common Stock does not receive dividends on both the shares of Class J Preferred Stock and the Class A Common Stock into which such shares are converted for the same Dividend Period, then notwithstanding anything herein to the contrary, it is the intent, and the Transfer Agent is authorized to ensure, that no conversion after the earlier of such record dates will be accepted until after the latter of such record dates. 13 (c) No fractional share of Class A Common Stock or scrip representing fractions of a share of Class A Common Stock shall be issued upon conversion of the shares of Class J Preferred Stock. Instead of any fractional interest in a share of Class A Common Stock that would otherwise be deliverable upon the conversion of shares of Class J Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of the Class A Common Stock on the Trading Day immediately preceding the date of conversion. If more than one share shall be surrendered for conversion at one time by the same holder, the number of full shares of Class A Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class J Preferred Stock so surrendered. 7.2 MANDATORY CONVERSION. (a) The Corporation shall have the right to require that all or part of the issued and outstanding shares of Class J Preferred Stock be converted into shares of Class A Common Stock under the following circumstances: (i) At any time on or prior to the fourth anniversary of the Issue Date, in the event that the Internal Rate of Return exceeds 12.5%, the Corporation shall have the right to require the issued and outstanding shares of Class J Preferred Stock to be converted, in whole or in part, into shares of Class A Common Stock as set forth in this Section 7.2. (ii) At any time after the fourth anniversary of the Issue Date, so long as the average of the daily Current Market Prices of the issued and outstanding shares of Class A Common Stock during the five most recent Trading Days is equal to or greater than $40, the Corporation shall have the right to require the issued and outstanding shares of Class J Preferred Stock to be converted, in whole or in part, into shares of Class A Common Stock as set forth in this Section 7.2. (b) Subject to and upon compliance with the provisions of this Section 7, the Corporation shall have the right, under the circumstances set forth in (a) (i) or (ii) above, to convert such shares, in whole or in part, into the number of fully paid and non-assessable shares of authorized but previously unissued shares of Class A Common Stock per each share of Class J Preferred Stock obtained by dividing the Liquidation Preference (excluding any accumulated accrued and unpaid dividends) per share of Class J Preferred Stock by the Conversion Price (as in effect at the time and on the date provided for in subparagraph (c)(v) of this Section 7.2). (c) (i) In order to exercise the conversion right, the Corporation shall, promptly upon the occurrence of an event described in (a)(i) or (ii) above, and in no event later than the close of business on the next succeeding business day, give notice of such conversion to each holder of record of the shares to be converted. Such 14 notice shall be provided by facsimile or, if facsimile is not available, then by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Any notice which was transmitted or mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date received by the holder. Each such notice shall state, as appropriate: (1) the date of conversion, which date may be any date within one business day following the date on which the notice is transmitted or mailed; (2) the number of shares of Class J Preferred Stock to be converted and, if fewer than all such shares held by such holder are to be converted, the number of such shares to be converted; (3) the event which gave rise to the conversion right; and (4) the then current Conversion Price. (ii) Upon receiving such notice of conversion, each such holder shall promptly surrender the certificates representing such shares of Class J Preferred Stock as are being converted on the conversion date, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent; provided, however, that the failure to so surrender any such certificates shall not in any way affect the validity of the conversion of the underlying shares of Class J Preferred Stock into shares of Class A Common Stock. Unless the shares issuable on conversion are to be issued in the same name as the name in which such shares of Class J Preferred Stock are registered, each such share surrendered following conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid). (iii) A holder of shares of Class J Preferred Stock shall, as of the date of the conversion of such shares to shares of Class A Common Stock, be entitled to receive cash payment in respect of any dividends (whether or not earned or declared) that are accumulated, accrued and unpaid thereon as of the time of such conversion, provided, however, that payment in respect of any dividend on such shares that has been declared but for which the Dividend Payment Date has not yet been reached shall be payable as of such Dividend Payment Date. Except as provided above, the Corporation shall make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares. (iv) As promptly as practicable after the surrender of certificates for shares of Class J Preferred Stock as aforesaid, and in any event no later than three business days after the date of such surrender, the Corporation shall issue and shall deliver at such office to such holder, or send on such holder's written order, a certificate or certificates for the number of full shares of Class A Common Stock issuable upon the conversion of such shares of Class J Preferred Stock in accordance with the provisions of this Section 7.2, and any fractional interest in respect of a share of Class A Common Stock arising upon such conversion shall be settled as provided in paragraph (d) of this Section 7.2. 15 (v) Each conversion shall be deemed to have been effected immediately prior to the close of business on the date identified as the conversion date in the notice of conversion sent by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Price in effect at such time on such date unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date identified as the conversion date in the notice of conversion sent by the Corporation as aforesaid. If the dividend payment record dates for the Class J Preferred Stock and Class A Common Stock do not coincide, and the preceding sentence does not operate to ensure that a holder of shares of Class J Preferred Stock whose shares are converted into Class A Common Stock does not receive dividends on both the shares of Class J Preferred Stock and the Class A Common Stock into which such shares are converted for the same Dividend Period, then notwithstanding anything herein to the contrary, it is the intent, and the Transfer Agent is authorized to ensure, that no conversion after the earlier of such record dates will be accepted until after the latter of such record dates. (d) No fractional share of Class A Common Stock or scrip representing fractions of a share of Class A Common Stock shall be issued upon conversion of the shares of Class J Preferred Stock. Instead of any fractional interest in a share of Class A Common Stock that would otherwise be deliverable upon the conversion of shares of Class J Preferred Stock, the Corporation shall pay to the holder of such share an amount of cash based upon the Current Market Price of the Class A Common Stock on the Trading Day immediately preceding the date of conversion. If more than one of any holder's shares shall be converted at one time, the number of full shares of Class A Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class J Preferred Stock so surrendered. 7.3 ADJUSTMENTS TO CONVERSION PRICE (a) The Conversion Price shall be adjusted from time to time as follows: (i) If the Corporation shall after the Issue Date (A) pay a dividend or make a distribution on its capital stock in shares of Class A Common Stock, (B) subdivide its outstanding Class A Common Stock into a greater number of shares, (C) combine its outstanding Class A Common Stock into a smaller number of shares or (D) issue any shares of capital stock by reclassification of its outstanding Class A Common Stock, the Conversion Price in effect at the opening of business on 16 the day following the date fixed for the determination of stockholders entitled to receive such dividend or distribution or at the opening of business on the day following the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any share of Class J Preferred Stock thereafter converted shall be entitled to receive the number of shares of Class A Common Stock (or fraction of a share of Class A Common Stock) that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such share of Class J Preferred Stock been converted immediately prior to the record date in the case of a dividend or distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this paragraph (a)(i) of this Section 7.3 shall become effective immediately after the opening of business on the day next following the record date (except as provided in paragraph (e) below) in the case of a dividend or distribution and shall become effective immediately after the opening of business on the day next following the effective date in the case of a subdivision, combination or reclassification. (ii) If the Corporation shall, after the Issue Date, issue rights, options or warrants to all holders of Class A Common Stock entitling them (for a period expiring within 45 days after the record date described below in this paragraph (a)(ii) of this Section 7.3) to subscribe for or purchase Class A Common Stock at a price per share less than the Fair Market Value per share of the Class A Common Stock on the record date for the determination of stockholders entitled to receive such rights, options or warrants, then the Conversion Price in effect at the opening of business on the day next following such record date shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the opening of business on the day following the date fixed for such determination by (B) a fraction, the numerator of which shall be the sum of (X) the number of shares of Class A Common Stock outstanding on the close of business on the date fixed for such determination and (Y) the number of shares that could be purchased at such Fair Market Value from the aggregate proceeds to the Corporation from the exercise of such rights, options or warrants for Class A Common Stock, and the denominator of which shall be the sum of (XX) the number of shares of Class A Common Stock outstanding on the close of business on the date fixed for such determination and (YY) the number of additional shares of Class A Common Stock offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided in paragraph (e) below). In determining whether any rights, options or warrants entitle the holders of Class A Common Stock to subscribe for or purchase Class A Common Stock at less than such Fair Market Value, there shall be taken into account any consideration received by the Corporation upon issuance and upon exercise of such rights, options or warrants, the value of such consideration, if other than cash, to be determined in good faith by the Board of Directors. 17 (iii) If the Corporation shall after the Issue Date make a distribution on its Class A Common Stock other than in cash or shares of Class A Common Stock (including any distribution in securities (other than rights, options or warrants referred to in paragraph (a)(ii) of this Section 7.3)) (each of the foregoing being referred to herein as a "distribution"), then the Conversion Price in effect at the opening of business on the next day following the record date for determination of stockholders entitled to receive such distribution shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the opening of business on the day following the record date by (B) a fraction, the numerator of which shall be the difference between (X) the number of shares of Class A Common Stock outstanding on the close of business on the record date and (Y) the number of shares determined by dividing (aa) the aggregate value of the property being distributed by (bb) the Fair Market Value per share of Class A Common Stock on the record date, and the denominator of which shall be the number of shares of Class A Common Stock outstanding on the close of business on the record date. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided below). The value of the property being distributed shall be as determined in good faith by the Board of Directors; provided, however, if the property being distributed is a publicly traded security, its value shall be calculated in accordance with the procedure for calculating the Fair Market Value of a share of Class A Common Stock (calculated for a period of five consecutive Trading Days commencing on the twentieth Trading Day after the distribution). Neither the issuance by the Corporation of rights, options or warrants to subscribe for or purchase securities of the Corporation nor the exercise thereof shall be deemed a distribution under this paragraph. (iv) No adjustment in the Conversion Price shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in such price: provided, however, that any adjustments that by reason of this paragraph (a)(iv) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided, further, that any adjustment shall be required and made in accordance with the provisions of this Section 7.3 (other than this paragraph (a)(iv)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of shares of Class A Common Stock. Notwithstanding any other provisions of this Section 7, the Corporation shall not be required to make any adjustment of the Conversion Price for the issuance of (A) any shares of Class A Common Stock pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of optional amounts in shares of Class A Common Stock under such plan or (B) any options, rights or shares of Class A Common Stock pursuant to any stock option, stock purchases or other stock-based plan maintained by the Corporation. All calculations under this Section 7 shall be made to the nearest cent ($.005 being rounded upward) or to the nearest one-tenth of a share (with .05 of a share being rounded upward), as the case may be. Anything in this paragraph (a) of this Section 7 to the contrary notwithstanding, the Corporation 18 shall be entitled, to the extent permitted by law, to make such reductions in the Conversion Price, in addition to those required by this paragraph (a), as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, reclassification or combination of shares, distribution of rights or warrants to purchase stock or securities, or a distribution of other assets (other than cash dividends) hereafter made by the Corporation to its stockholders shall not be taxable, or if that is not possible, to diminish any income taxes that are otherwise payable because of such event. (b) If the Corporation shall be a party to any transaction (including with limitation a merger, consolidation, statutory share exchange, sale of all or substantially all of the Corporation's assets or recapitalization of the Class A Common Stock, but excluding any transaction as to which paragraph (a)(i) of this Section 7.3 applies) (each of the foregoing being referred to herein as a "Transaction"), in each case as a result of which shares of Class A Common Stock shall be converted into the right to receive stock, securities or other property (including cash or any combination thereof), each share of Class J Preferred Stock which is not converted into the right to receive stock, securities or other property in connection with such Transaction shall thereupon be convertible into the kind and amount of shares of stock, securities and other property (including cash or any combination thereof) receivable upon such consummation by a holder of that number of shares of Class A Common Stock into which one share of Class J Preferred Stock was convertible immediately prior to such Transaction. The Corporation shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this paragraph (b), and it shall not consent or agree to the occurrence of any Transaction until the Corporation has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the Class J Preferred Stock that will contain provisions enabling the holders of the Class J Preferred Stock that remain outstanding after such Transaction to convert into the consideration received by holders of Class A Common Stock at the Conversion Price in effect immediately apply to successive Transactions: (c) If: (i) the Corporation shall declare a dividend (or any other distribution) on the Class A Common Stock (other than cash dividends and cash distributions); or (ii) the Corporation shall authorize the granting to all holders of the Class A Common Stock of rights or warrants to subscribe for or purchase any shares of any class or series of capital stock or any other rights or warrants; or (iii) there shall be any reclassification of the outstanding Class A Common Stock or any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation is required, or a statutory share exchange, or the sale or transfer of all or substantially all of the assets of the Corporation as an entirety; or 19 (iv) there shall occur the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, then the Corporation shall cause to be filed with the Transfer Agent and shall cause to be mailed to each holder of shares of Class J Preferred Stock at such holder's address as shown on the stock records of the Corporation, as promptly as possible, a notice stating (A) the record date for the payment of such dividend, distribution or rights or warrants, or, if a record date is not established, the date as of which the holders of Class A Common Stock of record to be entitled to such dividend, distribution or rights or warrants are to be determined or (B) the date on which such reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up is expected to become effective, and the date as of which it is expected that holders of Class A Common Stock of record shall be entitled to exchange their shares of Class A Common Stock for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7. (d) Whenever the Conversion Price is adjusted as herein provided, the Corporation shall promptly file with the Transfer Agent an officer's certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after delivery of such certificate, the Corporation shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the effective date such adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to each holder of shares of Class J Preferred Stock at such holder's address as shown on the stock record of the Corporation. (e) In any case in which paragraph (a) of this Section 7.3 provides that an adjustment shall become effective on the day next following the record date for an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any share of Class J Preferred Stock converted after such record date and before the occurrence of such event the additional Class A Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Class A Common Stock issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount of cash in lieu of any fraction pursuant to Section 7.2(d) or Section 7.1(c). (f) There shall be no adjustment of the Conversion Price in case of the issuance of any capital stock of the Corporation except as specifically set forth in 20 this Section 7. In addition, notwithstanding any other provision contained in this Section 7, there shall be no adjustment of the Conversion Price upon the payment of any cash dividends or distributions on any capital stock of the Corporation, including, without limitation, the Special Dividend (as such term is defined in the Class E Articles Supplementary) on the Corporation's Class E Preferred Stock or upon the automatic conversion of the shares of such Preferred Stock into shares of Class A Common Stock, as provided in the Class E Articles Supplementary. (g) If the Corporation shall take any action affecting the Class A Common Stock, other than action described in this Section 7, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of Class J Preferred Stock, the Conversion Price for the Class J Preferred Stock may be adjusted, to the extent permitted by law in such manner, if any, and at such time as the Board of Directors, in its sole discretion, may determine to be equitable under the circumstances. (h) The Corporation shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Class A Common Stock solely for the purpose of effecting conversion of the Class J Preferred Stock, the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of Class J Preferred Stock not theretofore converted into Class A Common Stock. For purposes of this paragraph (h), the number of shares of Class A Common Stock that shall be deliverable upon the conversion of all outstanding shares of Class J Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder (and without regard to the Ownership Limit). The Corporation covenants that any shares of Class A Common Stock issued upon conversion of the shares of Class J Preferred Stock shall be validly issued, fully paid and nonassessable. The Corporation shall use its best efforts to list the shares of Class A Common Stock required to be delivered upon conversion of the shares of Class J Preferred Stock, prior to such delivery, upon each national securities exchange, if any, upon which the outstanding shares of Class A Common Stock are listed at the time of such delivery. (i) The Corporation will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Class A Common Stock or other securities or property on conversion of shares of Class J Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Class A Common Stock or other securities or property in a name other than that of the holder of the shares of Class J Preferred Stock to be converted, and no such issue or delivery shall be made unless 21 and until the Person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid. (j) In addition to any other adjustment required hereby, to the extent permitted by law, the Corporation from time to time may decrease the Conversion Price by any amount, permanently or for a period of at least twenty Business Days, if the decrease is irrevocable during the period. (k) Notwithstanding anything to the contrary contained in this Section 7, conversion of Class J Preferred Stock pursuant to this Section 7 shall be permitted only to the extent that such conversion would not result in a violation of the Ownership Restrictions (as defined in the Charter), after taking into account any waiver of such limitation granted to any holder of the shares of Class J Preferred Stock. 8. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class J Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class J Preferred Stock ("Senior Stock"); (b) on a parity with the Class J Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or liquidation prices per share thereof be different from those of the Class J Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, or Class H Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class J Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority of one over the other (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Stock"); and (c) junior to the Class J Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such capital stock or series shall be Common Stock, (ii) such capital stock is Class E Cumulative Convertible Preferred Stock or (iii) the holders of Class J 22 Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series (the capital stock referred to in clauses (i), (ii) and (iii) of this paragraph being hereinafter referred to, collectively, as "Junior Stock"). 9. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class J Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class J Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class J Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class J Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been declared and paid, or declared and set apart for payment, then the right of the holders of the Class J Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all persons elected as directors by the holders of the Class J Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class J Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class J Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class J Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class J Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu 23 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 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 J Preferred Stock voting as a single class with the holders of all other classes or series of Parity Stock entitled to vote on such matters, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class J Preferred Stock; provided, however, that the amendment of or supplement to the provisions of the Charter so as to authorize or create, or to increase or decrease the authorized amount of, or to issue any Junior Stock, Class J Preferred Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class J Preferred Stock; or (ii) The authorization, creation of, increase in the authorized amount of, or issuance of any shares of any class or series of Senior Stock or any security convertible into shares of any class or series of Senior Stock (whether or not such class or series of Senior Stock is currently authorized). For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class J Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock of the Corporation shall have the right to vote with the Class J Preferred Stock as a single class on any matter, then the Class J Preferred Stock and such other class or series shall have with respect to such matters one quarter of one (.25) vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Class J Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 24 10. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class J Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 11. OWNERSHIP AND TRANSFERS. 11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (a) Limitation on Beneficial Ownership. Except as provided in Section 11.8, from and after the Issue Date, no Person (other than the Initial Holder) shall Beneficially Own shares of Class J Preferred Stock in excess of the Ownership Limit and the Initial Holder shall not Beneficially Own shares of Class J Preferred Stock in excess of the Initial Holder Limit. (b) Transfers in Excess of Ownership Limit. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder) Beneficially Owning shares of Class J Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class J Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class J Preferred Stock. (c) Transfers in Excess of Initial Holder Limit. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class J Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class J Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class J Preferred Stock. (d) Transfers Resulting in "Closely Held" Status. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 25 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class J Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class J Preferred Stock. (e) Severability on Void Transactions. A Transfer of a share of Class J Preferred Stock that is null and void under Sections 11.1(b), (c) or (d) of this Article because it would, if effective, result in (i) the ownership of Class J Preferred Stock in excess of the Initial Holder Limit or the Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class J Preferred Stock in the same or any other related transaction. 11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 11.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class J Preferred Stock in violation of Section 11.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then Current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class J Preferred Stock acquired in violation of Section 11.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or, in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 11.3 of this Article; provided, further, that the provisions of this Section 11.2 shall be subject to the provisions of Section 11.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class J Preferred Stock that is expressly authorized pursuant to Section 11.8(c) of this Article. 26 11.3 TRANSFER IN TRUST. (a) Establishment of Trust. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Equity Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder) would Beneficially Own shares of Class J Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class J Preferred Stock in excess of the Initial Holder Limit (in either such event, the Person or Initial Holder that would Beneficially Own shares of Class J Preferred Stock in excess of the Ownership Limit or the Initial Holder Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 11.8 of this Article, such shares of Class J Preferred Stock in excess of the Ownership Limit or the Initial Holder Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit or the Initial Holder Limit. (b) Appointment of Trustee. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (c) Status of Shares Held by the Trustee. Shares of Class J Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 11.3(e), the Prohibited Transferee shall have no rights in the Class J Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. (d) Dividend and Voting Rights. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class J Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class J Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class J Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable 27 Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class J Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit or the Initial Holder Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class J Preferred Stock for the benefit of the Charitable Beneficiary. (e) Restrictions on Transfer. The Trustee of the Trust may sell the shares held in the Trust to a Person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 11.3(e). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 11.3(e) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class J Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class J Preferred Stock on behalf of the Corporation. (f) Purchase Right in Stock Transferred to the Trustee. Shares of Class J Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (g) Designation of Charitable Beneficiaries. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class J Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) 28 each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class J Preferred Stock in violation of Section 11.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 11.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class J Preferred Stock will be required to provide certain information as set out below. (a) Annual Disclosure. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class J Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class J Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class J Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class J Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit or the Initial Holder Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class J Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 11.5 from the Beneficial Owner. (b) Disclosure at the Request of the Corporation. Any Person that is a Beneficial Owner of shares of Class J Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class J Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit and the Initial Holder Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class J Preferred Stock already Beneficially Owned by such stockholder or 29 proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 11.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit and the Initial Holder Limit. 11.7 AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 11 of this Article, or in the case of an ambiguity in any definition contained in Section 11 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 11.8 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 11.1 of this Article. (a) Waiver of Ownership Limit. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may, but shall not be required to, waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion. (b) Pledge by Initial Holder. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class J Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 11.1 of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class J Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. (c) Underwriters. For a period of 270 days (or such longer period of time as any underwriter described below shall hold an unsold allotment of Class J Preferred Stock) following the purchase of Class J Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class J Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class J Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class J Preferred Stock purchased in connection with market making activities. 30 11.9 LEGEND. Each certificate for Class J Preferred Stock shall bear substantially the following legend: "The shares of Class J Cumulative Convertible Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class J Cumulative Convertible Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class J Cumulative Convertible Preferred Stock). Any Person that attempts to Beneficially Own shares of Class J Cumulative Convertible Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class J Cumulative Convertible Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of the shares of Class J Cumulative Convertible Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class J Cumulative Convertible Preferred Stock) or (ii) the shares of Class J Cumulative Convertible Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 11.10 SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit and the Initial Holder Limit in the event of a change in law. 11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. 31 FOURTH: The terms of the Class J Cumulative Convertible Preferred Stock set forth in Article Third hereof shall become Article XX of the Charter. 32 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 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) 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 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 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." 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 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 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: "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 "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 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 "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 "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 "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 February 17, 2002, the greater of $0.50 or the quarterly cash dividend paid or payable (determined on each Dividend Payment Date) on the number of shares of Class A Common Stock (or portion thereof) into which a share of Class K Preferred Stock is convertible, and (ii) during the period from and after February 18, 2002, the greater of $0.625 or the quarterly cash dividend paid or payable (determined on each Dividend Payment Date) on the number of shares of Class A Common Stock (or portion thereof) into which a share of Class K Preferred Stock is convertible. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on May 18, 1999. Each such dividend shall be payable in arrears to the holders of record of the Class K Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the February 1, May 1, August 1 or November 1 (each a "Record Date"), as the case may be, immediately preceding such Dividend Payment Date. Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) Any dividend payable on the Class K Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class K Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Class K Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class K Preferred Stock that may be in arrears. (c) So long as any of the shares of Class K Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Parity Stock unless, in each case, dividends equal to the full amount of accumulated, accrued and unpaid dividends on all outstanding shares of Class K Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for payment of such dividends on the Class K Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made, as the case may be, with respect to such shares of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class K Preferred Stock and all dividends declared upon any shares of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class K Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. 8 (d) So long as any of the shares of Class K Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless, in each case, dividends equal to the full amount of all accumulated, accrued and unpaid dividends on all outstanding shares of Class K Preferred Stock have been declared and paid, or such dividends have been declared and a sum sufficient for the payment thereof has been set apart for such payment, on all outstanding shares of Class K Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made with respect to such shares of Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or otherwise acquired or monies paid to or made available for any sinking fund for such redemption, or the date any such cash or other property is paid or distributed to or for the benefit of any holders of Junior Stock in respect thereof, as the case may be. Notwithstanding the provisions of this Section 3, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class K Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class K Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class K Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not 9 earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class K Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class K Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class K Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class K Preferred Stock and any Parity Stock, as provided in Section 4(a), any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class K Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class K Preferred Stock shall not be redeemable by the Corporation prior to February 20, 2002, except as set forth in Section 11.2 of this Article. During the period beginning on February 20, 2002, the Corporation, at its option, may redeem shares of Class K Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to the Cash Redemption Price applicable thereto. On and after February 20, 2002, the Corporation, at its option, may redeem shares of Class K Preferred Stock, in whole or from time to time in part, in exchange for a number of shares of Class A Common Stock equal to (i) 105% of the applicable Cash Redemption Price, divided by (ii) the Redemption Market Price applicable to such redemption. In lieu of any fractional shares of Class A Common Stock which would otherwise be issuable upon any redemption of Class K Preferred Stock, the Corporation shall pay a cash adjustment in respect of such fractional interest in an amount in cash (computed to the nearest cent) equal to the applicable Redemption Market Price multiplied by the fractional interest (computed to the nearest 1/100th of a percent) that otherwise would have been deliverable upon such redemption of Class K Preferred Stock. In the event of a redemption of shares of Class K Preferred Stock, if the Redemption Date occurs after a dividend record date and on or prior to the related Dividend Payment Date, the dividend payable on such Dividend Payment Date in respect of such shares called for redemption shall be payable on such Dividend Payment Date to the holders of record at the close of business on such dividend record 10 date notwithstanding the redemption of such shares, and shall not be payable as part of the redemption price for such shares. In connection with any redemption for cash pursuant to this Section 5(a), the redemption price of the Class K Preferred Stock (other than any portion thereof consisting of accumulated, accrued and unpaid dividends) shall be payable solely with the proceeds from the sale by the Corporation or the Operating Partnership of other capital shares of the Corporation or the Operating Partnership (whether or not such sale occurs concurrently with such redemption). For purposes of the preceding sentence, "capital shares" means any common stock, preferred stock, depositary shares, partnership or other interests, participations or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable at the option of the holder for equity securities (unless and to the extent such debt securities are subsequently converted into capital shares)) or options to purchase any of the foregoing of or in the Corporation or the Operating Partnership. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class K Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class K Preferred Stock may be redeemed unless all outstanding shares of Class K Preferred Stock are simultaneously redeemed, and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class K Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class K Preferred Stock. (d) If the Corporation shall redeem shares of Class K Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which has been mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (i) the Redemption Date; (ii) the number of shares of Class K Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the place or places at which certificates for such shares are to be surrendered for cash or shares of Class A Common Stock; and (iv) the redemption price payable on such Redemption Date (whether in cash or shares of Class A Common Stock), including, without limitation, a statement as to whether or not accumulated, accrued and unpaid dividends will be payable as part of the redemption price, or payable on the next Dividend 11 Payment Date to the record holder at the close of business on the relevant record date as described in the next succeeding sentence. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) dividends on the shares of Class K Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class K Preferred Stock called for redemption, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class K Preferred Stock of the Corporation shall cease except the right to receive the cash payable, or shares of Class A Common Stock issuable, upon such redemption, without interest thereon, upon surrender of their certificates if so required; provided, however, that if the Redemption Date for any shares of Class K Preferred Stock occurs after any dividend record date and on or prior to the related Dividend Payment Date, the full dividend payable on such Dividend Payment Date in respect of such shares of Class K Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. At the close of business on the Redemption Date, without any further action, each holder of shares of Class K Preferred Stock redeemed for shares of Class A Common Stock shall be deemed a holder of the number of shares of Class A Common Stock for which such Class K Convertible Preferred Stock has been redeemed (unless the Corporation defaults on its obligation to deliver shares of Class A Common Stock or cash). The Corporation's obligation to make available the cash necessary to effect such redemption in accordance with the preceding sentence shall be deemed fulfilled if, on or before the applicable Redemption Date, the Corporation shall irrevocably deposit in trust with a bank or trust company (which may not be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption plus, if such Redemption Date occurs after any dividend record date and on or prior to the related Dividend Payment Date, such amount of cash as is necessary to pay the dividend payable on such Dividend Payment Date in respect of such shares of Class K Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class K Preferred Stock so called for redemption and, if applicable, the payment of such dividend. No interest shall accrue for the benefit of the holders of shares of Class K Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class K Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class K Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) or shares of Class A Common Stock for which such shares have been 12 redeemed in accordance with such notice. If fewer than all the outstanding shares of Class K Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class K Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class K Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class K Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. (e) All shares of Class A Common Stock that may be issued upon redemption of shares of Class K Preferred Stock shall be duly and validly issued and fully paid and non-assessable, and prior to giving any notice of redemption the Corporation shall take any corporate action necessary therefor. 6. STATUS OF REACQUIRED STOCK. All shares of Class K Preferred Stock that have been issued and reacquired in any manner by the Corporation (including, without limitation, shares of Class K Preferred Stock which have been surrendered for conversion) shall be returned to the status of authorized but unissued shares of Class K Preferred Stock. 7. CONVERSION. 7.1 CONVERSION AT HOLDERS' OPTION. At any time on or after the Issue Date, holders of shares of Class K Preferred Stock shall have the right to convert all or a portion of such shares into shares of Class A Common Stock, as follows: (a) Subject to and upon compliance with the provisions of this Section 7, each share of Class K Preferred Stock shall, at the option of the holder thereof, be convertible at any time (unless such share is called for redemption, then to and including but not after the close of business on the date immediately prior to the Redemption Date, unless the Corporation shall default in payment due upon redemption thereof), into that number of fully paid and non-assessable shares of Class A Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing $25 by the Conversion Price in effect at such time and by surrender of the certificate representing such shares to be converted in the manner provided in subsection (b) of this Section 7.1. (b) In order to convert shares of Class K Preferred Stock, the holder of the shares to be converted shall surrender the certificate representing such shares at any office or agency maintained by the Corporation for such purpose, accompanied by 13 the funds, if any, required by the last paragraph of this subsection (b), and shall give written notice of conversion in the form provided on such certificate representing shares of Class K Preferred Stock (or such other notice as is acceptable to the Corporation) to the Corporation at such office or agency that the holder elects to convert the shares of Class K Preferred Stock specified in such notice. Such notice shall also state the name or names, together with address or addresses, in which the certificate or certificates for shares of Class A Common Stock which shall be issuable in such conversion shall be issued. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Class K Preferred Stock is registered, each certificate representing a share of Class K Preferred Stock surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax. As promptly as practicable after the surrender of certificates representing such shares of Class K Preferred Stock and the receipt of such notice, instruments of transfer and funds, if any, as aforesaid, the Corporation shall issue and shall deliver at such office or agency to such holder, or as designated in such holder's written instructions, a certificate or certificates for the number of full shares of Class A Common Stock issuable upon the conversion of such share or shares of Class K Preferred Stock in accordance with provisions of this Section 7, and a check or cash in respect of any fractional interest in a share of Class A Common Stock arising upon such conversion, as provided in paragraph (c) of this Section 7.1. Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which certificates representing such shares of Class K Preferred Stock shall have been surrendered and such notice (and any applicable instruments of transfer and any required taxes) received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date, and such conversion shall be at the Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. Holders of Class K Preferred Stock at the close of business on a Record Date will be entitled to receive an amount equal to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion of such shares following such Record Date and prior to such Dividend Payment Date; provided, however, that Class K Preferred Stock surrendered for conversion during the period between the close of business on any Record Date and the opening of business 14 on the corresponding Dividend Payment Date (except shares converted after the issuance of a notice of redemption with respect to a Redemption Date during such period or coinciding with such Dividend Payment Date, which will be entitled to such dividend) must be accompanied by payment of an amount equal to the dividend payable on such shares on such Dividend Payment Date. A holder of Class K Preferred Stock on a Record Date who (or whose transferee) tenders any such shares for conversion into shares of Class A Common Stock on such Dividend Payment Date will receive the dividend payable by the Corporation on such shares of Class K Preferred Stock on such date, and the converting holder need not include payment of the amount of such dividend upon surrender of Class K Preferred Stock for conversion. Except as provided herein, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends on the Class A Common Stock issued upon such conversion. (c) No fractional shares of Class A Common Stock or scrip representing fractions of a share of Class A Common Stock shall be issued upon conversion of shares of Class K Preferred Stock. If more than one share of Class K Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Class A Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class K Preferred Stock so surrendered. In lieu of any fractional interest in a share of Class A Common Stock that would otherwise be deliverable upon the conversion of any share of Class K Preferred Stock, the Corporation shall pay to the holder of such shares an amount in cash (computed to the nearest cent) equal to the Closing Price of the Class A Common Stock on the Trading Day immediately preceding the date of conversion, multiplied by the fractional interest that otherwise would have been deliverable upon conversion of such share. 7.2 ADJUSTMENTS TO CONVERSION PRICE (a) The Conversion Price shall be adjusted from time to time as follows: (i) If the Corporation shall after the Issue Date (A) pay a dividend or make a distribution on its Class A Common Stock in shares of Class A Common Stock, (B) subdivide its outstanding shares of Class A Common Stock into a greater number of shares, (C) combine its outstanding shares of Class A Common Stock into a smaller number of shares or (D) issue any shares of capital stock by reclassification of its outstanding Class A Common Stock, then, in each such case, the Conversion Price in effect immediately prior to such action shall be adjusted so that the holder of any share of Class K Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Class A Common Stock or other capital stock of the Corporation which such holder would have owned or been entitled to receive immediately following such action had such share been converted immediately prior to the occurrence of such event. An adjustment made pursuant to 15 this subsection (i) of this Section 7.2(a) shall become effective immediately after the record date, in the case of a dividend or distribution, or immediately after the effective date, in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subsection (i), the holder of any share of Class K Preferred Stock thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of capital stock or shares of Class A Common Stock and other capital stock of the Corporation, the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent) shall determine the allocation of the adjusted Conversion Price between or among shares of such classes of capital stock or shares of Class A Common Stock and other capital stock. (ii) If the Corporation shall, after the Issue Date, issue rights, options or warrants to all holders of its outstanding shares of Class A Common Stock entitling them (for a period expiring within 45 days after the record date described below) to subscribe for or purchase shares of Class A Common Stock at a price per share less than the current market price per share (determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common Stock (other than pursuant to any stock option, restricted stock or other incentive or benefit plan or stock ownership or purchase plan for the benefit of employees, directors or officers or any dividend reinvestment plan of the Corporation in effect at the time hereof or any other similar plan adopted or implemented hereafter), then the Conversion Price in effect immediately prior thereto shall be adjusted so that it shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date by a fraction, the numerator of which shall be the sum of (A) the number of shares of Class A Common Stock outstanding on the record date and (B) the number of shares which the aggregate proceeds to the Corporation from the exercise of such rights, options or warrants for Class A Common Stock would purchase at such current market price, and the denominator of which shall be the sum of (A) the number of shares of Class A Common Stock outstanding on the record date and (B) the number of additional shares of Class A Common Stock offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall be made successively whenever any rights, options or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants; provided, however, that if all of the shares of Class A Common Stock offered for subscription or purchase are not delivered upon the exercise of such rights, options or warrants, upon the expiration of such rights, options or warrants, the Conversion Price shall be readjusted to the Conversion Price which would have been in effect had the numerator and the denominator of the foregoing fraction and the resulting adjustment been made based upon the number of shares of Class A Common Stock actually delivered upon the exercise of such rights, options or warrants rather than upon the number of shares of Class A Common Stock offered for subscription or purchase. In determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of Class A Common Stock at less than such current market price, and in determining 16 the aggregate offering price of such shares of Class A Common Stock, there shall be taken into account any consideration received by the Corporation for such rights, options or warrants, with the value of such consideration, if other than cash, determined by the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent). (iii) In case the Corporation shall, by dividend or otherwise, distribute to all holders of its outstanding Class A Common Stock any capital stock (other than Class A Common Stock), evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase securities of the Corporation (excluding (A) those referred to in subsections (i) and (ii) of this Section 7.2(a), (B) dividends and distributions paid in cash out of the retained earnings of the Corporation, and (C) distributions upon mergers or consolidations to which subsection (b) of this Section 7.2 applies), then, in each such case, the Conversion Price shall be adjusted to equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date of such distribution by a fraction, the numerator of which shall be the current market price per share (determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common Stock, less the fair market value on such record date (determined by the Board or Directors, whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent) of the portion of the capital stock or assets or the evidences of indebtedness or assets so distributed to the holder of one share of Class A Common Stock or of such subscription rights or warrants applicable to one share of Class A Common Stock, and the denominator of which shall be such current market price per share of Class A Common Stock. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. (iv) For the purpose of any computation under subsections (ii) and (iii) of this Section 7.2(a), the current market price per share of Class A Common Stock on any date shall be the average of the Closing Price of the Class A Common Stock for the shorter of (A) 20 consecutive Trading Days ending on the last full Trading Day prior to the Time of Determination or (B) the period commencing on the date next succeeding the first public announcement of the issuance of such rights or warrants or such distribution through such last full Trading Day prior to the Time of Determination. For purposes of the foregoing, the term "Time of Determination" shall mean the time and date of the earlier of (A) the record date for determining stockholders entitled to receive the rights, warrants or distribution referred to in subsections (ii) and (iii) of this Section 7.2, or (B) the commencement of "ex-dividend" trading on the exchange or market referred to in the definition of "Closing Price." (v) No adjustment in the Conversion Price shall be required to be made unless such adjustment would require an increase or decrease of at least one percent of such price; provided, however, that any adjustment which by reason of this subsection (v) is not required to be made shall be carried forward and taken into 17 account in any subsequent adjustment. All calculations under this Section 7.2 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. Anything in this Section 7.2 to the contrary notwithstanding, the Corporation shall be entitled to make such reduction in the Conversion Price, in addition to those required by this Section 7.2, as it shall determine in its discretion to be advisable in order that any stock dividend, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock hereafter made by the Corporation to its stockholders shall not be taxable to the recipients. Except as set forth in subsections (i), (ii) and (iii) above, the Conversion Price shall not be adjusted for the issuance of Class A Common Stock, or any securities convertible into or exchangeable for Class A Common Stock or carrying the right to purchase any of the foregoing, in exchange for cash, property or services. (vi) The Corporation from time to time may decrease the Conversion Price by any amount for any period of time if the period is at least 20 days and if the decrease is irrevocable during the period. Whenever the Conversion Price is so decreased, the Corporation shall mail to holders of record of shares of Class K Preferred Stock a notice of the decrease at least 15 days before the date the decreased Conversion Price takes effect, and such notice shall state the decreased Conversion Price and the period it will be in effect. (b) Notwithstanding any other provision herein to the contrary, in case of any merger or consolidation to which the Corporation is a party (other than a merger or consolidation in which the Corporation is the continuing entity and in which the Class A Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, or the securities or other property of another entity), or in the case of any sale or transfer of all or substantially all of the Corporation's property and assets to another entity, there will be no adjustment of the Conversion Price, and lawful provision shall be made by the entity formed by such consolidation or the entity whose securities, cash or other property will immediately after the merger or consolidation be owned, by virtue of the merger or consolidation, by the holders of Class A Common Stock immediately prior to the merger or consolidation, or the entity which shall have acquired such assets of the Corporation, such that each share of Class K Preferred Stock then outstanding will, without the consent of the holder thereof, become convertible into the kind and amount of securities, cash or other property receivable upon such merger, consolidation, sale or transfer by a holder of the number of shares of Class A Common Stock into which such share of Class K Preferred Stock was convertible immediately prior to such merger, consolidation, sale or transfer assuming such holder of Class A Common Stock did not exercise his rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such merger, consolidation, sale or transfer. In the case of a cash merger of the Corporation into another entity or any other cash transaction of the type mentioned in this Section 7.2(b), each share of Class K Preferred Stock will thereafter be convertible at the Conversion Price in effect at such time into the same amount of cash per share into which each share of Class K Preferred Stock would have been convertible had 18 such share been converted into Class A Common Stock immediately prior to the effective date of such cash merger or other transaction. The foregoing provisions of this Section 7.2(b) shall similarly apply to successive mergers, consolidations, sales or transfers. (c) If (i) the Corporation shall take any action that would require an adjustment in the Conversion Price pursuant to Section 7.2; (ii) the Corporation shall authorize the granting to the holders of the Class A Common Stock generally of rights or warrants to subscribe for or purchase any shares of stock of any class or series or of any other rights or warrants; (iii) there shall be any reorganization or reclassification of the Class A Common Stock (other than an event to which subsection (i) of Section 7.2(a) applies) or any consolidation or merger to which the Corporation is a party or any sale or transfer of all or substantially all of the assets of the Corporation, in each case, for which approval of any stockholders of the Corporation is required; or (iv) there shall be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation; then, in each such case, the Corporation shall cause to be given to the holders of shares of Class K Preferred Stock and the Transfer Agent as promptly as possible, but in any event at least 15 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such action or granting of rights or warrants, or, if a record is not to be taken, the date as of which the holders of Class A Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined, or (ii) the date on which such reorganization, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is expected to become effective or occur, and the date as of which it is expected that holders of Class A Common Stock of record shall be entitled to exchange their shares of Class A Common Stock for securities, cash or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.2(c). (d) Whenever the Conversion Price is adjusted as herein provided, (i) the Corporation shall promptly file with the Transfer Agent a certificate setting forth the Conversion Price after such adjustment and a brief statement of the facts requiring such adjustment and the manner of computing the same, which certificate shall be conclusive evidence of the correctness of such adjustment, and (ii) the Corporation shall mail or cause to be mailed by first class mail, postage prepaid, as soon as practicable to each holder of record of shares of Class K Preferred Stock a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price. (e) In any case in which paragraph (a) of this Section 7.2 shall require that an adjustment be made immediately following a record date or an effective date, the Corporation may elect to defer (but only until the filing by the Corporation with the Transfer Agent of the certificate required by subsection 7.2(d)) (i) issuing to 19 the holder of any share of Class K Preferred Stock converted after such record date or effective date the shares of Class A Common Stock issuable upon such conversion in excess of the shares of Class A Common Stock issuable upon such conversion on the basis of the Conversion Price prior to adjustment, and (ii) paying to such holder any amount of cash in lieu of a fractional share. (f) In the event that at any time, as a result of an adjustment made pursuant to subsection (i) of Section 7.2(a), the holder of any share of Class K Preferred Stock thereafter surrendered for conversion shall become entitled to receive any shares of the Corporation other than shares of Class A Common Stock, thereafter the Conversion Price of such other shares so receivable upon conversion of any share of Class K Preferred Stock shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Class A Common Stock contained in this Section 7.2. (g) The Corporation shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Class A Common Stock, for the purpose of effecting conversion of shares of Class K Preferred Stock, the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of Class K Preferred Stock not theretofore converted and on or before (and as a condition of) taking any action that would cause an adjustment of the Conversion Price resulting in an increase in the number of shares of Class A Common Stock deliverable upon conversion in excess of the number thereof previously reserved and available therefor, the Corporation shall take all such action so required. For purposes of this paragraph (g), the number of shares of Class A Common Stock which shall be deliverable upon the conversion of all outstanding shares of Class K Preferred Stock shall be computed as if at the time of computation all such outstanding shares of Class K Preferred Stock were held by a single holder (and without regard to the Ownership Limit). Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value (if any) of the shares of Class A Common Stock deliverable upon conversion of the shares of Class K Preferred Stock, the Corporation shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Class A Common Stock at such adjusted Conversion Price. (h) The Corporation will pay any and all documentary stamp, issue or transfer taxes, and any other similar taxes, payable in respect of the issue or delivery of shares of Class A Common Stock upon conversion of shares of Class K Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Class A Common Stock in a name other than that of the holder of the shares of Class K Preferred Stock to be converted, and no such issue or delivery shall be made unless and until the Person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid. 20 (i) Notwithstanding anything to the contrary contained in this Section 7, conversion of Class K Preferred Stock pursuant to this Section 7 shall be permitted only to the extent that such conversion would not result in a violation of the Ownership Restrictions (as defined in the Charter). 8. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class K Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class K Preferred Stock ("Senior Stock"); (b) on a parity with the Class K Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class K Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock or Class J Cumulative Convertible Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class K Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority of one over the other (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Stock"); and (c) junior to the Class K Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such capital stock or series shall be Common Stock or (ii) the holders of Class K Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Junior Stock"). 21 9. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class K Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class K Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class K Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class K Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been declared and paid, or declared and set apart for payment, then the right of the holders of the Class K Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all persons elected as directors by the holders of the Class K Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class K Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class K Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class K Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class K Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class K Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class K Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. 22 (b) So long as any shares of Class K Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the holders of the Class K Preferred Stock voting as a single class with the holders of all other classes or series of Parity Stock entitled to vote on such matters, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class K Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class K Preferred Stock; or (ii) The authorization, creation of, increase in the authorized amount of, or issuance of any shares of any class or series of Senior Stock or any security convertible into shares of any class or series of Senior Stock (whether or not such class or series of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class K Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such Senior Stock or convertible or exchangeable security is to be made, as the case may be, provision is made for the redemption of all shares of Class K Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class K Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock of the Corporation shall have the right to vote with the Class K Preferred Stock as a single class on any matter, then the Class K Preferred Stock and such other class or series shall have with respect to such matters one quarter of one vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Class K Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 10. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class K Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 23 11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 11.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class K Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class K Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class K Preferred Stock in excess of the Look- Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class K Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class K Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class K Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class K Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class K Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class K Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 11.8 from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class K Preferred Stock in excess of the Look- Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class K Preferred Stock that would be otherwise Beneficially Owned by such Look- Through Entity in excess of the Look-Through Ownership Limit and such Look- Through Entity shall acquire no rights in such shares of Class K Preferred Stock. 24 (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class K Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class K Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class K Preferred Stock that is null and void under Sections 11.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class K Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class K Preferred Stock in the same or any other related transaction. 11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 11.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class K Preferred Stock in violation of Section 11.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class K Preferred Stock acquired in violation of Section 11.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or, in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 11.3 of this Article; provided, further, that the provisions of this Section 11.2 shall be subject to the provisions of Section 11.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class K Preferred Stock that is expressly authorized pursuant to Section 11.8(C) of this Article. 25 11.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Equity Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class K Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class K Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class K Preferred Stock in excess of the Look- Through Ownership Limit (in any such event, the Person, Initial Holder or Look- Through Entity that would Beneficially Own shares of Class K Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 11.8 of this Article, such shares of Class K Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look- Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class K Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 11.3(E), the Prohibited Transferee shall have no rights in the Class K Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. 26 (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class K Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class K Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class K Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class K Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class K Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a Person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 11.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class K Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class K Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class K Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 27 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class K Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class K Preferred Stock in violation of Section 11.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 11.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class K Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class K Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class K Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class K Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class K Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look- Through Ownership Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class K Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 11.5 from the Beneficial Owner. 28 (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 (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 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 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 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: "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 "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 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 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 "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 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 (b) Any dividend payable on the Class I Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class I Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Class I Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class I Preferred Stock that may be in arrears. (c) So long as any of the shares of Class I Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Parity Stock unless, in each case, dividends equal to the full amount of accumulated, accrued and unpaid dividends on all outstanding shares of Class I Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for payment of such dividends on the Class I Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made, as the case may be, with respect to such shares of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class I Preferred Stock and all dividends declared upon any shares of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class I Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class I Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless, in each case, dividends equal to the full amount of all accumulated, accrued and unpaid dividends on all outstanding shares of Class I Preferred Stock have been declared and paid, or such dividends have been declared and a sum sufficient for the payment thereof has been set apart for such payment, on all outstanding shares of Class I Preferred Stock 8 for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made with respect to such shares of Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or otherwise acquired or monies paid to or made available for any sinking fund for such redemption, or the date any such cash or other property is paid or distributed to or for the benefit of any holders of Junior Stock in respect thereof, as the case may be. Notwithstanding the provisions of this Section 3, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, setting apart for payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class I Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class I Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class I Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class I Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class I Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class I Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class I 9 Preferred Stock and any Parity Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class I Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class I Preferred Stock shall not be redeemable by the Corporation prior to March 1, 2005, except as set forth in Section 10(b) of this Article. On and after March 1, 2005, the Corporation, at its option, may redeem shares of Class I Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to 100% of the Liquidation Preference thereof, plus all accumulated, accrued and unpaid dividends to the date fixed for redemption (the "Redemption Date"); provided, however, that in the event of a redemption of shares of Class I Preferred Stock, if the Redemption Date occurs after a dividend record date and on or prior to the related Dividend Payment Date, the dividend payable on such Dividend Payment Date in respect of such shares called for redemption shall be payable on such Dividend Payment Date to the holders of record at the close of business on such dividend record date, and shall not be payable as part of the redemption price for such shares. In connection with any redemption pursuant to this Section 5(a), the redemption price of the Class I Preferred Stock (other than any portion thereof consisting of accumulated, accrued and unpaid dividends) shall be payable solely with the proceeds from the sale by the Corporation or the Operating Partnership, of other capital shares of the Corporation or the Operating Partnership (whether or not such sale occurs concurrently with such redemption). For purposes of the preceding sentence, "capital shares" means any common stock, preferred stock, depositary shares, partnership or other interests, participations or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable at the option of the holder for equity securities (unless and to the extent such debt securities are subsequently converted into capital shares)) or options to purchase any of the foregoing of or in the Corporation or the Operating Partnership. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class I Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class I Preferred Stock may be redeemed unless all outstanding shares of Class I Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class I Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class I Preferred Stock. 10 (d) If the Corporation shall redeem shares of Class I Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (1) the Redemption Date; (2) the number of shares of Class I Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the place or places at which certificates for such shares are to be surrendered for cash; and (4) the redemption price payable on such Redemption Date, including, without limitation, a statement as to whether or not accumulated, accrued and unpaid dividends will be (x) payable as part of the redemption price, or (y) payable on the next Dividend Payment Date to the record holder at the close of business on the relevant record date as described in the next succeeding sentence. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) dividends on the shares of Class I Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class I Preferred Stock called for redemption, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class I Preferred Stock of the Corporation shall cease except the rights to receive the cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required; provided, however, that if the Redemption Date for any shares of Class I Preferred Stock occurs after any dividend record date and on or prior to the related Dividend Payment Date, the full dividend payable on such Dividend Payment Date in respect of such shares of Class I Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the redemption price in accordance with the preceding sentence shall be deemed fulfilled if, on or before the applicable Redemption Date, the Corporation shall irrevocably deposit in trust with a bank or trust company (which may not be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption plus, if such Redemption Date occurs after any dividend record date and on or prior to the related Dividend Payment Date, such amount of cash as is necessary to pay the dividend payable on such Dividend Payment Date in respect of such shares of Class I Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class I Preferred Stock so called for redemption and, if applicable, the payment of such dividend. No interest shall accrue for the benefit of the holders of shares of Class 11 I Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class I Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class I Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class I Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class I Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class I Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class I Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class I Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized, but unissued shares of Class I Preferred Stock. 7. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class I Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class I Preferred Stock ("Senior Stock"); (b) on a parity with the Class I Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class I Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock or Class K Convertible Cumulative Preferred Stock of the 12 Corporation, or (ii) the holders of such class of stock or series and the Class I Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority of one over the other (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Stock"); and (c) junior to the Class I Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such capital stock or series shall be Common Stock or (ii) the holders of Class I Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Junior Stock"). 8. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class I Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class I Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class I Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class I Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been declared and paid, or declared and set apart for payment, then the right of the holders of the Class I Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all persons elected as directors by the holders of the Class I Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class I Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of 13 Class I Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class I Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class I Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class I Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class I Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class I Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the holders of the Class I Preferred Stock voting as a single class with the holders of all other classes or series of Parity Stock entitled to vote on such matters, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class I Preferred Stock; provided, however, that the amendment of or supplement to the provisions of the Charter so as to authorize or create, or to increase or decrease the authorized amount of, or to issue any Junior Stock, Class I Preferred Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class I Preferred Stock; or (ii) The authorization, creation of, increase in the authorized amount of, or issuance of any shares of any class or series of Senior Stock or any security convertible into shares of any class or series of Senior Stock (whether or not such class or series of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class I Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to 14 take effect, or when the issuance of any such Senior Stock or convertible or exchangeable security is to be made, as the case may be, provision is made for the redemption of all shares of Class I Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class I Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock of the Corporation shall have the right to vote with the Class I Preferred Stock as a single class on any matter, then the Class I Preferred Stock and such other class or series shall have with respect to such matters one quarter of one vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Class I Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 9. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class I Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 10. RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (a) (i) LIMITATION ON BENEFICIAL OWNERS. Except as provided in Section 10(h), from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class I Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class I Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class I Preferred Stock in excess of the Look-Through Ownership Limit. (ii) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 10(h), from and after the Issue Date (and subject to Section 10(l)), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class I Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class I Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class I Preferred Stock. 15 (iii) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 10(h), from and after the Issue Date (and subject to Section 10(l)), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class I Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class I Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder Limit, and the Initial Holder shall acquire no rights in such shares of Class I Preferred Stock. (iv) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 10(h) from and after the Issue Date (and subject to Section 10(l)), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class I Preferred Stock in excess of the Look-Through Ownership Limit shall be void ab initio as to the Transfer of such shares of Class I Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look-Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class I Preferred Stock. (v) TRANSFERS RESULTING IN "CLOSELY HELD" SHARES. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class I Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class I Preferred Stock. (vi) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class I Preferred Stock that is null and void under Sections 10(a)(ii), (iii), (iv), or (v) of this Article because it would, if effective, result in (i) the ownership of Class I Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class I Preferred Stock in the same or any other related transaction. 16 (b) REMEDIES FOR BREACH. If the Board of Directors shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 10(a) of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class I Preferred Stock in violation of Section 10(a) of this Article (whether or not such violation is intended), the Board of Directors shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class I Preferred Stock acquired in violation of Section 10(a) of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or, in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 10(a) of this Article, regardless of any action (or non-action) by the Board of Directors (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 10(c) of this Article; provided, further, that the provisions of this Section 10(b) shall be subject to the provisions of Section 10(l) of this Article; provided, further, that the Board of Directors may not exercise such authority in a manner that interferes with any ownership or transfer of Class I Preferred Stock that is expressly authorized pursuant to Section 10(h)(iii) of this Article. (c)(i) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Equity Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class I Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class I Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class I Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class I Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 10(h) of this Article, such shares of Class I Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the 17 exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership Limit. (ii) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (iii) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class I Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 10(c)(v), the Prohibited Transferee shall have no rights in the Class I Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. (iv) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class I Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class I Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class I Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class I Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class I Preferred Stock for the benefit of the Charitable Beneficiary. (v) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a Person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 10(c)(v). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee 18 did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 10(c)(v) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class I Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class I Preferred Stock on behalf of the Corporation. (vi) PURCHASE RIGHT IN STOCK TRANSFERRED TO TRUSTEE. Shares of Class I Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors or a committee thereof determines in good faith that an Excess Transfer or other event occurred. (vii) REGISTRATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class I Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. (d) NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class I Preferred Stock in violation of Section 10(a) of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 10(c) of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. (e) OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class I Preferred Stock will be required to provide certain information as set out below. 19 (i) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Class I Preferred Stock shall, within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class I Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class I Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class I Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class I Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 10(e) from the Beneficial Owner. (ii) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class I Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class I Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class I Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. (f) REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 10(l) of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. (g) AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 10 of this Article, or in the case of an ambiguity in any definition contained in Section 10 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 20 (h) EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 10(a) of this Article. (i) WAIVER OF OWNERSHIP LIMITS. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code and is a corporation, partnership, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (ii) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class I Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 10(a) of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class I Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. (iii) UNDERWRITERS. For a period of 270 days (or such longer period of time as any underwriter described below shall hold an unsold allotment of Class I Preferred Stock) following the purchase of Class I Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class I Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class I Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class I Preferred Stock purchased in connection with market making activities. (i) LEGEND. Each certificate for Class I Preferred Stock shall bear substantially the following legend: "The shares of Class I Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class I Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class I Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class I Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class I Cumulative Preferred 21 Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of the shares of Class I Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class I Cumulative Preferred Stock) or (ii) the shares of Class I Cumulative Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." (j) SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. (k) BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. (l) SETTLEMENT. Nothing in this Section 10 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. FOURTH: The terms of the Class I Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXII of the Charter. 22 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 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: "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Aggregate Value" shall mean, with respect to any block of Equity Stock, the sum of the products of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such Person pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the Code, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (a) (ii) of the definition of "Person" shall be disregarded. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings. "Board of Directors" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class L Preferred Stock; provided that, for purposes of paragraph (a) of Section 9 of this Article, the term "Board of Directors" shall not include any such committee. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 11.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "Class L Preferred Stock" shall have the meaning set forth in Section 1 of this Article. 2 "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 "Dividend Periods" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including February 28, May 28, August 28, and November 28 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class L Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Optional Redemption Date or Mandatory Redemption Date, as applicable, with respect to the Class L Preferred Stock being redeemed. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" has the meaning set forth in Section 11.3(A) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Issue Date" shall mean May 28, 1999. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including August 27, 1999. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class L Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class L Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. 4 "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 "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 listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class L Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class L Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class L Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class L Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class L Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class L Preferred Stock. "Trust" shall mean the trust created pursuant to Section 11.3 of this Article. "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "Voting Preferred Stock" shall have the meaning set forth in Section 9 of this Article. 3. DIVIDENDS. (a) The holders of Class L Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, out of funds legally available for that purpose, quarterly cash dividends on the Class L Preferred Stock in an amount per share equal to (i) during the period from the Issue Date through and including May 27, 2002, the greater of $0.50625 or the quarterly cash dividend paid or payable (determined on each Dividend Payment Date by reference to the dividend most recently declared on the Class A Common Stock) on the number of shares of Class A 7 Common Stock (or portion thereof) into which a share of Class L Preferred Stock is convertible, and (ii) during the period from and after May 28, 2002, the greater of $0.625 or the quarterly cash dividend paid or payable (determined on each Dividend Payment Date by reference to the dividend most recently declared on the Class A Common Stock) on the number of shares of Class A Common Stock (or portion thereof) into which a share of Class L Preferred Stock is convertible. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on August 28, 1999. Each such dividend shall be payable in arrears to the holders of record of the Class L Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the tenth Business Day immediately preceding such Dividend Payment Date (each a "Record Date"). Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) Any dividend payable on the Class L Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class L Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Class L Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class L Preferred Stock that may be in arrears. (c) So long as any of the shares of Class L Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Parity Stock unless, in each case, dividends equal to the full amount of accumulated, accrued and unpaid dividends on all outstanding shares of Class L Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for payment of such dividends on the Class L Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made, as the case may be, with respect to such shares of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class L Preferred Stock and all dividends declared upon any shares of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class L Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. 8 (d) So long as any of the shares of Class L Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the Corporation unless, in each case, dividends equal to the full amount of all accumulated, accrued and unpaid dividends on all outstanding shares of Class L Preferred Stock have been declared and paid, or such dividends have been declared and a sum sufficient for the payment thereof has been set apart for such payment, on all outstanding shares of Class L Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made with respect to such shares of Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or otherwise acquired or monies paid to or made available for any sinking fund for such redemption, or the date any such cash or other property is paid or distributed to or for the benefit of any holders of Junior Stock in respect thereof, as the case may be. Notwithstanding the provisions of this Section 3, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class L Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class L Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. Until the holders of the Class L Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not 9 earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class L Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class L Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class L Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class L Preferred Stock and any Parity Stock, as provided in Section 4(a), any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class L Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION (a) Shares of Class L Preferred Stock shall not be redeemable by the Corporation prior to May 28, 2002, except as set forth in Section 11.2 of this Article. On or after May 28, 2002, the Corporation, at its option, may redeem shares of Class L Preferred Stock, in whole or from time to time in part, for cash in an amount equal to the applicable Redemption Price. (b) In the event of any redemption, the Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class L Preferred Stock have not been declared and paid, or declared and set apart for payment, for all preceding Dividend Periods no shares of Class L Preferred Stock may be redeemed unless all outstanding shares of Class L Preferred Stock are simultaneously redeemed, and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class L Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class L Preferred Stock. 10 (d) In the event of a redemption, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which has been mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (i) the Redemption Date; (ii) the number of shares of Class L Preferred Stock to be redeemed and, if fewer than all such shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the place or places at which certificates for such shares are to be surrendered for cash; and (iv) the Redemption Price payable on such Redemption Date, including, without limitation, a statement as to whether or not accumulated, accrued and unpaid dividends will be payable as part of the Redemption Price, or payable on the next Dividend Payment Date to the record holder at the close of business on the relevant record date as described in the next succeeding sentence. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) dividends on the shares of Class L Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class L Preferred Stock called for redemption, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class L Preferred Stock of the Corporation shall cease except the right to receive the cash payable upon such redemption, without interest thereon, upon surrender of their certificates if so required. The Corporation's obligation to make available the cash necessary to effect such redemption in accordance with the preceding sentence shall be deemed fulfilled if, on or before the applicable Redemption Date, the Corporation shall irrevocably deposit in trust with a bank or trust company (which may not be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption plus, if such Redemption Date occurs after any dividend record date and on or prior to the related Dividend Payment Date, such amount of cash as is necessary to pay the dividend payable on such Dividend Payment Date in respect of such shares of Class L Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class L Preferred Stock so called for redemption and, if applicable, the payment of such dividend. No interest shall accrue for the benefit of the holders of shares of Class L Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class L Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. 11 As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class L Preferred Stock to be so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for the cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. If fewer than all the outstanding shares of Class L Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class L Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class L Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class L Preferred Stock represented by any certificate are redeemed, then a new certificate representing the unredeemed shares shall be issued without cost to the holders thereof. 6. STATUS OF REACQUIRED STOCK. All shares of Class L Preferred Stock that have been issued and reacquired in any manner by the Corporation (including, without limitation, shares of Class L Preferred Stock which have been surrendered for conversion) shall be returned to the status of authorized but unissued shares of Class L Preferred Stock. 7. CONVERSION. 7.1 CONVERSION AT HOLDERS' OPTION. At any time on or after the Issue Date, holders of shares of Class L Preferred Stock shall have the right to convert all or a portion of such shares into shares of Class A Common Stock, as follows: (a) Subject to and upon compliance with the provisions of this Section 7, each share of Class L Preferred Stock shall, at the option of the holder thereof, be convertible at any time (unless such share is called for redemption, then to and including but not after the close of business on the date immediately prior to the Redemption Date, unless the Corporation shall default in payment due upon redemption thereof), into that number of fully paid and non-assessable shares of Class A Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing $25 by the Conversion Price in effect at such time and by surrender of the certificate representing such shares to be converted in the manner provided in subsection (b) of this Section 7.1. (b) In order to convert shares of Class L Preferred Stock, the holder of the shares to be converted shall surrender the certificate representing such shares at any office or agency maintained by the Corporation for such purpose, accompanied by the funds, if any, required by the last paragraph of this subsection (b) to be paid by 12 such holder, and shall give written notice of conversion in the form provided on such certificate representing shares of Class L Preferred Stock (or such other notice as is acceptable to the Corporation) to the Corporation at such office or agency that the holder elects to convert the shares of Class L Preferred Stock specified in such notice. Such notice shall also state the name or names, together with address or addresses, in which the certificate or certificates for shares of Class A Common Stock which shall be issuable in such conversion shall be issued. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Class L Preferred Stock is registered, each certificate representing a share of Class L Preferred Stock surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation that such taxes have been paid). As promptly as practicable after the surrender of certificates representing such shares of Class L Preferred Stock and the receipt of such notice and instruments of transfer as aforesaid, the Corporation shall issue and shall deliver at such office or agency to such holder, or as designated in such holder's written instructions, a certificate or certificates for the number of full shares of Class A Common Stock issuable upon the conversion of such share or shares of Class L Preferred Stock in accordance with provisions of this Section 7, and a check or cash in respect of (i) the cash amount payable to such holder, if any, referred to in the last paragraph of this subsection (b), and (ii) any fractional interest in a share of Class A Common Stock arising upon such conversion, as provided in paragraph (c) of this Section 7.1. Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which certificates representing such shares of Class L Preferred Stock shall have been surrendered and such notice (and any applicable instruments of transfer and any required taxes) received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date, and such conversion shall be at the Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. Except as provided herein, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends (other than dividends on the Class A Common Stock the record date for 13 which is after the conversion date and which the Corporation shall pay in the ordinary course to the record holder as of the record date) on the Class A Common Stock issued upon such conversion. Holders of Class L Preferred Stock at the close of business on a Record Date will be entitled to receive an amount equal to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion of such shares following such Record Date. If the Dividend Adjustment Amount (as defined below) with respect to any shares of Class L Preferred Stock surrendered for conversion is positive, the holders of such shares shall, as of the date of conversion, be entitled to receive a cash payment equal to such Dividend Adjustment Amount. If the Dividend Adjustment Amount with respect to any shares of Class L Preferred Stock surrendered for conversion is negative, such shares must be accompanied by payment of a cash amount equal to the absolute value of such Dividend Adjustment Amount. As used herein, "Dividend Adjustment Amount" shall mean, with respect to any share of Class L Preferred Stock that has been surrendered for conversion, the sum of: (i) the aggregate amount of any dividends (whether or not earned or declared) that are accumulated, accrued and unpaid on such share as of the time of such conversion; minus (ii) if such share has been surrendered for conversion during the period between the close of business on any Record Date and the opening of business on the corresponding Dividend Payment Date, the amount of the dividend payable thereon on such Dividend Payment Date; minus (iii) if such share has not been surrendered for conversion during the period between the close of business on any record date for the payment of a dividend on the Class A Common Stock and the opening of business on the corresponding dividend payment date, an amount equal to the product of (A) the quarterly cash dividend per share that was most recently declared on the Class A Common Stock, determined as of the date of conversion, and (B) a fraction, the numerator of which is the number of days in the period from and including the date of the most recent dividend payment date for the Class A Common Stock or the Class L Preferred Stock, whichever is later, to but excluding the date of such conversion, and the denominator of which is 90. (c) No fractional shares of Class A Common Stock or scrip representing fractions of a share of Class A Common Stock shall be issued upon conversion of shares of Class L Preferred Stock. If more than one share of Class L Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Class A Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class L Preferred Stock so surrendered. In lieu of any fractional interest in a share of Class A Common Stock that would otherwise be deliverable upon the conversion of any share of Class L Preferred Stock, the Corporation shall pay to the holder of such shares an amount 14 in cash (computed to the nearest cent) equal to the Closing Price of the Class A Common Stock on the Trading Day immediately preceding the date of conversion, multiplied by the fractional interest that otherwise would have been deliverable upon conversion of such share. 7.2 ADJUSTMENTS TO CONVERSION PRICE (a) The Conversion Price shall be adjusted from time to time as follows: (i) If the Corporation shall after the Issue Date (A) pay a dividend or make a distribution on its Class A Common Stock in shares of Class A Common Stock, (B) subdivide its outstanding shares of Class A Common Stock into a greater number of shares, (C) combine its outstanding shares of Class A Common Stock into a smaller number of shares or (D) issue any shares of capital stock by reclassification of its outstanding Class A Common Stock (including a reclassification pursuant to a merger or consolidation in which the Corporation is the continuing entity and in which the Class A Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, or securities or other property of another entity), then, in each such case, the Conversion Price in effect immediately prior to such action shall be adjusted so that the holder of any share of Class L Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Class A Common Stock or other capital stock of the Corporation which such holder would have owned or been entitled to receive immediately following such action had such share been converted immediately prior to the occurrence of such event. An adjustment made pursuant to this subsection (i) of this Section 7.2(a) shall become effective immediately after the record date, in the case of a dividend or distribution, or immediately after the effective date, in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subsection (i), the holder of any share of Class L Preferred Stock thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of capital stock or shares of Class A Common Stock and other capital stock of the Corporation, the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent) shall determine the allocation of the adjusted Conversion Price between or among shares of such classes of capital stock or shares of Class A Common Stock and other capital stock. (ii) If the Corporation shall, after the Issue Date, issue rights, options or warrants to all holders of its outstanding shares of Class A Common Stock entitling them (for a period expiring within 45 days after the record date described below) to subscribe for or purchase shares of Class A Common Stock at a price per share less than the current market price per share (determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common Stock (other than pursuant to any stock option, restricted stock or other incentive or benefit plan or stock ownership or purchase plan for the benefit of employees, directors or officers or any dividend 15 reinvestment plan of the Corporation in effect at the time hereof or any other similar plan adopted or implemented hereafter), then the Conversion Price in effect immediately prior thereto shall be adjusted so that it shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date by a fraction, the numerator of which shall be the sum of (A) the number of shares of Class A Common Stock outstanding on the record date and (B) the number of shares which the aggregate proceeds to the Corporation from the exercise of such rights, options or warrants for Class A Common Stock would purchase at such current market price, and the denominator of which shall be the sum of (A) the number of shares of Class A Common Stock outstanding on the record date and (B) the number of additional shares of Class A Common Stock offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall be made successively whenever any rights, options or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants; provided, however, that if all of the shares of Class A Common Stock offered for subscription or purchase are not delivered upon the exercise of such rights, options or warrants, upon the expiration of such rights, options or warrants, the Conversion Price shall be readjusted to the Conversion Price which would have been in effect had the numerator and the denominator of the foregoing fraction and the resulting adjustment been made based upon the number of shares of Class A Common Stock actually delivered upon the exercise of such rights, options or warrants rather than upon the number of shares of Class A Common Stock offered for subscription or purchase. In determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of Class A Common Stock at less than such current market price, and in determining the aggregate offering price of such shares of Class A Common Stock, there shall be taken into account any consideration received by the Corporation for such rights, options or warrants, with the value of such consideration, if other than cash, determined by the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent). (iii) In case the Corporation shall, by dividend or otherwise, distribute to all holders of its outstanding Class A Common Stock any capital stock (other than Class A Common Stock), evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase securities of the Corporation (excluding (A) those referred to in subsections (i) and (ii) of this Section 7.2(a), (B) dividends and distributions paid in cash out of the retained earnings of the Corporation, and (C) distributions upon mergers or consolidations to which subsection (b) of this Section 7.2 applies), then, in each such case, the Conversion Price shall be adjusted to equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date of such distribution by a fraction, the numerator of which shall be the current market price per share (determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common Stock, less the fair market value on such record date (determined by the Board or Directors, whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent) of 16 the portion of the capital stock or assets or the evidences of indebtedness or assets so distributed to the holder of one share of Class A Common Stock or of such subscription rights or warrants applicable to one share of Class A Common Stock, and the denominator of which shall be such current market price per share of Class A Common Stock. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. (iv) For the purpose of any computation under subsections (ii) and (iii) of this Section 7.2(a), the current market price per share of Class A Common Stock on any date shall be the average of the Closing Price of the Class A Common Stock for the shorter of (A) 20 consecutive Trading Days ending on the last full Trading Day prior to the Time of Determination or (B) the period commencing on the date next succeeding the first public announcement of the issuance of such rights or warrants or such distribution through such last full Trading Day prior to the Time of Determination. For purposes of the foregoing, the term "Time of Determination" shall mean the time and date of the earlier of (A) the record date for determining stockholders entitled to receive the rights, warrants or distribution referred to in subsections (ii) and (iii) of this Section 7.2, or (B) the commencement of "ex-dividend" trading on the exchange or market referred to in the definition of "Closing Price." (v) No adjustment in the Conversion Price shall be required to be made unless such adjustment would require an increase or decrease of at least one percent of such price; provided, however, that any adjustment which by reason of this subsection (v) is not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 7.2 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. Anything in this Section 7.2 to the contrary notwithstanding, the Corporation shall be entitled to make such reduction in the Conversion Price, in addition to those required by this Section 7.2, as it shall determine in its discretion to be advisable in order that any stock dividend, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock hereafter made by the Corporation to its stockholders shall not be taxable to the recipients. Except as set forth in subsections (i), (ii) and (iii) above, the Conversion Price shall not be adjusted for the issuance of Class A Common Stock, or any securities convertible into or exchangeable for Class A Common Stock or carrying the right to purchase any of the foregoing, in exchange for cash, property or services. (vi) The Corporation from time to time may decrease the Conversion Price by any amount for any period of time if the period is at least 20 days and if the decrease is irrevocable during the period. Whenever the Conversion Price is so decreased, the Corporation shall mail to holders of record of shares of Class L Preferred Stock a notice of the decrease at least 15 days before the date the decreased Conversion Price takes effect, and such notice shall state the decreased Conversion Price and the period it will be in effect. 17 (b) Notwithstanding any other provision herein to the contrary, in case of any merger or consolidation to which the Corporation is a party (other than a merger or consolidation in which the Corporation is the continuing entity and in which the Class A Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, or the securities or other property of another entity), or in the case of any sale or transfer of all or substantially all of the Corporation's property and assets to another entity, there will be no adjustment of the Conversion Price, and lawful provision shall be made by the entity formed by such consolidation or the entity whose securities, cash or other property will immediately after the merger or consolidation be owned, by virtue of the merger or consolidation, by the holders of Class A Common Stock immediately prior to the merger or consolidation, or the entity which shall have acquired such assets of the Corporation, such that each share of Class L Preferred Stock then outstanding will, without the consent of the holder thereof, become convertible into the kind and amount of securities, cash or other property receivable upon such merger, consolidation, sale or transfer by a holder of the number of shares of Class A Common Stock into which such share of Class L Preferred Stock was convertible immediately prior to such merger, consolidation, sale or transfer assuming such holder of Class A Common Stock did not exercise his rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such merger, consolidation, sale or transfer. In the case of a cash merger of the Corporation into another entity or any other cash transaction of the type mentioned in this Section 7.2(b), each share of Class L Preferred Stock will thereafter be convertible at the Conversion Price in effect at such time into the same amount of cash per share into which each share of Class L Preferred Stock would have been convertible had such share been converted into Class A Common Stock immediately prior to the effective date of such cash merger or other transaction. The foregoing provisions of this Section 7.2(b) shall similarly apply to successive mergers, consolidations, sales or transfers. (c) If (i) the Corporation shall take any action that would require an adjustment in the Conversion Price pursuant to Section 7.2; (ii) the Corporation shall authorize the granting to the holders of the Class A Common Stock generally of rights or warrants to subscribe for or purchase any shares of stock of any class or series or of any other rights or warrants; (iii) there shall be any reorganization or reclassification of the Class A Common Stock (other than an event to which subsection (i) of Section 7.2(a) applies) or any consolidation or merger to which the Corporation is a party or any sale or transfer of all or substantially all of the assets of the Corporation, in each case, for which approval of any stockholders of the Corporation is required; or (iv) there shall be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation; then, in each such case, the Corporation shall cause to be given to the holders of shares of Class L Preferred Stock and the Transfer Agent as promptly as possible, but in any event at least 15 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such action or granting of rights or warrants, or, if a record is not to be taken, the date as of which the holders of Class A Common Stock of record to be entitled to such 18 dividend, distribution, rights or warrants are to be determined, or (ii) the date on which such reorganization, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is expected to become effective or occur, and the date as of which it is expected that holders of Class A Common Stock of record shall be entitled to exchange their shares of Class A Common Stock for securities, cash or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.2(c). (d) Whenever the Conversion Price is adjusted as herein provided, (i) the Corporation shall promptly file with the Transfer Agent a certificate setting forth the Conversion Price after such adjustment and a brief statement of the facts requiring such adjustment and the manner of computing the same, which certificate shall be conclusive evidence of the correctness of such adjustment, and (ii) the Corporation shall mail or cause to be mailed by first class mail, postage prepaid, as soon as practicable to each holder of record of shares of Class L Preferred Stock a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price. (e) In any case in which paragraph (a) of this Section 7.2 shall require that an adjustment be made immediately following a record date or an effective date, the Corporation may elect to defer (but only until the filing by the Corporation with the Transfer Agent of the certificate required by subsection 7.2(d)) (i) issuing to the holder of any share of Class L Preferred Stock converted after such record date or effective date the shares of Class A Common Stock issuable upon such conversion in excess of the shares of Class A Common Stock issuable upon such conversion on the basis of the Conversion Price prior to adjustment, and (ii) paying to such holder any amount of cash in lieu of a fractional share. (f) In the event that at any time, as a result of an adjustment made pursuant to subsection (i) of Section 7.2(a), the holder of any share of Class L Preferred Stock thereafter surrendered for conversion shall become entitled to receive any shares of the Corporation other than shares of Class A Common Stock, thereafter the Conversion Price of such other shares so receivable upon conversion of any share of Class L Preferred Stock shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Class A Common Stock contained in this Section 7.2. (g) The Corporation shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Class A Common Stock, for the purpose of effecting conversion of shares of Class L Preferred Stock, the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of Class L Preferred Stock not theretofore converted and on or before (and as a condition of) taking any action that 19 would cause an adjustment of the Conversion Price resulting in an increase in the number of shares of Class A Common Stock deliverable upon conversion in excess of the number thereof previously reserved and available therefor, the Corporation shall take all such action so required. For purposes of this paragraph (g), the number of shares of Class A Common Stock which shall be deliverable upon the conversion of all outstanding shares of Class L Preferred Stock shall be computed as if at the time of computation all such outstanding shares of Class L Preferred Stock were held by a single holder (and without regard to the Ownership Limit). Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value (if any) of the shares of Class A Common Stock deliverable upon conversion of the shares of Class L Preferred Stock, the Corporation shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Class A Common Stock at such adjusted Conversion Price. (h) The Corporation will pay any and all documentary stamp, issue or transfer taxes, and any other similar taxes, payable in respect of the issue or delivery of shares of Class A Common Stock upon conversion of shares of Class L Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Class A Common Stock in a name other than that of the holder of the shares of Class L Preferred Stock to be converted, and no such issue or delivery shall be made unless and until the Person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid. (i) Notwithstanding anything to the contrary contained in this Section 7, conversion of Class L Preferred Stock pursuant to this Section 7 shall be permitted only to the extent that such conversion would not result in a violation of the Ownership Restrictions (as defined in the Charter). (j) If the Corporation shall take any action affecting the Class A Common Stock, other than action described in this Section 7, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of Class L Preferred Stock, the Board of Directors may, but shall have no obligation to, adjust the Conversion Price for the Class L Preferred Stock to the extent permitted by law in such manner, if any, and at such time as the Board of Directors, in its sole discretion, may determine to be equitable under the circumstances. 20 8. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class L Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class L Preferred Stock ("Senior Stock"); (b) on a parity with the Class L Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class L Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock or Class K Convertible Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class L Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority of one over the other (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Stock"); and (c) junior to the Class L Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such capital stock or series shall be Common Stock or (ii) the holders of Class L Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Junior Stock"). 9. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class L Preferred Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any 21 other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class L Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class L Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class L Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been declared and paid, or declared and set apart for payment, then the right of the holders of the Class L Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all persons elected as directors by the holders of the Class L Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class L Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class L Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class L Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class L Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class L Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class L Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class L Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the holders of the Class L Preferred Stock voting as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: 22 (i) Any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class L Preferred Stock (including any amendment, alteration or repeal effected pursuant to a merger, consolidation or similar transaction) or would convert the Class L Preferred Stock into cash or any other security other than a preferred stock with terms and provisions equivalent to those set forth in these Articles Supplementary; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class L Preferred Stock; or (ii) The authorization, creation of, increase in the authorized amount of, or issuance of any shares of any class or series of Senior Stock or any security convertible into shares of any class or series of Senior Stock (whether or not such class or series of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class L Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such Senior Stock or convertible or exchangeable security is to be made, as the case may be, provision is made for the redemption of all shares of Class L Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class L Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock of the Corporation shall have the right to vote with the Class L Preferred Stock as a single class on any matter, then the Class L Preferred Stock and such other class or series shall have with respect to such matters one quarter of one vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Class L Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 10. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class L Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 23 11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 11.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class L Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class L Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class L Preferred Stock in excess of the Look- Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class L Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class L Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class L Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class L Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class L Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class L Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 11.8 from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class L Preferred Stock in excess of the Look- Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class L Preferred Stock that would be otherwise Beneficially Owned by such Look- Through Entity in excess of the Look-Through Ownership Limit and such Look- Through Entity shall acquire no rights in such shares of Class L Preferred Stock. (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being 24 "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class L Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class L Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class L Preferred Stock that is null and void under Sections 11.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class L Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class L Preferred Stock in the same or any other related transaction. 11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 11.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class L Preferred Stock in violation of Section 11.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class L Preferred Stock acquired in violation of Section 11.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or, in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 11.3 of this Article; provided, further, that the provisions of this Section 11.2 shall be subject to the provisions of Section 11.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of 25 Class L Preferred Stock that is expressly authorized pursuant to Section 11.8(C) of this Article. 11.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Equity Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class L Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class L Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class L Preferred Stock in excess of the Look- Through Ownership Limit (in any such event, the Person, Initial Holder or Look- Through Entity that would Beneficially Own shares of Class L Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 11.8 of this Article, such shares of Class L Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look- Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class L Preferred Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 11.3(E), the Prohibited Transferee shall have no rights in the Class L Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. 26 (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class L Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class L Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class L Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class L Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class L Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a Person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 11.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class L Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class L Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class L Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 27 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 (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 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 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 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 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS M CONVERTIBLE CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, as amended to date (the "Charter"), the Board of Directors has duly divided and classified 1,600,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share (the "Class A Common Stock"), into a class designated as Class M Convertible Cumulative Preferred Stock, par value $.01 per share, and has provided for the issuance of such class. SECOND: The reclassification increases the number of shares classified as Class M Convertible Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 1,600,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 475,937,500 shares immediately prior to the reclassification to 474,337,500 shares immediately after the reclassification. THIRD: The terms of the Class M Convertible Cumulative Preferred Stock (including the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption) as set by the Board of Directors are as follows: 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred Stock shall be designated as Class M Convertible Cumulative Preferred Stock, par value $.01 per share (the "Class M Preferred Stock"), and One Million, Six Hundred Thousand (1,600,000) shall be the authorized number of shares of such Class M Preferred Stock constituting such class. -1- 2. DEFINITIONS. For purposes of the Class M Preferred Stock, the following terms shall have the meanings indicated: "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. "Aggregate Value" shall mean, with respect to any block of Equity Stock, the sum of the product of (i) the number of shares of each class of Equity Stock within such block multiplied by (ii) the corresponding Market Price of one share of Equity Stock of such class. "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (i) the number of shares of Equity Stock directly owned by such Person, (ii) the number of shares of Equity Stock indirectly owned by such Person (if such Person is an "individual" as defined in Section 542(a)(2) of the Code) taking into account the constructive ownership rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the Exchange Act, provided that when applying this definition of Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and clause (a) (ii) of the definition of "Person" shall be disregarded. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings. "Board of Directors" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Class M Preferred Stock; provided that, for purposes of paragraph (a) of Section 9 of this Article, the term "Board of Directors" shall not include any such committee. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 11.3 of this Article, each of which shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. "Class M Preferred Stock" shall have the meaning set forth in Section 1 of this Article. -2- "Closing Price" shall mean, when used with respect to a share of any Equity Stock and for any date, the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case, as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if the Equity Stock is not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Equity Stock is listed or admitted to trading or, if the Equity Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if the Equity Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Equity Stock selected by the Board of Directors of the Corporation. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor thereto, as interpreted by any applicable regulations or other administrative pronouncements as in effect from time to time. "Common Stock" shall mean the Class A Common Stock, par value $.01 per share, of the Corporation, and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "Conversion Price" shall mean the conversion price per share of Class A Common Stock for which each share of Class M Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to Section 7 of this Article. The initial Conversion Price shall be $44.00 (equivalent to a conversion rate of approximately 0.5681818 shares of Class A Common Stock for each share of Class M Preferred Stock). "Dividend Payment Date" shall mean January 13, April 13, July 13 and October 13 of each year; provided, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment payable on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date and no interest shall accrue on such dividend from such date to such Dividend Payment Date. "Dividend Periods" shall mean the Initial Dividend Period and each subsequent quarterly dividend period commencing on and including January 13, April 13, July 13 and October 13 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period, other than the Dividend Period during which any Class M -3- Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class M Preferred Stock being redeemed. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" has the meaning set forth in Section 11.3(A) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Issue Date" shall mean January 13, 2000. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including April 12, 2000. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class M Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class M Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class M Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity -4- Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class M Preferred Stock that are Beneficially Owned by the Look-Through Entity. "Market Price" on any date shall mean, with respect to any share of Equity Stock, the Closing Price of a share of that class of Equity Stock on the Trading Day immediately preceding such date. "NYSE" shall mean the New York Stock Exchange, Inc. "Outstanding" shall mean issued and outstanding shares of Equity Stock of the Corporation, provided that for purposes of the application of the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any Person, the term "Outstanding" shall be deemed to include the number of shares of Equity Stock that such Person alone, at that time, could acquire pursuant to any options or convertible securities. "Ownership Limit" shall mean, for any Person other than the Initial Holder or a Look-Through Entity, a number of the Outstanding shares of Class M Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class M Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean collectively the Ownership Limit, as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit, as applied to the Initial Holder, and the Look-Through Ownership Limit, as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8 of this Article. "Person" shall mean (a) for purposes of Section 11 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, "private foundation," within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) a "group," as that term is used for purposes of Section 13(d)(3) of the Exchange Act, and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity. "Prohibited Transferee" has the meaning set forth in Section 11.3(A) of this Article. "Record Date" shall have the meaning set forth in paragraph (a) of Section 3 of this Article. -5- "Redemption Date" shall mean, in the case of any redemption of any shares of Class M Preferred Stock, the date fixed for redemption of such shares. "Redemption Price" shall mean, with respect to any shares of Class M Preferred Stock to be redeemed, (i) if the Redemption Date occurs during the period from and including January 13, 2003, to but excluding January 13, 2004, 102% of the Liquidation Preference thereof, and (ii) if the Redemption Date occurs on or after January 13, 2004, 100% of the Liquidation Preference thereof, plus, in the case of clause (i) or (ii), all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 8 of this Article. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Stock or any class or series of Parity Stock are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Class M Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, when used with respect to any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. -6- "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class M Preferred Stock (including (i) the granting of an option or any series of such options or entering into any agreement for the sale, transfer or other disposition of Class M Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class M Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by operation of law or otherwise (including, but not limited to, any transfer of an interest in other entities that results in a change in the Beneficial Ownership of shares of Class M Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" means such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class M Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class M Preferred Stock. "Trust" shall mean the trust created pursuant to Section 11.3 of this Article. "Trustee" shall mean the Person unaffiliated with either the Corporation or the Prohibited Transferee that is appointed by the Corporation to serve as trustee of the Trust. "Voting Preferred Stock" shall have the meaning set forth in Section 9 of this Article. 3. DIVIDENDS. (a) The holders of Class M Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, out of funds legally available for that purpose, quarterly cash dividends on the Class M Preferred Stock in an amount per share equal to (i) during the period from the Issue Date through and including January 13, 2003, the greater of $0.53125 or the quarterly cash dividend paid or payable (determined on each Dividend Payment Date by reference to the dividend most recently declared on the Class A Common Stock) on the number of shares of Class A Common Stock (or portion thereof) into which a share of Class M Preferred Stock is then convertible, and (ii) during the period from and after January 13, 2003, the greater of $0.578125 or the quarterly cash dividend paid or payable (determined on each Dividend Payment Date by reference to the dividend most recently declared on the Class A Common Stock) on the number of shares of Class A Common Stock (or portion thereof) into which a share of Class M Preferred Stock is then convertible. Such dividends shall be cumulative from the Issue Date, whether or not in any Dividend Period or Periods such dividends shall be declared or there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on April 13, 2000. Each such dividend shall be payable in arrears to the holders of record of the Class M Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the tenth Business Day immediately preceding such Dividend Payment -7- Date (each a "Record Date"). Accumulated, accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, which date shall not precede by more than 45 days the payment date thereof, as may be fixed by the Board of Directors. (b) Any dividend payable on the Class M Preferred Stock for any partial dividend period shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class M Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Class M Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class M Preferred Stock that may be in arrears. (c) So long as any of the shares of Class M Preferred Stock are outstanding, except as described in the immediately following sentence, no dividends shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Parity Stock unless, in each case, dividends equal to the full amount of accumulated, accrued and unpaid dividends on all outstanding shares of Class M Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof has been or contemporaneously is set apart for payment of such dividends on the Class M Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made, as the case may be, with respect to such shares of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon the Class M Preferred Stock and all dividends declared upon any shares of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class M Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class M Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock) shall be declared or paid or set apart for payment by the Corporation and no other distribution of cash or other property shall be declared or made, directly or indirectly, by the Corporation with respect to any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Stock), nor shall any other cash or other property otherwise be paid or distributed to or for the benefit of any holder of shares of Junior Stock in respect thereof, directly or indirectly, by the -8- Corporation unless, in each case, dividends equal to the full amount of all accumulated, accrued and unpaid dividends on all outstanding shares of Class M Preferred Stock have been declared and paid, or such dividends have been declared and a sum sufficient for the payment thereof has been set apart for such payment, on all outstanding shares of Class M Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, set apart for payment or made with respect to such shares of Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or otherwise acquired or monies paid to or made available for any sinking fund for such redemption, or the date any such cash or other property is paid or distributed to or for the benefit of any holders of Junior Stock in respect thereof, as the case may be. Notwithstanding the provisions of this Section 3, the Corporation shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any shares of Parity Stock or (ii) redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation as a REIT under Section 856 of the Code. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital, surplus or otherwise) shall be made to or set apart for the holders of Junior Stock, the holders of shares of Class M Preferred Stock shall be entitled to receive the greater of (i) Twenty-Five Dollars ($25) per share of Class M Preferred Stock (the "Liquidation Preference"), plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, or (ii) the amount that would be payable to the holders of Class M Preferred Stock if they had converted all outstanding shares of Class M Preferred Stock into shares of Common Stock immediately prior to such liquidation, dissolution or winding up; but such holders shall not be entitled to any further payment. Until the holders of the Class M Preferred Stock have been paid the Liquidation Preference in full, plus an amount equal to all dividends (whether or not earned or declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders, no payment will be made to any holder of Junior Stock upon the liquidation, dissolution or winding up of the Corporation. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Class M Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class M Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class M Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a -9- consolidation or merger of the Corporation with one or more corporations, (ii) a sale or transfer of all or substantially all of the Corporation's assets, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Class M Preferred Stock and any Parity Stock, as provided in Section 4(a), any other series or class or classes of Junior Stock shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class M Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class M Preferred Stock shall not be redeemable by the Corporation prior to January 13, 2003, except as set forth in Section 11.2 of this Article. On and after January 13, 2003, except as set forth in paragraph (e) below, the Corporation, at its option, may redeem shares of Class M Preferred Stock, in whole but not in part, at a redemption price payable in cash equal to the Redemption Price applicable thereto. In the event of a redemption of shares of Class M Preferred Stock, if the Redemption Date occurs after a dividend record date and on or prior to the related Dividend Payment Date, the dividend payable on such Dividend Payment Date in respect of such shares called for redemption shall be payable on such Dividend Payment Date to the holders of record at the close of business on such dividend record date notwithstanding the redemption of such shares, and shall not be payable as part of the redemption price for such shares. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class M Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class M Preferred Stock may be redeemed unless all outstanding shares of Class M Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class M Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class M Preferred Stock. (d) If the Corporation shall redeem shares of Class M Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such redemption shall be given to each holder of record of the shares to be redeemed. Such notice shall be provided by first class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation. Neither the failure to mail any notice required by this paragraph (d), nor any defect -10- therein or in the mailing thereof to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which has been mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state, as appropriate: (i) the Redemption Date; (ii) the place or places at which certificates for such shares are to be surrendered for cash; and (iii) the redemption price payable on such Redemption Date, including, without limitation, a statement as to whether or not accumulated, accrued and unpaid dividends will be payable as part of the redemption price, or payable on the next Dividend Payment Date to the record holder at the close of business on the relevant record date as described in the next succeeding sentence. Notice having been mailed as aforesaid, from and after the Redemption Date (unless the Corporation shall fail to make available the amount of cash necessary to effect such redemption), (i) dividends on the shares of Class M Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class M Preferred Stock called for redemption, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Class M Preferred Stock of the Corporation shall cease except the right to receive the cash payable upon such redemption, without interest thereon, upon surrender of their certificates if so required; provided, however, that if the Redemption Date for any shares of Class M Preferred Stock occurs after any dividend record date and on or prior to the related Dividend Payment Date, the full dividend payable on such Dividend Payment Date in respect of such shares of Class M Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the cash necessary to effect such redemption in accordance with the preceding sentence shall be deemed fulfilled if, on or before the applicable Redemption Date, the Corporation shall irrevocably deposit in trust with a bank or trust company (which may not be an affiliate of the Corporation) that has, or is an affiliate of a bank or trust company that has, a capital and surplus of at least $50,000,000, such amount of cash as is necessary for such redemption plus, if such Redemption Date occurs after any dividend record date and on or prior to the related Dividend Payment Date, such amount of cash as is necessary to pay the dividend payable on such Dividend Payment Date in respect of such shares of Class M Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class M Preferred Stock so called for redemption and, if applicable, the payment of such dividend. No interest shall accrue for the benefit of the holders of shares of Class M Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of two years from the Redemption Date shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class M Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares of Class M Preferred Stock to be so redeemed (properly endorsed -11- or assigned for transfer, if the Corporation shall so require and the notice shall so state), such certificates shall be exchanged for cash (without interest thereon) for which such shares have been redeemed in accordance with such notice. 6. STATUS OF REACQUIRED STOCK. All shares of Class M Preferred Stock that have been issued and reacquired in any manner by the Corporation (including, without limitation, shares of Class M Preferred Stock which have been surrendered for conversion) shall be returned to the status of authorized but unissued shares of Class M Preferred Stock. 7. CONVERSION. 7.1 CONVERSION AT HOLDERS' OPTION. At any time on or after the Issue Date, except as set forth in Section 7.2(i) of this Article, holders of shares of Class M Preferred Stock shall have the right to convert all or a portion of such shares into shares of Class A Common Stock, as follows: (a) Subject to and upon compliance with the provisions of this Section 7, each share of Class M Preferred Stock shall, at the option of the holder thereof, be convertible at any time (unless such share is called for redemption, then to and including but not after the close of business on the date immediately prior to the Redemption Date, unless the Corporation shall default in payment due upon redemption thereof), into that number of fully paid and non-assessable shares of Class A Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing $25 by the Conversion Price in effect at such time and by surrender of the certificate representing such shares to be converted in the manner provided in subsection (b) of this Section 7.1. (b) In order to convert shares of Class M Preferred Stock, the holder of the shares to be converted shall surrender the certificate representing such shares at any office or agency maintained by the Corporation for such purpose, accompanied by the funds, if any, required by the last paragraph of this subsection (b) to be paid by such holder, and shall give written notice of conversion in the form provided on such certificate representing shares of Class M Preferred Stock (or such other notice as is acceptable to the Corporation) to the Corporation at such office or agency that the holder elects to convert the shares of Class M Preferred Stock specified in such notice. Such notice shall also state the name or names, together with address or addresses, in which the certificate or certificates for shares of Class A Common Stock which shall be issuable in such conversion shall be issued. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Class M Preferred Stock is registered, each certificate representing a share of Class M Preferred Stock surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the -12 Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation that such taxes have been paid). As promptly as practicable after the surrender of certificates representing such shares of Class M Preferred Stock and the receipt of such notice, instruments of transfer and funds, if any, as aforesaid, the Corporation shall issue and shall deliver at such office or agency to such holder, or as designated in such holder's written instructions, a certificate or certificates for the number of full shares of Class A Common Stock issuable upon the conversion of such share or shares of Class M Preferred Stock in accordance with provisions of this Section 7, and a check or cash in respect of (i) the cash amount payable to such holder, if any, referred to in the last paragraph of this subsection (b), and (ii) any fractional interest in a share of Class A Common Stock arising upon such conversion, as provided in paragraph (c) of this Section 7.1. Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which certificates representing such shares of Class M Preferred Stock shall have been surrendered and such notice (and any applicable instruments of transfer and any required taxes) received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date, and such conversion shall be at the Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. Except as provided herein, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends (other than dividends on the Class A Common Stock the record date for which is after the conversion date and which the Corporation shall pay in the ordinary course to the record holder as of the record date) on the Class A Common Stock issued upon such conversion. Holders of Class M Preferred Stock at the close of business on a Record Date will be entitled to receive an amount equal to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion of such shares following such Record Date. In addition to any such dividend, if the Dividend Adjustment Amount (as defined below) with respect to any shares of Class M Preferred Stock surrendered for conversion is positive, the holders of such shares shall, as of the date of conversion, be entitled to receive a cash payment equal to the Dividend Adjustment Amount. If the Dividend Adjustment Amount with respect to any shares of Class M Preferred Stock surrendered for conversion is negative, such shares must be accompanied by payment of a cash amount equal to the absolute value of the Dividend Adjustment Amount. As used herein, -13- the "Dividend Adjustment Amount" shall mean, with respect to any share of Class M Preferred Stock that has been surrendered for conversion, the sum of: (i) the aggregate amount of any dividends (whether or not earned or declared) that are accumulated, accrued and unpaid on such share as of the time of such conversion; minus (ii) if such share has been surrendered for conversion during the period between the close of business on any Record Date and the opening of business on the corresponding Dividend Payment Date, the amount of the dividend payable thereon on such Dividend Payment Date; minus (iii) an amount equal to the product of (A) the number (which may be a fraction) of shares of Class A Common Stock into which a share of Class M Preferred Stock is then convertible, multiplied by (B) the quarterly cash dividend per share that was most recently declared on the Class A Common Stock, determined as of the date of conversion, and if the date of such conversion is not a record date for the payment of a dividend on the Class A Common Stock, multiplied by (C) a fraction, the numerator of which is the number of days in the period from and including the date of the most recent record date for the payment of a dividend on the Class A Common Stock to but excluding the date of such conversion, and the denominator of which is 90. (c) No fractional shares of Class A Common Stock or scrip representing fractions of a share of Class A Common Stock shall be issued upon conversion of shares of Class M Preferred Stock. If more than one share of Class M Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Class A Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Class M Preferred Stock so surrendered. In lieu of any fractional interest in a share of Class A Common Stock that would otherwise be deliverable upon the conversion of any share of Class M Preferred Stock, the Corporation shall pay to the holder of such shares an amount in cash (computed to the nearest cent) equal to the Closing Price of the Class A Common Stock on the Trading Day immediately preceding the date of conversion, multiplied by the fractional interest that otherwise would have been deliverable upon conversion of such share. 7.2 ADJUSTMENTS TO CONVERSION PRICE (a) The Conversion Price shall be adjusted from time to time as follows: (i) If the Corporation shall after the Issue Date (A) pay a dividend or make a distribution on its Class A Common Stock in shares of Class A Common Stock, (B) subdivide its outstanding shares of Class A Common Stock into a greater number of shares, (C) combine its outstanding shares of Class A Common Stock into a smaller number of shares or (D) -14- issue any shares of capital stock by reclassification of its outstanding Class A Common Stock, then, in each such case, the Conversion Price in effect immediately prior to such action shall be adjusted so that the holder of any share of Class M Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Class A Common Stock or other capital stock of the Corporation which such holder would have owned or been entitled to receive immediately following such action had such share been converted immediately prior to the occurrence of such event. An adjustment made pursuant to this subsection (i) of this Section 7.2(a) shall become effective immediately after the record date, in the case of a dividend or distribution, or immediately after the effective date, in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subsection (i), the holder of any share of Class M Preferred Stock thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of capital stock or shares of Class A Common Stock and other capital stock of the Corporation, the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent) shall determine the allocation of the adjusted Conversion Price between or among shares of such classes of capital stock or shares of Class A Common Stock and other capital stock. (ii) If the Corporation shall, after the Issue Date, issue rights, options or warrants to all holders of its outstanding shares of Class A Common Stock entitling them (for a period expiring within 45 days after the record date described below) to subscribe for or purchase shares of Class A Common Stock at a price per share less than the current market price per share (determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common Stock (other than pursuant to any stock option, restricted stock or other incentive or benefit plan or stock ownership or purchase plan for the benefit of employees, directors or officers or any dividend reinvestment plan of the Corporation in effect at the time hereof or any other similar plan adopted or implemented hereafter), then the Conversion Price in effect immediately prior thereto shall be adjusted so that it shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date by a fraction, the numerator of which shall be the sum of (A) the number of shares of Class A Common Stock outstanding on the record date and (B) the number of shares which the aggregate proceeds to the Corporation from the exercise of such rights, options or warrants for Class A Common Stock would purchase at such current market price, and the denominator of which shall be the sum of (A) the number of shares of Class A Common Stock outstanding on the record date and (B) the number of additional shares of Class A Common Stock offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall be made successively whenever any rights, options or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants; provided, however, that if all of the shares of Class A Common Stock offered for subscription or purchase are not delivered upon the exercise of such rights, options or warrants, upon the expiration of such rights, options or warrants, the Conversion Price shall be readjusted to the Conversion Price which would have been in effect had the numerator and the denominator of the foregoing fraction and the resulting adjustment been made based upon the number of shares of Class A Common -15- Stock actually delivered upon the exercise of such rights, options or warrants rather than upon the number of shares of Class A Common Stock offered for subscription or purchase. In determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of Class A Common Stock at less than such current market price, and in determining the aggregate offering price of such shares of Class A Common Stock, there shall be taken into account any consideration received by the Corporation for such rights, options or warrants, with the value of such consideration, if other than cash, determined by the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent). (iii) In case the Corporation shall, by dividend or otherwise, distribute to all holders of its outstanding Class A Common Stock any capital stock (other than Class A Common Stock), evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase securities of the Corporation (excluding (A) those referred to in subsections (i) and (ii) of this Section 7.2(a), (B) dividends and distributions paid in cash out of the retained earnings of the Corporation, and (C) distributions upon mergers or consolidations to which subsection (b) of this Section 7.2 applies), then, in each such case, the Conversion Price shall be adjusted to equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date of such distribution by a fraction, the numerator of which shall be the current market price per share (determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common Stock, less the fair market value on such record date (determined by the Board or Directors, whose determination shall be conclusive and shall be described in a statement filed by the Corporation with the Transfer Agent) of the portion of the capital stock or assets or the evidences of indebtedness or assets so distributed to the holder of one share of Class A Common Stock or of such subscription rights or warrants applicable to one share of Class A Common Stock, and the denominator of which shall be such current market price per share of Class A Common Stock. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. (iv) For the purpose of any computation under subsections (ii) and (iii) of this Section 7.2(a), the current market price per share of Class A Common Stock on any date shall be the average of the Closing Price of the Class A Common Stock for the shorter of (A) 10 consecutive Trading Days ending on the last full Trading Day prior to the Time of Determination or (B) the period commencing on the date next succeeding the first public announcement of the issuance of such rights or warrants or such distribution through such last full Trading Day prior to the Time of Determination. For purposes of the foregoing, the term "Time of Determination" shall mean the time and date of the earlier of (A) the record date for determining stockholders entitled to receive the rights, warrants or distribution referred to in subsections (ii) and (iii) of this Section 7.2, or (B) the commencement of "ex-dividend" trading on the exchange or market referred to in the definition of "Closing Price." -16- (v) No adjustment in the Conversion Price shall be required to be made unless such adjustment would require an increase or decrease of at least one percent of such price; provided, however, that any adjustment which by reason of this subsection (v) is not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 7.2 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. Anything in this Section 7.2 to the contrary notwithstanding, the Corporation shall be entitled to make such reduction in the Conversion Price, in addition to those required by this Section 7.2, as it shall determine in its discretion to be advisable in order that any stock dividend, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock hereafter made by the Corporation to its stockholders shall not be taxable to the recipients. Except as set forth in subsections (i), (ii) and (iii) above, the Conversion Price shall not be adjusted for the issuance of Class A Common Stock, or any securities convertible into or exchangeable for Class A Common Stock or carrying the right to purchase any of the foregoing, in exchange for cash, property or services. (vi) The Corporation from time to time may decrease the Conversion Price by any amount for any period of time if the period is at least 20 days and if the decrease is irrevocable during the period. Whenever the Conversion Price is so decreased, the Corporation shall mail to holders of record of shares of Class M Preferred Stock a notice of the decrease at least 15 days before the date the decreased Conversion Price takes effect, and such notice shall state the decreased Conversion Price and the period it will be in effect. (b) Notwithstanding any other provision herein to the contrary, in case of any merger or consolidation to which the Corporation is a party (other than a merger or consolidation in which the Corporation is the continuing entity and in which the Class A Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, or the securities or other property of another entity), or in the case of any sale or transfer of all or substantially all of the Corporation's property and assets to another entity, there will be no adjustment of the Conversion Price, and lawful provision shall be made by the entity formed by such consolidation or the entity whose securities, cash or other property will immediately after the merger or consolidation be owned, by virtue of the merger or consolidation, by the holders of Class A Common Stock immediately prior to the merger or consolidation, or the entity which shall have acquired such assets of the Corporation, such that each share of Class M Preferred Stock then outstanding will, without the consent of the holder thereof, become convertible into the kind and amount of securities, cash or other property receivable upon such merger, consolidation, sale or transfer by a holder of the number of shares of Class A Common Stock into which such share of Class M Preferred Stock was convertible immediately prior to such merger, consolidation, sale or transfer (without regard to any Ownership Restrictions as defined in Article IV of the Charter) assuming such holder of Class A Common Stock did not exercise his rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such merger, consolidation, sale or transfer. In the case of a cash merger of the Corporation into another entity or any other cash transaction of the type mentioned in this -17- Section 7.2(b), each share of Class M Preferred Stock will thereafter be convertible at the Conversion Price in effect at such time into the same amount of cash per share into which each share of Class M Preferred Stock would have been convertible had (without regard to any Ownership Restrictions as defined in Article IV of the Charter) such share been converted into Class A Common Stock immediately prior to the effective date of such cash merger or other transaction. The foregoing provisions of this Section 7.2(b) shall similarly apply to successive mergers, consolidations, sales or transfers. (c) If (i) the Corporation shall take any action that would require an adjustment in the Conversion Price pursuant to Section 7.2; (ii) the Corporation shall authorize the granting to the holders of the Class A Common Stock generally of rights or warrants to subscribe for or purchase any shares of stock of any class or series or of any other rights or warrants; (iii) there shall be any reorganization or reclassification of the Class A Common Stock (other than an event to which subsection (i) of Section 7.2(a) applies) or any consolidation or merger to which the Corporation is a party or any sale or transfer of all or substantially all of the assets of the Corporation, in each case, for which approval of any stockholders of the Corporation is required; or (iv) there shall be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation; then, in each such case, the Corporation shall cause to be given to the holders of shares of Class M Preferred Stock and the Transfer Agent as promptly as possible, but in any event at least 15 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such action or granting of rights or warrants, or, if a record is not to be taken, the date as of which the holders of Class A Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined, or (ii) the date on which such reorganization, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is expected to become effective or occur, and the date as of which it is expected that holders of Class A Common Stock of record shall be entitled to exchange their shares of Class A Common Stock for securities, cash or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.2(c). (d) Whenever the Conversion Price is adjusted as herein provided, (i) the Corporation shall promptly file with the Transfer Agent a certificate setting forth the Conversion Price after such adjustment and a brief statement of the facts requiring such adjustment and the manner of computing the same, which certificate shall be conclusive evidence of the correctness of such adjustment, and (ii) the Corporation shall mail or cause to be mailed by first class mail, postage prepaid, as soon as practicable to each holder of record of shares of Class M Preferred Stock a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price and the effective date thereof. (e) In any case in which paragraph (a) of this Section 7.2 shall require that an adjustment be made immediately following a record date or an effective date, the Corporation -18- may elect to defer (but only until the filing by the Corporation with the Transfer Agent of the certificate required by subsection 7.2(d)) (i) issuing to the holder of any share of Class M Preferred Stock converted after such record date or effective date the shares of Class A Common Stock issuable upon such conversion in excess of the shares of Class A Common Stock issuable upon such conversion on the basis of the Conversion Price prior to adjustment, and (ii) paying to such holder any amount of cash in lieu of a fractional share. (f) In the event that at any time, as a result of an adjustment made pursuant to subsection (i) of Section 7.2(a), the holder of any share of Class M Preferred Stock thereafter surrendered for conversion shall become entitled to receive any shares of the Corporation other than shares of Class A Common Stock, thereafter the Conversion Price of such other shares so receivable upon conversion of any share of Class M Preferred Stock shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Class A Common Stock contained in this Section 7.2. (g) The Corporation shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Class A Common Stock, for the purpose of effecting conversion of shares of Class M Preferred Stock, the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of Class M Preferred Stock not theretofore converted and on or before (and as a condition of) taking any action that would cause an adjustment of the Conversion Price resulting in an increase in the number of shares of Class A Common Stock deliverable upon conversion in excess of the number thereof previously reserved and available therefor, the Corporation shall take all such action so required. For purposes of this paragraph (g), the number of shares of Class A Common Stock which shall be deliverable upon the conversion of all outstanding shares of Class M Preferred Stock shall be computed as if at the time of computation all such outstanding shares of Class M Preferred Stock were held by a single holder (and without regard to the Ownership Limit). Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value (if any) of the shares of Class A Common Stock deliverable upon conversion of the shares of Class M Preferred Stock, the Corporation shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Class A Common Stock at such adjusted Conversion Price. (h) The Corporation will pay any and all documentary stamp, issue or transfer taxes, and any other similar taxes, payable in respect of the issue or delivery of shares of Class A Common Stock upon conversion of shares of Class M Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Class A Common Stock in a name other than that of the holder of the shares of Class M Preferred Stock to be converted, and no -19- such issue or delivery shall be made unless and until the Person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid. (i) Notwithstanding anything to the contrary contained in this Section 7, conversion of Class M Preferred Stock pursuant to this Section 7 shall be permitted only to the extent that such conversion would not result in a violation of the Ownership Restrictions (as defined in Article IV of the Charter), after taking into account any applicable waivers. This limitation shall not, however, be taken into account in determining any amounts to which the holders of any shares of Class M Preferred Stock may be entitled under Sections 3, 4 or 5. (j) If the Corporation shall take any action affecting the Class A Common Stock, other than an action described in this Section 7, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of Class M Preferred Stock, the Board of Directors may, but shall have no obligation to, adjust the Conversion Price for the Class M Preferred Stock to the extent permitted by law in such manner, if any, and at such time as the Board of Directors, in its sole discretion, may determine to be equitable under the circumstances. 8. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class M Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class M Preferred Stock ("Senior Stock"); (b) on a parity with the Class M Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Class M Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock or Class L Convertible Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class M Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority of one over the other (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Parity Stock"); and -20- (c) junior to the Class M Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such capital stock or series shall be Common Stock or (ii) the holders of Class M Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such class or series (the capital stock referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Junior Stock"). 9. VOTING. (a) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class M Preferred Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not earned or declared, the number of directors then constituting the Board of Directors shall be increased by two (if not already increased by reason of similar types of provisions with respect to shares of Parity Stock of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class M Preferred Stock, together with the holders of shares of all other Voting Preferred Stock then entitled to exercise similar voting rights, voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class M Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class M Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been declared and paid, or declared and set apart for payment, then the right of the holders of the Class M Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearages), and the terms of office of all persons elected as directors by the holders of the Class M Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class M Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Class M Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class M Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of Class M Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the -21- stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Class M Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Class M Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (b) So long as any shares of Class M Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the votes entitled to be cast by the holders of the Class M Preferred Stock voting as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) Any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class M Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to authorize or create, or to increase the authorized amount of, or issue any Junior Stock or any shares of any class of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of Class M Preferred Stock; or (ii) The authorization, creation of, increase in the authorized amount of, or issuance of any shares of any class or series of Senior Stock or any security convertible into shares of any class or series of Senior Stock (whether or not such class or series of Senior Stock is currently authorized); provided, however, that no such vote of the holders of Class M Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such Senior Stock or convertible or exchangeable security is to be made, as the case may be, provision is made for the redemption of all shares of Class M Preferred Stock at the time outstanding to the extent such redemption is authorized by Section 5 of this Article. For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class M Preferred Stock shall have one (1) vote per share, except that when any other class or series of preferred stock of the Corporation shall have the right to vote with the Class M Preferred Stock as a single class on any matter, then the Class M Preferred Stock and such other class or series shall have with respect to such matters one quarter of one -22- vote per $25 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Class M Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 10. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class M Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 11.1. RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 11.8, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class M Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class M Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class M Preferred Stock in excess of the Look-Through Ownership Limit. (B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Person (other than the Initial Holder or a Look-Through Entity) Beneficially Owning shares of Class M Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class M Preferred Stock that would be otherwise Beneficially Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such shares of Class M Preferred Stock. (C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 11.8, from and after the Issue Date (and subject to Section 11.12), any Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in the Initial Holder Beneficially Owning shares of Class M Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class M Preferred Stock that would be otherwise Beneficially Owned by the Initial Holder in excess of the Initial Holder limit, and the Initial Holder shall acquire no rights in such shares of Class M Preferred Stock. (D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 11.8 from and after the Issue Date (and subject to Section 11.12), any -23- Transfer (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) that, if effective, would result in any Look-Through Entity Beneficially Owning shares of Class M Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class M Preferred Stock that would be otherwise Beneficially Owned by such Look-Through Entity in excess of the Look-Through Ownership Limit and such Look-Through Entity shall acquire no rights in such shares of Class M Preferred Stock. (E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue Date, any Transfer that, if effective would result in the Corporation being "closely held" within the meaning of Section 856(h) of the Code, or would otherwise result in the Corporation failing to qualify as a REIT (including, without limitation, a Transfer or other event that would result in the Corporation owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code) shall be void ab initio as to the Transfer of shares of Class M Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and the intended transferee shall acquire no rights in such shares of Class M Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class M Preferred Stock that is null and void under Sections 11.1(B), (C), (D), or (E) of this Article because it would, if effective, result in (i) the ownership of Class M Preferred Stock in excess of the Initial Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely held" within the meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing to qualify as a REIT, shall not adversely affect the validity of the Transfer of any other share of Class M Preferred Stock in the same or any other related transaction. 11.2. REMEDIES FOR BREACH. If the Board of Directors or a committee thereof shall at any time determine in good faith that a Transfer or other event has taken place in violation of Section 11.1 of this Article or that a Person intends to acquire or has attempted to acquire Beneficial Ownership of any shares of Class M Preferred Stock in violation of Section 11.1 of this Article (whether or not such violation is intended), the Board of Directors or a committee thereof shall be empowered to take any action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, but not limited to, refusing to give effect to such Transfer or other event on the books of the Corporation, causing the Corporation to redeem such shares at the then current Market Price and upon such terms and conditions as may be specified by the Board of Directors in its sole discretion (including, but not limited to, by means of the issuance of long-term indebtedness for the purpose of such redemption), demanding the repayment of any distributions received in respect of shares of Class M Preferred Stock acquired -24- in violation of Section 11.1 of this Article or instituting proceedings to enjoin such Transfer or to rescind such Transfer or attempted Transfer; provided, however, that any Transfers or attempted Transfers (or, in the case of events other than a Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article, regardless of any action (or non-action) by the Board of Directors or such committee, (a) shall be void ab initio or (b) shall automatically result in the transfer described in Section 11.3 of this Article; provided, further, that the provisions of this Section 11.2 shall be subject to the provisions of Section 11.12 of this Article; provided, further, that neither the Board of Directors nor any committee thereof may exercise such authority in a manner that interferes with any ownership or transfer of Class M Preferred Stock that is expressly authorized pursuant to Section 11.8(C) of this Article. 11.3. TRANSFER IN TRUST. (A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions contained in this Article, at any time after the Issue Date there is a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the result of transactions entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system) or other change in the capital structure of the Corporation (including, but not limited to, any redemption of Equity Stock) or other event (including, but not limited to, any acquisition of any share of Equity Stock) such that (a) any Person (other than the Initial Holder or a Look-Through Entity) would Beneficially Own shares of Class M Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class M Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Class M Preferred Stock in excess of the Look-Through Ownership Limit (in any such event, the Person, Initial Holder or Look-Through Entity that would Beneficially Own shares of Class M Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a "Prohibited Transferee"), then, except as otherwise provided in Section 11.8 of this Article, such shares of Class M Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest whole share) shall be automatically transferred to a Trustee in his capacity as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the Excess Transfer, change in capital structure or another event giving rise to a potential violation of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership Limit. (B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with either the Corporation or any Prohibited Transferee. The Trustee may be an individual or a bank or trust company duly licensed to conduct a trust business. (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class M Preferred -25- Stock held by the Trustee shall be issued and outstanding shares of capital stock of the Corporation. Except to the extent provided in Section 11.3(E), the Prohibited Transferee shall have no rights in the Class M Preferred Stock held by the Trustee, and the Prohibited Transferee shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class M Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution paid prior to the discovery by the Corporation that the shares of Class M Preferred Stock have been transferred to the Trustee shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Class M Preferred Stock. Any dividends or distributions so disgorged or rescinded shall be paid over to the Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class M Preferred Stock have been transferred to the Trustee will be rescinded as void ab initio and shall be recast in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary. The owner of the shares at the time of the Excess Transfer, change in capital structure or other event giving rise to a potential violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the Trustee to vote the shares of Class M Preferred Stock for the benefit of the Charitable Beneficiary. (E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the shares held in the Trust to a Person, designated by the Trustee, whose ownership of the shares will not violate the Ownership Restrictions. If such a sale is made, the interest of the Charitable Beneficiary shall terminate and proceeds of the sale shall be payable to the Prohibited Transferee and to the Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited Transferee shall receive the lesser of (1) the price paid by the Prohibited Transferee for the shares or, if the Prohibited Transferee did not give value for the shares (through a gift, devise or other transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any proceeds in excess of the amount payable to the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any of the transfer restrictions set forth in this Section 11.3(E) or any application thereof is determined in a final judgment to be void, invalid or unenforceable by any court having jurisdiction over the issue, the Prohibited Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class M Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class M Preferred Stock on behalf of the Corporation. -26- (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class M Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of 90 days after the later of (i) the date of the Excess Transfer or other event resulting in a transfer to the Trust and (ii) the date that the Board of Directors determines in good faith that an Excess Transfer or other event occurred. (G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Trust relating to such Prohibited Transferee if (i) the shares of Class M Preferred Stock held in the Trust would not violate the Ownership Restrictions in the hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code. 11.4. NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class M Preferred Stock in violation of Section 11.1 of this Article, or any Person that is a Prohibited Transferee such that stock is transferred to the Trustee under Section 11.3 of this Article, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or attempted Transfer or other event on the Corporation's status as a REIT. Failure to give such notice shall not limit the rights and remedies of the Board of Directors provided herein in any way. 11.5. OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class M Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of shares of Class M Preferred Stock convertible into more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Equity Stock shall upon written request by the Corporation, such request to be made within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record or Beneficial Owner, the number of shares of Class M Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class M Preferred Stock shall, upon demand by the Corporation, disclose to the Corporation in writing such additional information with respect to the Beneficial Ownership of the Class M Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to (i) comply with the provisions of the Code regarding the qualification of the Corporation as a REIT under the Code and (ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or the Look-Through Ownership -27- Limit, as applicable. Each stockholder of record, including without limitation any Person that holds shares of Class M Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 11.5 from the Beneficial Owner. (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class M Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class M Preferred Stock for a Beneficial Owner, and any proposed transferee of shares, shall provide such information as the Corporation, in its sole discretion, may request in order to determine the Corporation's status as a REIT, to comply with the requirements of any taxing authority or other governmental agency, to determine any such compliance or to ensure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide a statement or affidavit to the Corporation setting forth the number of shares of Class M Preferred Stock already Beneficially Owned by such stockholder or proposed transferee and any related persons specified, which statement or affidavit shall be in the form prescribed by the Corporation for that purpose. 11.6. REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable (subject to the provisions of Section 11.12 of this Article) (i) to protect the Corporation and the interests of its stockholders in the preservation of the Corporation's status as a REIT and (ii) to insure compliance with the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit. 11.7. AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of Section 11 of this Article, or in the case of an ambiguity in any definition contained in Section 11 of this Article, the Board of Directors shall have the power to determine the application of the provisions of this Article with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. 11.8. EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 11.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code (as modified to exclude qualified trusts from treatment as individuals pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership, limited liability company, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. -28- (B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this Article, the pledge by the Initial Holder of all or any portion of the Class M Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 11.1 of this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class M Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. (C) UNDERWRITERS. For a period of 270 days (or such longer period of time as any underwriter described below shall hold an unsold allotment of Class M Preferred Stock) following the purchase of Class M Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class M Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class M Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class M Preferred Stock purchased in connection with market making activities. 11.9. LEGEND. Each certificate for Class M Preferred Stock shall bear substantially the following legend: "The shares of Class M Convertible Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class M Convertible Cumulative Preferred Stock in excess of the Ownership Restrictions, as applicable, with certain further restrictions and exceptions set forth in the Charter (including the Articles Supplementary setting forth the terms of the Class M Convertible Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class M Convertible Cumulative Preferred Stock in excess of the applicable limitation must immediately notify the Corporation. All capitalized terms in this legend have the meanings ascribed to such terms in the Charter (including the Articles Supplementary setting forth the terms of the Class M Convertible Cumulative Preferred Stock), as the same may be amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each stockholder that so requests. If the restrictions on transfer are violated (i) the transfer of the shares of Class M Convertible Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class M Convertible Cumulative Preferred Stock) or (ii) the shares of Class M Convertible Cumulative Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 11.10. SEVERABILITY. If any provision of this Article or any application of any such provision is determined in a final and unappealable judgment to be void, invalid or unenforceable -29- by any Federal or state court having jurisdiction over the issues, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. 11.11. BOARD OF DIRECTORS DISCRETION. Anything in this Article to the contrary notwithstanding, the Board of Directors shall be entitled to take or omit to take such actions as it in its discretion shall determine to be advisable in order that the Corporation maintain its status as and continue to qualify as a REIT, including, but not limited to, reducing the Ownership Limit, the Initial Holder Limit and the Look-Through Ownership Limit in the event of a change in law. 11.12. SETTLEMENT. Nothing in this Section 11 of this Article shall be interpreted to preclude the settlement of any transaction entered into through the facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. FOURTH: The terms of the Class M Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXIV of the Charter. -30- IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President, General Counsel and Secretary and witnessed by its Assistant Secretary on January 12, 2000. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ BARB FOSTER /s/ JOEL BONDER - ------------------- --------------------------------------------- Barb Foster Joel Bonder Assistant Secretary Executive Vice President, General Counsel and Secretary THE UNDERSIGNED, Executive Vice President, General Counsel and Secretary of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ JOEL BONDER --------------------------------------------- Joel Bonder Executive Vice President, General Counsel and Secretary -31- ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS N 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 4,000,000 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 N 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 N Convertible Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 4,000,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 474,337,500 shares immediately prior to the reclassification to 470,337,500 shares immediately after the reclassification. THIRD: The terms of the Class N 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 N Convertible Cumulative Preferred Stock, par value $.01 per share (the "Class N Preferred Stock"), and Four Million (4,000,000) shall be the authorized number of shares of such Class N Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class N Preferred Stock, the following terms shall have the meanings indicated: "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person shall mean 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. "Base Rate" shall mean a quarterly dividend payment in an amount per share equal to $0.5625; provided, however, that from and after the date of a Change of Control, the "Base Rate" shall mean a quarterly dividend payment in an amount per share equal to (i) for all Dividend Periods commencing after the date of such Change of Control, the greater of (a) $0.75 or (b) the product of (x) $6.25 and (y) the sum of 800 basis points plus the greater of (x) the annual yield to maturity of U.S. Treasury securities with a five year maturity and (y) the annual yield to maturity of U.S. Treasury securities with a ten year maturity, in each case as compiled by and published in the most recent Federal Reserve Statistical Release H.15(519) which has become publicly available on the second Business Day prior to the date of such Change of Control (or, if such Statistical Release is no longer published, any publicly available source of similar data), and (ii) for the Dividend Period in which such Change of Control occurs, a weighted average (based on the number of days in such Dividend Period occurring before and after the date of such Change of Control) of (a) the Base Rate in effect prior thereto and (b) the Base Rate determined in accordance with the foregoing clause (i). "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 2 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 N 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. "Change of Control" shall mean the occurrence of any of the following: (i) the acquisition, directly or indirectly, by any individual or entity or group (as such term is used in Section 13(d)(3) of the Exchange Act) (other than a holder of the Class N Preferred Stock or any of its affiliates) of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act, except that such individual or entity shall be deemed to have beneficial ownership of all shares that any such individual or entity has the right to acquire, whether such right is exercisable immediately or only after passage of time) of more than 25% of the Corporation's outstanding capital stock with voting power, under ordinary circumstances, to elect directors of the Corporation; (ii) other than with respect to the election, resignation or replacement of any director designated, appointed or elected by the holders of the Class N Preferred Stock (each, a "Preferred Director"), during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Corporation (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Corporation was approved by a vote of 66-2/3% of the directors of the Corporation (excluding Preferred Directors) (the "Incumbent Board") then still in office who were either directors at the beginning of such period, or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Corporation then in office, provided, however, 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 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; (iii) the Corporation or one of its subsidiaries is not the general partner of the Operating Partnership; or (iv) (A) the Corporation consolidating with or merging with or into another entity or conveying, transferring or leasing all or substantially all of its assets (including, but not limited to, real property investments) to any individual or entity, or (B) any 3 corporation consolidating with or merging into the Corporation which, in either event (A) or (B), is pursuant to a transaction in which the outstanding voting capital stock of the Corporation is reclassified or changed into or exchanged for cash, securities or other property; provided, however, that the events described in clause (iv) shall not be deemed to be a Change of Control (a) if the sole purpose of such event is that the Corporation is seeking to change its domicile or to change its form of organization from a corporation to a statutory business trust or (b) if (x) the holders of the exchanged securities of the Corporation immediately after such transaction beneficially own at least a majority of the securities of the merged or consolidated entity normally entitled to vote in elections of directors, (y) the chairman and the president of the Corporation immediately prior to the execution of the transaction agreement are the chairman and the president of the merged or consolidated company, and (z) the individuals who were members of the Incumbent Board immediately prior to the execution of the transaction agreement constitute at least a majority of the members of the board of directors of the merged or consolidated company. "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 A 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. "Class N 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 4 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. "Conversion Price" shall mean the conversion price per share of Class A Common Stock for which each share of Class N Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to Section 7 of this Article. The initial Conversion Price shall be $52.50 (equivalent to a conversion rate of 0.4762 shares of Class A Common Stock for each share of Class N Preferred Stock). "Dividend Payment Date" shall mean January 1, April 1, July 1 and October 1 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 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 N Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the date on which the Class N Preferred Stock is redeemed in accordance with Section 5 hereof. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" shall have 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 September 12, 2000. 5 "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including September 30, 2000. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class N 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 N 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 (compounded monthly) under which the present value of the Inflows associated with an outstanding share of Class N 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 (other than Class N Preferred 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 Weighted Average Trading Price (as defined below) of a share of Class A Common Stock during the 45 most recent Trading Days, such weighted average multiplied by the Liquidation Preference (excluding any accumulated, accrued and unpaid dividends) per share of Class N Preferred Stock, and such product divided by the Conversion Price; provided, that notwithstanding the foregoing, "Inflows" shall not include (x) any commitment or placement fees payable in connection with the issuance of shares of Class N Preferred Stock and (y) the amount of any dividends or distributions (in excess of the dividends or distributions otherwise payable) resulting from an increase in the Base Rate upon the occurrence of a Change of Control. For purposes of the preceding sentence, the "Weighted Average Trading Price" shall be determined by dividing (a) the sum of, for each reported sale of Class A Common Stock on the NYSE during such 45 Trading Day period, the product of (i) the sale price per share of Class A Common Stock and (ii) the number of shares of Class A Common Stock sold, by (b) the total number of shares of Class A Common Stock sold on the NYSE during such 45 Trading Days. For purposes of calculating the amounts of any Inflows, all dividends or distributions received in property or stock (other than Class N Preferred 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 6 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 $25 and shall be deemed to have taken place on the Closing Date of the Subscription Agreement. (iii) Neither the fact of any transfer of Class N 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. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class N 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 N 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 N Preferred Stock of the Corporation having an Aggregate Value not in excess 7 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 N Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean collectively the Ownership Limit, as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit, as applied to the Initial Holder, and the Look-Through Ownership Limit, as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8 of this Article. "Person" shall mean (a) for purposes of Section 11 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, "private foundation," within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) a "group," as that term is used for purposes of Section 13(d)(3) of the Exchange Act, and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity. "Prohibited Transferee" shall have 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 N Preferred Stock, the date fixed for redemption of such shares. "Redemption Price" shall mean, with respect to any shares of Class N Preferred Stock to be redeemed, (i) if the Redemption Date occurs during the period from the Issue Date to but excluding September 12, 2003, 105% of the Liquidation Preference thereof, (ii) if the Redemption Date occurs during the period from and including September 12, 2003 to but excluding September 12, 2004, 104% of the Liquidation Preference thereof, and (iii) if the Redemption Date occurs on or after September 12, 2004, 102% of the Liquidation Preference thereof, plus, in the case of clause (i), (ii) or (iii), 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 8 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 N Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Subscription Agreement" shall mean the Class N Convertible Cumulative Preferred Stock Subscription Agreement, dated as of September 12, 2000, by and among the Corporation and GE Capital Equity Investments, Inc. "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 N 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 N Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class N Preferred Stock), whether voluntary or involuntary, whether of record or Beneficial Ownership, and whether by 9 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 N Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" shall mean such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class N 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 N Preferred Stock. "Trust" shall mean the trust created pursuant to Section 11.3(A) 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 paragraph (a) of Section 9 of this Article. 3. DIVIDENDS. (a) The holders of Class N 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 N Preferred Stock in an amount per share equal to the greater of (i) the Base Rate, or (ii) 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 N 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 October 1, 2000. Each such dividend shall be payable in arrears to the holders of record of the Class N 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 N 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 N Preferred Stock shall not be entitled to any 10 dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Class N 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 N Preferred Stock that may be in arrears. (c) So long as any of the shares of Class N 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 N 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 N 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 N 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 N Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class N 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 Class A 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 N 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 N 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, 11 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 N Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class N 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 N 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 N 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 N Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class N 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 N 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 12 holders of the Class N Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION (a) The Corporation, at its option, may redeem shares of Class N Preferred Stock, in whole or from time to time in part, for cash in an amount equal to the applicable Redemption Price (i) at any time on or after September 12, 2003, (ii) on or after the occurrence of a Change of Control, or (iii) as set forth in Section 11.2 of this Article. (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 N Preferred Stock have not been declared and paid, or declared and set apart for payment, for all preceding Dividend Periods no shares of Class N Preferred Stock may be redeemed unless all outstanding shares of Class N Preferred Stock are simultaneously redeemed, and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class N Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class N Preferred Stock. (d) In the event of a redemption of Class N Preferred Stock pursuant to paragraph (a) above, 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 N 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 13 shares of Class N Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class N 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 N 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 $200,000,000, 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 N Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class N 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 N 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 N 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 N 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 N Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class N Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class N 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 N 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 N Preferred Stock that have been issued and reacquired in any manner by the Corporation (including, without limitation, shares of 14 Class N Preferred Stock which have been surrendered for conversion) shall be returned to the status of authorized but unissued shares of Class N Preferred Stock. 7. CONVERSION. 7.1 CONVERSION AT HOLDERS' OPTION. At any time on or after the Issue Date, holders of shares of Class N 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 N 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 N Preferred Stock, the holder of the shares to be converted shall surrender the certificate representing such shares at any office or agency maintained by the Corporation for such purpose, accompanied by the funds, if any, required by the last paragraph of this subsection (b) to be paid by such holder, and shall give written notice of conversion in the form provided on such certificate representing shares of Class N 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 N 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 N Preferred Stock is registered, each certificate representing a share of Class N 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 N 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 15 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 N 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 N Preferred Stock shall have been surrendered and such notice (and any applicable instruments of transfer and any required taxes) received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date, and such conversion shall be at the Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. Except as provided herein, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends (other than dividends on the Class A Common Stock the record date for which is after the conversion date and which the Corporation shall pay in the ordinary course to the record holder as of the record date) on the Class A Common Stock issued upon such conversion. Holders of Class N 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 N 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 N 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 N 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 16 (ii) if such share has been surrendered for conversion during the period between the close of business on any Record Date and the opening of business on the corresponding Dividend Payment Date, the amount of the dividend payable thereon on such Dividend Payment Date; minus (iii) an amount equal to the product of (A) the number of shares of Class A Common Stock (or fraction thereof) into which such share of Class N Preferred Stock has been converted, (B) the quarterly cash dividend per share that was most recently declared on the Class A Common Stock, determined as of the date of conversion, and (C) 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 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 N Preferred Stock. If more than one share of Class N 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 N 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 N 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 MANDATORY CONVERSION. (a) The Corporation shall have the right to require that all or part of the issued and outstanding shares of Class N Preferred Stock be converted into shares of Class A Common Stock under the following circumstances: (i) at any time from and including the first anniversary of the Issue Date to but excluding the second anniversary of the Issue Date, if the Internal Rate of Return exceeds 20.0% per annum from and including the Issue Date (such condition, the "Conversion Condition"), on one occasion only the Corporation shall have the right, upon 30 days advance written notice, to require that up to 2,000,000 shares of Class N Preferred Stock be converted into shares of Class A Common Stock as set forth in this Section 7.2; (ii) at any time from and including the second anniversary of the Issue Date to but excluding the third anniversary of the Issue Date, if the Internal 17 Rate of Return exceeds 20.0% per annum from and including the Issue Date, on one occasion only the Corporation shall have the right, upon 30 days advance written notice, to require that all or any portion of the outstanding shares of Class N Preferred Stock be converted into shares of Class A Common Stock as set forth in this Section 7.2; provided, however, that (A) if a Conversion Condition occurs and the Corporation is entitled to require the conversion referred to in Section 7.2(a)(i) and does not so convert, then the Corporation's right to require the conversion referred to in Section 7.2(a)(ii) will be limited to a right to require that up to 2,000,000 shares of Class N Preferred Stock be converted into shares of Class A Common Stock as set forth in this Section 7.2(a)(ii); (B) if the Corporation receives a Liquidity Failure Notice pursuant to Section 7.2(c)(vi), then the right to cause a conversion under Section 7.2(a)(ii) shall thereupon terminate; and (C) the Corporation may not exercise its right to convert under Section 7.2(a)(ii) unless and until at least 90 days have transpired since the date of any conversion under Section 7.2(a)(i). (b) Subject to and upon compliance with the provisions of this Section 7.2, 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 N Preferred Stock obtained by dividing the Liquidation Preference (excluding any accumulated accrued and unpaid dividends) per share of Class N 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 Corporation exercising its right to require conversion pursuant to (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 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 thirty days following the date on which the notice is transmitted or mailed; (2) the number of shares of Class N 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; and (3) the then current Conversion Price. 18 (ii) Upon receiving such notice of conversion, each such holder shall promptly (and in any event, within 30 days) surrender the certificates representing such shares of Class N 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 N 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 N 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, if any (or evidence reasonably satisfactory to the Corporation that such taxes have been paid). (iii) A holder of shares of Class N Preferred Stock shall, as of the date of the conversion of such shares to shares of Class A Common Stock, be entitled to receive a 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 N 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 N 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. (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 dates 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 19 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 N 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 N Preferred Stock whose shares are converted into Class A Common Stock does not receive dividends on both the shares of Class N 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. (vi) In the event that the Corporation has elected to cause a conversion of the shares of Class N Preferred Stock pursuant to Section 7.2(a)(i) above, and the holders of a majority of the shares of Class N Preferred Stock so converted provide a written notice (a "Liquidity Failure Notice") to the Corporation within 90 days after the date of conversion that during such 90 day period, such holders were unable (based on commercially reasonable efforts, taking into account volume) to sell the shares of Class A Common Stock received upon conversion on the open market at price(s) that would have provided such holder(s) with an Internal Rate of Return of at least 20% per annum thereon from the Issue Date through the date of sale of all such shares of Class A Common Stock (provided that in calculating the Inflows, instead of calculating the Weighted Average Trading Prices as provided in clause (i) of the definition of Internal Rate of Return, the Internal Rate of Return shall be calculated using the actual sale prices obtained by the holder(s)), then from and after the delivery of the Liquidity Failure Notice, the right of the Corporation to convert shares of Class N Preferred Stock under Section 7.2(ii) shall terminate. The Liquidity Failure Notice shall include a list of dates on which shares of Class A Common Stock were sold, the number and price per share so sold and shall include a calculation of the Internal Rate of Return on the aggregate number of shares of Class A Common Stock so sold during the period. (d) 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 N Preferred Stock. If more than one share of Class N 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 N Preferred Stock so converted. 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 N 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. 20 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 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 N 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 7.3(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 N 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 7.3(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, 21 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 7.3(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 7.3 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 7.3(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. 22 (iv) For the purpose of any computation under subsections (ii) and (iii) of this Section 7.3(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 7.3, 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 7.3 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 7.3 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 7.3, 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 N 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 23 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 N 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 N 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 7.3(b), each share of Class N 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 N 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 7.3(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 7.3; (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 7.3(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 N 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 24 notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7.3(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 N 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 7.3 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 7.3(d)) (i) issuing to the holder of any share of Class N 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 7.3(a), the holder of any share of Class N 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 N 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 7.3. (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 N Preferred Stock, the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of Class N 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 N Preferred Stock shall be computed as if at the time 25 of computation all such outstanding shares of Class N 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 N 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 N 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 N 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 N 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 N Preferred Stock, the Board of Directors may, but shall have no obligation to, adjust the Conversion Price for the Class N Preferred Stock to the extent permitted by law in such manner, if any, and at such time as the Board of Directors, in its sole discretion, may determine to be equitable under the circumstances. 8. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class N 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 N Preferred Stock ("Senior Stock"); 26 (b) on a parity with the Class N 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 N Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock, Class L Convertible Cumulative Preferred Stock or Class M Convertible Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class N 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 N 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 Class A Common Stock or (ii) the holders of Class N 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 (i) six quarterly dividends (whether or not consecutive) payable on the Class N 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 Class A Common Stock in an amount per share at least equal to $0.5950 (subject to adjustment consistent with any adjustment of the Conversion Price pursuant to Section 7.3 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 shares of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class N 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 (in the case of an arrearage in dividends described in clause (i)) or one (in the case of an arrearage in 27 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 N 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 N 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, or (2) in the case of an arrearage in dividends described in clause (ii), the Corporation makes a quarterly dividend payment on the Class A 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 N 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 N 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 N 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 N Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class N 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 N 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 N 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 N 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 N 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 N Preferred Stock voting as a single 28 class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class N Preferred Stock (including any amendment, alteration or repeal effected pursuant to a merger, consolidation, or similar transaction) or would convert the Class N 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 N 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 N 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 N 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 N 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 N Preferred Stock as a single class on any matter, then the Class N 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 N 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 N Preferred Stock as the true and lawful owner thereof 29 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 N Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class N Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class N 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 N Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class N 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 N 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 N Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class N 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 N 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 N Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class N 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 N Preferred Stock. 30 (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 N 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 N Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class N 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 N 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 N 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 N 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 N 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 31 exercise such authority in a manner that interferes with any ownership or transfer of Class N 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 N Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class N 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 N 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 N 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 N 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 N 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 N 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. 32 (D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and rights to dividends with respect to shares of Class N 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 N 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 N 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 N 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 N 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 N Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class N Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class N 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 33 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 N 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 N 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 N 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 N 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 N Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class N 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 N 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 N 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. 34 (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class N Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class N 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 N 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 N 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 35 Ownership Limit with respect to the Class N 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 N Preferred Stock) following the purchase of Class N Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class N Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class N Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class N Preferred Stock purchased in connection with market making activities. 11.9 LEGEND. Each certificate for Class N Preferred Stock shall bear substantially the following legend: "The shares of Class N Convertible Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class N 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 N Convertible Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class N 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 N 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 N 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 N Convertible Cumulative Preferred Stock) or (ii) the shares of Class N 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. 36 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. 37 FOURTH: The terms of the Class N Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXV of the Charter. (the next page is the signature page) 38 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on September 12, 2000. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ KATHLEEN HARVEY /s/ PAUL J. MCAULIFFE - -------------------------- ------------------------------ Kathleen Harvey Paul J. McAuliffe Assistant Secretary Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive 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/ PAUL J. MCAULIFFE ------------------------------ Paul J. McAuliffe Executive Vice President and Chief Financial Officer 39 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS O 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 1,904,762 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share, into a class designated as Class O 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 O Cumulative Convertible Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 1,904,762 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 470,337,500 shares immediately prior to the reclassification to 468,432,738 shares immediately after the reclassification. The number of shares classified as Class O Cumulative Convertible Preferred Stock may be decreased pursuant to Section 6 of Article Third of these Articles Supplementary upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class O Cumulative Convertible 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 O Cumulative Convertible Preferred Stock (the "Class O Preferred Stock") and One Million Nine Hundred Four Thousand Seven Hundred and Sixty-Two (1,904,762) shall be the authorized number of shares of such Class O Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class O 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 product of (i) the number of shares of each class of Equity Stock within such block and (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. "Base Rate" shall mean a quarterly dividend payment in an amount per share equal to $1.18125; provided, however, that, if the Corporation gives notice of its election to make a Dividend Increase following a Change of Control in accordance with Section 6.5(a) of the Purchase Agreement, then, from and after the date of such notice, the "Base Rate" shall mean a quarterly dividend payment in an amount per share equal to (i) for all Dividend Periods commencing after the date such notice is given, the greater of (a) $1.575 or (b) the product of (x) $13.125 and (y) the sum of 800 basis points plus the greater of (x) the annual yield to maturity of U.S. Treasury securities with a five year maturity and (y) the annual yield to maturity of U.S. Treasury securities with a ten year maturity, in each case as compiled by and published in the most recent Federal Reserve Statistical Release H.15(519) which has become publicly available at least two business days prior to the date of such notice (or, if such Statistical Release is no longer published, any publicly available source of similar data), and (ii) for the Dividend Period in which such notice is given, a weighted average (based on the number of days in such Dividend Period occurring before and after the date of such notice) of (a) the Base Rate in effect prior thereto and (b) the Base Rate determined in accordance with the foregoing clause (i). "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (without duplication) (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 2 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 O 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. "Change of Control" shall have the meaning set forth in the Purchase Agreement. "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 A Common Stock" shall mean the Class A Common Stock, par value $.01 per share, of the Corporation, and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "Class O 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 or, if the Equity Stock is not publicly traded, 3 the fair value of a share of such Equity Stock as reasonably determined in good faith by the Board of Directors. "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. "Conversion Price" shall mean the conversion price per share of Class A Common Stock for which each share of Class O Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to Section 7 of this Article. The initial Conversion Price shall be $52.50 (equivalent to a conversion rate of one share of Class A Common Stock for each share of Class O Preferred Stock). "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 11:00 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 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 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 O Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class O Preferred Stock being redeemed. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" has the meaning set forth in Section 11.3(A) of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Fair Market Value" shall mean the average of the daily Closing Prices of a share of Class A Common Stock during the twenty (20) consecutive 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 4 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 Closing Price. "Issue Date" shall mean September 15, 2000. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including September 30, 2000. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class O 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 O 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 O 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 (other than stock of the Corporation)) 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 weighted average price of a share of the Class A Common Stock during the forty-five most recent Trading Days, such weighted average multiplied by the Liquidation Preference (excluding any accumulated, accrued and unpaid dividends) per share of Class O Preferred Stock, and such product divided by the Conversion Price; provided, that notwithstanding the foregoing, "Inflows" shall not include (x) any commitment or placement fees payable in connection with the issuance of shares of Class O Preferred Stock and (y) the amount of any dividends or distributions (in excess of the dividends or distributions otherwise payable) resulting from an increase in the Base Rate upon the occurrence of a Change of Control. For purposes of calculating the amounts of any Inflows, the weighted average price of a share of Class A Common Stock is determined by dividing (a) the sum of the product for all sales of Class A Common Stock during such 45 Trading Days of (i) the sale price per share of Class A Common Stock and (ii) the number of shares of Class A Common Stock sold by (b) the total number of shares of Class A Common Stock sold during such 45 Trading Days. For purposes of calculating the amounts of any Inflows, all dividends or distributions received in property or stock (other than stock of the Corporation) shall be deemed to have a value equal to 5 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 $52.50 and shall be deemed to have taken place on the Closing Date of the Purchase Agreement. (iii) Neither the fact of any transfer of Class O 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. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class O 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 O 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, however, 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 O Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the 6 Aggregate Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class O Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean, collectively, the Ownership Limit, as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit, as applied to the Initial Holder, and the Look-Through Ownership Limit, as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8 of this Article. "Person" shall mean (a) for purposes of Section 11 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, "private foundation," within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) a "group," as that term is used for purposes of Section 13(d)(3) of the Exchange Act, and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity. "Prohibited Transferee" shall have the meaning set forth in Section 11.3(A) of this Article. "Purchase Agreement" shall mean the Class O Cumulative Convertible Preferred Share Purchase Agreement, dated as of September 13, 2000, by and among Security Capital Preferred Growth Incorporated, the Corporation and AIMCO Properties, L.P. "Redemption Date" shall mean, in the case of any redemption of any shares of Class O Preferred Stock, the date fixed for redemption of such shares. "Redemption Price" shall mean, with respect to any share of Class O Preferred Stock to be redeemed, (i) if the Redemption Date occurs during the period from and including the third anniversary of the Issue Date, to but excluding the fourth anniversary of the Issue Date, 104% of the Liquidation Preference thereof, and (ii) if the Redemption Date occurs on or after the fourth anniversary of the Issue Date, 102% of the Liquidation Preference thereof, plus, in the case of clause (i) or (ii), all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "Repurchase Offer" shall have the meaning set forth in the Purchase Agreement. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 8 of this Article. 7 "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 O Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, when used with respect to any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class O 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 O Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class O Preferred Stock), whether voluntary or involuntary, whether of record ownership 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 O 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 O 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 O 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. 8 3. DIVIDENDS. (a) The holders of Class O 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 O Preferred Stock equal to the greater of (i) the Base Rate, or (ii) the cash dividends declared on the number of shares of Class A Common Stock, or portion thereof, into which a share of Class O 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 Class A Common Stock, or portion thereof calculated to the fourth decimal point, into which a share of Class O 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 Class A Common Stock outstanding as of the record date for the payment of dividends on the Class A Common Stock with respect to such Dividend Period. If (A) the Corporation pays a cash dividend on the Class A Common Stock after the Dividend Payment Date for the corresponding Dividend Period and (B) the dividend on the Class O Preferred Stock for such Dividend Period calculated pursuant to clause (ii) of this paragraph (a), taking into account the Class A Common Stock dividend referenced in clause (A), exceeds the dividend previously declared on the Class O Preferred Stock for such Dividend Period, the Corporation shall pay an additional dividend to the holders of the Class O Preferred Stock on the date that the Class A 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 O 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 O 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 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) The amount of dividends payable per share of Class O Preferred Stock for the Initial Dividend Period, or any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class O Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or 9 stock, in excess of cumulative dividends, as herein provided, on the Class O 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 O Preferred Stock that may be in arrears. (c) So long as any of the shares of Class O 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 O 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 O 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 O Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class O 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 Class A 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 O 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 O 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 O Preferred Stock and the current dividend period with respect to such Parity Stock. 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution by the Corporation (whether of capital, surplus or otherwise) shall be made to or set apart for the 10 holders of Junior Stock, the holders of shares of Class O Preferred Stock shall be entitled to receive Fifty Two Dollars and Fifty Cents ($52.50) per share of Class O 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 O 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 O 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 O Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class O 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 O 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 O 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 O Preferred Stock shall not be redeemable by the Corporation prior to the third anniversary of the Issue Date, except as set forth in Section 11.2 of this Article. On and after the third anniversary of the Issue Date, the Corporation, at its option, may redeem shares of Class O Preferred Stock, in whole or from time to time in part, at a price payable in cash equal to the Redemption Price applicable thereto. (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 O Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class O Preferred Stock may be redeemed unless all outstanding shares of Class O Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may 11 purchase or acquire shares of Class O Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class O Preferred Stock. (d) If the Corporation shall redeem shares of Class O 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 recognized overnight courier 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 mailed in the manner herein provided shall be conclusively presumed to have been duly given on the day after 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 O 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; (iv) the then-current Conversion Price; (v) the Redemption Price payable on such Redemption Date; and (vi) 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 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 O Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class O 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 O Preferred Stock of the Corporation shall cease (except the right 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 O 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 O Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the cash necessary to effect the 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 $200,000,000, 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 O Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class O 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 O Preferred Stock to be redeemed on any cash so set aside by the Corporation. 12 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 O 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 O 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 O Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class O Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class O 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 O 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 O Preferred Stock that have been issued and reacquired in any manner by the Corporation (including, without limitation, shares of Class O Preferred Stock which have been surrendered for conversion) shall be returned to the status of authorized but unissued shares of Class O Preferred Stock. 7. CONVERSION. 7.1 CONVERSION AT HOLDERS' OPTION. At any time on or after the Issue Date, except as set forth in Section 7.2 of this Article, holders of shares of Class O 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 O 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), in whole or in part, into the 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 the Liquidation Preference (excluding any accumulated, accrued and unpaid dividends) per share of Class O Preferred Stock by the Conversion Price (as in effect at the time and on the date provided for in paragraph (b) 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; provided, however, that the right to convert shares of Class O Preferred Stock called for redemption pursuant to Section 5 shall terminate at 13 the close of business on the Redemption Date fixed for such redemption, unless the Corporation shall default in making payment of cash payable upon such redemption under Section 5 of this Article. (b) To convert shares of Class O Preferred Stock, the holder of the shares to be converted shall surrender the certificate representing such shares at the office of the Transfer Agent, accompanied by the funds, if any, required by the last paragraph of this subsection (b) to be paid by such holder, and shall give written notice of conversion in the form provided on such certificate representing shares of Class O Preferred Stock (or such other notice as is reasonably acceptable to the Corporation) to the Corporation at such office or agency that the holder elects to convert the shares of Class O 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 on 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 O Preferred Stock is registered, each certificate representing a share of Class O 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, but in no event later than three Business Days after the surrender of certificates representing such shares of Class O 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 O Preferred Stock in accordance with provisions of this Section 7.1, and a check or cash in respect of the cash amount payable to such holder, if any, referred to in subsection (c), below. 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 O 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 14 than dividends on the Class A Common Stock the record date for which is after the conversion date and which the Corporation shall pay in the ordinary course to the record holder as of the record date) on the Class A Common Stock issued upon such conversion. Holders of Class O Preferred Stock at the close of business on a record date for the payment of dividends on the Class O Preferred Stock 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 O 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 O 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 O 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 dividend record date and the opening of business on the corresponding Dividend Payment Date, the amount of the dividend payable thereon on such Dividend Payment Date; minus (iii) an amount equal to the product of (A) the number of shares of Class A Common Stock (or fraction thereof) into which such share of Class O Preferred Stock has been converted, (B) the quarterly cash dividend per share that was most recently declared on the Class A Common Stock, determined as of the date of conversion, and (C) 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 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 O Preferred Stock. If more than one share of Class O 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 O Preferred Stock so converted. 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 O 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 15 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 MANDATORY CONVERSION. (a) The Corporation shall have the right to require that all or part of the issued and outstanding shares of Class O Preferred Stock be converted into shares of Class A Common Stock under the following circumstances: (i) At any time from and including the first anniversary of the Issue Date to but excluding the second anniversary of the Issue Date, if the Internal Rate of Return exceeds 20.0% per annum, from and including the Issue Date (such condition the "Conversion Condition) on one occasion only, the Corporation shall have the right, upon 30 days advance written notice, to require that up to 952,381 shares of Class O Preferred Stock be converted into shares of Class A Common Stock as set forth in this Section 7.2. (ii) At any time from and including the second anniversary of the Issue Date to but excluding the third anniversary of the Issue Date, if the Internal Rate of Return exceeds 20.0% per annum, from and including the Issue Date, on one occasion only, the Corporation shall have the right, upon 30 days advance written notice, to require that all or any portion of the outstanding shares of Class O Preferred Stock be converted into shares of Class A Common Stock as set forth in this Section 7.2; provided, however, that (A) if a Conversion Condition occurs and the Corporation is entitled to require the conversion referred to in Section 7.2(a)(i) and does not so convert, then the Corporation's right to require the conversion referred to in Section 7.2(a)(ii) will be limited to a right to require that up to 952,381 shares of Class O Preferred Stock be converted into shares of Class A Common Stock as set forth in this Section 7.2(a)(ii); (B) if the Corporation receives a Liquidity Failure Notice pursuant to Section 7.2(c)(vi), then the right to cause a conversion under Section 7.2(a)(ii) shall thereupon terminate; and (C) the Corporation may not exercise its right to convert under Section 7.2(a)(ii) unless and until at least 90 days have transpired since the date of any conversion under Section 7.2(a)(i). (b) Subject to and upon compliance with the provisions of this Section 7.2, 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 O Preferred Stock obtained by dividing the Liquidation Preference (excluding any accumulated 16 accrued and unpaid dividends) per share of Class O 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 Corporation exercising its right to require conversion pursuant to (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 notice shall be provided by facsimile or, if facsimile is not available, then by recognized overnight courier 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 at least two business days following the date on which the notice is transmitted or mailed; (2) the number of shares of Class O 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, and (3) 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 O 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 O 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 O 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, if any (or evidence reasonably satisfactory to the Corporation that such taxes have been paid). (iii) A holder of shares of Class O Preferred Stock shall, as of the date of the conversion of such shares to shares of Class A Common Stock, be entitled to receive a 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 O 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 O Preferred Stock in accordance with the provisions of this Section 7.2, and any fractional interest 17 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. (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 dates 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 O 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 O Preferred Stock whose shares are converted into Class A Common Stock does not receive dividends on both the shares of Class O 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. (vi) In the event that the Corporation has elected to cause a conversion of the shares of Class O Preferred Stock pursuant to Section 7.2(a)(i) above, and the holders of a majority of the shares of Class O Preferred Stock so converted provide a written notice (a "Liquidity Failure Notice") to the Corporation within 90 days after the date of conversion that during such 90 day period, such holders were unable (based on commercially reasonable efforts, taking into account volume) to sell the shares of Class A Common Stock received upon conversion on the open market at price(s) that would have provided such holder(s) with an Internal Rate of Return of at least 20% per annum thereon from the Issue Date through the date of sale of all such shares of Class A Common Stock (provided that in calculating the Inflows, instead of calculating the weighted average price as provided in clause (i) of the definition of Internal Rate of Return, the Internal Rate of Return shall be calculated using the actual sale prices obtained by the holder(s)), then from and after the delivery of the Liquidity Failure Notice, the right of the Corporation to convert shares of Class O Preferred Stock under Section 7.2(ii) shall terminate. The Liquidity Failure Notice shall include a list of dates on which shares of Class A Common Stock were sold, the number and price per share so sold and shall include a calculation of the Internal Rate of Return on the aggregate number of shares of Class A Common Stock so sold during the period. (d) 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 O Preferred Stock. If more than one share of Class O Preferred Stock shall be surrendered for 18 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 O Preferred Stock so converted. 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 O 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. 7.3 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 Class A Common 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 (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 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 O Preferred Stock thereafter surrendered for conversion 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 O 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 issue, after the Issue Date, 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 19 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. (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, that 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) If, after the Issue Date, the Corporation shall acquire, pursuant to an issuer or self tender offer, all or any portion of the outstanding Class A Common Stock and such tender offer involves the payment of consideration per share of Class A Common Stock having a fair market value (as determined in good faith by the Board of Directors), at the last 20 time (the "Expiration Time") tenders may be made pursuant to such offer, that exceeds the Closing Price per share of Class A 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 Class A Common Stock outstanding (including the shares acquired in the tender offer (the "Acquired Shares")) immediately prior to the Expiration Time, multiplied by (Y) the Closing Price per share of Class A 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 Class A Common Stock outstanding (less any Acquired Shares) at the Expiration Time, multiplied by (II) the Closing Price per share of Class A 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 (a)(v) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; 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)(v)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of shares of Class A Common Stock. Notwithstanding any other provisions of this Section 7.3, 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 purchase or other stock-based plan maintained by the Corporation. All calculations under this Section 7.3 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a share (with .05 of a share being rounded upward), as the case may be. Anything in this paragraph (a) of this Section 7.3 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 (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 without limitation a merger, consolidation, statutory share exchange, issuer or self tender offer for at least 30% of the shares of Class A Common Stock outstanding, 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 21 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 O 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 O Preferred Stock was convertible immediately prior to such Transaction (without giving effect to any Conversion Price adjustment pursuant to Section 7.3(a)(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 (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 O Preferred Stock that will contain provisions enabling the holders of the Class O 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 prior to such Transaction. The provisions of this paragraph (b) shall similarly 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, an issuer or self tender offer shall have been commenced for at least 30% of the outstanding shares of Class A 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 O 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, 22 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 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 7.3. (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 O Preferred Stock at such holder's last address as shown on the stock records 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 O 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 paragraph (c) of Section 7.1 or paragraph (d) of Section 7.2, as the case may be. (f) 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 7.3. (g) If the Corporation shall take any action affecting the Class A Common Stock, other than action described in this Section 7.3, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of Class O Preferred Stock, the Conversion Price for the Class O 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 O Preferred Stock, the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of 23 Class O 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 O 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 Class A Common Stock issued upon conversion of the shares of Class O 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 O 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 or redemption of shares of Class O 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 O 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. (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 7.3, conversion of Class O Preferred Stock pursuant to this Section 7.3 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 O 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 O 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 24 distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Class O Preferred Stock ("Senior Stock"); (b) on a parity with the Class O 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 O Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock, Class L Convertible Cumulative Preferred Stock or Class M Convertible Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class O 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 O 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 Class A Common Stock or (ii) the holders of Class O 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 (i) six quarterly dividends (whether or not consecutive) payable on the Class O 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 Class A Common Stock in an amount per share at least equal to Fifty-Nine and One-Half Cents ($0.595) (subject to adjustment consistent with any adjustment of the Conversion Price pursuant to Section 7.3 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 shares of any other class or series of Parity Stock which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class O 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 (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 25 annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Class O 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 O 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, or (2) in the case of an arrearage in dividends described in clause (ii), the Corporation makes a quarterly dividend payment on the Class A 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 O 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 O 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 O 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 O Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class O 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 O 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 O 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 O 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 O 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 O 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: 26 (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 O Preferred Stock (including any amendment, alteration or repeal effected pursuant to a merger, consolidation or similar transaction) or would convert the Class O 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 O 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 O 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 O 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 O 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 O Preferred Stock as a single class on any matter, then the Class O 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 O 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 O 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 O Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class O Preferred Stock in excess 27 of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class O 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 O Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class O 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 O 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 O Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class O 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 O 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 O Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class O 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 O 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 O 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 O Preferred Stock. 28 (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class O 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 O 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 O 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 O 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 O 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 O 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 O Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class O Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through 29 Entity would Beneficially Own shares of Class O 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 O 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 O 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 O 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 O 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 O 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 O 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 O 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 O 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 O 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 30 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 O Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class O Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class O 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 O 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 O 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 O Preferred Stock will be required to provide certain information as set out below. 31 (A) ANNUAL DISCLOSURE. Every record holder or Beneficial Owner of shares of Class O Preferred Stock convertible into more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Equity Stock shall upon written request by the Corporation, such request to be made within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record holder or Beneficial Owner, the number of shares of Class O Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record holder or Beneficial Owner of Class O 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 O 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 O 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 O Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class O 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 O 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. 32 (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code (as modified to exclude qualified trusts from treatment as individuals pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership, limited liability company, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (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 O 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 O 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 O Preferred Stock) following the purchase of Class O Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class O Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class O Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class O Preferred Stock purchased in connection with market making activities. 11.9 LEGEND. Each certificate for Class O Preferred Stock shall bear substantially the following legend: "The shares of Class O Cumulative Convertible Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class O 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 O Cumulative Convertible Preferred Stock). Any Person that attempts to Beneficially Own shares of Class O 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 O 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 O 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 O Cumulative Convertible Preferred Stock) or (ii) the shares of Class O 33 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, 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 O Cumulative Convertible Preferred Stock set forth in Article Third hereof shall become Article XXVI of the Charter. 34 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on September 15, 2000. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ KATHLEEN HARVEY /s/ PAUL J. MCAULIFFE - -------------------------- ------------------------------ Kathleen Harvey Paul J. McAuliffe Assistant Secretary Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive 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/ PAUL J. MCAULIFFE ------------------------------ Paul J. McAuliffe Executive Vice President and Chief Financial Officer 35 [STATE OF MARYLAND STAMP] ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS P 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 4,000,000 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 P 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 P Convertible Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 4,000,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 468,432,738 shares immediately prior to the reclassification to 464,432,738 shares immediately after the reclassification. THIRD: The terms of the Class P 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 P Convertible Cumulative Preferred Stock, par value $.01 per share (the "Class P Preferred Stock"), and Four Million (4,000,000) shall be the authorized number of shares of such Class P Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class P Preferred Stock, the following terms shall have the meanings indicated: "Act" shall mean the Securities Act of 1933, as amended. "affiliate" of a Person shall mean 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. "Base Rate" shall mean a quarterly dividend payment in an amount per share equal to $.5625; provided, however, that from and after the date of a Change of Control, the "Base Rate" shall mean a quarterly dividend payment in an amount per share equal to (i) for all Dividend Periods commencing after the date of such Change of Control, the greater of (a) $0.75 or (b) the product of (x) $6.25 and (y) the sum of 800 basis points plus the greater of (x) the annual yield to maturity of U.S. Treasury securities with a five year maturity and (y) the annual yield to maturity of U.S. Treasury securities with a ten year maturity, in each case as compiled by and published in the most recent Federal Reserve Statistical Release H.15(519) which has become publicly available on the second Business Day prior to the date of such Change of Control (or, if such Statistical Release is no longer published, any publicly available source of similar data), and (ii) for the Dividend Period in which such Change of Control occurs, a weighted average (based on the number of days in such Dividend Period occurring before and after the date of such Change of Control) of (a) the Base Rate in effect prior thereto and (b) the Base Rate determined in accordance with the foregoing clause (i). "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. 2 "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 P 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. "Change of Control" shall mean the occurrence of any of the following: (i) the acquisition, directly or indirectly, by any individual or entity or group (as such term is used in Section 13(d)(3) of the Exchange Act) (other than a holder of the Class P Preferred Stock or any of its affiliates) of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act, except that such individual or entity shall be deemed to have beneficial ownership of all shares that any such individual or entity has the right to acquire, whether such right is exercisable immediately or only after passage of time) of more than 25% of the Corporation's outstanding capital stock with voting power, under ordinary circumstances, to elect directors of the Corporation; (ii) other than with respect to the election, resignation or replacement of any director designated, appointed or elected by the holders of the Class P Preferred Stock (each, a "Preferred Director"), during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Corporation (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Corporation was approved by a vote of 66-2/3% of the directors of the Corporation (excluding Preferred Directors) (the "Incumbent Board") then still in office who were either directors at the beginning of such period, or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Corporation then in office, provided, however, 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 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; (iii) the Corporation or one of its subsidiaries is not the general partner of the Operating Partnership; or (iv) (A) the Corporation consolidating with or merging with or into another entity or conveying, transferring or leasing all or substantially all of its assets (including, but not limited to, real property investments) to any individual or entity, or (B) any corporation consolidating with or merging into the Corporation which, in either event (A) or (B), is pursuant to a transaction in which the outstanding voting capital stock of the Corporation 3 is reclassified or changed into or exchanged for cash, securities or other property; provided, however, that the events described in clause (iv) shall not be deemed to be a Change of Control (a) if the sole purpose of such event is that the Corporation is seeking to change its domicile or to change its form of organization from a corporation to a statutory business trust or (b) if (x) the holders of the exchanged securities of the Corporation immediately after such transaction beneficially own at least a majority of the securities of the merged or consolidated entity normally entitled to vote in elections of directors, (y) the chairman and the president of the Corporation immediately prior to the execution of the transaction agreement are the chairman and the president of the merged or consolidated company, and (z) the individuals who were members of the Incumbent Board immediately prior to the execution of the transaction agreement constitute at least a majority of the members of the board of directors of the merged or consolidated company. "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 A 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. "Class P 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. 4 "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. "Conversion Price" shall mean the conversion price per share of Class A Common Stock for which each share of Class P Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to Section 7 of this Article. The initial Conversion Price shall be $56.00 (equivalent to a conversion rate of 0.4464 shares of Class A Common Stock for each share of Class P 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 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 P Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the date on which the Class P Preferred Stock is redeemed in accordance with Section 5 hereof. "Equity Stock" shall mean one or more shares of any class of capital stock of the Corporation. "Excess Transfer" shall have 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 March 26, 2001. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including April 14, 2001. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class P Preferred Stock of the Corporation having an Aggregate Value not in excess of the 5 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 P Preferred Stock that are Beneficially Owned by the Initial Holder. From the Issue Date, the secretary of the Corporation, or such other person as shall be designated by the Board of Directors, shall upon request make available to the representative(s) of the Initial Holder and the Board of Directors, a schedule that sets forth the then-current Initial Holder Limit applicable to the Initial Holder. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class P 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 P 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. "Merger" shall mean the merger of AIMCO/OTEF, LLC with and into Oxford Tax Exempt Fund II Limited Partnership. "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 P Preferred Stock of the 6 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 P Preferred Stock that are Beneficially Owned by the Person. "Ownership Restrictions" shall mean collectively the Ownership Limit, as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit, as applied to the Initial Holder, and the Look-Through Ownership Limit, as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8 of this Article. "Person" shall mean (a) for purposes of Section 11 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, "private foundation," within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) a "group," as that term is used for purposes of Section 13(d)(3) of the Exchange Act, and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity. "Prohibited Transferee" shall have 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 P Preferred Stock, the date fixed for redemption of such shares. "Redemption Price" shall mean, with respect to any shares of Class P Preferred Stock to be redeemed, 100% of the Liquidation Preference thereof plus 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. 7 "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 P Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, when used with respect to any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class P 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 P Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class P 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 P Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" shall mean such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class P Preferred Stock; 8 provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Class P Preferred Stock. "Trust" shall mean the trust created pursuant to Section 11.3(A) 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 paragraph (a) of Section 9 of this Article. 3. DIVIDENDS. (a) The holders of Class P 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 P Preferred Stock in an amount per share equal to the greater of (i) the Base Rate, or (ii) 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 P 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 April 15, 2001. Each such dividend shall be payable in arrears to the holders of record of the Class P 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 P 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 P 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 P 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 P Preferred Stock that may be in arrears. 9 (c) So long as any of the shares of Class P 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 P 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 P 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 P 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 P Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class P 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 Class A 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 P 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 P 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 10 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 P Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class P 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 P 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 P 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 P Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class P 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 P 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 11 entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Class P Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION (a) The Corporation, at its option, may redeem shares of Class P Preferred Stock, in whole or from time to time in part, for cash in an amount equal to the Redemption Price (i) at any time on or before March 26, 2004, if the Market Price of the Class A Common Stock is $56 or higher, in which case the Corporation may redeem shares of Class P Preferred Stock pursuant to this Section 5(a)(i) for 6 months following any date on which such Market Price exceeds $56, (ii) at any time after March 26, 2004, (iii) on or after the occurrence of a Change of Control, or (iv) as set forth in Section 11.2 of this Article. (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 P Preferred Stock have not been declared and paid, or declared and set apart for payment, for all preceding Dividend Periods no shares of Class P Preferred Stock may be redeemed unless all outstanding shares of Class P Preferred Stock are simultaneously redeemed, and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class P Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class P Preferred Stock. (d) In the event of a redemption of Class P Preferred Stock pursuant to paragraph (a) above, 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 P 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 12 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 P Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class P 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 P 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 $200,000,000, 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 P Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class P 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 P 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 P 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 P 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 P Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class P Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class P Preferred Stock held of record by each holder of such shares, pro rata (as nearly as may be) or by any other method 13 as may be determined by the Board of Directors in its discretion to be equitable. If fewer than all the shares of Class P 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 P Preferred Stock that have been issued and reacquired in any manner by the Corporation (including, without limitation, shares of Class P Preferred Stock which have been surrendered for conversion) shall be returned to the status of authorized but unissued shares of Class P Preferred Stock. 7. CONVERSION. 7.1 CONVERSION AT HOLDERS' OPTION. At any time on or after the Issue Date, holders of shares of Class P 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 P 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 P Preferred Stock, the holder of the shares to be converted shall surrender the certificate representing such shares at any office or agency maintained by the Corporation for such purpose, accompanied by the funds, if any, required by the last paragraph of this subsection (b) to be paid by such holder, and shall give written notice of conversion in the form provided on such certificate representing shares of Class P 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 P 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 14 conversion are to be issued in the same name as the name in which such share of Class P Preferred Stock is registered, each certificate representing a share of Class P 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 P 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 P 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 P Preferred Stock shall have been surrendered and such notice (and any applicable instruments of transfer and any required taxes) received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date, and such conversion shall be at the Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. Except as provided herein, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends (other than dividends on the Class A Common Stock the record date for which is after the conversion date and which the Corporation shall pay in the ordinary course to the record holder as of the record date) on the Class A Common Stock issued upon such conversion. Holders of Class P Preferred Stock at the close of business on a Record Date will be entitled to receive an amount equal to the dividend 15 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 P 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 P 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 P Preferred Stock that has been surrendered for conversion, the sum of: (i) the aggregate amount of any dividends (whether or not earned or declared) that are accumulated, accrued and unpaid on such share as of the time of such conversion; minus (ii) if such share has been surrendered for conversion during the period between the close of business on any Record Date and the opening of business on the corresponding Dividend Payment Date, the amount of the dividend payable thereon on such Dividend Payment Date; minus (iii) an amount equal to the product of (A) the number of shares of Class A Common Stock (or fraction thereof) into which such share of Class P Preferred Stock has been converted (B) the quarterly cash dividend per share that was most recently declared on the Class A Common Stock, determined as of the date of conversion, and (C) 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 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 P Preferred Stock. If more than one share of Class P 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 P 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 P 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, 16 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 P 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 P 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 17 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 purchased 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 18 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 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 19 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 P 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 P 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 P 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 P 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 P 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 20 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 P 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 P 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 P 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 21 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 P 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 P 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 P Preferred Stock, the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of Class P 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 P Preferred Stock shall be computed as if at the time of computation all such outstanding shares of Class P 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 P 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 P 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 P Preferred Stock to be converted, and no such issue or 22 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 P 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 P Preferred Stock, the Board of Directors may, but shall have no obligation to, adjust the Conversion Price for the Class P Preferred Stock to the extent permitted by law in such manner, if any, and at such time as the Board of Directors, in its sole discretion, may determine to be equitable under the circumstances. 8. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class P 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 P Preferred Stock ("Senior Stock"); (b) on a parity with the Class P 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 P Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock or Class O Convertible Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class P Preferred Stock shall be entitled to the receipt of dividends and of amounts 23 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 P 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 Class A Common Stock or (ii) the holders of Class P 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 (i) six quarterly dividends (whether or not consecutive) payable on the Class P 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 Class A Common Stock in an amount per share at least equal to $0.5950 (subject to adjustment consistent with any adjustment of the Conversion Price pursuant to Section 7.2 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 shares of any other class or series which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class P 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 (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 P 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 P 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 24 payment, or (2) in the case of an arrearage in dividends described in clause (ii), the Corporation makes a quarterly dividend payment on the Class A 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 P 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 P 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 P 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 P Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class P 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 P 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 P 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 P 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 P 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 P Preferred Stock voting as a single class, given in person or by proxy, either in writing without a meeting or by 25 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 P Preferred Stock (including any amendment, alteration or repeal effected pursuant to a merger, consolidation, or similar transaction) or would convert the Class P 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 P 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 P 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 P 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 P 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 P Preferred Stock as a single class on any matter, then the Class P 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 P 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. 26 10. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class P 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 P Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class P Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class P 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 P Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class P 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 P 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 P Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class P 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 P 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 27 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 P Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class P 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 P 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 P 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 P Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class P 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 P 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 P 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 P 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 28 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 P 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 P 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 P Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class P 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 P 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 P 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 P 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 29 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 P 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 P 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 P 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 P 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 P 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 P 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 P 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 30 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 P Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class P Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class P 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 P 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 P 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. 31 11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class P 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 P 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 P Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record or Beneficial Owner of Class P 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 P 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 P 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 P Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class P 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 P 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 32 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 P 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 P 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 P Preferred Stock) following the purchase of Class P Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class P Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class P Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class P Preferred Stock purchased in connection with market making activities. 11.9 LEGEND. Each certificate for Class P Preferred Stock shall bear substantially the following legend: 33 "The shares of Class P Convertible Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class P 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 P Convertible Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class P 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 P 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 P 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 P Convertible Cumulative Preferred Stock) or (ii) the shares of Class P 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. 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 34 facilities of the NYSE or other securities exchange or an automated inter-dealer quotation system. FOURTH: The terms of the Class P Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXVII of the Charter. (the next page is the signature page) 35 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on March 1, 2001. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ KATHLEEN HARVEY /s/ PAUL J. MCAULIFFE - ------------------------ ------------------------------ Kathleen Harvey Paul J. McAuliffe Assistant Secretary Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive 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/ PAUL J. MCAULIFFE ---------------------------- Paul J. McAuliffe Executive Vice President and Chief Financial Officer ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS Q 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 2,530,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share, into a class designated as Class Q 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 Q Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 2,530,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 464,432,738 shares immediately prior to the reclassification to 461,902,738 shares immediately after the reclassification. The number of shares classified as Class Q Cumulative Preferred Stock may be decreased upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class Q 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 Q Cumulative Preferred Stock (the "Class Q Preferred Stock") and Two Million Five Hundred Thirty Thousand (2,530,000) shall be the authorized number of shares of such Class Q Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class Q Preferred Stock, the following terms shall have the meanings indicated: STATE OF MARYLAND [SEAL] I hereby certify that this is a true and complete copy of the 23 page document on file in this office. DATED: 3/15/01. -- ------- STATE DEPARTMENT OF ASSIGNMENTS AND TAXATION BY: /s/ ANN CUSTIS, Custodian ---------------- This stamp replaces our previous certification system. Effective: 6/95 "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 product of (i) the number of shares of Equity Stock within such block and (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 (without duplication) (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 Q 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(G) 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 A Common Stock" shall mean the Class A Common Stock, par value $.01 per share, of the Corporation, and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "Class Q Preferred Stock" shall have the meaning set forth in Section 1 of this Article. 2 "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 or, if the Equity Stock is not publicly traded, the fair value of a share of such Equity Stock as reasonably determined in good faith by the Board of Directors. "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. "Dividend Payment Date" shall mean March 15, June 15, September 15, and December 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 March 15, June 15, September 15, and December 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 Q Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class Q 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. 3 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Issue Date" shall mean March 19, 2001. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including June 15, 2001. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class Q 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 Q 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 Q 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 Q 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. 4 "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, however, 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 Q 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 Q 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) 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" shall have the meaning set forth in Section 10.3(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 Q Preferred Stock, the date fixed for redemption of such shares. 5 "Redemption Price" shall mean, with respect to any share of Class Q Preferred Stock to be redeemed, 100% of the Liquidation Preference thereof, plus all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 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 Q Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, when used with respect to any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class Q 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 Q Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class Q Preferred Stock), whether voluntary or involuntary, whether of record ownership 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 Q Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. 6 "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 Q 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 Q Preferred Stock. "Trust" shall mean the trust created pursuant to Section 10.3(A) 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 Q 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 Q Preferred Stock in an amount per share equal to $0.63125. 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 June 15, 2001. Each such dividend shall be payable in arrears to the holders of record of the Class Q Preferred Stock, as they appear on the stock records of the Corporation at the close of business on March 1, June 1, September 1 or December 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) The amount of dividends payable per share of Class Q Preferred Stock for the Initial Dividend Period, or any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class Q 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 Q 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 Q Preferred Stock that may be in arrears. (c) So long as any of the shares of Class Q 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 7 and a sum sufficient for the payment thereof has been or contemporaneously is set apart for such payment, on the Class Q Preferred Stock for all Dividend Periods terminating 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 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 Q 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 Q Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class Q 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 Class A 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 Q 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 Q 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. 8 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 Q Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class Q 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 Q 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 Q 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 Q Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class Q 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 Q 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 Q 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 Q Preferred Stock shall not be redeemable by the Corporation prior to March 19, 2006, except as set forth in Section 10.2 of this Article. On and after March 19, 2006, the Corporation, at its option, may redeem shares of Class Q Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to the Redemption Price applicable thereto. In the event of a redemption of shares of Class Q Preferred Stock, if the Redemption Date occurs after a 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 Record 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 pursuant to this Section 5(a), the redemption price of the Class Q Preferred Stock 9 (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 Q Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class Q Preferred Stock may be redeemed unless all outstanding shares of Class Q Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class Q Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class Q Preferred Stock. (d) If the Corporation shall redeem shares of Class Q 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 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 Q 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; 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 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 Q Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class Q Preferred Stock called for redemption, (ii) said shares shall no longer be deemed to be outstanding, and (iii) 10 all rights of the holders thereof as holders of Class Q Preferred Stock of the Corporation shall cease (except the right 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 Q 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 Q Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the cash necessary to effect the 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 Q Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class Q 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 Q Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash un claimed 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 Q 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 Q 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). If fewer than all the outstanding shares of Class Q Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class Q Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class Q 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 Q 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 Q Preferred Stock that have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized but unissued shares of Class Q Preferred Stock. 11 7. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class Q 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 Q Preferred Stock ("Senior Stock"); (b) on a parity with the Class Q 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 Q Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock, Class O Cumulative Convertible Preferred Stock or Class P Convertible Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class Q 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 Q 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 Class A Common Stock or (ii) the holders of Class Q 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 Q 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 any other class or series of Parity Stock which is 12 entitled to similar voting rights (the "Voting Preferred Stock") and the holders of shares of Class Q 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 Q Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class Q 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 Q 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 Q 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 Q 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 Q Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class Q 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 Q 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 Q 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 Q 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 Q 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 Q 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: 13 (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 Q 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 Q 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 Q 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 Q 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 Q 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 Q Preferred Stock as a single class on any matter, then the Class Q 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 Q 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 Q 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 Q Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class Q Preferred Stock in excess 14 of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class Q 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 Q Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class Q 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 Q 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 Q Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class Q 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 Q 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 Q Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class Q 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 Q 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 Q Preferred Stock that would cause the Corporation (i) to be "closely held" within the meaning of Section 856(h) of 15 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 Q Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class Q 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 Q 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 Q 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 Q 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 Q 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 exercise such authority in a manner that interferes with any ownership or transfer of Class Q 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 16 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 Q Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class Q 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 Q 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 Q Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity Limit, respectively, is referred to as a {-1- 34}Prohibited Transferee{-1- 34}), then, except as otherwise provided in Section 10.8 of this Article, such shares of Class Q 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 Q 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 Q 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 Q 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 Q 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 Q 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 Q 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 17 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 Q 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 Q Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class Q Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class Q 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 Q 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 Q 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 18 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 Q Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record holder or 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 Q 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 holder or Beneficial Owner, the number of shares of Class Q Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record holder or Beneficial Owner of Class Q 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 Q 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 Q 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 Q Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class Q 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 Q 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. 19 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 (as modified to exclude qualified trusts from treatment as individuals pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership, limited liability company, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (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 Q 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 Q 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 Q Preferred Stock) following the purchase of Class Q Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class Q Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class Q Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class Q Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class Q Preferred Stock shall bear substantially the following legend: "The shares of Class Q Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class Q 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 Q Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class Q 20 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 Q 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 Q Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class Q Cumulative Preferred Stock) or (ii) the shares of Class Q 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. 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 Q Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXVIII of the Charter. 21 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on March 15, 2001. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ KATHLEEN HARVEY /s/ PAUL J. MCAULIFFE Kathleen Harvey Paul J. McAuliffe Assistant Secretary Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive 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/ PAUL J. MCAULIFFE Paul J. McAuliffe Executive Vice President and Chief Financial Officer 22 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS R 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 4,140,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share, into a class designated as Class R 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 R Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 4,140,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 461,902,738 shares immediately prior to the reclassification to 457,762,738 shares immediately after the reclassification. The number of shares classified as Class R Cumulative Preferred Stock may be decreased upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class R 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 R Cumulative Preferred Stock (the "Class R Preferred Stock") and Four Million One Hundred Forty Thousand (4,140,000) shall be the authorized number of shares of such Class R Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class R Preferred Stock, the following terms shall have the meanings indicated: "Act" shall mean the Securities Act of 1933, as amended. 1 - ------------------------------------------------------------------------------- STATE OF MARYLAND I hereby certify that this is a true and complete copy of the 22 page document on file in this office. DATED: 8-3-01. STATE DEPARTMENT OF ASSESSMENTS AND TAXATION BY: Ann Custis, Custodian This stamp replaces our previous certification system. Effective: 6/95 - ------------------------------------------------------------------------------- "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 product of (i) the number of shares of Equity Stock within such block and (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 (without duplication) (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 R 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(G) 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 A Common Stock" shall mean the Class A Common Stock, par value $.01 per share, of the Corporation, and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "Class R 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 2 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 or, if the Equity Stock is not publicly traded, the fair value of a share of such Equity Stock as reasonably determined in good faith by the Board of Directors. "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. "Dividend Payment Date" shall mean March 15, June 15, September 15, and December 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 March 15, June 15, September 15, and December 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 R Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class R 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 20, 2001. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including September 15, 2001. "Initial Holder" shall mean Terry Considine. 3 "Initial Holder Limit" shall mean a number of the Outstanding shares of Class R 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 R 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 R 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 R 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, however, 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 R 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 R Preferred Stock that are Beneficially Owned by the Person. 4 "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) 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" shall have the meaning set forth in Section 10.3(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 R Preferred Stock, the date fixed for redemption of such shares. "Redemption Price" shall mean, with respect to any share of Class R Preferred Stock to be redeemed, 100% of the Liquidation Preference thereof, plus all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 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 R Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, when used with respect to any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a 5 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 R 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 R Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class R Preferred Stock), whether voluntary or involuntary, whether of record ownership 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 R 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 R 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 R Preferred Stock. "Trust" shall mean the trust created pursuant to Section 10.3(A) 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 R 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 R Preferred Stock in an amount per share equal to $0.625. 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 September 15, 2001. Each such dividend shall be payable in arrears to the holders of record of the Class R Preferred Stock, as they appear on the stock records of the Corporation at the close of business on March 1, June 1, September 1 or December 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 6 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 R Preferred Stock for the Initial Dividend Period, or any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class R 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 R 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 R Preferred Stock that may be in arrears. (c) So long as any of the shares of Class R 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 R Preferred Stock for all Dividend Periods terminating 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 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 R 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 R Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class R 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 Class A 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 R Preferred Stock have been declared and paid, or such dividends have been declared and a sum sufficient for the payment thereof has 7 been set apart for such payment, on all outstanding shares of Class R 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 R Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class R 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 R 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 R 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 R Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class R 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 R Preferred Stock and any Parity Stock, as provided in Section 4(a), any other series or class or classes of Junior Stock shall, 8 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 R 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 R Preferred Stock shall not be redeemable by the Corporation prior to July 20, 2006, except as set forth in Section 10.2 of this Article. On and after July 20, 2006, the Corporation, at its option, may redeem shares of Class R Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to the Redemption Price applicable thereto. In the event of a redemption of shares of Class R Preferred Stock, if the Redemption Date occurs after a 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 Record 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 pursuant to this Section 5(a), the redemption price of the Class R 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 R Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class R Preferred Stock may be redeemed unless all outstanding shares of Class R Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class R Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class R Preferred Stock. (d) If the Corporation shall redeem shares of Class R 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 9 validity of the proceedings for redemption with respect to the other holders. Any notice 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 R 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; 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 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 R Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class R 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 R Preferred Stock of the Corporation shall cease (except the right 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 R 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 R Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the cash necessary to effect the 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 R Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class R 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 R 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 R 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 R 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 10 certificates shall be exchanged for cash (without interest thereon). If fewer than all the outstanding shares of Class R Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class R Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class R 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 R 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 R Preferred Stock that have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized but unissued shares of Class R 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 R 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 R Preferred Stock ("Senior Stock"); (b) on a parity with the Class R 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 R Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock, Class O Cumulative Convertible Preferred Stock, Class P Convertible Cumulative Preferred Stock or Class Q Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class R 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 R 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 Class A Common Stock or (ii) the holders of Class R Preferred Stock 11 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 R 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 any other class or series of Parity Stock which is entitled to similar voting rights (the _Voting Preferred Stock_) and the holders of shares of Class R 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 R Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class R 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 R 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 R 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 R 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 R Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class R 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 R 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 R 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 R Preferred Stock and the Voting Preferred Stock or the successor of 12 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 R 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 R 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 R Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to increase the authorized amount of Class R Preferred Stock, or 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 R 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 R 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 R 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 R 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 R Preferred Stock as a single class on any matter, then the Class R 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 R Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action. 13 9. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class R 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 R Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class R Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class R 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 R Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class R 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 R 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 R Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class R 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 R 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 R Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class R 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 R Preferred Stock. 14 (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 R 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 R Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class R 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 R 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 R 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 R 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 R 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 exercise such authority in a 15 manner that interferes with any ownership or transfer of Class R 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 R Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class R 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 R 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 R 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 R 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 R 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 R 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 R Preferred Stock held in the Trust, which rights shall be exercised for the benefit of the Charitable Beneficiary. Any dividend or distribution 16 paid prior to the discovery by the Corporation that the shares of Class R 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 R 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 R 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 R 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 R Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class R Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class R 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 17 Class R 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. 10.5 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class R 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. 10.6 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Class R Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record holder or 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 R 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 holder or Beneficial Owner, the number of shares of Class R Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record holder or Beneficial Owner of Class R 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 R 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 R 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 R Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class R 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 R 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. 18 10.7 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. 10.8 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. 10.9 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 (as modified to exclude qualified trusts from treatment as individuals pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership, limited liability company, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (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 R 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 R 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 R Preferred Stock) following the purchase of Class R Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class R Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class R Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class R Preferred Stock purchased in connection with market making activities. 19 10.10 LEGEND. Each certificate for Class R Preferred Stock shall bear substantially the following legend: "The shares of Class R Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class R 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 R Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class R 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 R 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 R Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class R Cumulative Preferred Stock) or (ii) the shares of Class R Cumulative Preferred Stock represented hereby will automatically be transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries." 10.11 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. 10.12 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. 10.13 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 R Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXIX of the Charter. 20 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on July 17, 2001. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ LUCY CORDOVA /s/ PAUL J. MCAULIFFE - -------------------------------- ---------------------------------- Lucy Cordova Paul J. McAuliffe Assistant Secretary Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive 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/ PAUL J. MCAULIFFE ------------------------------- Paul J. McAuliffe Executive Vice President and Chief Financial Officer ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS R 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 800,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share, into additional shares of preferred stock heretofore designated as "Class R Cumulative Preferred Stock, par value $.01 per share," (the "Class R Preferred Stock") and has provided for the issuance of such additional shares. SECOND: The reclassification increases the number of shares classified as Class R Preferred Stock from 4,140,000 shares immediately prior to the reclassification to 4,940,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 457,762,738 shares immediately prior to the reclassification to 456,962,738 shares immediately after the reclassification. The number of shares classified as Class R Preferred Stock may be decreased upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class R 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 Article THIRD of the Articles Supplementary to the Charter (dated July 17, 2001 and filed with the MSDAT on July 18, 2001) and remain unchanged by these Articles Supplementary. - ------------------------------------------------------------------------------- STATE OF MARYLAND I hereby certify that this is a true and complete copy of the 3 page document on file in this office. DATED: 8-3-01. STATE DEPARTMENT OF ASSESSMENTS AND TAXATION BY: Ann Custis, Custodian This stamp replaces our previous certification system. Effective: 6/95 - ------------------------------------------------------------------------------- IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Chairman of the Board and witnessed by its Assistant Secretary on July 31, 2001. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ LUCY CORDOVA /s/ TERRY CONSIDINE - ------------------- ------------------------ Lucy Cordova Terry Considine Assistant 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 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 of the Board CERTIFICATE OF CORRECTION TO ARTICLES SUPPLEMENTARY CLASS K CONVERTIBLE 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, 1999, of the Corporation relating to its Class K Convertible Cumulative Preferred Stock (par value $.01 per share) were filed with the State Department of Assessments and Taxation of Maryland on February 17, 1999, 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: The definition of "Dividend Payment Date" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: "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. THIRD: The definition of "Dividend Payment Date" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as follows: "DIVIDEND PAYMENT DATE" shall mean February 18, May 18, August 18 and November 18 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 FOURTH: The inaccuracy or defect in the definition of "Dividend Payment Date" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed is an error in transcription or other error in the dates used for the Dividend Payment Dates. 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 October 17, 2001 WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Joel F. Bonder By: /s/ Terry Considine Joel F. Bonder, 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 - 2 - [STAMP] ARTICLES OF MERGER BETWEEN APARTMENT INVESTMENT AND MANAGEMENT COMPANY (A MARYLAND CORPORATION) and CASDEN PROPERTIES 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 CASDEN PROPERTIES INC., a corporation duly organized and existing under the laws of the State of Maryland ("CASDEN"), do hereby certify that: FIRST: AIMCO and CASDEN agree 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 CASDEN PROPERTIES INC., a Maryland corporation. AIMCO shall survive the merger as the successor corporation 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 the State of Maryland in Baltimore City. CASDEN has its principal office in the State of Maryland in Baltimore City. CASDEN 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 by unanimous written consent dated November 29, 2001 signed by all the directors and filed with the minutes of proceedings of the Board of Directors of AIMCO adopted resolutions which declared that the proposed merger was advisable on substantially the terms and conditions set forth or referred to in the resolutions. No vote of stockholders was necessary because the merger does not reclassify or change the terms of any class or series of its stock that is outstanding immediately before the merger becomes effective or otherwise amend its charter and the number of shares of Class A Common Stock of AIMCO to be issued or delivered in the merger is less than 20 -1- percent of the shares of Class A Common Stock of AIMCO outstanding immediately before the proposed merger becomes effective. (b) The Board of Directors of CASDEN at telephonic meetings duly called and held on November 30, 2001 and December 3, 2001 adopted resolutions 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 CASDEN. Notice which stated that a purpose of the special meeting was to act on the proposed merger was given by CASDEN as required by law. The only votes of the holders of any class or series of the shares of CASDEN that are required to approve the proposed merger are the affirmative votes of (a) holders of at least a majority of the shares of CASDEN Common Stock outstanding on the record date for the special meeting, voting as a class, and (b) holders of 55% of the shares of CASDEN Class A Preferred Stock, voting as a class. At a special meeting of stockholders of CASDEN duly called and held on February 4, 2002 and adjourned from time to time until March 7, 2002, the proposed merger was approved by the stockholders of CASDEN by the affirmative vote required by law and the charter of CASDEN 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 terms of any class or series of outstanding capital stock of AIMCO. SIXTH: The total number of shares of capital stock of all classes which AIMCO or CASDEN, respectively, has authority to issue, the number of shares of each class which AIMCO or CASDEN, respectively, has authority to issue, and the par value of the shares of each class which AIMCO or CASDEN, respectively, has authority to issue are as follows: (a) The total number of shares of stock of all classes which AIMCO has authority to issue is set forth on Schedule A hereto. The aggregate par value of all the shares of stock of all classes of AIMCO is $5,105,875.00. The merger does not change the authorized stock of AIMCO. (b) The total number of shares of stock of all classes which CASDEN has authority to issue is 250,000,000 shares, of which 150,000,000 shares are classified as Common Stock (par value $0.01 per share); 15,000,000 shares are classified as Class A Preferred Stock (par value $0.01 per share); 424,000 shares are classified as Junior Preferred Stock (par value $0.01 per share), and 84,576,000 shares are classified as Preferred Stock (par value $0.01 per share). The aggregate par value of all the shares of stock of all classes of CASDEN is $2,500,000.00. SEVENTH: The manner and basis of converting or exchanging issued stock of the merging corporations into different stock of a corporation or for other consideration and the -2- 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 on 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) The issued and outstanding shares of capital stock of CASDEN, options to purchase shares of capital stock of CASDEN and warrants for the purchase of shares of capital stock of CASDEN shall be exchanged for AIMCO stock and other consideration according to, and in the manner set forth in, the Agreement and Plan of Merger attached as Schedule B hereto. EIGHTH: The merger shall become effective at 10:15 A.M. EST on March 11, 2002. -3- IN WITNESS WHEREOF, AIMCO has caused these presents to be signed in its name and on its behalf by its chairman and witnessed by its secretary on March 11, 2002. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY (a Maryland corporation) /s/ MILES CORTEZ By: /s/ TERRY CONSIDINE - ------------------------------- --------------------------------- Miles Cortez, Secretary Terry Considine, Chairman THE UNDERSIGNED, Chairman 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. By: /s/ TERRY CONSIDINE --------------------------------- Terry Considine, Chairman -4- IN WITNESS WHEREOF, CASDEN has caused these presents to be signed in its name and on its behalf by its chairman and witnessed by its secretary on March 11, 2002. WITNESS; CASDEN PROPERTIES INC. (a Maryland Corporation) /s/ ANDREW J. STARRELS By: /s/ ALAN I. CASDEN - -------------------------------- -------------------------------- Andrew J. Starrels, Secretary Alan I. Casden, Chairman THE UNDERSIGNED, Chairman of CASDEN PROPERTIES 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/ ALAN I. CASDEN -------------------------------- Alan I. Casden, Chairman -5- Schedule A APARTMENT INVESTMENT AND MANAGEMENT COMPANY AUTHORIZED CAPITAL STOCK
NUMBER OF CLASS OF CAPITAL STOCK SHARES AUTHORIZED ---------------------- ----------------- Class A Common Stock, par value $0.01 per share 456,962,738 Class B Cumulative Convertible Preferred Stock, par value $0.01 per share 750,000 Class C Cumulative Preferred Stock par value $0.01 per share 2,400,000 Class D Cumulative Preferred Stock, par value $0.01 per share 4,200,000 Class G Cumulative Preferred Stock, par value $0.01 per share 4,050,000 Class H Cumulative Preferred Stock, par value $0.01 per share 2,000,000 Class I Cumulative Preferred Stock, par value $0.01 per share 10,000,000 Class J Cumulative Convertible Preferred Stock, par value $0.01 per share 1,250.000 Class K Convertible Cumulative Preferred Stock, par value $0.01 per share 5,000,000 Class L Convertible Cumulative Preferred Stock, par value $0.01 per share 5,000,000 Class M Convertible Cumulative Preferred Stock, par value $0.01 per share 1,600,000 Class N Convertible Cumulative Preferred Stock, par value $0.01 per share 4,000,000 Class 0 Cumulative Convertible Preferred Stock, par value $0.01 per share 1,904,762 Class P Convertible Cumulative Preferred Stock, par value $0.01 per share 4,000,000 Class Q Cumulative Preferred Stock, par value $0.01 per share 2,530,000 Class R Cumulative Preferred Stock, par value $0.01 per share 4,940,000 Total Authorized Stock $10,587,500
Note: All of the unissued or reacquired shares of capital stock of AIMCO are subject to classification and reclassification by the Board of Directors. -6- SCHEDULE B AGREEMENT AND PLAN OF MERGER BY AND AMONG APARTMENT INVESTMENT AND MANAGEMENT COMPANY, CASDEN PROPERTIES INC. AND XYZ HOLDINGS LLC Dated as of December 3, 2001 -7- AGREEMENT AND PLAN OF MERGER BY AND AMONG APARTMENT INVESTMENT AND MANAGEMENT COMPANY, CASDEN PROPERTIES INC. AND XYZ HOLDINGS LLC Dated as of December 3, 2001 TABLE OF CONTENTS
Page ARTICLE I THE MERGER............................................................................................5 Section 1.1 THE MERGER............................................................................5 Section 1.2 EFFECTS OF THE MERGER.................................................................5 Section 1.3 EFFECTIVE TIME OF THE MERGER..........................................................6 ARTICLE II TREATMENT OF SHARES..................................................................................6 Section 2.1 CERTAIN DEFINITIONS...................................................................6 Section 2.2 EFFECT OF THE MERGER ON SHARES.......................................................13 Section 2.3 PAYMENT OF MERGER CONSIDERATION......................................................17 Section 2.4 APPRAISAL RIGHTS.....................................................................20 ARTICLE III THE CLOSING........................................................................................20 Section 3.1 CLOSING..............................................................................20 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CASDEN............................................................20 Section 4.1 ORGANIZATION AND QUALIFICATION; ASSETS...............................................20 Section 4.2 CAPITALIZATION.......................................................................23 Section 4.3 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS; COMPLIANCE........................24 Section 4.4 CASDEN FINANCIAL STATEMENTS..........................................................26 Section 4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS.................................................26 Section 4.6 LITIGATION...........................................................................27 Section 4.7 TAX MATTERS..........................................................................27 Section 4.8 EMPLOYEE MATTERS; ERISA..............................................................30 Section 4.9 ENVIRONMENTAL PROTECTION.............................................................34 Section 4.10 VOTE REQUIRED........................................................................36 Section 4.11 HUD..................................................................................36 Section 4.12 ABSENCE OF INDUCEMENT................................................................37 Section 4.13 REAL PROPERTIES......................................................................37 Section 4.14 BOOKS AND RECORDS....................................................................40 Section 4.15 NO UNDISCLOSED LIABILITIES...........................................................40 Section 4.16 INSURANCE............................................................................40 Section 4.17 CONTRACTS............................................................................41 Section 4.18 PROPRIETY OF PAST PAYMENTS...........................................................41 Section 4.19 BANK ACCOUNTS........................................................................42 Section 4.20 DEFICIT RESTORATION OBLIGATIONS, ADJUSTED CAPITAL ACCOUNT DEFICITS AND CAPITAL CONTRIBUTION OBLIGATIONS.....................................................42 Section 4.21 COMPLIANCE WITH LAWS.................................................................42 Section 4.22 RELATIONSHIPS WITH RELATED PERSONS...................................................42 Section 4.23 MARYLAND TAKEOVER LAWS...............................................................42 Section 4.24 OFFICERS AND DIRECTORS...............................................................43 Section 4.25 NO CASDEN MATERIAL MISSTATEMENTS.....................................................43
i Section 4.26 TAX QUESTIONNAIRES...................................................................43 Section 4.27 CLOSING PAYOFF AMOUNTS...............................................................43 Section 4.28 CASDEN BOARD OF DIRECTORS APPROVAL...................................................43 ARTICLE V REPRESENTATIONS AND WARRANTIES OF AIMCO..............................................................43 Section 5.1 ORGANIZATION AND QUALIFICATION.......................................................43 Section 5.2 AIMCO SUBSIDIARIES...................................................................43 Section 5.3 CAPITALIZATION.......................................................................44 Section 5.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS; COMPLIANCE........................44 Section 5.5 REPORTS AND FINANCIAL STATEMENTS.....................................................46 Section 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.................................................46 Section 5.7 LITIGATION...........................................................................46 Section 5.8 REGISTRATION STATEMENT...............................................................46 Section 5.9 TAX MATTERS..........................................................................47 Section 5.10 EMPLOYEE MATTERS; ERISA..............................................................48 Section 5.11 ENVIRONMENTAL PROTECTION.............................................................49 Section 5.12 HUD ...............................................................................50 Section 5.13 ABSENCE OF INDUCEMENT................................................................51 Section 5.14 NO AIMCO MATERIAL MISSTATEMENTS......................................................51 Section 5.15 MARYLAND TAKEOVER LAWS...............................................................51 ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER..............................................................51 Section 6.1 COVENANTS OF CASDEN..................................................................51 Section 6.2 COVENANTS OF AIMCO...................................................................56 ARTICLE VII ADDITIONAL AGREEMENTS..............................................................................56 Section 7.1 ACCESS TO INFORMATION................................................................56 Section 7.2 REGISTRATION RIGHTS AGREEMENT........................................................57 Section 7.3 LETTERS OF ACCOUNTANTS...............................................................57 Section 7.4 REGULATORY MATTERS...................................................................58 Section 7.5 APPROVAL OF CASDEN STOCKHOLDERS......................................................58 Section 7.6 PUBLIC ANNOUNCEMENTS.................................................................58 Section 7.7 NO SOLICITATION......................................................................59 Section 7.8 EXPENSES.............................................................................59 Section 7.9 FURTHER ASSURANCES...................................................................59 Section 7.10 REIT STATUS..........................................................................60 Section 7.11 EMPLOYEES; EMPLOYEE PLANS............................................................60 Section 7.12 RECORD DATES AND DIVIDEND PAYMENT DATES..............................................61 Section 7.13 INSURANCE............................................................................61 Section 7.14 BREACHES ............................................................................61 Section 7.15 TRANSFER TAXES.......................................................................61 Section 7.16 NAMES AND TRADEMARKS.................................................................62 Section 7.17 PREPARATION OF TAX RETURNS...........................................................62 Section 7.18 DEPOSIT BY AIMCO.....................................................................62 Section 7.19 TAX FREE REORGANIZATION..............................................................63 Section 7.20 MEZZANINE LOAN.......................................................................63 Section 7.21 PLEDGE AND GUARANTY AGREEMENTS.......................................................63
ii Section 7.22 RELEASE .............................................................................63 Section 7.23 QUESTIONNAIRES.......................................................................63 Section 7.24 CPLB DISTRIBUTION....................................................................64 Section 7.25 COMMERCIAL PROPERTIES................................................................64 Section 7.26 LEGAL MATTERS........................................................................64 Section 7.27 RESERVATION OF AIMCO STOCK...........................................................64 Section 7.28 CASDEN WARRANTS......................................................................64 Section 7.29 MATERIAL ADVERSE EFFECTS; KNOWLEDGE OF BREACHES......................................64 Section 7.30 LITIGATION...........................................................................64 Section 7.31 LISTING OF SHARES....................................................................65 Section 7.32 NAPICO SYNDICATED PROPERTIES.........................................................65 Section 7.33 COMPLIANCE WITH THE MGCL.............................................................65 Section 7.34 CASDEN CHARTER.......................................................................65 Section 7.35 NAPICO PROPERTY CONSENTS.............................................................65 Section 7.36 CLOSING PAYOFF AMOUNTS...............................................................65 ARTICLE VIII CONDITIONS........................................................................................66 Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER...........................66 Section 8.2 CONDITIONS TO OBLIGATION OF AIMCO TO EFFECT THE MERGER...............................66 Section 8.3 CONDITIONS TO OBLIGATION OF CASDEN TO EFFECT THE MERGER..............................68 ARTICLE IX TERMINATION, AMENDMENT AND WAIVER...................................................................70 Section 9.1 TERMINATION..........................................................................70 Section 9.2 EFFECT OF TERMINATION................................................................71 Section 9.3 TERMINATION FEES.....................................................................71 Section 9.4 AMENDMENT............................................................................72 Section 9.5 WAIVER...............................................................................72 Section 9.6 DAMAGES..............................................................................72 ARTICLE X GENERAL PROVISIONS...................................................................................72 Section 10.1 BROKERS .............................................................................72 Section 10.2 NOTICES .............................................................................73 Section 10.3 MISCELLANEOUS........................................................................74 Section 10.4 INTERPRETATION.......................................................................75 Section 10.5 COUNTERPARTS; EFFECT.................................................................75 Section 10.6 PARTIES' INTEREST....................................................................75 Section 10.7 ENFORCEMENT..........................................................................75 Section 10.8 SEVERABILITY.........................................................................76
iii EXHIBITS TO AGREEMENT Exhibit A Form of OP Contribution Agreement Exhibit B-1 Form of Casden Contribution Agreement Exhibit B-2 Form of Commercial Purchase Agreement Exhibit C-1 Form of Tri-Party Agreement Exhibit C-2 Form of WW Letter Agreement Exhibit C-3 Form of Villa Azure Letter Agreement Exhibit D Form of CPLB Merger Agreement Exhibit E-1 Form of Development LLC Agreement Exhibit E-2 Form of Ross Purchase Agreement Exhibit E-3 Form of Development LLC Purchase Agreement Exhibit F Form of Consent and Voting Agreement Exhibit G Form of Tax Indemnification and Tax Contest Agreement Exhibit H Form of Master Indemnification Agreement Exhibit I Form of Amended and Restated Limited Liability Company Operating Agreement of Casden Park La Brea A LLC Exhibit J Form of Amended and Restated Limited Liability Company Operating Agreement of Casden Park La Brea B LLC Exhibit K Form of Amended and Restated Limited Liability Company Operating Agreement of Casden Park La Brea C LLC Exhibit L Form of Amended and Restated Limited Liability Company Operating Agreement of Casden Glendon LLC Exhibit M Form of Registration Rights Agreement (Stock) Exhibit N Form of Consulting Agreement Exhibit O List of Core Properties Exhibit P-1 Form of Tax Questionnaires - Subsidiaries Exhibit P-2 Form of General Questionnaires Exhibit P-3 Form of Tax Questionnaires - NAPICO Exhibit Q-1 Form of Non-Foreign Status (1) Exhibit Q-2 Form of Non-Foreign Status (2) Exhibit R Form of Casden Comfort Letter Exhibit S Form of AIMCO Comfort Letter Exhibit T Form of Investor Representation Letter Exhibit U Form of Escrow Agreement Exhibit V Form of Mezzanine Loan Documents Exhibit W-1 Form of Pledge Agreement Exhibit W-2 Form of Guaranty Agreement Exhibit X-1 Form of Release (Casden) Exhibit X-2 Form of Release (Blackacre) Exhibit Y CPLB Instrument of Assignment Exhibit 8.2(c)-1 Form of Opinion of Casden's Maryland Counsel(1) Exhibit 8.2(c)-2 Form of Opinion of Casden's Maryland Counsel(2) Exhibit 8.2(d) Form of Opinion of Casden Special Counsel Exhibit 8.2(f) Form of Casden REIT Opinion Exhibit 8.3(c) Form of Opinion of AIMCO's Maryland Counsel Exhibit 8.3(d)(i) Form of Merger Opinion of Casden's Counsel iv Exhibit 8.3(d)(ii) Form of AIMCO Officer's Certificate re: REIT Exhibit 8.3(e) Form of Opinion of AIMCO's Counsel SCHEDULES TO AGREEMENT Schedule 2.1(a) Closing Payoff Amounts Schedule 2.1(b) Casden Mortgage Debt v TABLE OF DEFINED TERMS
Cross Reference Term in Agreement Page Acquisition Proposal .............................................Section 2.1.....................................6 Additional Tax Liabilities .......................................Section 2.1.....................................6 Affected Employees ...............................................Section 7.11(a)................................60 Affiliate ........................................................Section 2.1.....................................6 Aggregate Consideration ..........................................Section 2.1.....................................6 Agreement ........................................................Preamble........................................1 AIC...............................................................Recitals........................................1 AIC Common Per Share Consideration................................Section 2.1.....................................6 AIC Common Stock..................................................Section 2.1.....................................6 AIMCO ............................................................Preamble........................................1 AIMCO Benefit Plans ..............................................Section 5.10(a)................................48 AIMCO Charter ....................................................Section 1.2.....................................5 AIMCO Common Stock ...............................................Section 2.1.....................................6 AIMCO Common Stock Price .........................................Section 2.1.....................................7 AIMCO CPLB Merger Sub ............................................Recitals........................................2 AIMCO Disclosure Letter ..........................................Article V......................................43 AIMCO Financial Statements .......................................Section 5.5....................................46 AIMCO Material Adverse Effect ....................................Section 2.1.....................................7 AIMCO OP .........................................................Recitals........................................1 AIMCO Required Statutory Approvals ...............................Section 5.4(c).................................45 AIMCO SEC Reports ................................................Section 2.1.....................................7 AIMCO Subsidiary .................................................Section 2.1.....................................7 ARP...............................................................Recitals........................................1 Articles of Merger ...............................................Recitals........................................1 Asset Purchase....................................................Recitals........................................3 Blackacre.........................................................Section 8.2(d).................................67 Blackacre Parties.................................................Section 8.2(d).................................67 Canceled Shares ..................................................Section 2.3(b)(i)..............................17 Casden ...........................................................Preamble........................................1 Casden Benefit Plans .............................................Section 4.8(a).................................30 Casden Capital Stock .............................................Section 2.1.....................................7 Casden Charter ...................................................Section 4.1(a).................................20 Casden Class A Preferred Stock ...................................Section 2.1.....................................7 Casden Common Stock ..............................................Section 2.1.....................................7 Casden Contribution Agreement.....................................Recitals........................................1 Casden Contribution Consideration.................................Section 2.1.....................................6 Casden Disclosure Letter .........................................Article IV.....................................20 Casden Financial Statements ......................................Section 2.1.....................................7 Casden Junior Preferred Stock ....................................Section 2.1.....................................7 Casden Material Adverse Effect ...................................Section 2.1.....................................8
vi Casden Meeting ...................................................Section 7.5(a).................................58 Casden OP ........................................................Recitals........................................1 Casden Option.....................................................Section 2.2(c).................................15 Casden OPUs ......................................................Recitals........................................1 Casden Pro Forma Financial Information............................Section 4.4(b).................................26 Casden Property Consents..........................................Section 4.3(b).................................24 Casden Properties ................................................Section 4.13(a)................................37 Casden Required Consents..........................................Section 7.35...................................24 Casden Required Statutory Approvals ..............................Section 4.3(c).................................25 Casden Reverse Stock Split .......................................Recitals........................................1 Casden Stock Plan ................................................Section 2.1.....................................8 Casden Stockholders' Approval ....................................Section 4.10...................................36 Casden Subsidiary ................................................Section 2.1.....................................8 Casden Transfer Tax Amount........................................Section 2.1.....................................8 Casden I Warrants ................................................Section 2.1.....................................8 Casden II Warrants ...............................................Section 2.1.....................................8 Cerberus Partners.................................................Recitals........................................3 Certificate ......................................................Section 2.3(b)(i)..............................17 Certificates .....................................................Section 2.3(b)(i)..............................17 CIC...............................................................Recitals........................................1 Closing ..........................................................Section 3.1....................................20 Closing Agreement ................................................Section 2.1.....................................8 Closing Date .....................................................Section 3.1....................................20 Code .............................................................Recitals........................................5 CommercialCo .....................................................Recitals........................................2 Commercial Debt ..................................................Recitals........................................2 Commercial Properties ............................................Recitals........................................2 Commercial Sale ..................................................Recitals........................................2 Common Per Share Value............................................Section 2.2(d).................................15 Confidentiality Agreement ........................................Section 7.1....................................56 Consulting Agreement ............................................Recitals........................................4 Contract .........................................................Section 2.1.....................................8 Contribution Effective Date.......................................Section 2.1.....................................8 Core Properties ..................................................Section 2.1.....................................9 Core Properties Earnout Amount ...................................Section 2.1.....................................9 CPLB .............................................................Recitals........................................1 CPLB LLC..........................................................Recitals........................................3 CPLB Merger ......................................................Recitals........................................2 CPLB Merger Agreement ............................................Recitals........................................2 CPLB Merger Consideration.........................................Section 2.1.....................................9 CPLB Reverse Stock Split .........................................Recitals........................................1 Deferred Consideration............................................Section 2.1.....................................9 Development LLC ..................................................Recitals........................................2 Development LLC Agreement ........................................Recitals........................................2 Development LLC Assets ...........................................Recitals........................................2 Development LLC Purchase Agreement ...............................Recitals........................................3 Development Properties ...........................................Recitals........................................2
vii Dissenting Shares ................................................Section 2.1.....................................9 Effective Time ...................................................Section 1.3.....................................6 Environmental Claim ..............................................Section 2.1.....................................9 Environmental Laws ...............................................Section 2.1.....................................9 Environmental Permits ............................................Section 4.9(b).................................35 Environmental Release.............................................Section 2.1.....................................9 Equity Consideration..............................................Section 2.2(d).................................15 ERISA ............................................................Section 4.8(a).................................30 ERISA Affiliate ..................................................Section 4.8(a).................................30 Escrow Agent .....................................................Section 7.18...................................62 Escrow Agreement..................................................Section 7.18...................................62 Escrow Amount ....................................................Section 7.18...................................62 Exchange Act .....................................................Section 2.1....................................10 Exchange Fund ....................................................Section 2.3(a).................................17 GAAP .............................................................Section 4.4(a).................................26 General Questionnaires............................................Section 2.1....................................10 Governmental Authority ...........................................Section 4.3(c).................................25 Ground Lease .....................................................Section 4.13(b)................................38 Hazardous Materials ..............................................Section 2.1....................................10 Holder ...........................................................Section 2.1....................................10 HSR Act ..........................................................Section 4.3(c).................................25 HUD ..............................................................Section 4.3(c).................................25 HUD Approval .....................................................Section 7.4(a).................................58 IRS ..............................................................Section 4.8(a).................................31 Joint Venture ....................................................Recitals........................................2 Junior Preferred Liquidation Amount ..............................Section 2.1....................................10 knowledge ........................................................Section 2.1....................................10 Latest Casden Financial Statements................................Section 2.1....................................10 Latest Casden Pro Forma Financial Information.....................Section 2.1....................................11 Laws .............................................................Section 4.13(a)................................38 Leased Properties ................................................Section 4.13(a)(ii)............................37 Leased Properties Lessees ........................................Section 4.13(a)(ii)............................37 Liens ............................................................Section 4.1(b).................................21 Liquidated Damages ...............................................Section 9.3(a).................................71 Master Indemnification Agreement .................................Recitals........................................3 Merger ...........................................................Recitals........................................1 Mezzanine Loan ...................................................Section 7.20...................................63 Mezzanine Loan Documents .........................................Section 7.20...................................63 Mortgage Debt Amortization........................................Section 2.1....................................11 MGCL .............................................................Section 1.2.....................................5 MSDAT ............................................................Section 1.3.....................................6 NAPICO ...........................................................Section 4.1(e).................................22 NAPICO Entities ..................................................Section 4.1(e).................................22 NAPICO Properties ................................................Section 4.13(a)(iii)...........................37 NAPICO Property Consents .........................................Section 7.35...................................65 NAPICO Property Owners ...........................................Section 4.13(a)(iii)...........................37
viii NAPICO Syndicated Properties .....................................Section 7.32...................................65 New Merger Sub....................................................Section 2.2(f).................................66 Non-Equity Consideration..........................................Section 2.2(d).................................15 Non-Equity Ratio..................................................Section 2.2(d).................................15 NYSE .............................................................Section 2.1....................................11 OP Contribution ..................................................Recitals........................................1 OP Contribution Agreement ........................................Recitals........................................1 OP Contribution Consideration.....................................Section 2.1....................................11 Option Settlement Amount..........................................Section 2.2(c).................................15 Other Common Per Share Consideration..............................Section 2.1....................................11 Other Common Stock................................................Section 2.1....................................11 Owned Properties .................................................Section 4.13(a)(i).............................37 Owner Property Owners.............................................Section 2.1....................................11 PBGC .............................................................Section 4.8(d).................................31 Per Share Casden Jenior Preferred Liquidation Amount .............Section 4.13(a)(i).............................37 Permitted Encumbrances ...........................................Section 4.13(a)................................38 Person ...........................................................Section 2.1....................................11 PLB ..............................................................Recitals........................................2 Proposed Transferred Employees....................................Section 4.8(s).................................34 Qualified REIT Subsidiary.........................................Section 4.1(c).................................21 Questionnaires....................................................Section 2.1....................................10 Registration Rights Agreement (Stock).............................Recitals........................................4 Registration Rights Agreement (Units).............................Recitals........................................4 Registration Statement ...........................................Section 2.1....................................11 REIT .............................................................Recitals........................................5 REIT Cash Consideration...........................................Section 2.1....................................11 REIT Common Consideration ........................................Section 2.1....................................12 REIT Common Deferred Consideration................................Section 2.1....................................12 REIT Merger Consideration.........................................Section 2.1....................................12 REIT Preferred Consideration......................................Section 2.1....................................12 Related Transaction Documents ....................................Section 2.1....................................12 Related Transactions .............................................Section 2.1....................................12 Release ..........................................................Section 7.22...................................63 Representatives ..................................................Section 7.1....................................56 Ross Purchase Agreement...........................................Recitals........................................3 Ross Retail LLC ..................................................Recitals........................................3 Ross Store Sale...................................................Recitals........................................3 SEC ..............................................................Section 2.1....................................12 Securities Act ...................................................Section 2.1....................................12 Spin-Off..........................................................Recitals........................................2 Status Requirements ..............................................Section 4.7(f).................................28 Subsidiary .......................................................Section 2.1....................................12 Surviving Corporation ............................................Section 1.1.....................................5 Tax Indemnity Agreement ..........................................Recitals........................................3 Tax Questionnaires-NAPICO.........................................Section 2.1....................................10 Tax Questionnaires-Subsidiaries...................................Section 2.1....................................10 Tax Return .......................................................Section 2.1....................................13 Tax Ruling .......................................................Section 2.1....................................13 Taxable Election..................................................Section 2.2(f).................................16 Taxable REIT Subsidiary...........................................Section 4.1(c).................................21 Taxes ............................................................Section 2.1....................................13 Termination Date .................................................Section 9.1(c).................................70 Test Date.........................................................Section 2.2(f).................................16 Total Consideration...............................................Section 2.2(d).................................15 Trademarks .......................................................Section 7.16(a)................................62 Transaction Documents ............................................Section 2.1....................................13 Transactions .....................................................Section 2.1....................................13 Transfer Taxes ...................................................Section 7.15...................................61 Transferred Employees.............................................Section 7.11(a)................................60 Transition Period ................................................Section 7.16(c)................................62 Tri-Party Agreement ..............................................Recitals........................................2 Villa Azure Earnout Amount .......................................Section 2.1....................................13 Villa Azure Letter Agreement......................................Recitals........................................2 Villa Azure Property .............................................Section 2.1....................................13 Violation ........................................................Section 4.3(b).................................24 Voting Agreement .................................................Recitals........................................3 Voting Debt ......................................................Section 4.2(a).................................23 WARN Act .........................................................Section 2.1....................................13 Westwood..........................................................Recitals........................................2 WW Letter Agreement...............................................Recitals........................................2 XYZ ..............................................................Preamble........................................1 XYZ Agreement.....................................................Section 2.1....................................13
ix AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into as of December 3, 2001, by and between Apartment Investment and Management Company, a Maryland corporation ("AIMCO"), Casden Properties Inc., a Maryland corporation ("Casden"), and XYZ Holdings LLC, a Delaware limited liability company ("XYZ"). WHEREAS, the respective boards of directors of AIMCO and Casden deem it advisable and in the best interests of their respective stockholders that AIMCO acquire Casden in a merger (the "Merger"), upon the terms and subject to the conditions set forth in this Agreement; WHEREAS, pursuant to this Agreement, AIMCO shall acquire Casden REIT, and pursuant to the OP Unit Contribution Agreement (as defined herein), the CPLB Merger Agreement (as defined herein) and the Casden Contribution Agreement (as defined herein), AIMCO shall acquire certain affiliated entities, all in exchange for the Aggregate Consideration; WHEREAS, immediately prior to the Closing Date (as defined in Section 3.1), Casden shall effect a reverse stock split with respect to the Casden Common Stock, whereby every 100 shares of Casden Common Stock will represent one share of Casden Common Stock after giving effect thereto (the "Casden Reverse Stock Split"); WHEREAS, immediately prior to the Closing Date, Casden Park La Brea, Inc., a Maryland corporation ("CPLB"), shall effect a reverse stock split with respect to its common stock, whereby every 10 shares of CPLB common stock will represent one share of CPLB common stock after giving effect thereto (the "CPLB Reverse Stock Split"); WHEREAS, upon the terms and subject to the conditions set forth herein, AIMCO and Casden shall execute Articles of Merger ("Articles of Merger") and shall file such Articles of Merger in accordance with Maryland law to effectuate the Merger; WHEREAS, Casden and AIMCO desire that, on or prior to the Contribution Effective Date, holders of limited partnership interests in Casden Properties Operating Partnership, L.P., a Delaware limited partnership ("Casden OP"), will exchange such limited partnership interests ("Casden OPUs") for cash and limited partnership interests in AIMCO Properties, L.P., a Delaware limited partnership ("AIMCO OP"), on the terms and subject to the conditions of an OP Unit Contribution Agreement, dated as of December 3, 2001 and attached hereto as Exhibit A (the "OP Contribution Agreement"), by and among the holders of Casden OPUs, Casden, Casden OP and AIMCO OP (the "OP Contribution"); WHEREAS, Casden and AIMCO desire that, on or prior to the Contribution Effective Date, (i) Alan I. Casden ("AIC") will contribute all of his interests in AIC REIT Properties LLC, a Delaware limited liability company ("ARP"), and (ii) Casden Investment Corp., a California corporation ("CIC"), will contribute all of its interests in NAPICO (as defined in Section 4.1(e)) to AIMCO OP in exchange for cash and/or limited partnership interests in AIMCO OP, on the terms and subject to the conditions of a Contribution Agreement, dated as of the date hereof and attached hereto as Exhibit B-1 (the "Casden Contribution Agreement"), by and among ARP, AIC, CIC and AIMCO OP; 1 WHEREAS, Casden and AIMCO desire that, on or prior to the Contribution Effective Date, certain commercial real estate properties of Casden (the "Commercial Properties") either (i) shall be sold to, and certain indebtedness of Casden relating to such Commercial Properties (the "Commercial Debt") shall be assumed by, one or more entities pursuant to an asset purchase agreement substantially in the form attached hereto as Exhibit B-2 or (ii) any Commercial Debt and the interests in the limited liability companies that own the Commercial Properties shall be distributed by Casden to its stockholders in a spin-off transaction (the "Spin-Off") (collectively, such entity or entities referred to herein as "CommercialCo" and such transaction(s), including the Spin-Off, referred to herein as the "Commercial Sale"); WHEREAS, Casden and AIMCO desire that, on the Closing Date, AIMCO acquire 100% of the ownership interest in certain real estate properties currently under development and commonly referred to as the "PLB" and "Westwood" developments (the "Development Properties"), subject to compliance with the terms and conditions of the Tri-Party and Construction Completion Agreement, by and among XYZ, AIMCO, Development LLC, AIMCO OP, Casden Park La Brea A LLC, Casden Park La Brea B LLC, Casden Park La Brea C LLC, Casden Glendon, LLC and the agent for the construction lenders named therein, substantially in the form attached hereto as Exhibit C-1 (the "Tri-Party Agreement"), subject to Section 7.9, providing for, among other things, the financing, development and completion of the construction of the Development Properties; WHEREAS, XYZ and AIMCO desire that, concurrently with the execution of the Tri-Party Agreement, AIMCO and XYZ shall execute and deliver a letter agreement relating to the "Westwood" Development Property, substantially in the form attached hereto as Exhibit C-2 (the "WW Letter Agreement"); WHEREAS, Casden and AIMCO desire that on the Closing Date, AIMCO shall execute and deliver, and Casden shall cause The Casden Company to execute and deliver, a letter agreement relating to the Villa Azure Property (as defined herein), substantially in the form attached hereto as Exhibit C-3 (the "Villa Azure Letter Agreement"); WHEREAS, on or prior to the date of the OP Contribution, Casden shall cause Casden OP to distribute to Casden its entire interest in CPLB; WHEREAS, immediately after the Effective Time (as defined in Section 1.3), a wholly-owned subsidiary of AIMCO ("AIMCO CPLB Merger Sub") will be merged with and into CPLB (the "CPLB Merger"), pursuant to an Agreement and Plan of Merger, dated as of December 3, 2001 (the "CPLB Merger Agreement"), by and among AIMCO, CPLB, AIMCO CPLB Merger Sub and XYZ and attached hereto as Exhibit D; WHEREAS, AIMCO and certain Casden stockholders desire to enter into a joint venture with respect to the development of real estate properties (the "Joint Venture"), and for such purpose AIMCO and certain Casden stockholders shall contribute cash and certain other assets (the "Development LLC Assets") to a newly formed limited liability company ("Development LLC"), on the terms and subject to the conditions of a limited liability company agreement substantially in the form attached hereto as Exhibit E-1 (the "Development LLC Agreement"); 2 WHEREAS, Casden and AIMCO desire that, on or prior to the Contribution Effective Date, either (i) Casden Park La Brea LLC, a Delaware limited liability company ("CPLB LLC"), shall sell all of the issued and outstanding ownership interests of Casden Park La Brea Retail LLC, a Delaware limited liability company ("Ross Retail LLC"), to Development LLC, on the terms and subject to the conditions of a purchase agreement (the "Ross Purchase Agreement"), substantially in the form attached hereto as Exhibit E-2 or (ii) the limited liability company interests in Ross Retail LLC shall be distributed to the stockholders of CPLB in a spin-off transaction (the transactions described in clauses (i) and (ii) above being referred to herein, collectively, as the "Ross Store Sale"); WHEREAS, Casden and AIMCO desire that, on or prior to the Contribution Effective Date, Casden shall sell certain assets it owns, together with all development rights that it acquires after the date hereof, to Development LLC (the "Asset Purchase"), on the terms and subject to the conditions of an asset purchase agreement (the "Development LLC Purchase Agreement") substantially in the form attached hereto as Exhibit E-3; WHEREAS, concurrently with the execution of this Agreement and as an inducement to AIMCO and Casden to enter into this Agreement, the following parties have entered into the following agreements (each of even date herewith): (i) certain of the holders of Casden OPUs, Casden, Casden OP and AIMCO OP have entered into the OP Contribution Agreement; (ii) ARP, AIC, CIC and AIMCO OP have entered into the Casden Contribution Agreement; (iii) AIMCO, AIMCO CPLB Merger Sub, CPLB and XYZ have entered into the CPLB Merger Agreement; (iv) the holders of at least two-thirds (2/3) of the Casden Common Stock and at least 55% of the Casden Class A Preferred Stock (each term as defined in Section 2.1) have entered into a Consent and Voting Agreement substantially in the form attached as Exhibit F hereto (the "Voting Agreement"), pursuant to which (a) such holders of Casden Class A Preferred Stock have delivered their consent to the approval of the Merger and the approval of this Agreement and (b) such holders of Casden Common Stock have agreed to vote their shares of Casden Capital Stock in favor of the approval of this Agreement and in favor of the Merger and the Casden Reverse Stock Split, subject to the terms of the Voting Agreement; (v) AIMCO, AIC, Cerberus Partners, L.P., a Delaware limited partnership ("Cerberus Partners"), XYZ, CIC, The Casden Company, CPLB and NAPICO have entered into a Tax Indemnification and Tax Contest Agreement (the "Tax Indemnity Agreement") substantially in the form attached hereto as Exhibit G providing for certain Tax indemnification rights and obligations of the parties thereto; (vi) AIMCO, AIMCO OP, AIC, Cerberus Partners, XYZ, CIC and The Casden Company have entered into a Master Indemnification Agreement (the "Master 3 Indemnification Agreement") substantially in the form attached hereto as Exhibit H, providing for certain indemnification rights and obligations of the parties thereto; (vii) AIMCO and the Persons named therein have entered into the registration rights agreement (the "Registration Rights Agreement (Units)") attached as an exhibit to the OP Contribution Agreement, providing for, among other things, AIMCO's registration of the AIMCO Common Stock issued in exchange for AIMCO OP Units received pursuant to the OP Contribution Agreement that are surrendered for redemption; WHEREAS, on or prior to the Closing Date, the following additional agreements shall have been entered into and the following actions shall have occurred: (i) AIMCO and certain Casden stockholders have entered into the Development LLC Agreement; (ii) Casden Park La Brea LLC and an appropriate Casden entity shall have executed and delivered amended and restated limited liability company agreements for the following entities: (A) Casden Park La Brea A LLC, substantially in the form attached hereto as Exhibit I, (B) Casden Park La Brea B LLC, substantially in the form attached hereto as Exhibit J, and (C) Casden Park La Brea C LLC, substantially in the form attached hereto as Exhibit K; (iii) Casden Glendon LLC and an appropriate Casden entity shall have executed and delivered an amended and restated limited liability company agreement for Casden Glendon LLC, substantially in the form attached hereto as Exhibit L; (iv) AIMCO and the Persons named therein shall have executed and delivered the registration rights agreement (the "Registration Rights Agreement (Stock)") substantially in the form attached hereto as Exhibit M providing for, among other things, AIMCO's registration of the AIMCO Common Stock issued in the Merger; (v) Development LLC and AIMCO shall have executed and delivered the consulting agreement (the "Consulting Agreement") substantially in the form attached hereto as Exhibit N; (vi) Casden, CommercialCo and the other parties named therein shall have executed and delivered the Commercial Sale Agreement; (vii) AIMCO and The Casden Company shall have executed and delivered the Villa Azure Letter Agreement; (viii) CPLB LLC and Development LLC shall have executed and delivered the Ross Purchase Agreement; and (ix) Casden and Development LLC shall have executed and delivered the Development LLC Purchase Agreement; 4 (x) each of the other Transaction Documents not previously executed and delivered by the parties thereto; WHEREAS, on or after the Closing, AIMCO, AIMCO OP, XYZ, Development LLC, Casden Park La Brea A LLC, Casden Park La Brea B LLC, Casden Park La Brea C LLC, Casden Glendon LLC and the agent for the construction lenders named therein shall execute and deliver the Tri-Party Agreement (and AIMCO and XYZ shall execute and deliver the WW Letter Agreement), subject to the terms of Section 7.9 hereof; WHEREAS, on or after the Closing, AIMCO will cause one or more mezzanine loans to be made to XYZ pursuant to the Mezzanine Loan Documents; WHEREAS, for Federal income tax purposes it is intended that the Merger will qualify as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), unless the Taxable Election (as defined in Section 2.2(f) is made); WHEREAS, AIMCO intends that, following the Merger, it shall continue to be subject to taxation as a real estate investment trust (a "REIT") within the meaning of Section 856 of the Code; and WHEREAS, AIMCO and Casden desire to make certain representations, warranties, covenants and agreements in connection with this Agreement. NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows: ARTICLE I THE MERGER Section 1.1 THE MERGER. Upon the terms and subject to the conditions of this Agreement, at the Effective Time (as defined in Section 1.3), Casden shall be merged with and into AIMCO in accordance with the laws of the State of Maryland. AIMCO shall be the surviving corporation in the Merger and shall continue its corporate existence under the laws of the State of Maryland. AIMCO after the Effective Time is sometimes referred to herein as the "Surviving Corporation." The effects and the consequences of the Merger shall be as set forth in Section 1.2. Section 1.2 EFFECTS OF THE MERGER. At the Effective Time, (i) the charter of AIMCO, as in effect immediately prior to the Effective Time (the "AIMCO Charter"), shall be the charter of the Surviving Corporation until thereafter amended as provided by law and the AIMCO Charter, (ii) the bylaws of AIMCO, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation until thereafter amended as provided by law, the AIMCO Charter and such bylaws, and (iii) the directors and officers of AIMCO immediately prior to the Effective Time shall be the directors and officers, respectively, of the Surviving Corporation until their respective successors are duly elected and qualified. Subject to the 5 foregoing, the additional effects of the Merger shall be as provided in the applicable provisions of the Maryland General Corporation Law ("MGCL"). Section 1.3 EFFECTIVE TIME OF THE MERGER. On the Closing Date, the Articles of Merger shall be executed and filed by AIMCO and Casden with the Maryland State Department of Assessments and Taxation (the "MSDAT") pursuant to the MGCL. The Merger shall become effective upon the acceptance by the MSDAT of the Articles of Merger or at such other time as is provided in the Articles of Merger (the "Effective Time"). ARTICLE II TREATMENT OF SHARES Section 2.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms have the following meanings: "Acquisition Proposal" means a proposal or offer (other than by AIMCO or an Affiliate of AIMCO) to acquire at least 10% of the outstanding equity securities of Casden or Casden OP, or a merger, consolidation, share exchange, or other business combination or spin off or similar distribution involving Casden or Casden OP or any proposal to acquire in any manner all or substantially all of the assets of Casden or Casden OP. "Additional Tax Liabilities" shall mean the aggregate of (i) the $949,927 plus interest and penalties payable in connection with the Closing Agreement executed by Casden on September 21, 2001, as described in Section 4.7(b) of the Casden Disclosure Letter and (ii) all taxes, costs and expenses incurred as a result of the transactions undertaken, whether incurred by Casden or CPLB, in connection with the Commercial Sale, the Ross Store Sale and the Asset Purchase. "Affiliate" means, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). "Aggregate Consideration" means the REIT Merger Consideration, the OP Contribution Consideration, the CPLB Merger Consideration and the Casden Contribution Consideration. "AIC Common Per Share Consideration" means 97.77% of the REIT Common Consideration, divided by the aggregate number of shares of AIC Common Stock outstanding as of the Effective Time, divided by the AIMCO Common Stock Price. "AIC Common Stock" means shares of Casden Common Stock held by any of AIC, CIC or TCC. 6 "AIMCO Common Stock" means the Class A Common Stock, par value $0.01 per share, of AIMCO. "AIMCO Common Stock Price" means $47 per share, as such price may be appropriately adjusted pursuant to any reclassification, recapitalization, split-up, combination, stock dividend or exchange of AIMCO Common Stock. "AIMCO Material Adverse Effect" means the existence of any fact or condition which has had or will have a material adverse effect on the business, assets, financial condition or results of operations of AIMCO and the AIMCO Subsidiaries taken as a whole; provided, however, that adverse effects on the business, assets, financial condition or results of operations of AIMCO or the AIMCO Subsidiaries due to general economic conditions, loss of employees, unsolicited third party offers for limited partnership interests of AIMCO Subsidiaries and AIMCO's response thereto, unsolicited offers to acquire one or more assets of any AIMCO Subsidiary and AIMCO's or any AIMCO Subsidiary's sale in response thereto and conditions affecting generally the multi-family apartment property market or any of the markets in which AIMCO or any AIMCO Subsidiary operates shall not be deemed to be an AIMCO Material Adverse Effect and shall not be taken into account in determining the existence of an AIMCO Material Adverse Effect. "AIMCO SEC Reports" means each Quarterly Report on Form 10-Q, Annual Report on Form 10-K, Current Report on Form 8-K and definitive proxy statement filed with the SEC by AIMCO pursuant to the requirements of the Exchange Act since December 31, 1998, as such documents have been amended since the time of their filing. "AIMCO Subsidiary" means any "significant subsidiary" (within the meaning of Rule 1-02 of SEC Regulation S-X) of AIMCO. "Casden Capital Stock" means, collectively, the Casden Common Stock, the Casden Class A Preferred Stock and the Casden Junior Preferred Stock. "Casden Class A Preferred Stock" means the Class A Cumulative Preferred Stock, par value $0.01 per share, of Casden. "Casden Common Stock" means the common stock, par value $0.01 per share, of Casden. "Casden Contribution Consideration" is (a) a number of Partnership Common Units of AIMCO OP equal to (i) $17,592,000, as reduced by the applicable pro rata share of the shortfall of the Villa Azure Earnout Amount and the shortfall of the Core Properties Earnout Amount and increased by the applicable pro rata share of the Mortgage Debt Amortization, divided by (ii) the AIMCO Common Stock Price, and (b) 8.56% of the Deferred Consideration (consisting of 4.47% of the Deferred Consideration attributable to PLB and 18.24% of the Deferred Consideration attributable to Westwood). "Casden Financial Statements" means the financial statements listed in Section 4.4(a) of the Casden Disclosure Letter. 7 "Casden Junior Preferred Stock" means the Junior Cumulative Preferred Stock, par value $0.01 per share, of Casden. "Casden Material Adverse Effect" means the existence of any fact or condition which has had or will have a material adverse effect on the business, assets, financial condition or results of operations of Casden and the Casden Subsidiaries taken as a whole; provided, however, that adverse effects on the business, assets, financial condition or results of operations of Casden or the Casden Subsidiaries due to general economic conditions, loss of employees, unsolicited third party offers for limited partnership interests of Casden Subsidiaries and Casden Subsidiaries' responses thereto, unsolicited offers to acquire one or more assets of any Casden Subsidiary and Casden's or any Casden Subsidiary's sale in response thereto, and conditions affecting generally the multi-family apartment property market or any of the markets in which Casden or any Casden Subsidiary operates shall not be deemed to be a Casden Material Adverse Effect and shall not be taken into account in determining the existence of a Casden Material Adverse Effect. "Casden Stock Plan" means the Casden Properties Inc. 1998 Stock Option Plan. "Casden Subsidiary" means (a) NAPICO, (b) Casden Properties Sub LLC, a Delaware limited liability company, (c) Casden Properties GP I LLC, a Delaware limited liability company, (d) Casden Properties GP I L.P., a Delaware limited partnership, (e) any limited liability company in which Casden or any Casden Subsidiary is a direct or indirect (including through attribution under the Code) manager or managing member, (f) any partnership of which Casden or any Casden Subsidiary is a direct or indirect (including through attribution under the Code) general partner and (g) any other Person with respect to which a majority of the voting power to elect directors or similar members of the governing body of such Person is directly or indirectly (including through attribution under the Code) held by Casden or a Casden Subsidiary, in each case with respect to clauses (b) through (g) above, other than the NAPICO Entities. "Casden Transfer Tax Amount" means $600,000. "Casden I Warrants" means warrants issued by Casden providing the holders thereof the right to purchase up to an aggregate of 14,298,997 shares of Casden Common Stock at an exercise price of $18.00 per share. "Casden II Warrants" means warrants issued by Casden providing the holders thereof the right to purchase up to an aggregate of 500,000 shares of Casden Common Stock at an exercise price of $19.80 per share. "Closing Agreement" means a written and legally binding agreement with a taxing authority relating to Taxes. "Contract" means any written contract, agreement, lease, obligation, note, bond, indenture, license, sublicense, promise or other instrument or undertaking that is legally binding. "Contribution Effective Date" shall have the meaning set forth in the OP Contribution Agreement. 8 "Core Properties" means, collectively, all of the properties identified on Exhibit O attached hereto. "Core Properties Earnout Amount" means an amount, not to exceed $26,000,000, equal to the quotient of (a) the positive difference, if any, between (i) the actual gross revenue attributable (in accordance with generally accepted accounting principles of accrual) to the Core Properties for the year 2001, minus (ii) $61,179,170, divided by (b) 0.085. "CPLB Merger Consideration" means (a) $1,000, and (b) 39.15% of the Deferred Consideration (consisting of 55.69% of the Deferred Consideration attributable to PLB). "Deferred Consideration" has the meaning set forth in the Tri-Party Agreement, provided that references in this Agreement to Deferred Consideration shall be deemed to refer to the net amount of Deferred Consideration payable to XYZ under the Tri-Party Agreement. "Dissenting Shares" means each share of Casden Capital Stock that is issued and outstanding immediately prior to the Effective Time and that is held by a stockholder who has properly exercised and perfected appraisal rights under Sections 3-203 through 3-213 of the MGCL. "Environmental Claim" means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, directives, claims, liens, investigations, proceedings or notices of noncompliance or violation (written or oral) by any Person (including any Governmental Authority) alleging potential liability (including potential responsibility for or liability for enforcement, investigatory costs, cleanup costs, governmental response costs, removal costs, remedial costs, natural resources damages, property damages, personal injuries or penalties) arising out of, based on or resulting from (A) the presence, Environmental Release or threatened Environmental Release into the environment of any Hazardous Materials at any location, whether or not owned, operated, leased or managed by Casden or any of the Casden Subsidiaries (for purposes of Section 4.9); or (B) circumstances forming the basis of any violation or alleged violation of any Environmental Law; or (C) any and all claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the presence or Environmental Release of any Hazardous Materials. "Environmental Laws" means all federal, state and local laws, rules and regulations relating to pollution, the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or protection of human health as it relates to the environment, including laws and regulations relating to Environmental Releases or threatened Environmental Releases of Hazardous Materials, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials. "Environmental Release" means any release, spill, emission, leaking, injection, deposit, disposal, discharge, dispersal, leaching or migration into the atmosphere, soil, surface water, groundwater or property. 9 "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any equivalent successor law, including the rules and regulations promulgated thereunder or under such successor law. "Hazardous Materials" means (A) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation and transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls; (B) any chemicals, materials or substances which are now defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants," or words of similar import under any Environmental Law and (C) any other chemical, material, substance or waste, exposure to which is now prohibited, limited or regulated under any Environmental Law in a jurisdiction in which Casden or any of the Casden Subsidiaries operates. "Holder" means a holder of one or more of (i) shares of Casden Capital Stock, (ii) options to acquire Casden Common Stock or (iii) the Casden I Warrants or Casden II Warrants. "Junior Preferred Liquidation Amount" means $10,015,250 plus accumulated and unpaid dividends to the Effective Time. "knowledge" of Casden, any Casden Subsidiary or any ERISA Affiliate of Casden or any Casden Subsidiary shall mean the actual knowledge of Alan I. Casden and Andrew J. Starrels or either of them, based on their actual knowledge of the day-to-day business and operations of Casden and the Casden Subsidiaries (other than NAPICO and the NAPICO Entities) and after (i) reviewing the responses to the questionnaires in the form attached hereto as Exhibit P-1 (the "Tax Questionnaires - Subsidiaries") sent to each manager and assistant manager of the Owned Properties and the Leased Properties and each regional supervisor employed by Casden and the Casden Subsidiaries (other than the NAPICO Entities) prior to the date hereof and (ii) conducting additional inquiries consisting solely of submitting questionnaires in the form attached hereto as Exhibit P-2 (the "General Questionnaires") and reviewing the responses to such General Questionnaires. With respect to NAPICO and the NAPICO Entities, the "knowledge" of Casden or any Casden Subsidiary or any ERISA Affiliate of Casden or any Casden Subsidiary shall mean the actual knowledge of Charles Boxenbaum and Bruce Nelson, or either of them, after (i) reviewing the responses to the questionnaires in the form attached hereto as Exhibit P-3 (the "Tax Questionnaires - NAPICO" and, together with the General Questionnaires and the Tax Questionnaires - Subsidiaries, the "Questionnaires") sent to the asset manager or property manager of each NAPICO Property and (ii) conducting additional inquiries consisting solely of submitting the General Questionnaires to the asset manager or property manager of each NAPICO Property and reviewing the responses to such General Questionnaires. The "knowledge" of AIMCO or any AIMCO Subsidiary shall mean the actual knowledge of Terry Considine and Peter Kompaniez, or either of them, except that with respect to property-related matters only, the "knowledge" of AIMCO shall mean the actual knowledge of Messrs. Considine and Kompaniez and Harry Alcock, or any of them. "Latest Casden Financial Statements" means, as of any date, the Casden Financial Statements or, if Casden has delivered to AIMCO, pursuant to Section 7.1, any financial 10 statements in respect of a fiscal quarter subsequent to June 30, 2001, the financial statements so delivered that relate to the most recently completed fiscal quarter of Casden and its subsidiaries. "Latest Casden Pro Forma Financial Information" means, as of any date, the Casden Pro Forma Financial Information or, if Casden has delivered to AIMCO, pursuant to Section 7.1, any financial statements in respect of a fiscal quarter subsequent to June 30, 2001, pro forma schedules that present fairly, in all material respects, the financial position of Casden and its subsidiaries, on a consolidated basis, as of the last day of such fiscal quarter, and the results of operations of Casden and its subsidiaries, on a consolidated basis, for the interim period then ended, in each case, after giving effect to the Commercial Sale, the Ross Store Sale, the Asset Purchase and the other transactions and adjustments disclosed in the Casden Pro Forma Financial Information. "Mortgage Debt Amortization" means the amount of normal amortization of Casden mortgage debt set forth on Schedule 2.1(b) hereto through the Effective Time, the exact amount of which Casden shall provide AIMCO written notice at least five (5) business days prior to the Effective Time. "NYSE" means the New York Stock Exchange, Inc. "OP Contribution Consideration" means (a) a number of Partnership Common Units of AIMCO OP equal to (i) $27,148,000, as reduced by the applicable pro rata share of the shortfall of the Villa Azure Earnout Amount and the shortfall of the Core Properties Earnout Amount and increased by the applicable pro rata share of the Mortgage Debt Amortization, divided by the AIMCO Common Stock Price, and (b) 11.92% of the Deferred Consideration (as further allocated in the OP Contribution Agreement). "Other Common Per Share Consideration" means 2.23% of the REIT Common Consideration divided by the AIMCO Common Stock Price divided by the number of shares of Other Common Stock outstanding as of the Effective Time. "Other Common Stock" means shares of Casden Common Stock other than the shares of AIC Common Stock. "Per Share Casden Junior Preferred Liquidation Amount" means the Junior Preferred Liquidation Amount divided by the number of shares of Casden Junior Preferred Stock outstanding as of the Effective Time. "Person" means any natural person, corporation, general or limited partnership, limited liability company, joint venture, trust, association or entity of any kind. "Registration Statement" means the Registration Statement on Form S-3 to be filed by AIMCO with respect to the AIMCO Common Stock issued in the Merger. "REIT Cash Consideration" means $205,418,000, minus (a) the aggregate Option Settlement Amount (as defined in Section 2.2(c) hereof), minus (b) the Casden Transfer Tax Amount, minus (c) the Additional Tax Liabilities, and minus (d) the amounts set forth on Schedule 2.1(a). 11 "REIT Common Consideration" means $108,049,000, as reduced by the applicable pro rata share of the shortfall of the Villa Azure Earnout Amount and the shortfall of the Core Properties Earnout Amount and increased by the applicable pro rata share of the Mortgage Debt Amortization. "REIT Common Deferred Consideration" means 0.58% of the Deferred Consideration (consisting of 0.48% of the Deferred Consideration attributable to PLB and 0.81% of the Deferred Consideration attributable to Westwood), provided that pursuant to the XYZ Agreement, the recipients of REIT Common Deferred Consideration will have no indemnification obligations to XYZ or AIMCO under the XYZ Agreement or the Master Indemnification Agreement, unlike AIC and holders of Casden Class A Preferred Stock. "REIT Merger Consideration" means the REIT Common Consideration, the REIT Common Deferred Consideration and the REIT Preferred Consideration. "REIT Preferred Consideration" means (a) a number of shares of AIMCO Common Stock equal to $60,630,000, divided by the AIMCO Common Stock Price, (b) cash in an amount equal to the REIT Cash Consideration, and (c) 39.79% of the Deferred Consideration (consisting of 32.45% of the Deferred Consideration attributable to PLB and 57.16% of the Deferred Consideration attributable to Westwood), and, with respect to clauses (a) and (b) above, as reduced by the applicable pro rata share of the shortfall of the Villa Azure Earnout Amount and the shortfall of the Core Properties Earnout Amount and increased by the applicable pro rata share of the Mortgage Debt Amortization. "Related Transaction Documents" means all the documents listed as Exhibits hereto, and all exhibits and schedules attached thereto. "Related Transactions" means, collectively, the OP Contribution, the Casden Contribution, the Commercial Sale, the CPLB Merger, the Joint Venture, the Mezzanine Loan, the Ross Store Sale, the Asset Purchase, the payments contemplated by the Villa Azure Letter Agreement and the other transactions contemplated by the Related Transaction Documents. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, or any equivalent successor law, including the rules and regulations promulgated thereunder or under such successor law. "Subsidiary" of a Person (other than Casden or AIMCO) means (a) any limited liability company in which such Person or any Subsidiary of such Person is a direct or indirect (including through attribution under the Code) manager or managing member, (b) any partnership in which such Person or any Subsidiary of such Person is a direct or indirect general partner and (c) any other Person with respect to which a majority of the voting power represented by the outstanding shares of capital stock or other voting securities or interests (including general partner interests) having voting power under ordinary circumstances to elect directors or similar members of the governing body of such corporation or entity shall at the time be held, directly or indirectly, by such Person or any Subsidiary of such Person. 12 "Taxes" means any federal, state, county, local or foreign taxes, charges, fees, levies or other assessments, including all net income, gross income, sales and use, ad valorem, transfer, gains, profits, excise, franchise, real and personal property, gross receipt, capital stock, share, production, business and occupation, disability, employment, payroll, license, estimated, stamp, custom duties, severance or withholding taxes or charges imposed by any governmental entity, and includes any interest and penalties (civil or criminal) on or additions to any such Taxes. "Tax Return" means a report, return or other information required to be supplied to a governmental entity with respect to Taxes, including, where permitted or required, combined or consolidated returns for any group of entities that includes Casden or any Casden Subsidiary, or AIMCO or any AIMCO Subsidiary, as the case may be. "Tax Ruling" means a written ruling of a taxing authority relating to Taxes. "Transaction Documents" means, collectively, this Agreement and the Related Transaction Documents. "Transactions" means, collectively, the Merger and the Related Transactions. "Villa Azure Earnout Amount" means an amount, not to exceed $10,000,000, equal to the quotient of (a) the positive difference, if any, between (i) the product of the revenue reflected on the rent roll for the Villa Azure Property as of January 1, 2002 (including any amounts actually paid pursuant to the terms of the Villa Azure Letter Agreement), multiplied by twelve, minus (ii) $12,595,787, divided by (b) 0.085. "Villa Azure Property" means that certain real property located at 5700 W. Centinela Avenue, Los Angeles, California, and commonly known as "Villa Azure." "WARN Act" means the Workers Adjustment and Retraining Notification Act of 1988, 29 U.S.C. Section 2101 et seq. "XYZ Agreement" means the limited liability company agreement of XYZ, as such agreement may be amended from time to time. Section 2.2 EFFECT OF THE MERGER ON SHARES. (a) CONVERSION OF CAPITAL STOCK OF CASDEN. Subject to Section 2.3, as of the Effective Time, by virtue of the Merger and without any action on the part of any person or the holder of any shares of Casden Capital Stock, each issued and outstanding share of Casden Capital Stock, other than shares of Casden Capital Stock (i) to be cancelled pursuant to Section 2.2(b)(ii) or (ii) as to which appraisal rights are perfected under Sections 3-203 through 3-213 of the MGCL, shall be converted as follows: (i) with respect to each share of Casden Common Stock and subject to Section 2.2(d): 13 (A) for each such share of AIC Common Stock the right to receive that number of fully paid and non-assessable shares of AIMCO Common Stock equal to the AIC Common Per Share Consideration. (B) for each share of Other Common Stock the right to receive (1) the number of fully paid and non-assessable shares of AIMCO Common Stock equal to the Other Per Share Common Consideration and (2) the REIT Common Deferred Consideration divided by the number of shares of Other Common Stock outstanding as of the Effective Time. (ii) with respect to each share of Casden Class A Preferred Stock, the right to receive the REIT Preferred Consideration, divided by the number of shares of Casden Class A Preferred Stock outstanding as of the Effective Time, provided, that cash payable pursuant to Section 2.2(a)(ii) shall be paid in shares of AIMCO Common Stock to the extent required under Section 2.2(d); (iii) with respect to each share of Casden Junior Preferred Stock, the right to receive the Per Share Casden Junior Preferred Liquidation Amount; (iv) notwithstanding Section 2.2(a)(i), with respect to each share of Casden Common Stock held by a Person that AIMCO reasonably believes may not be an accredited investor (as defined in Rule 501(a) of the Securities Act), the right to receive cash in an amount equal to the Other Common Per Share Consideration; and (v) it shall be a condition to the receipt of any Deferred Consideration pursuant to the Merger that the holder of a share of Casden Capital Stock shall have agreed (A) to be bound by the XYZ Agreement, (B) to contribute such interest in Deferred Consideration to XYZ in accordance with the terms of the XYZ Agreement and (B) that any Deferred Consideration shall be paid to a holder of Casden Capital Stock solely pursuant to and in accordance with the provisions of the XYZ Agreement. (b) CANCELLATION OF CASDEN CAPITAL STOCK. (i) As of the Effective Time, all such shares of Casden Capital Stock (other than shares to be cancelled pursuant to Section 2.2(b)(ii)) shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a Certificate (as defined in Section 2.3(b)) formerly representing any such shares shall cease to have any rights with respect to such shares, except the right to receive the REIT Merger Consideration in accordance with Section 2.2(a), and cash in lieu of fractional shares and dividends and other distributions in accordance with Section 2.3(c) and Section 2.3(d). (ii) As of the Effective Time, by virtue of the Merger and without any action on the part of any person or any holder of any Casden Capital Stock, all shares of Casden Capital Stock that are (x) beneficially owned by Casden or any wholly-owned Subsidiary of Casden or (y) owned by AIMCO or any wholly owned subsidiary of AIMCO shall be canceled and retired and shall cease to exist and no REIT Merger Consideration or other consideration shall be issued or delivered in exchange therefor. 14 (c) STOCK OPTIONS. Section 2.2(c) of the Casden Disclosure Letter sets forth the options granted under the Casden Stock Plan, the dates on which options under the plan were granted, name of the optionee for each such grant, the number of options granted on each such date, the exercise price thereof, and the vesting schedule thereof. Pursuant to Section 10 of the Casden Stock Plan, upon notice from the Board (as defined in the Casden Stock Plan) of the pendency of the Merger, each unexpired and unexercised option to purchase a share of Casden Common Stock granted under the Casden Stock Plan (each, a "Casden Option") will become exercisable in full for a period of thirty (30) days following the delivery of such notice. AIC shall exercise his Casden Options prior to the Effective Time on a net exercise basis. Immediately prior to the expiration of such thirty (30) day period, each holder of an unexercised Casden Option shall be entitled to receive from Casden in cancellation thereof a payment (subject to applicable withholding taxes) in an amount equal to (i) the excess, if any, of $21.66, over the per share exercise price of such Casden Option, multiplied by the number of unexercised shares of Casden Common Stock subject to such Casden Option (the "Option Settlement Amount"). The aggregate Option Settlement Amount in respect of each Casden Option shall be paid by AIMCO in cash to such option holder concurrently with the Closing. The surrender of a Casden Option shall be deemed a release of any and all rights the holder had or may have in respect of such option. (d) ADJUSTMENT TO CONSIDERATION. Subject to Section 2.2(f) below, if the Non-Equity Ratio is equal to or greater than 60%, first, cash payable pursuant to Section 2.2(a)(ii) shall be converted (on a pro rata basis among all holders of Casden Class A Preferred Stock) into the right to receive shares of AIMCO Common Stock at a value equal to the Common Per Share Value in lieu of cash, second, the Deferred Consideration payable in cash pursuant to Section 2.2(a)(i)(B)(2) shall be converted (on a pro rata basis among all holders of Other Common Stock) into the right to receive shares of AIMCO Common Stock at a value equal to the Common Per Share Value in lieu of cash, third, the Deferred Consideration payable in cash pursuant to Section 2.2(a)(ii) shall be converted (on a pro rata basis among all holders of Casden Class A Preferred Stock) into the right to receive the shares of AIMCO Common Stock at a value equal to the Common Per Share Value in lieu of cash, and fourth, any other amounts payable in cash to the holders of Casden Capital Stock pursuant to this Agreement shall be converted into the right to receive shares of AIMCO Common Stock at a value equal to the Common Per Share Value in lieu of cash, in amounts sufficient to cause the Non-Equity Ratio to be less than 60%; provided, that, the aggregate consideration payable pursuant to this Agreement shall not be increased or decreased as a result of any such adjustment. The "Non-Equity Ratio" shall equal the Non-Equity Consideration divided by the Total Consideration. The "Non-Equity Consideration" shall equal the aggregate of (A) the aggregate amount of cash payable pursuant to Section 2.2(a)(ii) (other than Deferred Consideration), (B) the aggregate amount of cash payable pursuant to Section 2.2(a)(iii), (C) the maximum amount of the portion of the Deferred Consideration payable in cash pursuant to the Tri-Party Agreement into which Casden Capital Stock was converted into the right to receive pursuant to Section 2.2(a), (D) the aggregate amount payable pursuant to Section 2.3(d) in lieu of fractional shares, (E) the aggregate amount payable in respect of Dissenting Shares, (F) the aggregate amount of cash paid pursuant to the Casden Reverse Stock Split, (G) the aggregate amount of cash payable pursuant to Section 2.2(a)(iv), and (H) any amount described in Treasury Reg. Section 1.368-1(e)(ii). The "Total Consideration" shall equal the aggregate of the Non-Equity Consideration and the Equity Consideration. The "Equity Consideration" shall equal the aggregate of the product of (x) the 15 Common Per Share Value of AIMCO Common Stock and (y) the number of shares of AIMCO Common Stock to be issued pursuant to Section 2.2(a). The "Common Per Share Value" shall equal the lower of (i) the mean between the highest and lowest quoted selling prices on the NYSE of a share of AIMCO Common Stock on the Closing Date and (ii) the price at which the last trade was made on the Closing Date. (e) CASDEN I AND II WARRANTS. At the Effective Time, each then outstanding, unexercised Casden I Warrant and Casden II Warrant which has been amended pursuant to Section 7.28 shall, in accordance with its terms, as amended, and by virtue of this Agreement and without any further action of Casden, AIMCO or the holder of such warrant, terminate. (f) TAXABLE ELECTION. In the event that on the third NYSE trading day prior to the anticipated Closing Date (the "Test Date") the Common Per Share Value of AIMCO Common Stock is such that if the Closing were to occur on the Test Date the provisions of Section 2.2(d) would require an adjustment to the consideration otherwise payable under Section 2.2(a), then Casden shall have the right to elect, in its sole discretion (or, alternatively, AIC in his sole discretion), to restructure the Merger as a reverse subsidiary merger. In the event Casden or AIC notifies AIMCO in writing, not later than the day following the Test Date, that it or he has determined to make the election permitted by this Section 2.2(f) (a "Taxable Election"), AIMCO shall form a new, wholly-owned subsidiary corporation ("New Merger Sub") solely for the purpose of merging into Casden, and the following provisions will apply: (i) the Merger will be effected by the merger of New Merger Sub with and into Casden in accordance with the laws of the State of Maryland, with Casden as the surviving corporation; (ii) all references to the term "Merger" shall be deemed references to the merger contemplated by this Section 2.2(f); (iii) all references to the term "Surviving Corporation" shall be deemed references to Casden; (iv) at the Effective Time, the charter and bylaws of New Merger Sub, as in effect immediately prior to the Effective Time, shall be the Charter and bylaws, respectively, of the surviving corporation and the directors and officers of New Merger Sub shall be the directors and officers of the surviving corporation; (v) the provisions of Section 2.2(d) shall have no further force and effect, and in the Merger each holder of Casden Capital Stock will receive the consideration such holder would have received pursuant to Section 2.2 without application of Section 2.2(d); (vi) the covenants set forth in Section 7.19 and the condition set forth in Section 8.3(d) shall thereafter cease to apply; and (vii) except as expressly provided in this Section 2.2(f), all terms, conditions and provisions of this Agreement shall remain in full force and effect; provided, however, that in the event the Common Per Share Value is less than $36 on the Test Date, a Taxable Election shall automatically, and without any action of any party hereto, be deemed to have been made. The parties shall cooperate to implement such reverse subsidiary merger structure in the event a Taxable Election is made (or is deemed to have been made pursuant to the immediately preceding sentence). If a Taxable Election is made pursuant to this Section 2.2(f), the parties hereto covenant and agree that the transaction effected pursuant to this Agreement shall be treated by the parties as a sale of the shares of Casden acquired by AIMCO hereunder for all income tax purposes and that the parties shall treat such transaction consistent therewith on all income tax returns and filings. No election provided under Section 338 of the Code shall be made with respect to this transaction without the prior written consent of all the shareholders of Casden prior to the Merger. 16 (g) CONSIDERATION ALLOCATION. Notwithstanding any provision in this Agreement or in any Related Transaction Documents to the contrary, at any time prior to the Effective Time, Casden may modify the allocation of the Aggregate Consideration among the REIT Common Consideration, the REIT Common Deferred Consideration, the REIT Preferred Consideration, the OP Contribution Consideration, the CPLB Merger Consideration and the Casden Contribution Consideration, and may reallocate the REIT Merger Consideration among and with respect to all recipients thereof, and may in connection therewith adjust the deemed $21.66 in Section 2.2(c), by giving written notice of such revised allocation(s) to AIMCO without the consent or approval of any Casden stockholder or any other party hereto, provided however that (i) neither the Aggregate Consideration nor the aggregate amount of Deferred Consideration may be increased, (ii) Casden may not modify the allocation of the Aggregate Consideration in any way that increases the aggregate number of shares of AIMCO Common Stock and AIMCO OP Units to be issued in the Transactions without the prior written consent of AIMCO and (iii) Casden may not modify the Aggregate Consideration without appropriate approval of the board of directors and independent directors of Casden. At least three (3) business days before the Effective Time, Casden shall provide AIMCO with written notice of its determination of its allocation in respect of the Villa Azure Earnout Amount, Core Properties Earnout Amount and Mortgage Debt Amortization. Section 2.3 PAYMENT OF MERGER CONSIDERATION. (a) EXCHANGE FUND. As promptly as practicable after the Effective Time, AIMCO shall hold, in trust for the benefit of holders of Certificates, cash in an amount sufficient to pay the aggregate cash portion of the REIT Merger Consideration plus the option payout and warrant payout amounts and (ii) the cash payable in respect of fractional shares pursuant to Section 2.3(d) (collectively, the "Exchange Fund"). The Exchange Fund shall not be used for any other purpose. (b) PAYMENT PROCEDURES. (i) Prior to the Effective Time, AIMCO (or any agent or agents appointed by AIMCO) shall deliver to each holder of record (identified on Schedule 4.2(c) of the Casden Disclosure Letter) of a certificate or certificates (a "Certificate" or the "Certificates") which immediately prior to the Effective Time will represent outstanding shares of Casden Capital Stock (the "Canceled Shares") that will be canceled and become instead a portion of the Closing Merger Consideration pursuant to Section 2.2(a): (w) an investor representation letter in the form attached hereto as Exhibit T, (x) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon actual delivery of the Certificates to AIMCO), and (y) instructions for use in effecting the surrender of the Certificates in exchange for that portion of the REIT Merger Consideration payable with respect to such shares. Casden hereby acknowledges that AIMCO shall rely solely on Section 4.2(c) of the Casden Disclosure Letter as to the holders of record to whom the foregoing should be delivered. (ii) Upon surrender of a Certificate to AIMCO for cancellation (or to such agent or agents as may be appointed by AIMCO), together with a duly executed letter of transmittal and a duly executed certificate of non-foreign status in the form attached hereto as 17 Exhibit Q-1 or Exhibit Q-2, the holder of such Certificate shall be entitled to receive with respect to the shares of Casden Capital Stock formerly represented thereby (in addition to any Deferred Consideration to which such holder may be entitled under the Tri-Party Agreement, if applicable), (A) a certificate or certificates representing that number of whole shares of AIMCO Common Stock into which such holder's Casden Capital Stock was converted pursuant to the provisions of Section 2.2, (B) the amount of cash which such holder is entitled to receive pursuant to Section 2.2 and (C) cash in lieu of fractional shares which such holder is entitled to receive pursuant to Section 2.3(d). (iii) In the event of a transfer of ownership of Canceled Shares which is not registered in the transfer records of Casden, that portion of the REIT Merger Consideration into which such holder's Casden Capital Stock was converted in the Merger may be issued to a transferee if the Certificate representing such Canceled Shares is surrendered to AIMCO, accompanied by all documents required to evidence and effect such transfer and by evidence satisfactory to AIMCO that any applicable share transfer taxes have been paid. Until surrendered as contemplated by this Section 2.3(b) or as otherwise provided in Section 2.3(e), each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender a portion of the REIT Merger Consideration. (iv) Notwithstanding the foregoing, with respect to any holder of a Certificate who presents any Certificate to AIMCO on or prior to the Closing Date, together with a duly executed letter of transmittal and such other documents as AIMCO shall reasonably require, AIMCO shall deliver to such holder, on the Closing Date, all of that portion of the REIT Merger Consideration to which such holder is entitled with respect to such Certificate. (c) DISTRIBUTIONS WITH RESPECT TO SHARES. Notwithstanding any other provision of this Agreement, all dividends or other distributions declared or made after the Effective Time with respect to shares of AIMCO Common Stock with a record date after the Effective Time shall be paid into an escrow account for the benefit of the holder of any unsurrendered Certificate with respect to the shares of AIMCO Common Stock represented thereby, and no cash amount or cash payment in lieu of fractional shares shall be paid to any such holder until the holder of such Certificate shall surrender such Certificate, at which time all proceeds in escrow for the benefit of such surrendering holder shall be released to such surrendering holder as though such shares of AIMCO Common Stock had been issued and outstanding at the Effective Time. Subject to the effect of unclaimed property, escheat and other applicable laws, following surrender of any such Certificate, there shall be paid to the holder of the certificates representing whole shares of AIMCO Common Stock issued in consideration therefor, without interest, (i) at the time of such surrender, the applicable cash amount payable pursuant to Section 2.2(a), any cash payable in lieu of fractional shares to which such holder is entitled pursuant to Section 2.3(d) and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid into escrow with respect to such whole shares of AIMCO Common Stock 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 AIMCO Common Stock. 18 (d) NO FRACTIONAL SHARES. No scrip representing fractional shares of AIMCO Common Stock shall be issued in the Merger and no dividend or other distribution, stock split or interest shall relate to any such fractional share, and such fractional share shall not entitle the owner thereof to any voting or other rights of a stockholder of AIMCO. In lieu of any fractional share of AIMCO Common Stock to which a holder of Casden Capital Stock would otherwise be entitled, upon surrender of a Certificate representing Casden Capital Stock as described in this Section, such holder shall be paid an amount in cash (without interest) equal to the product of (i) the AIMCO Common Stock Price multiplied by (ii) the fraction of a share of AIMCO Common Stock to which such holder would otherwise be entitled. AIMCO shall make available to AIMCO the amount of cash necessary to make such payments without regard to any other cash being provided to AIMCO. (e) BOOK ENTRY. Notwithstanding any other provision of this Agreement, the letter of transmittal referred to in Section 2.3(b) may, at the option of AIMCO, provide for the right of a holder of one or more Certificates to elect that any shares of AIMCO Common Stock into which such holder's AIMCO Common Stock was converted in the Merger be in uncertificated form. (f) CLOSING OF TRANSFER BOOKS; ETC. From and after the Effective Time, the Casden stock transfer books shall be closed and no registration of any transfer of any capital stock of Casden shall thereafter be made on the Casden stock transfer books. If Certificates are presented to AIMCO after the Effective Time they shall be canceled and exchanged for (i) certificates representing the appropriate number of shares of AIMCO Common Stock, (ii) the applicable cash amount payable pursuant to Section 2.2(a), and (iii) cash in lieu of fractional shares and dividends and other distributions, as provided in Sections 2.3(c) and 2.3(d). Shares of AIMCO Common Stock into which Canceled Shares are converted in the Merger shall be outstanding as of the Effective Time. AIMCO shall cause all such shares of AIMCO Common Stock to be duly authorized, validly issued, fully paid and non-assessable and not subject to preemptive rights. In the event any Certificate(s) shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate(s) to be lost, stolen or destroyed and, if reasonably required by AIMCO, upon the provision by such Person of an unsecured indemnity against any claim that may be made against AIMCO with respect to such Certificate(s), AIMCO will deliver in respect of such lost, stolen or destroyed Certificate(s), a certificate representing the AIMCO Common Stock into which the shares of Casden Common Stock represented by such lost, stolen or destroyed Certificate(s) were converted in the Merger and the applicable cash amount payable pursuant to Section 2.2(a) and cash in lieu of fractional shares in accordance with Section 2.3(d) and such Person shall be entitled to the voting, dividend and other distribution rights provided herein with respect thereto. (g) TERMINATION OF EXCHANGE FUND. All unclaimed cash in the Exchange Fund on the first anniversary of the Effective Time shall be retained by AIMCO, and thereafter, any holder of unsurrendered Certificates shall look only to AIMCO for payment of such funds and the delivery of certificates representing shares of AIMCO Common Stock to which such holder may be due, subject to applicable law as described in the following sentence. AIMCO shall not be liable to any Person for such shares or funds delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. 19 Section 2.4 APPRAISAL RIGHTS. Notwithstanding anything to the contrary in this Agreement, Dissenting Shares shall not be converted into or exchangeable for the right to receive any portion of the REIT Merger Consideration, but shall be entitled to receive cash consideration as shall be determined pursuant to Sections 3-203 through 3-213 of the MGCL; provided, however, that if a holder of Casden Common Stock or Casden Class A Preferred Stock fails to perfect or effectively withdraws or loses the right to appraisal and payment under the MGCL, each share of such Casden Capital Stock of such holder shall thereupon be deemed to have been converted into and become exchangeable for, as of the Effective Time, the right to receive any portion of the REIT Merger Consideration, assuming that such shares were shares of Other Common Stock, and such shares shall no longer be Dissenting Shares. Casden shall give prompt notice to AIMCO of any written demands received by Casden for appraisal of Casden Common Stock or Casden Class A Preferred Stock and any objections to the Merger received prior to the Merger and AIMCO shall have the right to participate in all negotiations with respect to such demands or objections. ARTICLE III THE CLOSING Section 3.1 CLOSING. The closing of the Merger (the "Closing") shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 300 South Grand Avenue, Suite 3400, Los Angeles, California 90071 at 10:00 A.M., local time, on January 31, 2002 or earlier following the third NYSE trading day immediately following the date on which the last of the conditions set forth in Article VIII hereof is fulfilled or has been waived or at such other time, date and place as AIMCO and Casden shall mutually agree (the "Closing Date"); provided, however, that in the event the Closing does not occur on or before December 31, 2001, AIMCO and Casden shall determine a mutually agreeable Closing Date that would not adversely affect Casden's REIT status for the taxable year ending on the Closing Date. The parties shall use commercially reasonable efforts to close on or prior to January 31, 2002. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CASDEN Casden makes the following representations and warranties to AIMCO. Except as set forth in the disclosure letter from Casden to AIMCO dated the date hereof (the "Casden Disclosure Letter"): Section 4.1 ORGANIZATION AND QUALIFICATION; ASSETS. (a) CASDEN. Casden is a corporation duly formed, validly existing and in good standing under the laws of the State of Maryland. Casden is duly qualified and in good standing as a foreign corporation under the laws of each jurisdiction where such qualification is required, other than in such jurisdictions where the failure to so qualify would not reasonably be expected to have a Casden Material Adverse Effect, has all requisite corporate power and authority, and has been duly authorized by all necessary approvals and orders to own, lease and operate its assets and properties to the extent owned, leased and operated and to carry on its 20 business as it is now being conducted. Each outstanding share of capital stock of Casden has been validly issued free of preemptive rights, and is fully paid and non-assessable. Casden has furnished to AIMCO true and complete copies of Casden's charter (the "Casden Charter") and Casden's bylaws, each as currently in effect. (b) CASDEN OP. Casden OP is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware. As of the date hereof, the sole general partner of Casden OP is Casden, and the limited partners of Casden OP are set forth in Section 4.1(b)(i) of the Casden Disclosure Letter. Other than as set forth in Section 4.1(b)(ii) of the Casden Disclosure Letter, Casden OP is not the record owner of more than 10% of any class of voting securities of any Person other than a Casden Subsidiary. Casden OP is duly qualified and in good standing as a foreign entity under the laws of each jurisdiction where such qualification is required, other than in such jurisdictions where the failure to so qualify would not reasonably be expected to have a Casden Material Adverse Effect. Casden OP has all requisite partnership power and authority, and has been duly authorized by all necessary approvals and orders to own, lease and operate its assets and properties to the extent owned, leased and operated and to carry on its business as it is now being conducted. Except as set forth in Section 4.1(b)(iii) of the Casden Disclosure Letter and in the Amended and Restated Agreement of Limited Partnership of Casden OP, each partnership interest in Casden OP has been validly issued free of preemptive rights, and is fully paid and non-assessable, and each partnership interest in Casden OP owned by Casden or any Casden Subsidiary is owned free and clear of any pledges, claims, liens, charges, encumbrances and security interests of any kind or nature whatsoever (collectively, "Liens"). Casden has furnished to AIMCO true and complete copies of the Amended and Restated Agreement of Limited Partnership of Casden OP (a copy of which is attached in Section 4.1(b) of the Casden Disclosure Letter) which is the partnership agreement of Casden OP in effect on the date of this Agreement. (c) CASDEN SUBSIDIARIES. Section 4.1(c)(i) of the Casden Disclosure Letter sets forth (i) each Casden Subsidiary, (ii) the ownership interest therein of Casden or a Casden Subsidiary, (iii) if not wholly-owned by Casden or a Casden Subsidiary, to the extent known by Casden, the identity and ownership interest of each of the other owners of such Casden Subsidiary and (iv) the Federal Tax status of each Casden Subsidiary as a corporation, "Taxable REIT Subsidiary" of Casden (within the meaning of Section 856(l) of the Code), "Qualified REIT Subsidiary" of Casden (within the meaning of Section 856(i)(2) of the Code), partnership, or disregarded entity. Section 4.1(c)(ii) of the Casden Disclosure Letter contains a complete and accurate organizational chart of Casden and the Casden Subsidiaries. (d) OWNERSHIP OF CASDEN SUBSIDIARIES. Except as set forth in Section 4.1(d) of the Casden Disclosure Letter, (i) all outstanding shares of capital stock of each Casden Subsidiary that is a corporation have been validly issued and are (A) fully paid and non-assessable, (B) owned by Casden or by a Casden Subsidiary and (C) in the case of any capital stock owned by Casden or a Casden Subsidiary, owned free and clear of all Liens and (ii) all equity interests in each Casden Subsidiary that is a partnership, joint venture, limited liability company or trust have been validly issued and all equity interests in each Casden Subsidiary which are owned by Casden or a Casden Subsidiary are owned free and clear of all Liens. Each Casden Subsidiary that is a corporation is duly incorporated and validly existing under the laws of its jurisdiction of incorporation and has the requisite corporate power and authority to carry on 21 its business as now being conducted, and each Casden Subsidiary that is a partnership, limited liability company or trust is duly organized and validly existing under the laws of its jurisdiction of organization and has the requisite power and authority to carry on its business as now being conducted. Each Casden Subsidiary is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed, individually or in the aggregate, would not reasonably be expected to have a Casden Material Adverse Effect. Copies of the charter and bylaws or similar organizational and governing documents and copies of the partnership, joint venture and operating agreements of each Casden Subsidiary, each as amended to the date of this Agreement, previously have been delivered or made available to AIMCO. (e) NAPICO ENTITIES. Section 4.1(e) of the Casden Disclosure Letter sets forth, as of November 1, 2001, the name and state of organization of, and ownership interest in, each Person of which National Partnership Investments Corp. ("NAPICO") or one of its Subsidiaries is a direct or indirect general partner (other than any Person (i) in which NAPICO is an administrative general partner and does not control the day-to-day operations of such Person, (ii) which does not operate, has not operated, and will not operate prior to the Closing Date, a "lodging facility" or "health care facility" within the meaning of Section 856(1)(4)(A) and 856(1)(4)(B) of the Code, respectively, and (iii) that does not license, has not licensed, and will not license prior to the Closing Date, rights to any brand name under which any such lodging facility or health care facility is operated), each wholly-owned corporate subsidiary of NAPICO or one of its Subsidiaries and each limited liability company in which NAPICO or one of its Subsidiaries is the direct or indirect managing member (collectively, the "NAPICO Entities"). The ownership interests of NAPICO and its Subsidiaries in each NAPICO Entity are owned by NAPICO or its Subsidiaries free and clear of all Liens (other than Liens described in Section 4.1(b) of the Casden Disclosure Letter). Each of the NAPICO Entities is an entity validly existing and in good standing under the laws of the jurisdiction of its organization and is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed, individually or in the aggregate, would not reasonably be expected to have a Casden Material Adverse Effect. To Casden's knowledge, all outstanding ownership interests in the NAPICO Entities and each Person in which the NAPICO Entities hold an ownership interest have been validly issued. Copies of the organizational and governing documents of each NAPICO Entity, as amended to the date of this Agreement, have been previously delivered or made available to AIMCO. (f) COMMERCIAL PROPERTIES. The Commercial Properties and the Commercial Debt to be assumed by CommercialCo, in the Commercial Sale are not used in and do not relate to the multi-family apartment business of Casden or any Casden Subsidiary (except to the extent such Commercial Properties are used by Casden or any Casden Subsidiary pursuant to a commercial lease for all or a portion of such Commercial Property), and such assets and liabilities will not be assets or liabilities of Casden or any Casden Subsidiary at the Effective Time, nor will title to such Commercial Properties directly or indirectly pass to AIMCO or any Affiliate of AIMCO in connection with the Merger. 22 (g) RESIDENTIAL PROPERTIES. As a result of the Merger, and assuming the receipt of all AIMCO Statutory Approvals and Casden Statutory Approvals, AIMCO will succeed to all of the assets of Casden relating to the multifamily apartment business of Casden and the Casden Subsidiaries, other than the Development LLC Assets and the Commercial Properties. Section 4.2 CAPITALIZATION. (a) CASDEN. The authorized shares of Casden Capital Stock consist of (i) 150,000,000 shares of Casden Common Stock; (ii) 15,000,000 shares of Casden Class A Preferred Stock; (iii) 424,000 shares of Casden Junior Preferred Stock and (iv) 84,576,000 shares of Preferred Stock, par value $0.01 per share. As of the date hereof, (A) 5,397,197 shares of Casden Common Stock were issued and outstanding, of which no shares of Casden Common Stock were held by Casden's wholly-owned Subsidiaries; (B) 2,000,000 shares of Casden Common Stock were reserved for issuance under the Casden Stock Plan, under which options to acquire 1,642,800 shares of Casden Common Stock have been granted and are outstanding; (C) 14,298,997 shares of Casden Common Stock were reserved for issuance upon exercise of the Casden I Warrants; (D) 500,000 shares of Casden Common Stock were reserved for issuance upon exercise of the Casden II Warrants; (E) 10,295,272 shares of Casden Class A Preferred Stock were issued and outstanding; (F) 400,610 shares of Casden Junior Preferred Stock were issued and outstanding; and (G) no bonds, debentures, notes or other indebtedness having the right to vote (or convertible into securities having the right to vote) on any matters on which stockholders may vote ("Voting Debt"), were issued or outstanding. Except as set forth in the preceding sentence above, in Section 4.2(b) below, in Section 4.2 of the Casden Disclosure Letter or pursuant to this Agreement, there are no securities, options, warrants, calls, rights, commitments or agreements of any character to which Casden or any Casden Subsidiary is a party or by which any of them are bound obligating Casden or any Casden Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of Casden or any Voting Debt of Casden or any Casden Subsidiary or obligating Casden or any Casden Subsidiary to grant, extend or enter into any such option, warrant, call, right, commitment or agreement. (b) CASDEN OP. The issued and outstanding Casden OPUs consist of (i) 10,295,272 Class A limited partnership units; (ii) 1,110,183 Class B restricted limited partnership units; (iii) 577,886 Junior limited partnership units; and (iv) 7,657,223 common limited partnership units and no other Casden OPUs are issued and outstanding. Except as set forth in Section 4.2(b) of the Casden Disclosure Letter, there are no securities, outstanding subscriptions, calls, options, contracts, voting trusts, proxies or other commitments, understandings, restrictions, arrangements, rights or warrants, including any right of conversion or exchange under any outstanding security, instrument or other agreement to which Casden OP is a party or by which it is bound obligating Casden OP to issue, deliver or sell, or cause to be issued, delivered or sold, additional partnership units or Voting Debt of Casden OP or obligating Casden OP to grant, extend or enter into any such option, warrant, call, right, commitment or agreement, other than rights to receive further vesting of up to 48,264 Class B restricted limited partnership units pursuant to the award agreements set forth in Section 4.2(b) of the Casden Disclosure Letter. 23 (c) Section 4.2(c) of the Casden Disclosure Letter sets forth a complete and accurate list of all of the holders of record of the Casden Capital Stock and the number of shares held by each such holder (i) as of the date hereof and (ii) after giving effect to the Casden Reverse Stock Split. (d) Section 4.2(d) of the Casden Disclosure Letter sets forth a complete and accurate list of all of the holders of record of Casden OPUs and the number of units held by each such holder. Section 4.3 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS; COMPLIANCE. (a) AUTHORITY. Casden has all requisite corporate power and authority to execute and deliver this Agreement and, subject to the receipt of the applicable Casden Stockholders' Approval (as defined in Section 4.10) and the applicable Casden Required Statutory Approvals (as defined in Section 4.3(c)), to consummate the Transactions. The execution and delivery of this Agreement and the consummation by Casden of the Transactions have been duly authorized by all necessary corporate action on the part of Casden, subject to obtaining the applicable Casden Stockholders' Approval. This Agreement has been duly and validly executed and delivered by Casden and, assuming the due authorization, execution and delivery hereof by AIMCO, constitutes the valid and binding obligation of Casden enforceable against Casden in accordance with the terms of this Agreement, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors' rights and general principles of equity. (b) NON-CONTRAVENTION. Except as set forth in Section 4.3(b) of the Casden Disclosure Letter, the execution and delivery of this Agreement by Casden does not, and the consummation of the Transactions will not, violate, conflict with, result in a breach of any provision of, constitute a default (with or without notice or lapse of time or both) under, or result in the termination or modification of, or accelerate the performance required by, or result in a right of termination, cancellation or acceleration of any obligation or the loss of a benefit under, or result in the creation of any Lien upon any of the properties or assets of Casden or any of the Casden Subsidiaries (each of the foregoing, a "Violation" with respect to Casden and such term when used in Article V has correlative meanings with respect to AIMCO) pursuant to any provisions of (i) the charter and bylaws, any declaration of trust or similar organizational or governing documents of Casden or any Casden Subsidiary, (ii) any Contract with any third party to which Casden or any of the Casden Subsidiaries is a party or (iii) subject to obtaining the Casden Required Statutory Approvals and the Casden Stockholders' Approval, any statute, law, ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit or license of any Governmental Authority (as defined in Section 4.3(c))applicable to Casden or any of its properties or assets, except in the case of the foregoing clauses (ii) and (iii) for any such Violation which would not reasonably be expected to have a Casden Material Adverse Effect. Section 4.3(b) of the Casden Disclosure Letter sets forth, (x) each construction lender under any construction loan encumbering any of the Casden Properties (other than the NAPICO Properties) and (y) each lender or housing agency in connection with any tax exempt bond financing affecting any of the Casden Properties (other than the NAPICO Properties), in either case, the consent or approval of which is necessary to prevent or avoid a Violation by Casden or any of 24 the Casden Subsidiaries as a result of the execution and delivery of this Agreement or any of the Related Transaction Documents or the consummation or performance of any of the Transactions (any and all such consents and approvals, the "Casden Property Consents"). (c) STATUTORY APPROVALS. No declaration, filing or registration with, or notice to or authorization, consent or approval of, any court, federal, state, local or foreign governmental or regulatory body or authority (including the United States Department of Housing and Urban Development, and/or applicable state housing agencies (collectively, "HUD"), a stock exchange or other self-regulatory body (each of the foregoing entities, bodies or authorities, including HUD, a "Governmental Authority") is necessary for the execution and delivery of this Agreement by Casden or the consummation of the Transactions by Casden, except (i) acceptance of the Articles of Merger by the Maryland Department of Assessments and Taxation, (ii) the filing of an amended Articles Supplementary relating to the Casden Junior Preferred Stock with the MSDAT (if desired by Casden under Section 6.1(d)), (iii) as described in Section 4.3(c) of the Casden Disclosure Letter or (iv) declarations, filings, registrations, notices, authorizations, consents or approvals, the failure of which to make, give or obtain would not result in a Casden Material Adverse Effect (all of the foregoing, the "Casden Required Statutory Approvals," it being understood that references in this Agreement to "obtaining" such Casden Required Statutory Approvals shall mean making such declarations, filings or registrations; giving such notices; obtaining such authorizations, consents or approvals; and observing such waiting periods as are necessary to avoid a violation of law). For purposes of determining compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), Casden confirms that the conduct of its business consists primarily of investing in, owning, developing and operating real estate for the benefit of its stockholders. (d) COMPLIANCE. Except as set forth in Section 4.6, Section 4.7, Section 4.8, Section 4.9 or Section 4.11 of the Casden Disclosure Letter, neither Casden nor any of the Casden Subsidiaries (i) is in violation of or has been given notice or been charged with any violation of, or (ii) to the knowledge of Casden, is under investigation with respect to any violation of, any law, statute, order, rule, regulation, ordinance, writ, injunction, decree or judgment (including any applicable Environmental Laws) of any Governmental Authority, except for violations which would not reasonably be expected to have a Casden Material Adverse Effect. Except as set forth in Section 4.9 or Section 4.11 of the Casden Disclosure Letter, Casden and the Casden Subsidiaries have all permits, licenses (including licenses required to operate as a property manager), franchises and other governmental authorizations, consents and approvals necessary to conduct their businesses as presently conducted, except where the failure to obtain such permits, licenses (including licenses required to operate as a property manager), franchises and other authorizations, consents and approvals would not reasonably be expected to have a Casden Material Adverse Effect. Except as set forth in Section 4.3(d), Section 4.6 or Section 4.8 of the Casden Disclosure Letter, neither Casden nor any Casden Subsidiary is in breach or violation of or in default in the performance or observance of any term or provision of, and no event has occurred which, with lapse of time or action by a third party, could result in a default by Casden or any Casden Subsidiary under (i) their respective organizational documents or (ii) any Contract (other than any organizational documents or loan agreements, notes and mortgages with respect to non-residential properties) to which Casden or any Casden Subsidiary is a party or by which it is bound or to which its property is subject, 25 except for possible Violations which individually or in the aggregate would not reasonably be expected to have a Casden Material Adverse Effect. Section 4.4 CASDEN FINANCIAL STATEMENTS. (a) The Casden Financial Statements have been provided by Casden to AIMCO prior to the date hereof. The audited consolidated financial statements and unaudited interim financial statements included in the Casden Financial Statements have been prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis (except as may be indicated therein or in the notes thereto, and except for the absence of notes in the case of unaudited statements) and fairly present in all material respects the financial position of the applicable entities (or consolidated group of entities) referenced therein as of the dates thereof and the results of their operations and cash flows for the periods then ended, subject to normal recurring audit and year-end adjustments, in the case of the unaudited interim financial statements. (b) The schedules attached as Section 4.4(b) of the Casden Disclosure Letter (collectively, the "Casden Pro Forma Financial Information") present fairly, in all material respects, the financial position of Casden and its subsidiaries, on a consolidated basis, as of December 31, 2000 and June 30, 2001, and the results of operations of Casden and its subsidiaries, on a consolidated basis, for the twelve months and six months then ended, in each case after giving effect to the Commercial Sale, the Ross Store Sale, the Asset Purchase and certain other transactions and adjustments disclosed therein. (c) Casden has delivered, or caused to be delivered, to AIMCO (i) a report of Deloitte & Touche LLP relating to its review, in accordance with standards promulgated by the American Institute of Certified Public Accountants, of the Casden Financial Statements as of June 30, 2001 and for the six months then ended, and (ii) a letter of Deloitte & Touche LLP, addressed to AIMCO, with respect to the Casden Financial Statements and the Casden Pro Forma Financial Information, and customary in scope and substance for comfort letters delivered by independent public accountants in connection with acquisition transactions in which there is an exchange of stock. Section 4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in Section 4.5 of the Casden Disclosure Letter or as otherwise expressly permitted in Section 6.1 of this Agreement or required under Article VII of this Agreement, since December 31, 2000, (i) Casden and each of the Casden Subsidiaries have conducted their business only in the ordinary course of business consistent with past practice (it being understood that acquisitions and dispositions of multi-family apartment properties and interests therein by the NAPICO Entities are ordinary course business activities and are consistent with past practice), (ii) neither Casden nor any Casden Subsidiary (other than any NAPICO Entity) has transferred any material assets other than to or among Casden, Casden OP and any wholly owned Subsidiary of Casden and (iii) there has not been any event or condition that would reasonably be expected to result in a Casden Material Adverse Effect. 26 Section 4.6 LITIGATION. Except as set forth in Section 4.6(i), Section 4.6(ii), Section 4.7, Section 4.8, Section 4.9 or Section 4.11 of the Casden Disclosure Letter, (i) there are no claims, suits, actions or proceedings by or against Casden or any of the Casden Subsidiaries or any of their respective properties (other than unlawful detainer actions by Casden against its tenants or counterclaims resulting therefrom) pending or, to the knowledge of Casden or a Casden Subsidiary, threatened in which damages in excess of $10,000 are asserted or alleged, (ii) there are no claims, suits, actions or proceedings by or against Casden or any of the Casden Subsidiaries or any of their respective properties pending or to the knowledge of Casden or any Casden Subsidiary threatened that could reasonably be expected to affect all or any portion of any of Casden's properties or any of Casden Subsidiary's properties or Casden's or any Casden Subsidiary's ownership, rights, use, development or maintenance of their respective properties, including, without limitation, tax reduction proceedings; (iii) there are no claims, suits, actions or proceedings by any Governmental Authority or third party pending nor, to the knowledge of Casden, threatened, nor are there, to the knowledge of Casden, any investigations or reviews by any Governmental Authority pending or threatened against, relating to or affecting Casden or any of the Casden Subsidiaries, (iv) there have not been any significant adverse developments since December 31, 2000 with respect to such disclosed claims, suits, actions, proceedings, investigations or reviews and (v) there are no judgments, decrees, injunctions, or orders of any Governmental Authority specifically applicable to Casden or any Casden Subsidiary which would, if fully enforced, result in payments or losses in excess of $10,000 individually. Section 4.6(i) of the Casden Disclosure Letter sets forth the claims, litigation, disputes and matters existing on the Closing Date over which AIMCO shall maintain responsibility and control following the Effective Time, subject to the limitations set forth in the Master Indemnification Agreement. XYZ shall maintain responsibility and control following the Effective Time over any and all claims, litigation, disputes or matters, based on facts or circumstances existing or arising prior to the Effective Time, not set forth specifically in Section 4.6(i) of the Casden Disclosure Letter, including, without limitation, those set forth in Section 4.6(ii) of the Casden Disclosure Letter. Section 4.7 TAX MATTERS. Except as set forth in Section 4.7 of the Casden Disclosure Letter: (a) TIMELY FILING OF TAX RETURNS. Casden and each of the Casden Subsidiaries have filed (or there have been filed on such Persons' behalf) all federal and all material foreign, state and local Tax Returns required to be filed by each of them under applicable law. All such Tax Returns were and are in all material respects true, complete and correct and filed on a timely basis (after giving effect to any filing extension properly granted by a Governmental Authority having the authority to do so). (b) PAYMENT OF TAXES. Casden and each of the Casden Subsidiaries have paid all material Taxes that are currently due and payable for all periods through and including the Closing Date within the time and in the manner prescribed by law, except for those Taxes contested in good faith and for which adequate reserves have been provided on their books and records and except for the tax under Section 857(b)(5) of the Code on Casden's federal 27 income tax return for the year 2000 for which a cash reserve in the amount of such liability has been established. (c) TAX RESERVES. Casden and the Casden Subsidiaries have established on their books and records reserves adequate to pay all material Taxes and reserves for deferred income Taxes in accordance with GAAP. (d) TAX LIENS. There are no Tax liens upon the material assets of Casden or any of the Casden Subsidiaries, except liens for Taxes not yet delinquent. (e) WITHHOLDING TAXES. Casden and each of the Casden Subsidiaries have complied in all material respects with the provisions of the Code relating to the withholding of Taxes, as well as similar provisions under any other laws, and have withheld and paid over to the proper Governmental Authorities all amounts required within the time and in the manner prescribed by law. (f) REIT CLASSIFICATION. At all times since December 30, 1998, Casden has been organized and operated in conformity with the requirements necessary to qualify as a REIT pursuant to Section 856 of the Code (the "Status Requirements"), and the execution or delivery by Casden of this Agreement and the consummation by Casden of the Transactions or compliance with or fulfillment of the terms and provisions hereof by Casden, will not adversely affect the qualification of Casden as a REIT for each taxable year ending on or before the Closing Date. (g) AUDIT, ADMINISTRATIVE AND COURT PROCEEDINGS. No audits or other administrative or court proceedings are presently pending with regard to any material Taxes or Tax Returns of Casden or any of the Casden Subsidiaries. (h) TAX RULINGS. Except for the rulings previously delivered by Casden to AIMCO and the Closing Agreement with the IRS executed on September 21, 2001, neither Casden nor any of the Casden Subsidiaries has applied for, received, or has pending a Tax Ruling or commenced negotiations or entered into a Closing Agreement with any taxing authority. (i) TAX SHARING AGREEMENTS. Neither Casden nor any Casden Subsidiary is a party to any agreement relating to allocating or sharing Taxes. (j) BUILT IN GAIN. None of Casden or any of the Casden Subsidiaries (excluding, for purposes of this provision, NAPICO and the NAPICO Entities) has been or will be subject to tax (i) under the principles of Section 1374, as described in IRS Notice 88-19 and Temporary Treasury Reg. Section 1.337(d)-5T, or (ii) under paragraphs (4), (5), (6) or (7) of Section 857(b) of the Code. (k) PAST DISTRIBUTIONS. With respect to the taxable year ending on the Closing Date, Casden will have distributed to its stockholders, in distributions qualifying for the dividends paid deduction pursuant to Section 857(b)(2)(B) of the Code, an amount equal to 100% of its real estate investment trust taxable income as described in Section 857(b) of the Code. 28 (l) ADDITIONAL DISTRIBUTIONS. If the Merger were not to occur, neither Casden nor CPLB would be required to make a distribution to stockholders pursuant to Section 858 or Section 860 of the Code in order to maintain their status as a REIT. (m) TAXABLE REIT SUBSIDIARIES. Each entity identified as a "Taxable REIT Subsidiary" of Casden (within the meaning of Section 856(l) of the Code) on Section 4.1(c) of the Casden Disclosure Letter at all times since January 1, 2001 has satisfied every requirement imposed by Section 856(1) of the Code. None of such entities (i) operates or manages, has operated or managed, or will operate or manage prior to the Closing Date a "lodging facility" or "health care facility" within the meaning of Section 856(1)(4)(A) and 856(1)(4)(B) of the Code, respectively, or (ii) licenses, has licensed, or will license prior to the Closing Date, rights to any brand name under which any such lodging facility or health care facility is operated. (n) LIABILITY FOR OTHERS. Neither Casden nor any of the Casden Subsidiaries has any material liability for Taxes of any Person other than Casden and the Casden Subsidiaries (i) under Treasury Reg. Section 1.1502-6 (or any similar provision of state, local or foreign law), (ii) by Contract, or (iii) otherwise. (o) SECTION 341(f). Neither Casden nor any of the Casden Subsidiaries has, with regard to any assets or property held or acquired by any of them, filed a consent to the application of Section 341(f)(2) of the Code, or agreed to have Section 341(f)(2) of the Code apply to any disposition of a "subsection (f) asset" (as such term is defined in Section 341(f)(4) of the Code) owned by Casden or any of the Casden Subsidiaries. (p) DEFICIENCIES. No deficiencies for any Taxes have been proposed, asserted or assessed against Casden, or any Casden Subsidiary, and there is no outstanding waiver of the statute of limitations with respect to any Taxes or Tax Returns of Casden or any Casden Subsidiary. (q) TEN PERCENT VOTING INTEREST. At the Closing Date, other than a corporation that is a "Qualified REIT Subsidiary" of Casden within the meaning of Section 856(i)(2) of the Code or a "Taxable REIT Subsidiary" of Casden within the meaning of Section 856(l) of the Code, neither Casden nor any Casden Subsidiary (excluding, for purposes of this provision, NAPICO and the NAPICO Entities) will own (as determined for purposes of Section 856 of the Code and the Regulations promulgated thereunder, including Treasury Reg. Section 1.856-3(g) and with the same meaning as when used in the Investment Company Act of 1940, as amended), directly or indirectly (i) securities (other than "real estate assets" within the meaning of Section 856(c)(5)(B) of the Code) possessing more than 10% of the total voting power of any issuer or (ii) securities (other than "real estate assets" within the meaning of Section 856(c)(5)(B) of the Code) having a value of more than 10% of the total value of the outstanding securities of any issuer, other than securities satisfying the straight debt safe harbor of Section 856(c)(7) of the Code. (r) SERVICES. At no time on or prior to the Closing Date, has Casden or any of the Casden Subsidiaries provided services to tenants other than services that (i) do not give rise to "impermissible tenant service income" as defined in Section 856(d)(7) of the Code or 29 (ii) give rise to impermissible tenant service income with respect to any property for any taxable year in an amount not in excess of one percent of all amounts received or accrued by Casden and the Casden Subsidiaries (excluding, for purposes of this provision, NAPICO) with respect to such property during such year. (s) OWNERSHIP OF CORPORATIONS. Neither Casden nor any Casden Subsidiary owns or has owned, directly or indirectly (including through attribution under the Code), an interest in a corporation other than interests in (i) "Qualified REIT Subsidiaries" within the meaning of Section 856(i)(2) of the Code, (ii) "Taxable REIT Subsidiaries" within the meaning of Section 856(l) of the Code, (iii) NAPICO, prior to its election to be treated as a "Taxable REIT Subsidiary" of Casden within the meaning of Section 856(l) of the Code, and (iv) REITs. (t) OWNERSHIP OF TRANSPARENT ENTITIES. Neither Casden nor any Casden Subsidiary other than NAPICO owns or has owned, directly or indirectly (including through attribution under the Code), other than through its ownership of NAPICO or a NAPICO Entity, an interest in a partnership or limited liability company in which Casden was not the direct or indirect (including through attribution under the Code) managing member or general partner. Section 4.8 EMPLOYEE MATTERS; ERISA. As of the date hereof, except as set forth in Section 4.8 of the Casden Disclosure Letter and as contemplated under Section 6.1(h) of the Casden Disclosure Letter: (a) BENEFIT PLANS. Section 4.8(a) of the Casden Disclosure Letter contains a true and complete list of each written or oral material employment agreement, arrangement, commitment, severance agreement or plan, change in control, or retention agreement, bonus plan, incentive compensation or deferred compensation plan, stock option plan or agreement, stock-based incentive plan, profit sharing plan, restricted stock plan or agreement, welfare plan, employee benefit plan (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), policy, program, agreement or arrangement and any related trust covering any current or former officer, director, agent, consultant or employee of Casden, any Casden Subsidiary or any trade or business, whether or not incorporated, that together with Casden or any Casden Subsidiary would be deemed a "single employer" within the meaning of Section 4001(b)(1) of ERISA (each, an "ERISA Affiliate") or their respective beneficiaries with respect to which AIMCO will have financial obligations following the Merger (collectively, the "Casden Benefit Plans"). Since December 31, 2000, except as set forth in Section 4.8(a) of the Casden Disclosure Letter, there have been no new plans, policies, agreements or arrangements adopted or changes, additions or modification to any existing Casden Benefit Plan that would reasonably be expected to materially increase the cost or liability under any Casden Benefit Plan. Neither Casden nor any Casden Subsidiary nor any of their ERISA Affiliates has any obligation to provide any former or present employee, director, officer, partner, agent or consultant any profit sharing, springing or existing equity or profit interest or participation, any paid sabbatical, or the right to purchase any asset or property including, without limitation, any apartment. With respect to the Casden Benefit Plans, a copy of (i) the last two annual reports (IRS Form 5500 Series, together with all required schedules and accountant's reports or opinions) prepared in connection with any such Casden Benefit Plan, as 30 applicable (ii) the latest determination letter from the Internal Revenue Service (the "IRS") for any Casden Benefit Plan which is intended to be qualified under Section 401 of the Code, (iii) the most recent summary plan description, if any, and (iv) a copy of the material documents and instruments establishing and governing each Casden Benefit Plan (including all amendments thereto) previously have been made available to AIMCO. (b) CONTRIBUTIONS. All contributions and other payments required to be made by Casden or any of the Casden Subsidiaries or any of their ERISA Affiliates to any Casden Benefit Plan (or to any person pursuant to the terms thereof) have been made or the amount of such payment or contribution obligations has been reflected in the Casden Financial Statements to the extent required by GAAP. (c) QUALIFICATION; COMPLIANCE. Except where the failure to so comply with each of the following representations would not individually or in the aggregate reasonably be expected to result in a Casden Material Adverse Effect, and with respect to any "multiemployer plan" (as defined in Section 3(37) of ERISA) the representations in this Section 4.8(c) are limited to the knowledge of Casden or any Casden Subsidiary, (i) each of the Casden Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of the Code has been determined by the IRS to be so qualified, and, to the knowledge of Casden, the Casden Subsidiaries and their ERISA Affiliates, no circumstances exist that are reasonably expected by Casden, any Casden Subsidiary or any of their ERISA Affiliates to result in the revocation of any such determination; (ii) Casden, the Casden Subsidiaries and their ERISA Affiliates are in compliance with, and each of the Casden Benefit Plans is and has been operated in compliance with, all applicable laws, rules and regulations governing such plan, including, ERISA and the Code; (iii) each Casden Benefit Plan intended to provide for the deferral of income, the reduction of salary or other compensation, or to afford other income tax benefits, complies with the requirements of the applicable provisions of the Code or other laws, rules and regulations required to provide such income tax benefits; and (iv) no "prohibited transactions" (as defined in Section 406 or 407 of ERISA or Section 4975 of the Code) have occurred for which a statutory or administrative exemption is not available with respect to any Casden Benefit Plan and which could give rise to liability on the part of Casden, any Casden Subsidiary, any of their ERISA Affiliates, any Casden Benefit Plan, or any fiduciary, party in interest or disqualified Person with respect to any Casden Benefit Plan. (d) LIABILITIES. With respect to the Casden Benefit Plans, no event has occurred, and, to the knowledge of Casden, the Casden Subsidiaries and their ERISA Affiliates, there does not now exist any condition or set of circumstances that could reasonably be expected to subject Casden, any of the Casden Subsidiaries or any of their ERISA Affiliates to any material liability arising under the Code, ERISA or any other applicable law (including any liability to any such plan or the Pension Benefit Guaranty Corporation (the "PBGC")), excluding liabilities for benefit claims and funding obligations payable in the ordinary course. No liability under Title IV of ERISA has been incurred by Casden, any of the Casden Subsidiaries or any of their ERISA Affiliates during the last six (6) years that has not been satisfied in full, and no condition exists that presents a risk to Casden, any of the Casden Subsidiaries or any of their ERISA Affiliates of incurring any liability under such Title, other than liability for premiums due the PBGC, which payments have been or will be made when due except as would not reasonably be expected to have a Casden Material Adverse Effect. 31 (e) WELFARE PLANS. None of the Casden Benefit Plans that are "welfare plans," within the meaning of Section 3(1) of ERISA, provide for any material benefits with respect to current or former employees for periods extending beyond their retirement or other termination of service, other than continuation coverage required to be provided under Section 4980B of the Code or Part 6 of Title I of ERISA. (f) PENALTIES. To Casden or any Casden Subsidiary's knowledge, none of any Casden Benefit Plan, any trust created thereunder, nor any trustee or administrator of any Casden Benefit Plan taken any action or failed to take any action which could reasonably be expected to subject Casden, any Casden Subsidiary or any of their ERISA Affiliates to any material liability for either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a Tax imposed pursuant to Section 4975(a) or (b) or 4976 or 4980B of the Code. (g) PAYMENTS RESULTING FROM THE TRANSACTIONS. Other than with respect to the option awards referred to in Section 7.11(a), or with respect to the employment agreements or arrangements set forth in Section 4.8(a) of the Casden Disclosure Letter, the consummation or announcement of any of the Transactions will not (either alone or upon the occurrence of any additional or further acts or events, including the termination of employment of any officers, directors, employees, agents or directors of Casden or any Casden Subsidiary on or prior to the Closing), result in any (i) payment (whether of severance pay or otherwise) becoming due from Casden or any of the Casden Subsidiaries to any Affected Employee (as defined in Section 7.11(a)) or to the trustee under any "rabbi trust" or similar arrangement, (ii) benefit of any Affected Employee under any Casden Benefit Plan becoming accelerated, vested or payable or (iii) "mass layoff" or "plant closing" as defined in the WARN Act requiring notice or pay in lieu of notice. (h) MULTIEMPLOYER PLAN. With respect to any Casden Benefit Plan that is a "multiemployer plan," as such term is defined in Section 3(37) of ERISA, (i) neither Casden, any Casden Subsidiary nor any ERISA Affiliate has, since September 26, 1980, made or suffered a "complete withdrawal" or a "partial withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of ERISA, (ii) no event has occurred that presents a material risk of a complete or partial withdrawal, (iii) neither Casden, any Casden Subsidiary nor any ERISA Affiliate has any contingent liability under Section 4204 of ERISA, (iv) to the knowledge of Casden or any Casden Subsidiary, no circumstances exist that present a material risk that any such multi-employer plan will go into reorganization, and (v) to the knowledge of Casden or any Casden Subsidiary, the aggregate withdrawal liability of Casden, each Casden Subsidiary and the ERISA Affiliates, computed as if a complete withdrawal by Casden, each Casden Subsidiary and all of its ERISA Affiliates had occurred under each such multiemployer plan on the date hereof, would be zero. (i) TITLE IV PLANS. Except with respect to any multiemployer plans, no Casden Employee Plan is subject to Title IV of ERISA and neither Casden, any ERISA Affiliate, nor any Casden Subsidiary has ever sponsored, maintained, contributed to, or incurred an obligation to contribute to, any plan that is subject to Title IV of ERISA. (j) DEDUCTIBILITY OF PAYMENTS. Except as disclosed in Section 4.8(j) of the Casden Disclosure Letter, there is no Casden Benefit Plan or any other 32 contract, agreement or arrangement with respect to any "disqualified individual" within the meaning of Section 1.280G-1 of the Proposed Regulations of Casden that could, individually or collectively, give rise to the payment of any amount by Casden or any Casden Subsidiary as a result of the consummation of the Transactions that would not be deductible pursuant to the terms of Section 280G of the Code. (k) LABOR MATTERS. Except as set forth in Section 4.8(k) of the Casden Disclosure Letter: (i) there is no labor strike, slowdown, work stoppage or lockout in effect, or, to the knowledge of Casden, threatened against or otherwise affecting Casden or any Casden Subsidiary, nor has Casden or any Casden Subsidiary experienced any such labor controversy since December 31, 1996; (ii) there is no unfair labor practice charge or complaint pending or, to the knowledge of Casden, threatened against or otherwise affecting Casden or any Casden Subsidiary before the National Labor Relations Board or any similar state or foreign agency; (iii) no grievance or arbitration proceeding before any Governmental Authority relating to any of the employees or former employees of Casden or any Casden Subsidiary, any labor organization or other representative of the employees or arising out of any collective bargaining agreement is pending or, to the knowledge of Casden, threatened against or otherwise affecting Casden or any Casden Subsidiary, which, if adversely decided, would reasonably be expected to have a Casden Material Adverse Effect; and (iv) no collective bargaining agreement exists that is binding on Casden or any Casden Subsidiary, and no petition has been filed or proceedings instituted by an employee or group of employees of Casden or any Casden Subsidiary with any labor relations board seeking recognition of a bargaining representative, and, to the knowledge of Casden, no organizational effort is currently being made or has been made since December 31, 1996, on behalf of any labor union to organize any employees of Casden or any Casden Subsidiary. (l) CONSENT DECREES OR SETTLEMENTS. Except as set forth on Section 4.8(l) of the Casden Disclosure Letter, Casden is not a party to, or otherwise bound by, any consent decree or settlement agreement with, or citation by, any Government Authority relating to employees or the employment practices of Casden. (m) COMPLIANCE WITH LAW. To the knowledge of Casden, Casden is in material compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment, immigration, wages, hours of work, independent contractor classification, income tax withholding and occupational safety and health. (n) PENDING OR THREATENED PROCEEDINGS. There are no proceedings pending or, to the knowledge of Casden, threatened in writing against or otherwise affecting Casden before any Governmental Authority brought by or on behalf of any of Casden's employees, prospective employees or former employees alleging breach of any express or implied contract of employment or any law or regulation governing employment or the termination thereof or other discriminatory, wrongful or tortious conduct in connection with the 33 employment relationship, which, if adversely decided, would reasonably be expected to have a Material Adverse Effect on Casden. (o) EMPLOYMENT TERMINATIONS. To the knowledge of Casden, and other than the Transferred Employees, no officer or other key employee of Casden intends to terminate his or her employment with Casden in connection with the Merger. (p) WARN EVENTS. In the past five years, (i) Casden has not effectuated a "plant closing" (as defined in the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of Casden's business, (ii) there has not occurred a "mass layoff" (as defined in the WARN Act) affecting any site of employment or facility of Casden's business, (iii) Casden has not engaged in layoffs or employment terminations sufficient in number to trigger application of any similar state, local or foreign law or regulation, (iv) Casden has not caused any of its employees at its corporate headquarters in Beverly Hills, California to suffer an "employment loss" (as defined in the WARN Act) during the 90 day period prior to the date hereof and (v) no other single site of employment of Casden (other than its corporate headquarters in Beverly Hills, California) has 50 or more employees. (q) EMPLOYEE POLICIES. Section 4.8(q) of the Casden Disclosure Letter sets forth a complete and accurate list of all written personnel policies, rules or procedures applicable to Casden's employees. (r) CASDEN EMPLOYEES. Section 4.8(r) of the Casden Disclosure Letter sets forth a complete and accurate list of all of the employees of Casden and the Casden Subsidiaries as of October 31, 2001, other than the Proposed Transferred Employees (as defined in Section 4.8(s) below), including each such individual's name, rate of compensation and whether such individual is a full-time or part-time employee or is on leave. (s) PROPOSED TRANSFERRED EMPLOYEES. Section 4.8(s) of the Casden Disclosure Letter sets forth (i) a preliminary list of the proposed employees of Casden or any subsidiary of Casden that will be given offers of employment by either CommercialCo or the Development LLC (the "Proposed Transferred Employees") immediately following the Effective Time and (ii) the entity that will offer such employment. Section 4.9 ENVIRONMENTAL PROTECTION. Except as set forth in Section 4.9 of the Casden Disclosure Letter: (a) COMPLIANCE. Casden and each of the Casden Subsidiaries is in compliance with all applicable Environmental Laws, except as in the aggregate would not result in a Casden Material Adverse Effect. Neither Casden nor any of the Casden Subsidiaries has received any written communication from any Governmental Authority that alleges that Casden or any of the Casden Subsidiaries is not in compliance with applicable Environmental Laws, except as in the aggregate would not result in a Casden Material Adverse Effect. Compliance with all applicable Environmental Laws will not require Casden or any Casden Subsidiary to incur costs that would be reasonably likely to result in a Casden Material Adverse Effect. 34 (b) ENVIRONMENTAL PERMITS. Casden and each of the Casden Subsidiaries has obtained or has applied for all environmental, health and safety permits and governmental authorizations (collectively, the "Environmental Permits") necessary for the construction of their facilities or the conduct of their operations, and all such Environmental Permits are in good standing or, where applicable, a renewal application has been timely filed and is pending agency approval, and Casden and the Casden Subsidiaries are in compliance with all terms and conditions of the Environmental Permits, except for Environmental Permits which in the aggregate would not result in a Casden Material Adverse Effect. (c) ENVIRONMENTAL CLAIMS. There is no Environmental Claim pending or, to the knowledge of Casden, threatened in writing (i) against Casden or any of the Casden Subsidiaries, (ii) against any Person whose liability for any Environmental Claim Casden or any of the Casden Subsidiaries has or may have retained or assumed either contractually or by operation of law, or (iii) against any real or personal property or operations which Casden or any of the Casden Subsidiaries owns, leases or manages, in whole or in part, except, in each case, for Environmental Claims which in the aggregate would not result in a Casden Material Adverse Effect. To the knowledge of Casden, no circumstances, events or conditions exist that would reasonably be expected to form the basis of any Environmental Claim against Casden or the Casden Subsidiaries, except as in the aggregate would not result in a Casden Material Adverse Effect. (d) HAZARDOUS MATERIALS. To the knowledge of Casden, no Hazardous Materials are located on any Casden Property, except in compliance with all Environmental Laws or except as in the aggregate would not reasonably be expected to result in a Casden Material Adverse Effect. (e) USTs. To the knowledge of Casden, no underground storage tank is located on any Casden Property, except in compliance with all Environmental Laws or except as in the aggregate would not reasonably be expected to result in a Casden Material Adverse Effect. (f) PREDECESSORS. To the knowledge of Casden, there is no pending or threatened Environmental Claim with respect to any predecessor of Casden or any of the Casden Subsidiaries which would have a Casden Material Adverse Effect, or any Environmental Release of Hazardous Materials that would be reasonably likely to form the basis of any Environmental Claim, except for Environmental Claims which in the aggregate would not result in a Casden Material Adverse Effect. (g) REPORTS. Casden has delivered to AIMCO copies of all environmental assessments, audits and reports in its possession relating to the Casden Properties. (h) GOVERNMENTAL APPROVAL. The Transactions do not require governmental approval under Environmental Laws. (i) MOLD. To the knowledge of Casden, no colonies or growths of toxin-producing molds or fungi are located in any habitable structures on any Casden Property, except as in the aggregate would not result in a Casden Material Adverse Effect. There are no claims pending or, to the knowledge of Casden, threatened, against Casden or any of the Casden 35 Subsidiaries or with respect to any real or personal property or operations which Casden or any of the Casden Subsidiaries owns, leases or manages, in whole or in part, alleging the presence of any such molds or fungi, except as in the aggregate would not result in a Casden Material Adverse Effect. Section 4.10 VOTE REQUIRED. The affirmative vote of (a) the holders of at least a majority of the shares of Casden Common Stock outstanding on the record date for the Casden Meeting (as defined in Section 7.5(a)) voting as a class, and (b) the holders of at least 55% of the shares of Casden Class A Preferred Stock outstanding as of the date hereof, voting as a class (collectively, the "Casden Stockholders' Approval"), are the only votes of the holders of any class or series of the shares of Casden or any of the Casden Subsidiaries that is required to approve the Merger and this Agreement. The affirmative vote of (i) the holders of at least 2/3 of the shares of Casden Common Stock and (ii) the holders of at least 90% of the shares of CPLB common stock subject to the CPLB Reverse Stock Split outstanding on the record date for determining the holders entitled to vote thereon are the only votes of the holders of any class or series of Casden Capital Stock that are required to approve (a) the Casden Reverse Stock Split and the amendment to the Casden Charter contemplated by Section 7.34 and (b) the CPLB Reverse Stock Split, respectively. The shares subject to the Voting Agreement will represent at least a majority of the shares of Casden Common Stock outstanding on the record date for the Casden Meeting and at least 55% of the shares of Casden Class A Preferred Stock as of the date hereof. The Stockholders of Casden set forth on Section 4.10 of the Casden Disclosure Letter, each of which is a party to the Voting Agreement are, in the aggregate, the record and beneficial owners of a sufficient number of shares of Casden Common Stock, Casden Junior Preferred Stock and Casden Class A Preferred Stock sufficient to constitute the Casden Stockholder Approval. The Stockholders of PLB that are parties to the Voting Agreement are, in the aggregate, the record and beneficial owners of a number of shares of PLB Common Stock sufficient to constitute 90% of the voting power of PLB Common Stock. Section 4.11 HUD. Other than as set forth on Section 4.11 of the Casden Disclosure Letter and except where the failure to obtain, or the presence of which, would not reasonably be expected to result in a Casden Material Adverse Effect, each of Casden and the Casden Subsidiaries as of the date hereof: (a) has all necessary consents and approvals of HUD to act as a general partner of and/or management agent for, as the case may be, each partnership which is an owner of a HUD-insured or HUD-assisted property for which Casden or any Casden Subsidiary acts as a general partner and/or management agent; (b) with respect to each HUD-insured or HUD-assisted property for which Casden or any Casden Subsidiary acts as a general partner and/or management agent, has not received any current physical inspection reviews with a REAC score of less than 60 for which an MIO plan which is satisfactory to HUD has not been developed (or disclosing any exigent health and safety matters which have not been resolved) or any management agent's performance reviews that are graded as less than "Satisfactory" or, as to state housing agencies, any physical inspection or management agent reviews with an equivalent or otherwise substandard rating; (c) has no "flags" or limited denials of participation, suspensions or debarments currently in effect under the HUD 2530 Previous Participation Clearance Procedures or any other applicable HUD regulations; (d) has not been notified by HUD of any matters currently pending before the HUD Departmental Enforcement Center; (e) has not received any notice from HUD with respect to any audited financial statement for any year prior to 2000 that remains unresolved to HUD's satisfaction; and (f) has filed all 36 annual audited financial statements in the timeframe required by HUD for the calendar year 2000. Section 4.12 ABSENCE OF INDUCEMENT. In entering into the Transaction Documents, Casden has not been induced by, or relied upon, any representations, warranties or statements by AIMCO not set forth or referred to in the Transaction Documents, the Schedules thereto or the other documents required to be delivered thereby, whether or not such representations, warranties or statements have actually been made, and Casden acknowledges that, in entering into the Transaction Documents, AIMCO has been induced by and relied upon the representations and warranties of Casden herein set forth, the information set forth in the Casden Financial Statements and the representations and warranties of the parties to the Transaction Documents, the Schedules thereto and the other documents required to be delivered thereby. Casden has made its own investigation of AIMCO prior to the execution of this Agreement and has not been induced by or relied upon any representations, warranties, statements or documents as to the advisability of entering into this Agreement other than as described above in the first sentence of this Section 4.12. Section 4.13 REAL PROPERTIES. (a) OWNERSHIP. Section 4.13(a) of the Casden Disclosure Letter sets forth a list of each of the following properties (collectively, but excluding the NAPICO Syndicated Properties (as defined in Section 7.32 below), the "Casden Properties"), together with the approximate number of apartment units located on each such property and the location of each such property: (i) each real property owned in whole or in part by Casden or a Casden Subsidiary other than the NAPICO Properties (collectively, the "Owned Properties"), together with the name of the entity or entities which own each such Owned Property (the "Owned Property Owners") and the percentage interests and organizational structure pursuant to which each such Owned Property is owned; (ii) each real property leased in whole or in part by Casden or a Casden Subsidiary as a tenant (collectively, the "Leased Properties"), together with the name of the entity or entities which lease each such Leased Property (the "Leased Property Lessees") and the percentage interests and organizational structure pursuant to which each such Leased Property is leased; and (iii) each real property owned by a NAPICO Entity as of November 1, 2001 (collectively, the "NAPICO Properties"), together with the name of the entity or entities which own each such NAPICO Property (the "NAPICO Property Owners"), the name of the NAPICO Entity that controls such owner and the percentage interest and organizational structure pursuant to which such NAPICO Entity controls such owner. Each Owned Property Owner holds good, valid, marketable and indefeasible fee simple title to the Owned Property, or the applicable portion thereof, that Section 4.13(a) of the Casden Disclosure Letter indicates as being owned by such Owned Property Owner, free and clear of all Liens, rights of way, easements and any other matters affecting title, other than encumbrances 37 which do not materially adversely affect the value of such property or the use thereof, which are described in Section 4.13(a) of the Casden Disclosure Letter or which are shown on the title insurance policy or title report with respect thereto ("Permitted Encumbrances"), with full right to convey the same. To Casden's knowledge, each Leased Property Lessee holds a good, valid, marketable and indefeasible leasehold interest in and to the Leased Property that Section 4.13(a) of the Casden Disclosure Letter indicates as being leased by such Leased Property Lessee, free and clear of all Liens, rights of way, easements and any other matters affecting title, other than Permitted Encumbrances, with full right to convey the same, subject to obtaining the consents specified on Section 4.13(a) of the Casden Disclosure Letter. Each NAPICO Property Owner holds good, valid, marketable and indefeasible fee simple title to the NAPICO Property, or the applicable portion thereof, that Section 4.13(a) of the Casden Disclosure Letter indicates as being owned by such NAPICO Property Owner, free and clear of all Liens, rights of way, easements and any other matters affecting title, other than Permitted Encumbrances, with full right to convey the same. Except as may be set forth in Section 4.13(a) of the Casden Disclosure Letter, neither Casden nor any Casden Subsidiary nor, to Casden's knowledge, any owner or lessee of any Casden Property has granted any option, right of first refusal, rights of first offer or comparable right to any third party to purchase or otherwise acquire a direct or indirect interest in any of the Casden Properties; provided, however, that in certain jurisdictions, tenants may have rights of first refusal or rights of first offer pursuant to applicable laws, ordinances, statutes, rules and regulations governing the transfer, ownership, use, operation, management and occupation of residential real estate and rental properties (collectively, "Laws"). The Casden Properties include all real properties used by Casden and the Casden Subsidiaries in the conduct of their respective businesses. The NAPICO Properties include all real properties used by the NAPICO Entities in the conduct of their respective businesses. (b) GROUND LEASES. A true, accurate and complete copy of each lease pursuant to which each Leased Property Lessee leases a Leased Property (each, a "Ground Lease") has heretofore been delivered to AIMCO. To Casden's knowledge, each Ground Lease is valid, binding and enforceable in accordance with its terms and is in full force and effect. There are no existing material defaults by any Leased Property Lessee under any of the Ground Leases. (c) NOTICES TO REPAIR. Except as set forth in Section 4.13(c) of the Casden Disclosure Letter, neither Casden nor any owner or lessee of any of the Casden Properties has received any written notice of any requirements by any insurance company that has issued a policy covering any Casden Property or by any board of fire underwriters or other body of competent jurisdiction of any repairs or work to be done on any part of any Casden Property, which repair or work has not been completed. (d) APPROVALS. Except as set forth in Section 4.13(d) of the Casden Disclosure Letter, to Casden's knowledge, Casden (or the applicable owner or lessee of the Casden Properties) has obtained all appropriate material certificates of occupancy, licenses, easements and rights of way, including proofs of dedication, required to use and operate the Casden Properties in the manner in which the Casden Properties are currently being used and operated. True, accurate and complete copies of all such certificates, permits and licenses have heretofore been furnished to AIMCO. Except as set forth in Section 4.13(d) of the Casden Disclosure Letter, to Casden's knowledge, Casden and each owner (or lessee in the case of 38 Leased Properties) of each Casden Property has all material approvals, permits and licenses necessary to own or operate the Casden Properties as currently owned and operated, and no such material approvals, permits or licenses will be required to be issued after the date hereof as a result of the Transactions in order to permit AIMCO and its Subsidiaries to continue to own or operate the Casden Properties following the Closing in the same manner as heretofore owned or operated, other than any such approvals, permits and licenses that are ministerial in nature and are normally issued in due course upon application therefor without further action by the applicant or the failure of which to obtain would not, in the aggregate, result in a Casden Material Adverse Effect. (e) COMPLIANCE WITH LAWS. Except as set forth in Section 4.13(e) of the Casden Disclosure Letter, to Casden's knowledge, each Casden Property is in material compliance with all material Laws, including, all material Laws with respect to zoning, building, fire and health codes, and sanitation and pollution control. (f) CONDEMNATION; SPECIAL ASSESSMENTS. Except as set forth in Section 4.13(f) of the Casden Disclosure Letter, Casden has no knowledge of any pending or threatened condemnation, eminent domain or similar proceeding or special assessment which would materially and adversely affect any of the Casden Properties. (g) PERSONAL PROPERTY. Except as set forth in Section 4.13(g) of the Casden Disclosure Letter and except for personal property of which any owner or lessee of any Casden Property is a lessee, all of the personal property owned by Casden and the Casden Subsidiaries is owned by each such entity free and clear of all Liens, other than Permitted Encumbrances and, in the case of personal property located on a Leased Property, other than any applicable landlord's Lien, and each such entity has good and marketable title to its respective personal property. (h) MORTGAGES; ENCUMBRANCES. Section 4.13(h) of the Casden Disclosure Letter sets forth a list of each and every outstanding mortgage or deed of trust encumbering any Owned Property or interest in Casden Property, or Casden's interest in any other Casden Property (together with the name of the Owned Property encumbered thereby), and there are no other mortgages or deeds of trust (other than Permitted Encumbrances) encumbering the Owned Properties, or Casden's interest in any other Casden Property. Except as set forth in Section 4.13(h) of the Casden Disclosure Letter, Casden has not received any written notice of any proceedings, claims, disputes or conditions affecting any Casden Property that might materially curtail or interfere with the use of the Casden Properties. Except as set forth in Section 4.13(h) of the Casden Disclosure Letter, neither Casden nor any owner (or lessee in the case of Leased Property) of any of the Casden Properties is a party to any commercial lease or similar arrangement under which Casden or such owner (or lessee in the case of Leased Property) is a lessor or otherwise makes available for use by any third party for any commercial purpose any portion of any Casden Property, in each case where such commercial lease or similar arrangement or permitted use is material to the income derived from, or the value of, such Casden Property. (i) PROPERTY LEVEL RESERVES. Except as set forth in Section 4.13(i) of the Casden Disclosure Letter, to the knowledge of Casden, all Owned Properties (other than 39 the "conventional" and the "80-20" properties) have property level reserves, and such property level reserves are sufficient for the reasonably anticipated immediate capital requirements of the respective Owned Properties for the 12-month period following the Effective Time, provided, however, that no representation or warranty is herein made as to (i) the needs or available funds related to such conventional and 80-20 properties or (ii) any future exercise by HUD or any state affordable housing agency of its discretion to (A) allow or disallow use of such reserves or (B) require additional reserves or additional repairs or capital improvements. Section 4.14 BOOKS AND RECORDS. The books of account, minute books, stock record books and other records of Casden and the Casden Subsidiaries, all of which have been made available to AIMCO, are complete and correct in all material respects and have been maintained in accordance with sound business practices, including an adequate system of internal controls. The minute books of Casden contain accurate and complete records of all meetings held of, and corporate action taken by, the Casden stockholders, the Casden Board of Directors and committees of the Casden Board of Directors, and no meeting of any of such Casden stockholders, the Casden Board of Directors or such committees has been held for which minutes have not been prepared and are not contained in such minute books. All of such books and records are in the possession of Casden or the Casden Subsidiary to which they relate. Section 4.15 NO UNDISCLOSED LIABILITIES. Except (a) as disclosed in the Casden Financial Statements, (b) pursuant to the terms and conditions of any Contracts listed in Section 4.17 of the Casden Disclosure Letter and (c) for liabilities and obligations incurred in the ordinary course of business and consistent with past practice since December 31, 2000, neither Casden nor any Casden Subsidiary has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, material to Casden and the Casden Subsidiaries, taken as a whole. The reserves reflected in the Casden Financial Statements are adequate, appropriate and reasonable and have been calculated in a consistent manner. Section 4.16 INSURANCE. Section 4.16 of the Casden Disclosure Letter contains a complete and accurate description of all fire, liability, workmen's compensation and other insurance policies owned or held by Casden and each Casden Subsidiary, including insurance policies covering material litigation against Casden or any Casden Subsidiary. Copies of all such insurance policies have been made available to AIMCO. All such policies are in full force and effect, all premiums with respect thereto covering all periods up to and including the Closing Date have been, or will be, paid within the time specified in such policies, and no notice of cancellation or termination has been received with respect to any such policy. Such policies are sufficient for compliance with all requirements of law and all Contracts to which Casden or any Casden Subsidiary is a party; are valid, outstanding and enforceable policies; provide adequate insurance coverage for the assets and operations of Casden and each Casden Subsidiary; will remain in full force and effect through the respective dates set forth in the Casden Disclosure Letter without the payment of additional premiums; and will not in any way be affected by, or terminate or lapse by reason of, the Transactions. The Casden Disclosure Letter identifies all risks which Casden, its Board of Directors or officers have designated as being self insured. Neither Casden nor any Casden Subsidiary has been refused any insurance with respect to its assets or operations, nor has its coverage been limited, by any insurance carrier to which it has applied for any such insurance or with which it has carried insurance since December 31, 1998. 40 Section 4.17 CONTRACTS. Section 4.17 of the Casden Disclosure Letter contains a complete and accurate list, and each of Casden and the Casden Subsidiaries has delivered to AIMCO, true and complete copies, including any amendments, supplements and modifications thereto, of: (a) each Contract (other than Contracts between Casden or any of its wholly owned Subsidiaries, on the one hand, and Casden or any of its wholly owned Subsidiaries, on the other hand) that involves performance of services or delivery of goods or materials by or to Casden or any of the Casden Subsidiaries of an amount or value in excess of $100,000 per year; (b) each collective bargaining agreement and other Contract to or with any labor union or other employee representative of a group of employees that is binding on Casden or any Casden Subsidiary; (c) each Contract (other than employment contracts) with any officer, director, employee or Affiliate of Casden or any of the Casden Subsidiaries, or any of such Person's family members or Affiliates calling for payments in excess of $100,000 per year; (d) each written warranty, guaranty, or other similar undertaking with respect to contractual performance extended by Casden or any of the Casden Subsidiaries, other than in the ordinary course of business; and (e) each other Contract that is material to Casden and the Casden Subsidiaries, taken as a whole. Section 4.18 PROPRIETY OF PAST PAYMENTS. To Casden's knowledge, (a) no unrecorded fund or asset of Casden or any Casden Subsidiary has been established for any purpose, (b) no accumulation or use of corporate funds of Casden or any Casden Subsidiary has been made without being properly accounted for in the books and records of Casden or such Casden Subsidiary and (c) none of Casden, any Casden Subsidiary, or any director, officer, employee or agent of Casden or any Casden Subsidiary has, directly or indirectly, made any illegal contribution, gift, bribe, rebate, payoff, influence payment, kickback or other illegal payment to any Person, private or public, regardless of form, whether in money, property or services, (i) to obtain favorable treatment for any Casden stockholder, Casden, any Casden Subsidiary or any Affiliate of Casden in securing business, (ii) to pay for favorable treatment for business secured for any Casden stockholder, Casden, any Casden Subsidiary or any Affiliate of Casden, (iii) to obtain special concessions, or for special concessions already obtained, for or in respect of any Casden stockholder, Casden, any Casden Subsidiary or any Affiliate of Casden or (iv) otherwise for the benefit of any Holder, Casden, any Casden Subsidiary or any Affiliate of Casden in violation of any federal, state, local, municipal, foreign, international, multinational or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty (including existing site plan approvals, zoning or subdivision regulations or urban redevelopment plans relating to real property) known to Casden. Neither Casden nor any Casden Subsidiary, nor, to Casden's knowledge, any current director, officer, agent, employee or other authorized Person acting on behalf of Casden or any Casden Subsidiary, has accepted or received any unlawful contribution, payment, gift, kickback, expenditure or other item of value. 41 Section 4.19 BANK ACCOUNTS. Section 4.19 of the Casden Disclosure Letter sets forth the names of all banks, trust companies, savings and loan associations and other financial institutions at which Casden or any Casden Subsidiary maintains safe deposit boxes, checking accounts or other accounts of any nature, as well as the account numbers or other identifying information regarding each such safe deposit box or account. Section 4.20 DEFICIT RESTORATION OBLIGATIONS, ADJUSTED CAPITAL ACCOUNT DEFICITS AND CAPITAL CONTRIBUTION OBLIGATIONS. Section 4.20 of the Casden Disclosure Letter sets forth (i) the amount of each obligation to restore a deficit balance in an adjusted capital account of Casden or any Casden Subsidiary that owns an equity interest in any non-corporate entity (including a partnership, limited partnership, limited liability company or joint venture), calculated through December 31, 2000, (ii) the amount of each deficit balance in any capital account of Casden or any Casden Subsidiary that owns an equity interest in any non-corporate entity (including a partnership, limited partnership, limited liability company or joint venture), calculated as of December 31, 2000, and (iii) each capital contribution required to be made by Casden or any Casden Subsidiary (other than to a Casden Subsidiary that is wholly owned by Casden) that owns an equity interest in any non-corporate entity (including a partnership, limited partnership, limited liability company or joint venture). Section 4.21 COMPLIANCE WITH LAWS. To Casden's knowledge, Casden and each of the Casden Subsidiaries have complied in a timely manner and in all respects with all laws, rules and regulations, ordinances, judgments, decrees, orders, writs and injunctions of all United States federal, state, local, foreign governments and agencies thereof that affect the business, properties or assets of Casden or any Casden Subsidiary, except where the failure to comply would not reasonably be expected to result in a Casden Material Adverse Effect, and no written notice, claim or action has been received by Casden or any Casden Subsidiary or has been filed, commenced or, to Casden's knowledge, threatened against Casden or any Casden Subsidiary alleging any material violation of any of the foregoing. Section 4.22 RELATIONSHIPS WITH RELATED PERSONS. To Casden's knowledge, since December 31, 1998, there have been no transactions, agreements, arrangements or understandings between Casden or any of the Casden Subsidiaries, on the one hand, and Casden's Affiliates (other than wholly-owned Subsidiaries of Casden) or other Persons, on the other hand, pertaining to or affecting Casden, that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act if Casden were the registrant. Section 4.23 MARYLAND TAKEOVER LAWS. The board of directors of Casden has authorized and approved the Merger and this Agreement (prior to the execution of this Agreement by Casden) in accordance with Section 3-603(c)(1)(ii) of the MGCL such that Section 3-602 shall not apply to this Agreement or the transactions contemplated hereby (including the Casden Reverse Stock Split). The board of directors of Casden has taken all such action required to be taken by them to provide that this Agreement and the transactions contemplated hereby, including without limitation, the direct or indirect ownership of any Casden Common Stock by AIMCO, and the Casden Reverse Stock Split shall be exempt from the requirements of any "moratorium," "control share," "fair price" or other anti-takeover laws or 42 regulations of the State of Maryland, including without limitation Subtitle 7 of the Title 3 of the MGCL. Section 4.24 OFFICERS AND DIRECTORS. Section 4.24 of the Casden Disclosure Letter sets forth a complete and accurate list of all officers and directors of Casden. Section 4.25 NO CASDEN MATERIAL MISSTATEMENTS. To Casden's knowledge, no representation or warranty of Casden contained in the Transaction Documents contains or will contain any untrue statement of material fact or omit to state any material fact necessary, in light of the circumstances and taking into account the express limitations set forth in each such representation and warranty, in order to make the representations and warranties made by Casden herein or therein not misleading. Section 4.26 TAX QUESTIONNAIRES. Casden and the Casden Subsidiaries (other than NAPICO and the NAPICO Entities) have sent to each manager and assistant manager of the Owned Properties and the Leased Properties and each regional supervisor employed by Casden and the Casden Subsidiaries (other than the NAPICO Entities) prior to the date hereof. Section 4.27 CLOSING PAYOFF AMOUNTS. After AIMCO pays the amounts set forth in Schedule 2.1(a) at the Effective Time, the loans and other obligations set forth on Schedule 7.36 shall be paid in full and there shall be no further obligations thereunder. Section 4.28 CASDEN BOARD OF DIRECTORS APPROVAL. The independent directors of Casden and the Board of Directors of Casden have approved the treatment of shares of Casden Capital Stock set forth in Article II and the fairness of the allocation of consideration among the holders of Casden Capital Stock set forth therein. ARTICLE V REPRESENTATIONS AND WARRANTIES OF AIMCO AIMCO makes the following representations and warranties to Casden and XYZ. Except as set forth in the AIMCO SEC Reports or the disclosure letter from AIMCO to Casden dated the date hereof (the "AIMCO Disclosure Letter"): Section 5.1 ORGANIZATION AND QUALIFICATION. AIMCO and each AIMCO Subsidiary is a corporation or other entity duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, has all requisite power and authority, and has been duly authorized by all necessary approvals and orders to own, lease and operate its assets and properties to the extent owned, leased and operated and to carry on its business as it is now being conducted and is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its assets and properties makes such qualification necessary, other than in such jurisdictions where the failure so to qualify would not reasonably be expected to have an AIMCO Material Adverse Effect. Section 5.2 AIMCO SUBSIDIARIES. All of the issued and outstanding shares of capital stock and all other equity interests owned in each AIMCO Subsidiary are, in the case of capital stock, validly issued, fully paid, non-assessable and free of preemptive rights, and, in the 43 case of capital stock and all other equity interests in any entity, are owned, directly or indirectly, by AIMCO free and clear of any Liens and there are no outstanding subscriptions, options, calls, contracts, voting trusts, proxies or other commitments, understandings, restrictions, arrangements, rights or warrants, including any right of conversion or exchange under any outstanding security, instrument or agreement, obligating by AIMCO or any AIMCO Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of its capital stock or other equity interests or obligating it to grant, extend or enter into any such agreement or commitment. Section 5.3 CAPITALIZATION. As of the date hereof, the authorized capital stock of AIMCO consists of (i) 510,587,500 shares of capital stock, of which 456,962,738 shares are classified as Class A Common Stock and the remainder are classified as Preferred Stock and (ii) no Voting Debt was issued or outstanding. All outstanding shares of AIMCO Common Stock and AIMCO Preferred Stock have been validly issued free of preemptive rights, and are fully paid and non-assessable. Upon consummation of the Merger and the concurrent automatic conversion of the Casden Capital Stock into AIMCO Common Stock in accordance with Section 2.2(a), all such shares will be validly issued, fully paid and non-assessable and will not be subject to preemptive rights. As of the date hereof, except as set forth in Section 5.3 of the AIMCO Disclosure Letter or pursuant to this Agreement and the AIMCO Benefit Plans, there are no securities, outstanding subscriptions, calls, options, contracts, voting trusts, proxies or other commitments, understandings, restrictions, arrangements, rights or warrants, including any right of conversion or exchange under any outstanding security, instrument or other agreement to which AIMCO or any AIMCO Subsidiary is a party or by which any of them are bound obligating AIMCO or any AIMCO Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or any Voting Debt of AIMCO or any AIMCO Subsidiary or obligating AIMCO or any AIMCO Subsidiary to grant, extend or enter into any such option, warrant, call, right, commitment or agreement. Section 5.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS; COMPLIANCE. (a) AUTHORITY. AIMCO has all requisite power and authority to execute and deliver this Agreement and, subject to the receipt of the applicable AIMCO Required Statutory Approvals (as defined in Section 5.4(c)), to consummate the Transactions. The execution and delivery of this Agreement and the consummation by AIMCO of the Transactions have been duly authorized by all necessary corporate action on the part of AIMCO. This Agreement has been duly and validly executed and delivered by AIMCO and, assuming the due authorization, execution and delivery hereof by Casden, constitutes the valid and binding obligation of AIMCO enforceable against AIMCO in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors' rights and general principles of equity. No approval of AIMCO's stockholders is required to execute and deliver this Agreement or to consummate the Transactions, including the issuance and listing on the NYSE of the AIMCO Common Stock to be issued in the Merger and the assumption of all obligations of Casden and the performance of all actions required by the documents governing such obligations. 44 (b) NON-CONTRAVENTION. Except as set forth in Section 5.4(b) of the AIMCO Disclosure Letter, the execution and delivery of this Agreement by AIMCO does not, and the consummation of the Transactions will not, result in a Violation with respect to AIMCO or any of the AIMCO Subsidiaries pursuant to any provisions of (i) the AIMCO Charter, bylaws or similar organizational or governing documents of AIMCO or any of the AIMCO Subsidiaries, (ii) subject to obtaining the AIMCO Required Statutory Approvals, any statute, law, ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit or license of any Governmental Authority applicable to AIMCO or any of the AIMCO Subsidiaries or any of their respective properties or assets or (iii) subject to obtaining the third-party consents set forth in Section 5.4(b) of the AIMCO Disclosure Letter, any Contract to which AIMCO or any of the AIMCO Subsidiaries is a party or to which such Persons or any of their respective properties or assets are subject, except in the case of the foregoing clause (ii) or (iii) for any such Violation which would not reasonably be expected to have an AIMCO Material Adverse Effect. (c) STATUTORY APPROVALS. No declaration, filing or registration with, or notice to or authorization, consent or approval of, any Governmental Authority is necessary for the execution and delivery of this Agreement by AIMCO or the consummation by AIMCO of the Transactions, except (i) acceptance of the Articles of Merger by the MSDAT, (ii) as described in Section 5.4(c) of the AIMCO Disclosure Letter or (iii) declarations, filings, registrations, notices, authorizations, consents or approvals, the failure of which to make, give or obtain would not result in an AIMCO Material Adverse Effect (the "AIMCO Required Statutory Approvals," it being understood that references in this Agreement to "obtaining" such AIMCO Required Statutory Approvals shall mean making such declarations, filings or registrations; giving such notices; obtaining such authorizations, consents or approvals; and observing such waiting periods as are necessary to avoid a violation of law). For purposes of determining compliance with the HSR Act, AIMCO confirms that the conduct of its business consists primarily of investing in, owning, developing and operating real estate for the benefit of its stockholders. (d) COMPLIANCE. Except as set forth in Section 5.4(d) of the AIMCO Disclosure Letter, neither AIMCO nor any of the AIMCO Subsidiaries (i) is in violation of or has been given notice or been charged with any violation of or (ii) to the knowledge of AIMCO, is under investigation with respect to any violation of, any law, statute, order, rule, regulation, ordinance or judgment (including any applicable Environmental Laws) of any Governmental Authority. AIMCO and the AIMCO Subsidiaries have all permits, licenses (including licenses to operate as a property manager), franchises and other governmental authorizations, consents and approvals necessary to conduct their businesses as presently conducted, except where the failure to obtain such permits, licenses (including licenses required as a property manager), franchises and other authorizations, consents and approvals would not reasonably be expected to have an AIMCO Material Adverse Effect. Neither AIMCO nor any AIMCO Subsidiary is in breach or violation of, or in default in the performance or observance of, any term or provision of, and no event has occurred which, with lapse of time or action by a third party, could result in a default by AIMCO or any AIMCO Subsidiary under (i) AIMCO's or AIMCO OP's organizational or governing documents or (ii) any Contract to which AIMCO or any AIMCO Subsidiary is a party or by which it is bound or to which its property is subject, except for possible Violations which individually or in the aggregate would not reasonably be expected to have an AIMCO Material Adverse Effect. 45 Section 5.5 REPORTS AND FINANCIAL STATEMENTS. The AIMCO SEC Reports have been filed with the SEC, including all forms, statements, reports, agreements (oral or written) and all documents, exhibits, amendments and supplements appertaining thereto, and such items complied, as of their respective dates, in all material respects with all applicable requirements of the appropriate statutes and the rules and regulations thereunder, except for such filings the failure of which to have been made or to so comply would not result in an AIMCO Material Adverse Effect. As of their respective dates, the AIMCO SEC Reports did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited consolidated financial statements and unaudited interim financial statements of AIMCO included in the AIMCO SEC Reports (collectively, the "AIMCO Financial Statements") have been prepared in accordance with GAAP applied on a consistent basis (except as may be indicated therein or in the notes thereto and except with respect to unaudited statements as permitted by Form 10-Q of the SEC) and fairly present in all material respects the financial position of AIMCO as of the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of the unaudited interim financial statements, to normal, recurring and year-end audit adjustments. True, accurate and complete copies of the AIMCO Charter and the AIMCO bylaws, each as amended to date and in effect on the date hereof, have been provided to Casden. Section 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as otherwise expressly permitted in Section 6.2 of this Agreement or required by Article VII of this Agreement, since December 31, 2000, AIMCO and each of the AIMCO Subsidiaries have conducted their business only in the ordinary course of business (except for acquisitions and dispositions) consistent with past practice and there has not been any event or condition which would reasonably be expected to result in an AIMCO Material Adverse Effect. Section 5.7 LITIGATION. Except as disclosed in Section 5.7 of the AIMCO Disclosure Letter, (a) there are no claims, suits, actions or proceedings against AIMCO or any AIMCO Subsidiary or any of their respective properties which would reasonably be expected to have an AIMCO Material Adverse Effect, (b) there are no claims, suits, actions or proceedings by any Governmental Authority or third party, pending or, to the knowledge of AIMCO, threatened, nor are there, any investigations or reviews by any Governmental Authority pending or threatened against, relating to or affecting AIMCO or any of the AIMCO Subsidiaries which would reasonably be expected to have an AIMCO Material Adverse Effect, (c) there have not been any significant adverse developments since December 31, 2000 with respect to such disclosed claims, suits, actions, proceedings, investigations or reviews and (d) there are no judgments, decrees, injunctions or orders of any Governmental Authority specifically applicable to AIMCO or any AIMCO Subsidiary which would reasonably be expected to have an AIMCO Material Adverse Effect. Section 5.8 REGISTRATION STATEMENT. None of the information supplied or to be supplied by or on behalf of AIMCO for inclusion or incorporation by reference in any Registration Statement will, at the time such Registration Statement is filed by AIMCO with the SEC and at the time it becomes effective under the Securities Act or the Exchange Act, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. Each 46 Registration Statement will comply as to form in all material respects with the provisions of the Securities Act or the Exchange Act, as applicable. Section 5.9 TAX MATTERS. Except as set forth in Section 5.9 of the AIMCO Disclosure Letter: (a) FILING OF TIMELY TAX RETURNS. AIMCO and each of the AIMCO Subsidiaries have filed (or there have been filed on such Persons' behalf) all Tax Returns required to be filed by each of them under applicable law. All such Tax Returns were and are in all material respects true, complete and correct and filed on a timely basis. (b) PAYMENT OF TAXES. AIMCO and each of the AIMCO Subsidiaries have paid all Taxes that are currently due and payable for all periods through and including the Closing Date within the time and in the manner prescribed by law, except for those Taxes contested in good faith and for which adequate reserves have been provided on their books and records. (c) TAX RESERVES. AIMCO and each of the AIMCO Subsidiaries have established on their books and records reserves adequate to pay all material Taxes and reserves for deferred income Taxes in accordance with GAAP. (d) TAX LIENS. There are no Tax liens upon the material assets of AIMCO or any of the AIMCO Subsidiaries except liens for Taxes not yet delinquent. (e) WITHHOLDING TAXES. AIMCO and each of the AIMCO Subsidiaries have complied in all material respects with the provisions of the Code relating to the withholding of Taxes, as well as similar provisions under any other laws, and have, within the time and in the manner prescribed by law, withheld and paid over to the proper governmental authorities all amounts required. (f) REIT CLASSIFICATION. At all times since the initial public offering of AIMCO, AIMCO has been organized and operated in conformity with the Status Requirements, and its proposed method of operation after the Merger will enable it to continue to meet the Status Requirements and otherwise qualify as a REIT. (g) CONTINUATION AS REIT. The execution or delivery by AIMCO of this Agreement and the consummation by AIMCO of the Transactions or compliance with or fulfillment of the terms and provisions hereof by AIMCO, will not adversely affect the qualification of AIMCO as a REIT for each taxable year ending on or after the Closing Date. (h) AUDIT, ADMINISTRATIVE AND COURT PROCEEDINGS. No audits or other administrative proceedings or court proceedings are presently pending with regard to any material Taxes or Tax Returns of AIMCO or any of the AIMCO Subsidiaries. (i) TAX RULINGS. Neither AIMCO nor any of the AIMCO Subsidiaries has received or has pending a Tax Ruling or entered into a Closing Agreement with any taxing authority. 47 (j) TAX SHARING AGREEMENTS. Except as between affiliates of AIMCO as set forth in Section 5.9 of the AIMCO Disclosure Letter, neither AIMCO nor any AIMCO Subsidiary is a party to any agreement relating to allocating or sharing Taxes. (k) LIABILITY FOR OTHERS. Neither AIMCO nor any of the Subsidiaries of AIMCO has any liability for material Taxes of any person other than AIMCO and the AIMCO Subsidiaries (i) under Treasury Reg. Section 1.1502-6 (or any similar provision of state, local or foreign law), (ii) by Contract, or (iii) otherwise. (l) SECTION 341(f). Neither AIMCO nor any of the AIMCO Subsidiaries has, with regard to any assets or property held or acquired by any of them, filed a consent to the application of Section 341(f)(2) of the Code, or agreed to have Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code) owned by AIMCO or any of the AIMCO Subsidiaries. (m) DEFICIENCIES. No deficiencies for any Taxes have been proposed, asserted or assessed against AIMCO and there is no outstanding waiver of the statute of limitations with respect to any Taxes or Tax Returns of AIMCO. (n) DOMESTIC CONTROL. AIMCO believes that it is a "domestically controlled" REIT within the meaning of Section 897(h)(4)(B) of the Code. Section 5.10 EMPLOYEE MATTERS; ERISA. Except as set forth in Section 5.10 of the AIMCO Disclosure Letter: (a) BENEFIT PLANS. As of the date hereof, AIMCO has made available to Casden a copy of each written or oral material employment agreement, arrangement, commitment, severance or retention agreement or policy, employee benefit plan, policy or agreement covering employees, former employees or directors of AIMCO and each of the AIMCO Subsidiaries or their beneficiaries, or providing benefits to such Persons in respect of services provided to any such entity, including any material employee benefit plans within the meaning of Section 3(3) of ERISA and any material severance or change in control agreement (collectively, the "AIMCO Benefit Plans"). Since December 31, 1996, there have been no new plans adopted nor changes, additions or modification to any existing AIMCO Benefit Plans that could reasonably be expected to materially increase the cost of such AIMCO Benefit Plan. (b) CONTRIBUTIONS. All material contributions and other material payments required to be made by AIMCO or any of the AIMCO Subsidiaries to any AIMCO Benefit Plan (or to any Person pursuant to the terms thereof) have been made or the amount of such payment or contribution obligations has been reflected in the AIMCO Financial Statements to the extent required by GAAP. (c) QUALIFICATION; COMPLIANCE. Except where the failure to so comply with each of the following representations would not individually or in the aggregate be expected to result in an AIMCO Material Adverse Effect: (i) each of the AIMCO Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of the Code has been determined by the IRS to be so qualified, and, to the knowledge of AIMCO, no circumstances exist that are reasonably expected by AIMCO to result in the revocation of any such determination; 48 (ii) AIMCO is in compliance with, and each of the AIMCO Benefit Plans is and has been operated in compliance with, all applicable laws, rules and regulations governing such plan, including, without limitation, ERISA and the Code; (iii) each AIMCO Benefit Plan intended to provide for the deferral of income, the reduction of salary or other compensation, or to afford other income tax benefits, complies with the requirements of the applicable provisions of the Code or other laws, rules and regulations required to provide such income tax benefits; and (iv) no "prohibited transactions" (as defined in Section 406 or 407 of ERISA or Section 4975 of the Code) have occurred for which a statutory or administrative exemption is not available with respect to any AIMCO Benefit Plan, and which could give rise to liability on the part of AIMCO, any AIMCO Benefit Plan, or any fiduciary, party in interest or disqualified Person. (d) LIABILITIES. With respect to the AIMCO Benefit Plans and except for liabilities that individually or in the aggregate would not reasonably be expected to result in an AIMCO Material Adverse Effect, no event has occurred, and, to the knowledge of AIMCO, there does not now exist any condition or set of circumstances that could reasonably be expected to subject AIMCO or any of the AIMCO Subsidiaries to any material liability arising under the Code, ERISA or any other applicable law (including any liability to any such plan or the PBGC), excluding liabilities for benefit claims and funding obligations payable in the ordinary course. (e) WELFARE PLANS. None of the AIMCO Benefit Plans that are "welfare plans," within the meaning of Section 3(1) of ERISA, provide for any material benefits with respect to current or former employees for periods extending beyond their retirement or other termination of service, other than continuation coverage required to be provided under Section 4980B of the Code or Part 6 of Title I of ERISA. (f) PAYMENTS RESULTING FROM THE MERGER. The consummation or announcement of any of the Transactions will not (either alone or upon the occurrence of any additional or further acts or events relating solely to the Transactions, including the termination of employment of any officers, directors, employees or agents of AIMCO or any of the AIMCO Subsidiaries) result in any (i) payment (whether of severance pay or otherwise) becoming due from AIMCO or any of the AIMCO Subsidiaries to any officer, employee, former employee or director thereof or to the trustee under any "rabbi trust" or similar arrangement, or (ii) benefit under any AIMCO Benefit Plan becoming accelerated, vested or payable. Section 5.11 ENVIRONMENTAL PROTECTION. (a) Except as set forth in Section 5.11 of the AIMCO Disclosure Letter, to the knowledge of AIMCO: (i) COMPLIANCE. AIMCO and each of the AIMCO Subsidiaries is in compliance with all applicable Environmental Laws except, in either case, in the aggregate would not reasonably be expected to result in an AIMCO Material Adverse Effect and neither AIMCO nor any of the AIMCO Subsidiaries has received any written communication from any Governmental Authority that alleges that AIMCO or any of the AIMCO Subsidiaries is not in compliance with applicable Environmental Laws, except, in either case, in the aggregate would not reasonably be expected to result in an AIMCO Material Adverse Effect. Compliance with all 49 applicable Environmental Laws will not require AIMCO or any AIMCO Subsidiary to incur costs that would be reasonably likely to result in an AIMCO Material Adverse Effect. (ii) ENVIRONMENTAL PERMITS. AIMCO and each of the AIMCO Subsidiaries have obtained or have applied for all Environmental Permits necessary for the construction of their facilities or the conduct of their operations, and all such Environmental Permits are in good standing or, where applicable, a renewal application has been timely filed and is pending agency approval, and AIMCO and the AIMCO Subsidiaries are in compliance with all terms and conditions of the Environmental Permits, except for Environmental Permits which in the aggregate would not reasonably be expected to result in an AIMCO Material Adverse Effect. (iii) ENVIRONMENTAL CLAIMS. There is no Environmental Claim pending (A) against AIMCO or any of the AIMCO Subsidiaries, (B) against any Person whose liability for any Environmental Claim AIMCO or any of the AIMCO Subsidiaries has or may have retained or assumed either contractually or by operation of law, or (C) against any real or personal property or operations which AIMCO or any of the AIMCO Subsidiaries owns, leases or manages, in whole or in part, except, in each case, for Environmental Claims which in the aggregate would not reasonably be expected to result in an AIMCO Material Adverse Effect. (iv) ENVIRONMENTAL RELEASES. There has been no Environmental Release of any Hazardous Material that would be reasonably likely to form the basis of any Environmental Claim against AIMCO or any of the AIMCO Subsidiaries or against any Person whose liability for any Environmental Claim AIMCO or any of the AIMCO Subsidiaries has or may have retained or assumed either contractually or by operation of law, except for Environmental Releases which in the aggregate would not reasonably be expected to result in an AIMCO Material Adverse Effect. (v) PREDECESSORS. There is no pending or threatened Environmental Claim with respect to any predecessor of AIMCO or any of the AIMCO Subsidiaries which would have a AIMCO Material Adverse Effect, or any Environmental Release of Hazardous Materials that would be reasonably likely to form the basis of any Environmental Claim, except for Environmental Claims which in the aggregate would not reasonably be expected to result in an AIMCO Material Adverse Effect. Section 5.12 HUD. Other than as set forth on Section 5.12 of the AIMCO Disclosure Letter and except where the failure to obtain, or the presence of which, would not reasonably be expected to result in an AIMCO Material Adverse Effect, each of AIMCO and the AIMCO Subsidiaries as of the date hereof: (a) has all necessary consents and approvals of HUD to act as a general partner of and/or management agent for, as the case may be, each partnership which is an owner of a HUD-insured or HUD-assisted property for which AIMCO or any AIMCO Subsidiary acts as a general partner and/or management agent; (b) with respect to each HUD-insured or HUD-assisted property for which AIMCO or any AIMCO Subsidiary acts as a general partner and/or management agent, has not received any current physical inspection reviews with a REAC score of less than 60 for which an MIO plan is satisfactory to HUD has not been developed (or disclosing any exigent health and safety matters which have not been resolved), or any management agent's performance reviews that are graded as less than "Satisfactory" or, as to 50 state housing agencies, any physical inspection or management agent reviews with an equivalent or otherwise substandard rating; (c) has no "flags" or limited denials of participation, suspensions or debarments currently in effect under the HUD 2530 Previous Participation Clearance Procedures or any other applicable HUD regulations; (d) has not been notified by HUD of any matters currently pending before the HUD Departmental Enforcement Center; (e) has not received any notice from HUD with respect to any audited financial statement for any year prior to 2000 that remains unresolved to HUD's satisfaction; and (f) has filed all annual audited financial statements in the timeframe required by HUD for the calendar year 2000. Section 5.13 ABSENCE OF INDUCEMENT. In entering into the Transaction Documents to which it is a party, AIMCO has not been induced by, or relied upon, any representations, warranties or statements by Casden not set forth or referred to in the Transaction Documents, the Schedules thereto or the other documents required to be delivered thereby, whether or not such representations, warranties or statements have actually been made and AIMCO acknowledges that, in entering into the Transaction Documents to which it is a party, Casden has been induced by and relied upon the representations and warranties of AIMCO herein set forth, the information set forth in the AIMCO Financial Statements and AIMCO SEC Reports and the representations and warranties of the parties to the Transaction Documents, the Schedules thereto or the other documents required to be delivered thereby. AIMCO has made its own investigation of Casden prior to the execution of this Agreement and has not been induced by or relied upon any representations, warranties or statements as to the advisability of entering into this Agreement other than as described above in the first sentence of this Section 5.13. Section 5.14 NO AIMCO MATERIAL MISSTATEMENTS. To AIMCO's knowledge, no representation or warranty of AIMCO contained in the Transaction Documents contains or will contain any untrue statement of material fact or omit to state any material fact necessary, in light of the circumstances and taking into account the express limitations set forth in each such representation and warranty, in order to make the representations and warranties made by AIMCO herein or therein not misleading. Section 5.15 MARYLAND TAKEOVER LAWS. Section 3-602 of the MGCL does not apply to AIMCO in connection with the transactions contemplated by this Agreement or the Transactions. ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER Section 6.1 COVENANTS OF CASDEN. Casden agrees, as to Casden and as to each of the Casden Subsidiaries, that after the date hereof and prior to the Effective Time or earlier termination of this Agreement pursuant to Section 9.1, (i) except as expressly contemplated in this Agreement or the Related Transaction Documents, (ii) except as AIMCO may otherwise agree in writing (which decision shall be made as soon as reasonably practicable), (iii) except with respect to the Commercial Properties, the Commercial Debt, the Commercial Sale, CommercialCo and Development LLC and (iv) except where a Casden Subsidiary (A) is a general partner of, or (B) controls a general partner or member of a Casden Subsidiary which is a partnership or a limited liability company and such Casden Subsidiary or general partner or 51 member is acting in a manner required by its fiduciary duty as a general partner or member under applicable law: (a) ORDINARY COURSE OF BUSINESS. Except with respect to the transfer of assets or securities constituting (i) the Commercial Properties or (ii) the Development LLC Assets or pursuant to the Ross Store Sale, the Asset Purchase, the Spin-Off or the Transaction Documents, Casden shall, and shall cause the Casden Subsidiaries to, (A) carry on their respective businesses in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and use all commercially reasonable efforts to preserve intact their present business organizations, (B) duly and timely file all reports, Tax Returns and other documents required to be filed with federal, state, local and other authorities, (C) subject to prudent management of work force needs and ongoing programs currently in force, use commercially reasonable efforts to keep available the services of the Affected Employees (as defined in Section 7.11(a)), and (D) take no action which would reasonably be expected to jeopardize the goodwill or relationships with customers, suppliers or others having business dealings with them except actions taken in connection with Casden's or any Casden Subsidiary's good faith disputes in the exercise of Casden's business judgment, relating to less than $100,000 in the aggregate; provided, however, nothing in this Section 6.1(a) shall prohibit Casden or any of the Casden Subsidiaries from transferring operations to Casden, any of its wholly-owned Subsidiaries, or Casden OP or from engaging in real estate development activities. Notwithstanding the foregoing, Casden shall not, nor shall Casden permit any Casden Subsidiary to, enter into a new line of business, defined as business activities that are substantially different from those currently conducted by Casden or any Casden Subsidiary or that are not reasonably related to the business of owning, operating and managing multi-family residential apartment complexes or communities or other residential real estate properties. (b) DISTRIBUTIONS. Except (i) to the extent permitted by Section 2.2(c) or Section 7.10 , (ii) the Casden Reverse Stock Split, (iii) the CPLB Reverse Stock Split, (iv) the redemption of the Casden Junior Preferred Stock in connection with the Merger, (v) in connection with scheduled dividends (including scheduled dividends in arrears) paid in cash or paid-in-kind with respect to the Casden Class A Preferred Stock and the Casden Common Stock, (vi) the distribution of the proceeds from the Commercial Sale or interests in CommercialCo, the Ross Store Sale or the Asset Purchase, or (vii) as otherwise set forth in Section 6.1(b) of the Casden Disclosure Letter, Casden shall not, nor shall Casden permit any Casden Subsidiary to, split, combine or reclassify any of their shares or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, their shares, or redeem, repurchase or otherwise acquire any shares, nor shall Casden declare or pay any distributions, nor permit any Casden Subsidiary to declare or pay any distributions in respect of any of their shares or partnership units or other equity interests other than, in the case of Casden or Casden OP, regular quarterly dividends or distributions not to exceed $0.27 per share or $0.27 per partnership unit, as the case may be. (c) ISSUANCE OF SECURITIES. Casden shall not, and shall not permit any Casden Subsidiary to, issue, agree to issue, deliver, sell, award, pledge, dispose of or otherwise encumber or authorize or propose the issuance, delivery, sale, award, pledge, disposal or other encumbrance of, any shares of any class or any securities convertible into or exchangeable for, or any rights, warrants or options to acquire, any such shares or convertible or exchangeable 52 securities, other than (i) issuances of shares upon exercise or conversion of outstanding stock options, warrants or convertible securities described in Section 4.2 hereof (ii) issuances of partnership units of the NAPICO Entities to the limited partners of such NAPICO Entities in accordance with the ordinary course of business consistent with past practice and (iii) distributions of limited liability interests in connection with the Spin-Off. The parties shall promptly furnish to each other such information as may be reasonably requested including financial information and take such action as may be reasonably necessary and otherwise fully cooperate with each other in the preparation of any registration statement under the Securities Act and other documents necessary in connection with the issuance of securities as contemplated by this Section 6.1(c), subject to obtaining customary indemnities. (d) CHARTER DOCUMENTS. Casden shall not, and shall not permit any of the Casden Subsidiaries to, amend or propose to amend its charter, bylaws or similar organizational or governing documents, other than amendments (i) to Casden's bylaws to opt out of Maryland's Control Share Act, (ii) to the Casden Charter required by Section 7.34 or (iii) to Sections 8.5(c) and 12.1(b)(iii) of the limited partnership agreement of Casden OP to shorten the notice requirement in Section 8.5(c) and to eliminate the legal opinion delivery requirement in Section 12.1(b)(iii), in each case, in connection with the Transactions. (e) ACQUISITIONS. Casden shall not, nor shall Casden permit any of the Casden Subsidiaries (other than NAPICO and the NAPICO Entities) to, (i) acquire, or publicly propose to acquire, or agree to acquire an equity interest in or the assets of, any business or any corporation, partnership, association or other business organization or division thereof (whether by merger or consolidation with, or by purchase or otherwise) (ii) acquire or agree to acquire any operating multifamily apartment complexes or communities or (iii) acquire or agree to acquire any assets, if such acquisition would adversely affect the tax-free treatment of the Merger under Section 368(a) of the Code or the treatment of AIMCO as a REIT following the Merger or Casden as a REIT prior to the Merger. (f) NO DISPOSITIONS. Casden shall not, nor shall Casden permit any of the Casden Subsidiaries (other than NAPICO and the NAPICO Entities) to, sell or dispose of any of their assets other than (i) dispositions of assets set forth on Section 6.1(f) of the Casden Disclosure Letter or (ii) the Commercial Sale, the Ross Store Sale or the Asset Purchase. (g) INDEBTEDNESS. Casden covenants and agrees that neither it nor any of the Casden Subsidiaries (other than NAPICO and the NAPICO Entities) shall incur any indebtedness other than under lines of credit existing on the date hereof and such indebtedness shall not exceed $9,000,000. (h) COMPENSATION; BENEFITS. Except as may be required by applicable law or applicable collective bargaining agreements or as contemplated by or permitted in this Agreement or as disclosed in Section 6.1(h) of the Casden Disclosure Letter, or as requested by AIMCO, Casden shall not, nor shall Casden permit any of the Casden Subsidiaries to, with respect to Affected Employees: (i) enter into, adopt or amend or increase the amount or accelerate the payment or vesting of any benefit or amount payable under, any Casden Benefit Plan or increase, 53 or enter into any Contract to increase in any manner, the compensation or fringe benefits, or otherwise to extend, expand or enhance the engagement, employment or any related rights, other than increases in connection with periodic reviews on an employee-by-employee basis in the ordinary course of business consistent with past practice; provided, however, that Casden shall be permitted to amend the terms of any stock option to allow for the net exercise of such option. (ii) enter into or amend (A) any employment, severance or special pay arrangement with respect to the termination of employment or other similar Contract, other than with respect to employees whose aggregate compensation is equal to or less than $75,000 per year, or (B) any change in control agreement or arrangement (in each case other than any severance or stay bonus arrangement referred to in Section 2(g) of the Master Indemnification Agreement); or (iii) deposit into any trust (including any "rabbi trust") amounts in respect of any obligations to Affected Employees; provided, however, that transfers into any trust, other than a rabbi or other trust with respect to any non-qualified deferred compensation, may be made in the ordinary course of business consistent with past practice. (i) ACCOUNTING. Casden shall not, nor shall Casden permit any of the Casden Subsidiaries to, make any changes in their accounting methods, except as expressly required by law, rule, regulation or GAAP. (j) AFFILIATE TRANSACTIONS. Except (i) as contemplated under the Related Transaction Documents or in connection with the Spin-Off or (ii) as set forth on Section 6.1(j) of the Casden Disclosure Letter, neither Casden (nor any of the Casden Subsidiaries) shall become a party to any Contract (other than partnership agreements which are set forth in Section 4.17 of the Casden Disclosure Letter) or engage in any transaction with any Affiliate of Casden or any Casden Subsidiary or any Person that beneficially owns 10% or more of any class of equity securities of Casden, or any Casden Subsidiary. (k) COOPERATION, NOTIFICATION. Casden shall (i) confer on a regular basis with one or more representatives of AIMCO to discuss, subject to applicable law, material operational matters and the general status of its ongoing operations, (ii) promptly notify AIMCO of any significant changes in its business, properties, assets, condition (financial or other), results of operations or prospects, and (iii) promptly provide AIMCO with copies of all filings made by Casden or any Casden Subsidiary with any state or federal court, administrative agency, commission or other Governmental Authority in connection with this Agreement and the Transactions. (l) NO BREACH, ETC. Casden shall not, nor shall Casden permit any of the Casden Subsidiaries to, willfully take any action that would result in (i) a breach of any provision of this Agreement or (ii) any of its representations and warranties set forth in this Agreement being untrue on and as of the Closing Date. (m) CONTRACTS. Except as set forth on Section 6.1(m) of the Casden Disclosure Letter, or for modifications or amendments made in the ordinary course of business consistent with past practice, Casden shall not, nor shall Casden permit any Casden Subsidiary 54 to, modify, amend, terminate, or fail to use reasonable business efforts to renew, as the case may be, any Contract material to Casden and the Casden Subsidiaries taken as a whole or waive, release or assign any material rights or claims. (n) INSURANCE. Casden shall maintain insurance with financially responsible insurance companies with respect to Casden and the Casden Subsidiaries in such amounts and against such risks and losses as are customary for entities engaged in the multi-family apartment business. (o) PERMITS. Casden shall, and shall cause the Casden Subsidiaries to, use reasonable efforts to maintain in effect all existing governmental permits which are material to the operations of Casden and the Casden Subsidiaries taken as a whole. (p) TAX MATTERS. Casden shall not, nor shall Casden permit any Casden Subsidiary to, (i) make or rescind any election relating to Taxes if such action would adversely affect the status of Casden or AIMCO as a REIT or the status of any Casden Subsidiary that is currently a partnership as a partnership for federal income tax purposes, (ii) without the written consent of AIMCO, which consent will not be unreasonably withheld, settle or compromise any material claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes unless such settlement or compromise results in a change in taxable income or Tax liability that will reverse in future periods and is therefore, by its nature, a timing difference or (iii) change in any material respect any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income tax return for the taxable year ending December 31, 1998, except as may be required by applicable law or except for such changes that would reduce consolidated federal taxable income or alternative minimum taxable income. Notwithstanding any other provision of this Agreement, in the event that, after the date hereof, Casden or any Casden Subsidiary seeks a "Closing Agreement" from the IRS or a definitive settlement agreement from the IRS or any state, local or foreign taxing authority on a matter that is subject to a representation, warranty or covenant set forth in this Agreement or any of the Related Transaction Documents, then: (A) Casden shall, or shall cause such Casden Subsidiary to, keep AIMCO informed as to the status of such agreement and any discussions, negotiations or arrangements related thereto, and (B) Casden shall not, and shall cause any such Casden Subsidiary not to, file or submit any document to any taxing authority in connection with any such agreement without first providing AIMCO with (1) copies of any such document and (2) an opportunity to review and comment on any such document prior to such filing or submission. (q) PARACHUTE PAYMENTS. Prior to the Effective Time, any agreements or arrangements that provide for benefits or payments that could constitute "parachute payments" within the meaning of Code Section 280G to "disqualified individuals" of Casden or any Casden Subsidiary shall have been approved by such number of shareholders of Casden as is required by the terms of Code Section 280G(b)(5)(B) and shall be obtained in a manner which satisfies all applicable requirements of such Code Section 280(G)(b)(5)(B) and the proposed Treasury Regulations thereunder, including (without limitation) Q-7 of Section 1.280G-1 of such proposed regulations. 55 (r) RESIGNATIONS. Casden shall obtain the resignations of all of the individuals listed in Section 4.24 of the Casden Disclosure Letter. (s) INVESTMENT REPRESENTATION LETTERS. Casden shall use its best efforts to obtain prior to the Closing Date investment representation letters, in substantially the form attached hereto as Exhibit T, from each holder receiving AIMCO Common Stock pursuant to Section 2.2 hereof (other than such Persons who are party to the Voting Agreement). Section 6.2 COVENANTS OF AIMCO. AIMCO agrees, as to itself and to each of its Subsidiaries, that after the date hereof and prior to the Effective Time or earlier termination of this Agreement: (a) COOPERATION, NOTIFICATION. AIMCO shall (i) confer on a regular basis with one or more representatives of Casden to discuss, subject to applicable law, material operational matters and the general status of its ongoing operations, (ii) promptly notify Casden of any significant changes in its business, properties, assets, condition (financial or other), results of operations or prospects, or of any complaints, investigations or hearings (or communications indicating the same may be contemplated) of or by any Governmental Authority and (iii) promptly provide Casden with copies of all filings made by AIMCO or any of its Subsidiaries with any state or federal court, administrative agency, commission or other Governmental Authority in connection with this Agreement and the Transactions. (b) ORDINARY COURSE, NO BREACH, ETC. AIMCO shall, and shall cause the AIMCO Subsidiaries to, (i) use their reasonable efforts to preserve intact their respective business organizations and goodwill and keep available the services of their respective officers and employees and (ii) not willfully take any action that would result in (A) a material breach of any provision of this Agreement or (B) any of AIMCO's material representations and warranties set forth in this Agreement being untrue on and as of the Closing Date; provided, however, that AIMCO and the AIMCO Subsidiaries may issue securities, acquire securities or assets and otherwise act in the ordinary course of their respective businesses. (c) ACCOUNTING. AIMCO shall not, nor shall AIMCO permit any AIMCO Subsidiary to, make any changes in their accounting methods, except as required by law, rule, regulation, the SEC or GAAP, and shall maintain its status as a REIT under the Code. (d) STATE SECURITIES LAWS. AIMCO shall use commercially reasonable efforts to obtain all necessary consents or approvals required pursuant to applicable state securities laws. ARTICLE VII ADDITIONAL AGREEMENTS Section 7.1 ACCESS TO INFORMATION. Upon reasonable notice, each party shall, and shall cause its Subsidiaries to, afford to the officers, directors, employees, accountants, counsel, investment bankers, financial advisors and other representatives of the other party (collectively, "Representatives") reasonable access, during normal business hours throughout the period prior to and following the Effective Time, to all of its properties, books, contracts, 56 commitments and records (including, but not limited to, Tax Returns) and, during such period, each party shall, and shall cause its Subsidiaries to, furnish promptly to the other party and its Representatives (i) access to each report, schedule and other document filed or received by it or any of its Subsidiaries pursuant to the requirements of federal or state securities laws or filed with or sent to the SEC or any other federal or state regulatory agency or commission in connection with the Transactions and (ii) access to all information concerning themselves, their Subsidiaries, directors, officers and stockholders and such other matters as may be reasonably requested by the other party in connection with any filings, applications or approvals required or contemplated by this Agreement or the Related Transaction Documents or for any other reason related to the Transactions. Without limiting the foregoing, Casden shall deliver to AIMCO, as soon as available but in any event within 90 days after the end of each fiscal quarter, a consolidated balance sheet as of the end of such quarter and the related consolidated statements of income, changes in stockholders' equity and cash flows for the fiscal quarter then ended and the period from the end of the latest fiscal year end through the end of such fiscal quarter, including, in each case, the notes thereto and, if available, any report thereon by Casden's independent accountants, in each case, prepared in accordance with GAAP, applied on a consistent basis (except as may be indicated therein or in the notes thereto) and which fairly present in all material respects the financial position of Casden and its subsidiaries, on a consolidated basis, as of the dates thereof, and the results of their operations and cash flows for the periods then ended, subject to normal recurring audit and year-end adjustments, in the case of any unaudited interim financial statements. Nothing in this Section 7.1 shall require Casden or AIMCO to take any action or furnish any access or information which would cause or would reasonably be expected to cause the waiver of any applicable attorney client privilege or the violation of any applicable law. In addition, nothing herein shall require Casden or AIMCO to provide information other than with respect to itself and its Subsidiaries, or the conduct of their businesses. Each party and its Representatives shall hold all information obtained by it pursuant to this Agreement or the Related Transaction Documents in accordance with the terms and provisions of the confidentiality agreement dated December 19, 2000 (the "Confidentiality Agreement"), which shall continue in full force and effect following execution of this Agreement. Section 7.2 REGISTRATION RIGHTS AGREEMENT. Prior to the Effective Time, AIMCO shall execute and deliver to Casden the Registration Rights Agreement (Stock) in the form attached hereto providing for, among other things, AIMCO's registration of the AIMCO Common Stock issued in the Merger. Section 7.3 LETTERS OF ACCOUNTANTS. (a) CASDEN. Casden shall use its reasonable best efforts to cause to be delivered to AIMCO (i) a report of Deloitte & Touche LLP relating to its review, in accordance with standards promulgated by the American Institute of Certified Public Accountants, of the Latest Casden Financial Statements, and (ii) a letter (or letters) of Deloitte & Touche LLP, substantially in the form attached hereto as Exhibit R, in form and substance reasonably satisfactory to AIMCO with respect to the Latest Casden Financial Statements and the Latest Casden Pro Forma Financial Information, and customary in scope and substance for letters delivered by independent public accountants in connection with acquisition transactions in which there is an exchange of stock. 57 (b) AIMCO. AIMCO shall use its reasonable best efforts to cause to be delivered to Casden and XYZ a letter of Ernst & Young LLP, a form of which is attached hereto as Exhibit S, dated a date within two business days before the Closing Date, in form and substance reasonably satisfactory to Casden and customary in scope and substance for letters delivered by independent public accountants in connection with acquisition transactions in which there is an exchange of stock. (c) COSTS. Each party shall bear its own costs for the letters described in this Section 7.3. Section 7.4 REGULATORY MATTERS. (a) HUD APPROVAL. AIMCO shall, after consultation with Casden, file or cause to be filed with HUD any documents required to be filed under any applicable law or the rules and regulations of HUD, with respect to HUD approval of the Merger and the Related Transactions ("HUD Approval"). AIMCO will use all commercially reasonable efforts to make such filings in a timely manner and Casden shall make reasonable efforts to assist AIMCO, upon request, in obtaining HUD Approval. AIMCO and Casden will respond on a timely basis to any requests for additional information made by HUD. (b) OTHER REGULATORY APPROVALS. Each party hereto shall cooperate and use its reasonable best efforts to promptly prepare and file all necessary documentation, to effect all necessary applications, notices, petitions, filings and other documents, and to use all commercially reasonable efforts to obtain all necessary permits, consents, approvals and authorizations of all Governmental Authorities necessary or advisable to obtain the Casden Required Statutory Approvals and the AIMCO Required Statutory Approvals. Section 7.5 APPROVAL OF CASDEN STOCKHOLDERS. (a) CASDEN MEETING. As soon as reasonably practical, Casden shall (i) take all steps necessary to duly call, give notice of, convene and hold a meeting of its stockholders for the purpose of securing the vote of such stockholders as is required to obtain the Casden Stockholders' Approval (together with any adjournments thereof, the "Casden Meeting"), (ii) distribute a notice of the Casden Meeting in accordance with applicable federal and state law and with the Casden Charter and Casden bylaws to the stockholders entitled to notice of and to vote at the Casden Meeting, (iii) recommend the approval of the Merger, the charter amendment effecting the Casden Reverse Stock Split and the amendment to the Casden Charter contemplated by Section 7.34 to its stockholders, and (iv) cooperate and consult with AIMCO with respect to each of the foregoing matters. (b) MEETING DATE. Casden agrees to use commercially reasonable efforts to hold the Casden Meeting not later than such date as Casden and AIMCO shall mutually determine. Section 7.6 PUBLIC ANNOUNCEMENTS. Subject to each party's disclosure obligations imposed by law and the rules of the NYSE, Casden and AIMCO will cooperate and consult with each other in the development and distribution of all news releases and other public information disclosures with respect to this Agreement or any of the Transactions and shall not 58 issue any public announcement or statement with respect hereto or thereto without the consent of the other party (which consent shall not be unreasonably delayed or withheld). The initial press releases with respect to the announcement of this Agreement and the Related Transaction Documents shall be in a form mutually agreed upon by the parties hereto and shall be issued on the date hereof. All press releases issued following the initial press releases will characterize the transaction in a manner consistent with the initial press releases. Section 7.7 NO SOLICITATION. From and after the date hereof, Casden will not, and will not authorize or permit any of its Affiliates or Representatives to, directly or indirectly, solicit, initiate or encourage (including by way of furnishing information) or take any other action to facilitate knowingly any inquiries or the making of any proposal which constitutes or may reasonably be expected to lead to an Acquisition Proposal from any Person, or engage in any discussion or negotiations relating thereto or accept any Acquisition Proposal. Casden shall immediately cease and terminate any existing solicitation, initiation, encouragement, activity, discussion or negotiation with any parties conducted heretofore by Casden, its Affiliates or its Representatives with respect to the foregoing. Section 7.8 EXPENSES. Except as otherwise provided in this Agreement, all costs and expenses incurred in connection with this Agreement, the other Transaction Documents and the Transactions shall be paid by the party incurring such expenses, it being understood that any fees or expenses of CSFB, Monga LLC, Gibson, Dunn & Crutcher LLP, Deloitte & Touche LLP, Katten Muchin Zavis and Schulte, Roth & Zabel LLP (for services rendered to and at the request of Casden or any of the Casden Subsidiaries) related to the Transactions shall be paid by Casden and Casden shall provide AIMCO written notice, at least three business days prior to the Closing Date of the aggregate amount of such fees and expenses. Section 7.9 FURTHER ASSURANCES. Each party will, and will cause its Subsidiaries to, use their respective reasonable best efforts to consummate the Transactions, including executing such further documents and instruments and taking such further actions, including applying for any necessary regulatory approvals or exemptions or any third party consents. Casden shall be primarily responsible for, and AIMCO shall cooperate with Casden in obtaining, the consents set forth on Section 4.3(b) of the Casden Disclosure Letter. If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either of Casden or the Casden Subsidiaries acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, the officers of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of Casden and each of the Casden Subsidiaries or otherwise, all such deeds, bills of sale, assignments and assurances and to take and do, in such names and on such behalves or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out the purposes of this Agreement. Each party acknowledges and agrees that they will cooperate with each other and use their respective commercially reasonable best efforts in obtaining the execution of the Tri-Party Agreement by the construction lenders and/or their agent (as such terms are defined in the Tri-Party 59 Agreement). In addition, each party acknowledges and agrees to make all amendments to the Transaction Documents as may be commercially reasonably requested by the Construction lenders (including, without limitation, separating the Tri-Party Agreement into four separate agreements to the extent required by the construction lenders named therein and/or their agent), provided that such amendments do not substantively alter the economic terms of the Tri-Party Agreement or substantially increase the parties obligations thereunder. Section 7.10 REIT STATUS. Notwithstanding anything to the contrary set forth in this Agreement or any Related Transaction Document, nothing in this Agreement or any such related Transaction Document shall prohibit Casden from taking, and Casden hereby agrees to take, any action at any time or from time to time that in the reasonable judgment of Casden or AIMCO is legally necessary for Casden to maintain its qualification as a REIT within the meaning of Sections 856-860 of the Code for any period or portion thereof ending on or prior to the Effective Time, including, without limitation, making distribution payments to Casden stockholders, which distributions shall not require the consent of AIMCO under Section 6.1(b) of this Agreement or otherwise. Section 7.11 EMPLOYEES; EMPLOYEE PLANS. (a) AFFECTED EMPLOYEES. At least thirty (30) days prior to the Effective Time, Casden shall deliver to AIMCO a final list of the employees of Casden or any Casden Subsidiary that will be given offers of employment by either CommercialCo or the Development LLC (the "Transferred Employees") indicating the entity which will offer employment to each such employee. Casden acknowledges and agrees that immediately following the Effective Time, pursuant to the Tri-Party Agreement, Development LLC will offer, or cause CommercialCo to offer, employment to the Transferred Employees. From and after the Effective Time, AIMCO shall, or shall cause the Surviving Corporation to, assume and honor the obligations of Casden and the Casden Subsidiaries with respect to their respective employees other than the Transferred Employees (the "Affected Employees"). From and after the Effective Time, AIMCO shall be the employer of the Affected Employees and shall have all rights accruing to an employer with respect to the Affected Employees. (b) VACATION AND RELATED BENEFITS. AIMCO shall, or shall cause the Surviving Corporation to, honor all unused vacation, holiday, sick and personal days accrued but unused for each Affected Employee under the policies and practices of Casden and the Casden Subsidiaries. (c) SERVICE CREDIT. In the event of any change in the welfare benefits provided to an Affected Employee under any Casden Benefit Plan, AIMCO shall, or shall cause the Surviving Corporation to, (i) waive all limitations as to preexisting conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to the Affected Employee under such new or changed plan (except to the extent that such conditions, exclusions or waiting periods would apply under any Casden Benefit Plan) and (ii) provide each Affected Employee with credit for any co-payments and deductibles paid prior to any such change in coverage in satisfying any applicable deductible or out-of-pocket requirements under such new or changed plan to the extent not previously reimbursed under any Casden Benefit Plan. AIMCO shall, or shall cause the Surviving Corporation to, provide each Affected 60 Employee with credit for all service with Casden and its Affiliates under each employee benefit plan, policy, program or arrangement in which such Affected Employee is eligible to participate, except to the extent the relevant benefits are provided under any similar Casden Benefit Plan in which such Affected Employee is entitled to participate, and except where such credit would result in a duplication of benefits with respect to the same period of service. (d) WAIVER OF CONDITIONS. On and after the Closing Date, AIMCO shall cause each AIMCO welfare plan to waive any pre-existing condition exclusions and waiting periods (except to the extent that such exclusions would have then applied or such waiting periods were not satisfied under the Casden welfare plans) with respect to the Affected Employees (and their beneficiaries). (e) ASSUMPTION OF COLLECTIVE BARGAINING AGREEMENTS. On the Closing Date, AIMCO agrees to assume and adopt the collective bargaining agreements of Casden and the Casden Subsidiaries identified in Section 4.17(b) of the Casden Disclosure Letter and to offer employment to all employees of Casden and the Casden Subsidiaries covered by those collective bargaining agreements. Section 7.12 RECORD DATES AND DIVIDEND PAYMENT DATES. AIMCO covenants and agrees that from the date hereof until the Effective Time, AIMCO shall (i) set record dates for the declaration of dividends on all its classes of equity securities and (ii) set payment dates for the payment of dividends on all its classes of equity securities, each consistent with past practice. Section 7.13 INSURANCE. AIMCO agrees to maintain in full force and effect directors' and officers' insurance and general partner liability insurance for a period of not less than six years following the Closing Date for each person covered by such insurance by Casden immediately prior to the Effective Time, each of whom is listed on Section 7.13 of the Casden Disclosure Letter; provided, however, that AIMCO shall be entitled to substitute existing policies with equivalent policies from reputable and financially sound insurers with the same or better coverage and amounts and containing terms and conditions no less favorable to such directors, officers and general partners, provided that no gap in coverage results from any such change or substitution. Section 7.14 BREACHES. Each party hereto agrees it shall promptly notify the other parties hereto in writing prior to the Closing if such party is aware of or has knowledge of another party's breach of any representation, warranty or covenant hereunder. Each such notice shall specify in reasonable detail the nature and grounds for the alleged breach, the representation, warranty or covenant to which such alleged breach relates and a good faith estimate of the estimates, damages or losses which are reasonably likely to result from such alleged breach if no curative measures are taken. Section 7.15 TRANSFER TAXES. The parties will cooperate in the preparation, execution and filing of all returns, questionnaires, applications or other documents regarding the real property transfer or gains, sales, use, transfer, value added, stock transfer and stamp taxes, and any transfer, recording, registration and other fees or similar Taxes ("Transfer Taxes") which become payable in connection with the Transactions that are required to be filed on or before the 61 Closing Date and AIMCO shall pay 100% of Transfer Taxes which become payable in connection with the Transactions. Section 7.16 NAMES AND TRADEMARKS. (a) AIMCO acknowledges and agrees that from and after the Effective Time Development LLC shall retain all right, title, and interest in and to, and shall be free to use, the Casden name and trademarks set forth in Section 7.16 of the Casden Disclosure Letter and any other names and trademarks to which Casden or any Casden Subsidiary has a legal right or claim (collectively, the "Trademarks") without restriction, including the ability to compete with AIMCO in any and all markets. From and after the Effective Time, AIMCO admits the validity of, and agrees not to challenge any, Trademark. AIMCO also agrees that any and all rights that may be acquired by the use of the Trademarks by AIMCO during the Transition Period (as defined in Section 7.16(c) below) shall inure to the sole benefit of Development LLC. From and after the Effective Time, AIMCO shall not use the Trademarks as part of its corporate name nor use any mark or name confusingly similar to the Trademarks. (b) From and after the Effective Time, AIMCO agrees not to register in the United States of America any name or mark resembling or confusingly similar to the Trademarks. From and after the Effective Time, AIMCO further agrees not to register any domain name or trademark resembling or confusingly similar to the Trademarks with Network Systems, Inc. or any other registration agency. If any application for registration is, or has been, filed with the United States Patent and Trademark Office by AIMCO which is deemed by the United States Patent and Trademark Office to be confusingly similar, deceptive or misleading with respect to any Trademark, AIMCO shall abandon any such application or registration or, from and after the Effective Time, assign it to Development LLC. AIMCO shall reimburse Development LLC, for all the costs and expenses of any oppositions, cancellation or related legal proceedings, including attorney's fees, instigated by Development LLC, from and after the Effective Time, in connection with any such registration or application. (c) AIMCO and Casden acknowledge and agree that pursuant to a separate agreement, Development LLC will agree that for a period of 90 days from the Effective Time (the "Transition Period"), Development LLC will not sue AIMCO for trademark infringement for use of the Trademarks, and further provided that the Trademarks shall only be used by AIMCO in the same manner in which they are currently used by Casden or any Casden Subsidiary. AIMCO and Casden (or Development LLC, from and after the Effective Time) may, by mutual written consent, agree to extend the Transition Period for an additional period of time. However, any use of the Trademarks beyond the Transition Period, shall constitute a material breach of this Agreement and be actionable by Development LLC. Section 7.17 PREPARATION OF TAX RETURNS. Tax Returns will be prepared in accordance with the Tax Indemnity Agreement. Section 7.18 DEPOSIT BY AIMCO. No later than the business day after the date hereof, AIMCO, Casden and Citibank, N.A. (the "Escrow Agent") shall enter into an Escrow Agreement in the form attached as Exhibit U to this Agreement (the "Escrow Agreement"), pursuant to which AIMCO shall deposit with the Escrow Agent pursuant to the terms of the 62 Escrow Agreement the sum of $7,000,000 in immediately available funds (the "Escrow Amount"). The Escrow Amount shall be (a) delivered to Casden upon termination of this Agreement in the event of a termination of this Agreement pursuant to which Casden is entitled to Liquidated Damages or (b) delivered to AIMCO to be used as part of the REIT Merger Consideration on the Closing Date. Section 7.19 TAX FREE REORGANIZATION. Unless a Taxable Election is made pursuant to Section 2.2(f), each of AIMCO and Casden shall use their reasonable best efforts to cause the Merger to qualify as a reorganization under the provisions of Section 368(a) of the Code and to obtain the tax opinion described in Section 8.3(d), including by executing and delivering the certificates and representation letters referred to therein. AIMCO shall not take any action after the Effective Time that, in the opinion of counsel to AIMCO, would prevent the Merger from qualifying as a reorganization under Section 368(a) of the Code. Section 7.20 MEZZANINE LOAN. At or after Closing, AIMCO will cause one or more mezzanine loans to be made to XYZ (the "Mezzanine Loan") on the terms and subject to the conditions set forth in the documents included in Exhibit V attached hereto (collectively, the "Mezzanine Loan Documents"). Section 7.21 PLEDGE AND GUARANTY AGREEMENTS. At or after Closing: (a) all of the members of XYZ that are affiliates of Casden or Cerberus Partners shall execute and deliver a pledge agreement substantially in the form attached hereto as Exhibit W-1 and (b) Development LLC shall execute and deliver a guaranty agreement substantially in the form attached hereto as Exhibit W-2. Section 7.22 RELEASE. Casden and each of the Casden Subsidiaries shall obtain a release (the "Release") in favor of the Surviving Corporation and its Subsidiaries substantially in the form attached as (a) Exhibit X-1 hereto from each of its directors (other than its independent directors but including any director of Casden who is affiliated with BA Casden Investors, LLC) and executive officers listed in Section 4.24 of the Casden Disclosure Letter and (b) Exhibit X-2 hereto from each of BA Casden Investors, LLC, Blackacre Park La Brea LLC, Blackacre Casden Investment, LLC, Blackacre Investment Warrant, LLC, BA Warrant Investors, LLC and each other Person who owns or has ever owned Casden Class A Preferred Stock, Casden I Warrants or Casden II Warrants. Section 7.23 QUESTIONNAIRES. Within 10 days of the date hereof, Casden shall submit the General Questionnaire to each manager and assistant manager of the Owned Properties and the Leased Properties and each regional supervisor employed by Casden, the Casden Subsidiaries (other than NAPICO and the NAPICO Entities). Casden shall submit the General Questionnaire to the asset manager or property manager of each NAPICO Property. Casden shall request that each of the persons receiving a Questionnaire, complete such General Questionnaire as accurately and completely as possible and use its best efforts to obtain the completed General Questionnaire as soon as possible, and shall provide complete and correct copies of the responses to the General Questionnaire promptly upon the receipt of each such response but in no event later than 20 days prior to the Effective Time. 63 Section 7.24 CPLB DISTRIBUTION. On or prior to the date of the OP Contribution, Casden shall cause Casden OP to distribute to Casden 100% of Casden OP's interest in CPLB, pursuant to the form of such instrument of assignment attached hereto as Exhibit Y. Section 7.25 COMMERCIAL PROPERTIES. On or prior to the date of the OP Contribution, Casden shall cause either the Spin-Off to occur or the Commercial Properties to be sold to and the Commercial Debt to be assumed by CommercialCo. Section 7.26 LEGAL MATTERS. Within ten business days prior to the Closing Date, Casden shall provide, or shall cause to be provided, to AIMCO: (i) the name, telephone number and address of the person or persons who shall be responsible following the Effective Time for supervising, controlling and making ultimate decisions with respect to the actions set forth in Section 4.6(ii); (ii) the names, addresses, and telephone numbers of all counsel of record in each of those lawsuits, identifying each counsel's respective client(s); (iii) the most recent offers/demands in those lawsuits, including both monetary and nonmonetary aspects of such demands and offers; and (iv) the procedural status of each of those lawsuits. Section 7.27 RESERVATION OF AIMCO STOCK. AIMCO covenants and agrees that prior to the Effective Time it will take all necessary actions to reserve for issuance a sufficient amount of shares of AIMCO Common Stock to be issued in the Merger. Section 7.28 CASDEN WARRANTS. Casden covenants and agrees that prior to the Closing Date, Casden will amend each Casden I Warrant and each Casden II Warrant such that at the Effective Time, (i) each then outstanding unexercised Casden I Warrant shall terminate and (ii) each then outstanding unexercised Casden II Warrant shall terminate. Section 7.29 MATERIAL ADVERSE EFFECTS; KNOWLEDGE OF BREACHES. (a) Casden shall promptly notify AIMCO of any event or condition (i) of which Casden obtains knowledge which individually or in the aggregate would reasonably be expected to constitute a Casden Material Adverse Effect, (ii) which, if known as of the date hereof, would have been required to be disclosed to AIMCO or (iii) of which Casden obtains knowledge which individually or in the aggregate would reasonably be expected to give rise to Casden's right to terminate this Agreement pursuant to Article 9 hereof. (b) AIMCO shall promptly notify Casden of any event or condition (i) of which AIMCO obtains knowledge which individually or in the aggregate would reasonably be expected to constitute an AIMCO Material Adverse Effect, (ii) which, if known as of the date hereof, would have been required to be disclosed to Casden or (iii) of which AIMCO obtains knowledge which individually or in the aggregate would reasonably be expected to give rise to AIMCO's right to terminate this Agreement pursuant to Article 9 hereof. Section 7.30 LITIGATION. AIMCO shall have monitoring rights on any action set forth on Section 4.6(ii) of the Casden Disclosure Letter and any Proceeding assumed by the Casden Indemnitors (as defined in the Master Indemnification Agreement) pursuant to the Master Indemnification Agreement. After the Closing Date, as often as AIMCO may reasonably request, but in no event more often than every six months, XYZ shall provide an amended Section 4.6(ii) of the Casden Disclosure Letter, updating the information previously provided. 64 AIMCO shall have the right to reasonably request further information or any documents with respect to any or all litigation on Section 4.6(ii) of the Casden Disclosure Letter, which XYZ shall provide within twenty (20) days of receipt of AIMCO's request. Section 7.31 LISTING OF SHARES. AIMCO shall cause the shares of AIMCO Common Stock issuable in connection with the Merger to be approved for listing on the NYSE upon official notice of issuance prior to the Effective Time. Section 7.32 NAPICO SYNDICATED PROPERTIES. Within ten business days prior to the Closing Date, Casden shall provide, or cause to be provided, to AIMCO, the name and state of organization, of and ownership interest in, each Person in which the NAPICO Entities holds an ownership interest and each real property (except for the NAPICO Properties) in which any fund sponsored by NAPICO has a limited partnership ownership interest (the "NAPICO Syndicated Properties"). Section 7.33 COMPLIANCE WITH THE MGCL. Each of the parties agrees to use their respective best efforts and take all reasonable steps to ensure that the Transactions contemplated by this Agreement and the Alternative Merger (as defined in the OP Unit Contribution Agreement), if consummated, complies with all applicable provisions of the MGCL. Section 7.34 CASDEN CHARTER. Prior to the Effective Time, Casden shall amend the Casden Charter to (i) effect the Casden Reverse Stock Split, (ii) provide that the consideration to be received by the holders of Casden Common Stock in the Merger may vary among the holders of Casden Common Stock and (iii) provide that, upon effectiveness the Merger, AIMCO may deliver to any holder of Casden Common Stock that AIMCO reasonably believes may not be an accredited investor (as defined in Rule 501(a) of the Securities Act), in lieu of any shares of AIMCO Common Stock otherwise deliverable to such holder upon the effectiveness of the Merger, cash in amount equal to the number of shares of Casden Common Stock held by such holder, multiplied by the Per Share Common Consideration. Section 7.35 NAPICO PROPERTY CONSENTS. Within 20 days after the date hereof, Casden shall deliver to AIMCO a schedule setting forth (x) each construction lender under any construction loan encumbering any of the NAPICO Properties and (y) each lender or housing agency in connection with any tax exempt bond financing affecting any of the NAPICO Properties, in either case, the consent or approval of which is necessary to prevent or avoid a Violation by Casden or any of the Casden Subsidiaries as a result of the execution and delivery of this Agreement or any of the Related Transaction Documents or the consummation or performance of any of the Transactions (any and all such consents and approvals, the "NAPICO Property Consents" and, together with the Casden Property Consents, the "Casden Required Consents"). Section 7.36 CLOSING PAYOFF AMOUNTS. At the Effective Time, AIMCO shall pay, or cause to be paid, the amounts set forth in Schedule 2.1(a). 65 ARTICLE VIII CONDITIONS Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The respective obligations of each party to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of the following conditions, except, to the extent permitted by applicable law, that such conditions may be waived in writing pursuant to Section 9.5 by the joint action of the parties hereto: (a) CASDEN STOCKHOLDERS' APPROVAL. The Casden Stockholders' Approval shall have been obtained. (b) NO INJUNCTION. No temporary restraining order or preliminary or permanent injunction or other order by any federal or state court preventing consummation of the Merger or the Related Transactions shall have been issued and be continuing in effect. (c) NO CHANGE IN LAW. The Transactions shall not have been prohibited under any applicable federal or state law or regulation adopted or amended after the date hereof. (d) STATE SECURITIES LAWS. All necessary consents or approvals required pursuant to applicable state securities laws shall have been obtained. (e) RELATED TRANSACTIONS. Except as expressly set forth in the Related Transaction Documents, each of the Related Transactions shall be completed prior to or concurrently with the Contribution Effective Date or the Effective Time, as applicable. (f) HUD. Approval of the Transactions by HUD shall have been obtained. Section 8.2 CONDITIONS TO OBLIGATION OF AIMCO TO EFFECT THE MERGER. The obligation of AIMCO to effect the Merger shall be subject to the satisfaction, on or prior to the Closing Date, of the following conditions, except as may be waived by AIMCO in writing pursuant to Section 9.5: (a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and warranties of Casden set forth in this Agreement shall be true and correct (i) on and as of the date hereof and (ii) on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date (except for representations and warranties that expressly speak only as of a specific date or time which need only be true and correct as of such date or time) and Casden and each Casden Subsidiary shall have performed in all material respects each of their respective obligations required to be performed prior to the Effective Time pursuant to this Agreement; provided, however, that this condition to the obligation of AIMCO to consummate the Merger shall be deemed satisfied if the aggregate loss, cost, damage or expense to AIMCO, if the Transactions were consummated, as a result of breaches of such representations and warranties (without giving effect to any materiality qualification or standard contained in any such representations and warranties) when aggregated with failures to comply with covenants by Casden would not reasonably be expected to exceed $100 million. 66 (b) CLOSING CERTIFICATE. AIMCO shall have received a certificate, signed by the chief executive officer of Casden, dated the Closing Date, to the effect that, to the best of such officer's knowledge, the condition set forth in Section 8.2(a) with respect to Casden has been satisfied. (c) OPINION OF CASDEN'S MARYLAND COUNSEL. Casden shall have caused to be delivered to AIMCO the opinion of Ballard Spahr Andrews & Ingersoll, LLP (or another nationally recognized law firm acceptable to AIMCO) to the effect that this Agreement and the Articles of Merger are enforceable under Maryland law, that all requisite approvals have been obtained, at the Effective Time all shares of Casden Capital Stock exchanged in connection with the Merger are validly issued, fully paid and non-assessable and not subject to preemptive rights, and as to such other matters as are customary in a transaction such as the Merger. AIMCO agrees that the forms of opinion attached hereto as Exhibit 8.2(c)-1 and Exhibit 8.2(c)-2 shall be acceptable to AIMCO and that the failure of Casden to deliver either such opinion shall constitute a breach of Section 7.9 by Casden unless such failure shall be due solely to a change in law (statutory or case law) or regulation occurring after the date hereof. (d) OPINION OF CASDEN'S SPECIAL COUNSEL. Casden shall have caused to be delivered to AIMCO (i) the opinion of Gibson, Dunn & Crutcher LLP or such other counsel reasonably acceptable to AIMCO to the effect that each of the Transaction Documents constitutes the valid and binding obligation of Casden, XYZ and/or the other parties thereto (other than AIMCO), as applicable, and that such agreements are enforceable against Casden, XYZ and/or the other parties thereto (other than AIMCO), as applicable, in accordance with their terms (with customary exceptions, assumptions and qualifications and based on customary representations); (ii) the opinion of Delaware counsel reasonably acceptable to AIMCO to the effect that, with respect to matters of Delaware law, each of the Related Transaction Documents are enforceable against Casden, XYZ and/or the parties thereto (other than AIMCO), as applicable, in accordance with their terms (with customary exceptions, assumptions and qualifications and based on customary representations); and (iii) the opinion of counsel reasonably acceptable to AIMCO to the effect that (A) each of Cerberus Partners, LP, BA Casden Investors LLC, Blackacre Park La Brea LLC, Blackacre Capital Management LLC ("Blackacre") and the Blackacre entity which will be a signatory to the Development LLC Agreement (collectively, the "Blackacre Parties") is duly organized, validly existing and in good standing in the jurisdiction of its formation, and (B) each of the Related Transaction Documents is duly authorized by, and constitutes the valid and binding obligation of, the Blackacre Parties which are parties thereto, as applicable, and that such agreements are enforceable against the Blackacre Parties which are parties thereto, as applicable, in accordance with their terms (with customary exceptions, assumptions and qualifications and based on customary representations). AIMCO agrees that the form of opinion attached hereto as Exhibit 8.2(d) shall be acceptable to AIMCO with respect to Casden's obligation pursuant to clause (i) hereof and that the failure of Casden to deliver any opinion required by this Section 8.2(d) shall constitute a breach of Section 7.9 by Casden unless such failure shall be due solely to a change in law (statutory or case law) or regulation occurring after the date hereof. (e) CASDEN REQUIRED STATUTORY APPROVALS. Casden shall have obtained each of the Casden Required Statutory Approvals and delivered copies thereof to AIMCO. 67 (f) CASDEN REIT OPINION. Casden shall have caused to be delivered to AIMCO the opinion of Gibson, Dunn & Crutcher LLP, dated as of the Effective Time, reasonably satisfactory to AIMCO that, for each taxable year since formation ending on or before the Effective Time (including the short taxable year ending immediately prior to the Effective Time), Casden was organized and has operated in conformity with the requirements for qualification as a REIT under the Code (with customary exceptions, assumptions and qualifications), substantially in the form attached hereto as Exhibit 8.2(f). Such opinion shall also be addressed to BA Casden Investors, LLC and may rely upon an officer's certificate of Casden and an officer's certificate of BA Casden Investors, LLC. The failure of Casden to deliver such opinion to AIMCO shall constitute a breach of Section 7.9 by Casden unless such failure shall be due solely to a change in law (statutory or case law) or regulation occurring after the date hereof. (g) LETTER OF CASDEN'S ACCOUNTANTS. AIMCO shall have received letters from Deloitte & Touche LLP, addressed to AIMCO and dated within two business days prior to the Closing Date, in form and substance reasonably satisfactory to AIMCO with respect to the most recent Casden Financial Statements. (h) RELEASES. AIMCO shall have received duly executed Releases from: (i) each director of Casden (other than the independent directors but including any director of Casden who is affiliated with BA Casden Investors, LLC) and each executive officer of Casden listed in Section 4.24 of the Casden Disclosure Letter and (ii) BA Casden Investors, LLC, a Delaware limited liability company, Blackacre Park La Brea LLC, a Delaware limited liability company, Blackacre Casden Investment, LLC, Blackacre Investment Warrant, LLC, BA Warrant Investors, LLC and each other Person who owns or has ever owned Casden Class A Preferred Stock, Casden I Warrants or Casden II Warrants. (i) CONSENTS. Casden shall have obtained each of the Casden Required Consents, each of which shall be in full force and effect, and delivered copies thereof to AIMCO. (j) RESIGNATIONS. Casden shall have obtained the resignations of all of the individuals listed in Section 4.24 of the Casden Disclosure Letter and delivered copies thereof to AIMCO. (k) LITIGATION INFORMATION. Casden shall have provided the information specified in Section 7.26 to AIMCO. (l) NAPICO DISCLOSURE. Casden shall have provided the information specified in Section 7.32 to AIMCO. Section 8.3 CONDITIONS TO OBLIGATION OF CASDEN TO EFFECT THE MERGER. The obligation of Casden to effect the Merger shall be subject to the satisfaction, on or prior to the Closing Date, of the following conditions, except as may be waived by Casden in writing pursuant to Section 9.5. (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of AIMCO set forth in this Agreement shall be true and correct (i) on and as of the date hereof and (ii) on and as of the Closing Date with the same effect as though such 68 representations and warranties had been made on and as of the Closing Date (except for representations and warranties that expressly speak only as of a specific date or time which need only be true and correct as of such date or time) and AIMCO and each AIMCO Subsidiary shall have performed in all material respects each of their respective obligations required to be performed prior to the Effective Time pursuant to this Agreement; provided, however, that this condition to the obligation of Casden to consummate the Merger shall be deemed satisfied if the aggregate loss, cost, damage or expense to Casden, if the Transactions were consummated, as a result of breaches of such representations and warranties (without giving effect to any materiality qualification or standard contained in any such representations and warranties) when aggregated with failures to comply with covenants by AIMCO would not reasonably be expected to exceed $100 million. (b) CLOSING CERTIFICATE. Casden shall have received a certificate signed by an executive officer of AIMCO, dated the Closing Date, to the effect that, to the best of such officer's knowledge, the condition set forth in Section 8.3(a) has been satisfied. (c) OPINION OF AIMCO'S MARYLAND COUNSEL. AIMCO shall have caused to be delivered to Casden and XYZ the opinion of Piper Marbury Rudnick & Wolfe LLP (or another nationally recognized law firm acceptable to Casden) to the effect that this Agreement and the Articles of Merger are enforceable under Maryland law, that all requisite approvals have been obtained, and at the Effective Time upon issuance thereof in accordance with the terms of this Agreement, such shares of AIMCO Common Stock issued in connection with the Merger will be validly issued, fully paid and non-assessable and not subject to preemptive rights, and as to such other matters as are customary in a transaction such as the Merger. Casden agrees that the form of opinion attached hereto as Exhibit 8.3(c) shall be acceptable to Casden and that the failure of AIMCO to deliver such opinion shall constitute a breach of Section 7.9 by AIMCO unless such failure shall be due solely to a change in law (statutory or case law) or regulation occurring after the date hereof. (d) MERGER OPINION. Unless a Taxable Election is made pursuant to Section 2.2(f), Casden shall have received an opinion of Gibson, Dunn & Crutcher LLP (or another nationally recognized law firm acceptable to Casden) that, based upon certificates and letters acceptable to Gibson, Dunn & Crutcher LLP (or another nationally recognized law firm acceptable to Casden) dated as of the Closing Date, the Merger will qualify as a "reorganization" within the meaning of Section 368 of the Code (with customary exceptions, assumptions and qualifications and based on customary representations). Such opinion shall also be addressed to BA Casden Investors, LLC, AIC, TCC and CIC. Casden agrees that an opinion substantially in the form attached as Exhibit 8.3(d)(i) hereto shall be acceptable to Casden and that the failure of Casden to obtain delivery of such opinion shall constitute a breach of Section 7.9 by Casden unless such failure shall be due solely to (i) a change in the law (statutory or case law) or regulation occurring after the date hereof or (ii) the failure of AIMCO to deliver to such counsel an officers' certificate in substantially the form attached hereto as Exhibit 8.3(d)(ii), in which case such failure of AIMCO shall constitute a breach by AIMCO of Section 7.9 and shall not be considered a breach by Casden of Section 7.9. (e) OPINION OF AIMCO'S COUNSEL. AIMCO shall have caused to be delivered to Casden and XYZ the opinion of Skadden, Arps, Slate, Meagher & Flom LLP (or 69 another nationally known law firm acceptable to Casden) to the effect that each of the Transaction Documents to which AIMCO is a party constitutes the valid and binding obligation of AIMCO and AIMCO OP, and that such agreements are enforceable against AIMCO and AIMCO OP, in accordance with their terms (with customary exceptions, assumptions and qualifications and based on customary representations). Casden agrees that an opinion substantially in the form attached as Exhibit 8.3(e) hereto shall be acceptable to Casden and that the failure of AIMCO to deliver such opinion shall constitute a breach of Section 7.9 by AIMCO unless such failure shall be due solely to a change in law (statutory or case law) or regulation occurring after the date hereof. (f) TRADING OF AIMCO COMMON STOCK. AIMCO Common Stock shall be listed and admitted for trading on the NYSE and there shall have occurred trading of AIMCO Common Stock on each of the five (5) trading days immediately prior to the Closing Date. (g) LISTING OF SHARES. The shares of AIMCO Common Stock issuable in connection with the Merger shall have been approved for listing on the NYSE upon official notice of issuance. The parties acknowledge and agree that if Casden elects to waive this condition in the event it is not satisfied, such waiver will not constitute a waiver of (or absolve AIMCO from liability for) the breach of the covenant in Section 7.31. (h) AIMCO REQUIRED STATUTORY APPROVALS. Each of the AIMCO Required Statutory Approvals shall have been obtained. ARTICLE IX TERMINATION, AMENDMENT AND WAIVER Section 9.1 TERMINATION. This Agreement may be terminated at any time prior to the Closing Date, whether before or after obtaining the Casden Stockholders' Approval, only: (a) by mutual written consent of the respective Boards of Directors of Casden and AIMCO; (b) (i) by either AIMCO or Casden if there has been any breach by the other party of any representation or warranty set forth in this Agreement, or failure by the other party to comply with any of its covenants or obligations set forth in this Agreement and which breach or failure individually or together with the other breaches or failures by such other party that have not been cured would result in losses, costs, damages or expenses to the terminating party, if the Transactions were consummated that would reasonably be expected to exceed $100 million, and which breach or failure has not been cured within 30 days following receipt by the breaching or failing party of notice of such breach or failure or adequate assurance of such cure shall not have been given by or on behalf of the breaching or failing party within such 30 day period or (ii) by AIMCO or Casden, if any state or federal law, order, rule or regulation is adopted or issued after the date hereof, which has the effect, as supported by the written opinion of outside counsel for such party, of prohibiting any of the Transactions, or if any court of competent jurisdiction in the United States or any state shall have issued an order, judgment or 70 decree permanently restraining, enjoining or otherwise prohibiting any of the Transactions, and such order, judgment or decree shall have become final and non-appealable; provided, however, that the party seeking to terminate this Agreement as a result of any such injunction or prohibition shall have used all reasonable efforts to remove such injunction or overturn such prohibition; (c) by either AIMCO or Casden, by written notice to the other party, if the Effective Time shall not have occurred on or before the six month anniversary of the date hereof (the "Termination Date") subject to AIMCO's and Casden's right to postpone the Closing pursuant to the proviso in Section 3.1; provided, however, that in the event the parties have not obtained approval of the Transactions by HUD by the Termination Date, such date may be extended at the election of AIMCO or Casden for one-month periods (up to an additional six months) pending such approval; provided, further, that the right to terminate this Agreement under this Section 9.1(c) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or before the Termination Date; or (d) by Casden if (i) all of AIMCO's conditions to closing set forth in Section 8.1 and Section 8.2 have been satisfied, (ii) within 10 days of receiving notice of Casden's intent to terminate pursuant to this Section 9.1(d), AIMCO has failed to close and (iii) at such time AIMCO is not entitled to terminate this Agreement pursuant to Article IX. Section 9.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 9.1 by either Casden or AIMCO, except as expressly provided in Section 9.3(a) below, no party hereto shall have any liability to any other party with respect to this Agreement or the transactions contemplated hereby and this Agreement shall be of no further force or effect; provided, however that notwithstanding the foregoing, Sections 9.1, 9.2, 9.3, 9.4, 9.6, 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7 and 10.8 shall survive the termination indefinitely (unless otherwise specifically provided therein). Section 9.3 TERMINATION FEES. (a) CASDEN LIQUIDATED DAMAGES. If the Merger is not consummated and Casden terminates this Agreement pursuant to Sections 9.1(b) or 9.1(d) above, (i) Casden shall be entitled to receive the Escrow Amount from the Escrow Agent and (ii) AIMCO shall pay to Casden in cash liquidated damages in the amount of $50 million (the amounts received by Casden pursuant to the foregoing clauses (i) and (ii), collectively, the "Liquidated Damages"); provided, however, that Casden shall not be entitled to receive the Liquidated Damages if AIMCO is entitled to terminate this Agreement pursuant to Section 9.1 above. The payment of the Liquidated Damages shall be compensation and liquidated damages for the loss suffered by Casden as the result of the failure to consummate the Merger and the Related Transactions and to avoid the difficulty of determining damages under the circumstances, and AIMCO and AIMCO OP shall not have any liability to Casden, other than the payment of the Liquidated Damages if the Merger is not consummated. 71 (b) NO PENALTY. The parties agree that the agreements contained in this Section 9.3 are an integral part of the transactions contemplated by this Agreement and constitute liquidated damages and not a penalty. Section 9.4 AMENDMENT. This Agreement may be amended by the parties hereto (or by Casden pursuant to Section 2.2(g)) at any time before or after the Casden Stockholders' Approval and prior to the Effective Time, subject to the requirements of the MGCL. Other than pursuant to Section 2.2(g), this Agreement may not be amended except by a written instrument signed on behalf of each of the parties hereto. Section 9.5 WAIVER. At any time prior to the Effective Time, a party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions of the other party contained herein, to the extent permitted by applicable law. Any agreement on the part of a party hereto to any such extension or waiver shall be valid if set forth in an instrument in writing signed on behalf of such party. Section 9.6 DAMAGES. Notwithstanding any other provision herein, the parties agree that if the Merger is consummated, the sole remedy of any such party for any other party's breach of representations or warranties or failure to comply with covenants, and any failure to satisfy any condition, shall be the right to collect damages for any breach of representations or warranties or failure to comply with covenants or to satisfy any condition, to the extent provided in the Master Indemnification Agreement (or, with respect to Tax matters, the Tax Indemnity Agreement). The representations and warranties of the parties contained herein shall survive the Effective Time in accordance with the terms of the Master Indemnification Agreement. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or agreement, will not affect the right to indemnification or other remedy based on such representations, warranties, covenants and agreements; provided, however, that if either party has knowledge prior to the Closing Date of any breach of any covenant or any inaccuracy of any representation or warranty contained in this Agreement prior to the Closing Date and such party did not comply with its Pre-Closing Notice (as defined in the Master Indemnification Agreement) obligation pursuant to the Master Indemnification Agreement, such party shall not be entitled to indemnification under the Master Indemnification Agreement for such breach or inaccuracy, except as pursuant to the Tax Indemnity Agreement. ARTICLE X GENERAL PROVISIONS Section 10.1 BROKERS. Casden represents and warrants that, except for CSFB and Monga LLC whose fees have been disclosed to AIMCO prior to the date hereof, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Casden. AIMCO represents and warrants that no broker, finder or investment banker is entitled to any 72 brokerage, finder's or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of AIMCO. Section 10.2 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given (a) when delivered personally, (b) when sent by reputable overnight courier service, or (c) when telecopied (which is confirmed by copy sent within one business day by a reputable overnight courier service) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) If to Casden (or XYZ, after the Effective Time), to: Casden Properties Inc. (or XYZ, after the Effective Time) 090 Wilshire Boulevard Beverly Hills, CA 90211 Attn: Andrew J. Starrels Telecopy: (310) 273-8418 Telephone: (310) 385-3057 with copies (which shall not constitute notice) to: Gibson, Dunn & Crutcher LLP 333 South Grand Avenue Los Angeles, CA 90071 Attn: Jesse Sharf, Esq. and Scott Calfas, Esq. Telecopy: (213) 229-6638 Telephone: (213) 229-7638 Blackacre Capital Management, LLC 450 Park Avenue, 28th Floor New York, NY 10022 Attn: Mark Neporent/Ronald J. Kravit Telecopy: (212) 891-2104 Telephone: (212) 891-1540 Katten Muchin Zavis 525 West Monroe Street, Suite 1600 Chicago, IL 60661-3696 Attn: Nina Matis, Esq. Telecopy: (312) 902-5560 Telephone: (312) 902-1061 and Schulte, Roth & Zabel LLP 919 Third Avenue New York, NY 10022 Attn: Alan Waldenberg, Esq. Telecopy: (212) 756-2501 Telephone: (212) 593-5955 73 (ii) If to AIMCO, to: Apartment Investment and Management Company 18350 Mt. Langley Avenue, Suite 220 Fountain Valley, CA 92708 Attn: Peter K. Kompaniez Telecopy: (714) 593-1703 Telephone: (714) 593-1733 and Apartment Investment and Management Company 2000 South Colorado Boulevard Tower Two, Suite 2-1000 Denver, CO 80222 Attn: Terry Considine and Harry Alcock Telecopy: (303) 753-9538 Telephone: (303) 691-4330 and Apartment Investment and Management Company Tower Two 2000 South Colorado Boulevard Suite 2-1000 Denver, CO 80222 Attn: Terry Considine and Harry Alcock Telecopy: (303) 691-5662 Telephone: (303) 691-4344 with copies (which shall not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP 4 Times Square New York, NY 10036 Attn: Joseph A. Coco, Esq. Telecopy: (212) 735-2000 Telephone: (212) 735-3000 Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue Los Angeles, CA 90071 Attn: Jonathan L. Friedman, Esq. Telecopy: (213) 687-5600 Telephone: (213) 687-5000 Section 10.3 MISCELLANEOUS. This Agreement, the Related Transaction Documents, the Confidentiality Agreement and the documents and instruments referred to herein and therein constitute the entire agreement and supersede all other prior or contemporaneous oral or written agreements and understandings among the parties, or any of them, with respect to the 74 subject matter hereof and thereof. This Agreement shall not be assigned by any party and shall be governed by and construed in accordance with the laws of the State of New York, including Sections 5-1401 and 5-1402 of the New York General Obligations Law and New York Civil Practice Laws and Rules 327(b), except to the extent the provisions of this Agreement (including the documents or instruments referred to herein) are expressly governed by or derive their authority from the MGCL. Section 10.4 INTERPRETATION. When a reference is made in this Agreement to Sections or Exhibits, such reference shall be to a Section or Exhibit of this Agreement, respectively, unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." Section 10.5 COUNTERPARTS; EFFECT. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Section 10.6 PARTIES' INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement, except that the directors, officers and general partners covered by the insurance referred to in Section 7.13 shall have the right to enforce such provisions. Section 10.7 ENFORCEMENT. (a) The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached until the consummation of the Merger. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the State of New York or in New York state court, this being in addition to any other remedy to which they are entitled pursuant to this Agreement, the Master Indemnification Agreement or the Tax Indemnity Agreement; provided, however, that following the consummation of the Merger, specific performance of the terms of this Agreement (other than under Section 7.30) shall no longer be available. (b) In addition, each of the parties hereto (i) consents to submit itself to the personal jurisdiction of any federal court located in the State of New York or any New York state court in the event any dispute arises out of this Agreement or any of the Transactions, (ii) agrees that it will not attempt to deny such personal jurisdiction by motion or other request for leave from any such court and (iii) agrees that it will not bring any action relating to this Agreement, the Related Transaction Documents or any of the Transactions in any court other than a federal or state court sitting in the State of New York. 75 Section 10.8 SEVERABILITY. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or entity or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons, entities or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. [signature page follows] 76 IN WITNESS WHEREOF, AIMCO, Casden and XYZ have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above. APARTMENT INVESTMENT AND MANAGEMENT COMPANY By: /s/ PETER KOMPANIEZ ----------------------------------------- Name: Peter Kompaniez ------------------------------------ Title: President ----------------------------------- CASDEN PROPERTIES INC. By: /s/ ALAN I. CASDEN ----------------------------------------- Name: Alan I. Casden ------------------------------------ Title: Chairman ----------------------------------- XYZ HOLDINGS LLC By: /s/ CASDEN INVESTMENT CORP. ----------------------------------------- its Managing Member By: /s/ ALAN I. CASDEN ----------------------------------------- Name: Alan I. Casden --------------------------------------- Title: Chairman -------------------------------------- REIT MERGER AGREEMENT SIGNATURE PAGE SCHEDULE 2.1(a) 1. Comerica Loan. $8,119,583 plus unpaid interest accrued from January 1, 2002 through the Effective Time, pursuant to the Loan Agreement and Addendum, between Comerica Bank-California and Casden OP, dated as of June 22, 2000 and the Floating Rate Note, by Casden OP in favor of Comerica Bank-California, dated June 22, 2000. 2. BCM Madeleine Loan. $20,000,000 plus unpaid interest accrued from January 1, 2002 through the Effective Time, pursuant to the Promissory Note by Casden OP in favor of Madeleine LLC, dated February 7, 2000. 3. BCM/AIC Glendon Loan. $14,462,784 plus unpaid interest accrued from January 1, 2002 through the Effective Time, pursuant to a Letter Agreement dated February 8, 2000 as evidenced by a Promissory Note dated February 7, 2000. 4. Declared and Unpaid Common Dividends. $23,486,403 for declared and unpaid dividends on the Casden Common Stock, or such lesser or greater amount as is outstanding on the Closing Date. 5. Declared and Unpaid Preferred Dividends. $22,824,000 for declared and unpaid cash dividends on the Casden Class A Preferred Stock, or such lesser or greater amount as is outstanding on the Closing Date. 6. Payables to AIC. $2,101,447 of payables to AIC pursuant to (i) Note-Straight for a loan made by The Casden Company to National Partnership Investments Corp. in the amount of Two Hundred Thousand Dollars ($200,000) dated February 14, 2000; (ii) Note-Straight for a loan made by The Casden Company to National Partnership Investments Corp. in the amount of Seven Hundred Thousand Dollars ($700,000) dated January 28, 2000; (iii) Note-Straight for a loan made by The Casden Company to National Partnership Investments Corp. in the amount of One Million Four Hundred Thousand Dollars ($1,400,000) dated October 14, 1999; and (iv) Note-Straight for a loan made by The Casden Company to National Partnership Investments Corp. in the amount of Five Hundred Thirty One Thousand Nine Hundred and Nine Dollars ($531,909) dated August 29, 2000 (principal has been paid, however interest at 12% from August 29, 2000 to October 31, 2001 in the amount of $5,946.00, remains unpaid). 7. Jr. Preferred Liquidation Amount. $10,015,250 plus accumulated and unpaid dividends to the Effective Time. 8. Reverse Stock Split. Amounts paid to former stockholders as a result of the Reverse Stock Split in lieu of the issuance of fractional shares. 9. Transaction Expenses. The expenses contemplated by Section 7.8 which are incurred after the date hereof or are otherwise due and payable at Closing (which are currently estimated to be $13 million). SCHEDULE 2.1(b) MORTGAGE DEBT [Attached] CASDEN PROPERTIES INC. SCHEDULE 2.1(b) 09/30/2001 Mortgage Debt
TOTAL TOTAL INTEREST MORTGAGE DEBT MORTGAGE DEBT CHANGE FROM DEVELOPMENT NAME RATE AT 9/30/2001 AT 6/30/2001 PRIOR PERIOD ---------------- -------- ------------- ------------- ------------ 1 Broadcast Center 3.9% 34,000,000 2 Canyon Terrace 7.5% 6,057,108 3 Creekside Apts 3.8% 19,070,000 4 Crescent Gardens 4.0% 10,700,000 5 Indian Oaks 4.0% 15,500,000 6 Lakes 3.8% 75,600,000 7 Malibu Canyon 3.9% 46,900,000 8 Mariners Cove 5.6% 11,586,059 Pro forma adjustment (7,165,987) ------------- ------------- ------------ 212,247,180 213,147,880 (900,700) ------------- ------------- ------------ 9 Loch Haven 8.4% 4,710,147 10 HillCreste 7.0% 56,000,000 11 Peppertree 8.5% 6,437,903 12 Pine Lake Terrace 8.5% 4,555,293 13 Rosewood 8.4% 8,119,778 14 Topanga 49 7.0% 2,880,539 15 Villa del Sol 8.4% 4,950,727 16 Village Grove 8.5% 3,664,446 ------------- ------------- ------------ 91,318,833 91,404,989 (86,156) ------------- ------------- ------------ 1 Beacon Hill 7.9% 6,234,929 2 Berger 8.3% 3,741,289 3 Berkeley Gardens 7.0% 1,255,923 4 Boulevard Towers 7.3% 5,655,723 5 Casa de Las Hermanitas 13.5% 2,672,686 6 Cherry Ridge Terrace 12.5% 1,689,518 7 Creekview 7.5% 1,905,368 8 Denny Place 8.5% 2,015,782 9 Echo Valley 6.8% 424,983 10 Edgewater 7.0% 6,918,779 11 Friendship Arms 7.7% 3,682,378 12 Hemet Estates 9.2% 2,389,727 13 Hudson Gardens 8.6% 1,280,414 14 King Towers 8.5% 717,583 15 Locust House 7.7% 1,987,372 16 Norristown 7.4% 5,090,922 17 Northwinds (Arrowhead) 7.4% 2,392,132 18 Oxford House 6.3% 4,465,849 19 Palm Springs Senior 13.0% 4,100,485 20 Parkview 9.3% 3,067,163 21 Paula Maria II (City Line) 7.0% 2,387,491 22 Prospect Towers 7.3% 2,572,917 23 Ridgewood 9.3% 2,215,685 24 Round Barn 6.8% 4,718,168 25 South Park 8.5% 591,195 26 Sterling Village 9.2% 2,392,900 27 Westwood Terrace 6.8% 2,642,300 28 Willowwood 8.5% 1,925,190 29 Bangor House 7.8% 3,520,643 30 Chidester Place 8.0% 2,915,000 31 Daugette Towers 7.9% 1,562,544 32 East Central Towers 7.5% 3,664,989 33 Freeland 8.1% 1,215,000 34 Grant Park 8.5% 4,354,808 35 Kern Villa 7.5% 2,197,801 36 New Baltimore 7.6% 1,699,888 37 Panorama City I 7.5% 658,234 38 Panorama City II 7.5% 613,703 39 Pynchon I 7.0% 5,753,648 40 Sandwich Manor 5.7% 1,806,207 41 Wasco Arms 7.5% 3,031,144 ------------- ------------- ------------ Total HUD 114,128,463 115,528,127 (1,399,664) ------------- ------------- ------------ Total REITSub, see attached 184,215,955 185,083,293 (867,338) ------------- ------------- ------------ CONSTRUCTION LOANS Centinela 74,617,786 Pro forma Adjustment 382,214 ------------- ------------- ------------ 75,000,000 75,000,000 -- ------------- ------------- ------------ TOTAL NEWCO 676,910,430 680,164,289 (3,253,859) ------------- ------------- ------------ OFFICE BUILDINGS 1 Wilshire Doheny 8.3% 10,318,358 2 Wilshire Lapeer 8.3% 9,267,415 3 Wilshire Palm 8.3% 4,299,316 ------------- ------------- ------------ Total Office 23,885,090 23,941,525 (56,435) ------------- ------------- ------------ WESTWOOD & PARKLABREA Westwood (Glendon) Guaranty Federal 11,400,000 Ralphs 7,687,804 Madeleine - PLB 20,000,000 ------------- ------------- ------------ 39,087,804 38,556,677 531,127 ------------- ------------- ------------ GRAND TOTAL MORTGAGE PAYABLE 739,883,324 742,662,491 (2,779,167) ------------- ------------- ------------ UNSECURED CORPORATE LOANS Madeleine - Glendon 14,462,784 Comerica 8,119,583 ------------- ------------- ------------ 22,582,367 24,206,284 (1,623,917) ------------- ------------- ------------ REITSUB NOTES PAYABLE, SEE ATTACHED 5,936,571 5,854,430 82,141 ------------- ------------- ------------ GRAND TOTAL NOTES PAYABLE 28,518,938 30,060,714 (1,541,776) ------------- ------------- ------------
ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS R CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, as amended to date (the "Charter"), the Board of Directors has duly divided and classified 1,000,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share, into additional shares of preferred stock heretofore designated as "Class R Cumulative Preferred Stock, par value $.01 per share," (the "Class R Preferred Stock") and has provided for the issuance of such additional shares. SECOND: The reclassification increases the number of shares classified as Class R Preferred stock from 4,940,000 shares immediately prior to the reclassification to 5,940,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 456,962,738 shares immediately prior to the reclassification to 455,962,738 shares immediately after the reclassification. The number of shares classified as Class R Preferred Stock may be decreased upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class R 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 Article THIRD of the Articles Supplementary to the Charter (dated July 17, 2001 and filed with the MSDAT on July 18, 2001) and remain unchanged by these Articles Supplementary. 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 witnessed by its Assistant Secretary on March 20, 2002. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ JOEL BONDER /s/ PATRIZIA BAILEY - ----------------------- ----------------------- Joel Bonder Patrizia Bailey Assistant Secretary Senior Vice President THE UNDERSIGNED, Senior Vice President of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ PATRIZIA BAILEY ----------------------- Patrizia Bailey Senior Vice President ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS R CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE) APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (hereinafter called the "Corporation"), having its principal office in Baltimore City, Maryland, hereby certifies to the Department of Assessments and Taxation of the State of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Section 1.2 of Article IV of the Charter of the Corporation, as amended to date (the "Charter"), the Board of Directors has duly divided and classified 1,000,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share, into additional shares of preferred stock heretofore designated as "Class R Cumulative Preferred Stock, par value $.01 per share," (the "Class R Preferred Stock") and has provided for the issuance of such additional shares. SECOND: The reclassification increases the number of shares classified as Class R Preferred stock from 5,940,000 shares immediately prior to the reclassification to 6,940,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 455,962,738 shares immediately prior to the reclassification to 454,962,738 shares immediately after the reclassification. The number of shares classified as Class R Preferred Stock may be decreased upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class R 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 Article THIRD of the Articles Supplementary to the Charter (dated July 17, 2001 and filed with the MSDAT on July 18, 2001) and remain unchanged by these Articles Supplementary. IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on April 9, 2002. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ LUCY CORDOVA /s/ PAUL J. MCAULIFFE - ----------------------- --------------------------------- Lucy Cordova Paul J. McAuliffe Assistant Secretary Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive 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/ PAUL J. MCAULIFFE ---------------------------------- Paul J. McAuliffe Executive Vice President and Chief Financial Officer ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS S CUMULATIVE REDEEMABLE 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 4,000,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share, into a class designated as Class S Cumulative Redeemable 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 S Cumulative Redeemable Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 4,000,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 454,962,738 shares immediately prior to the reclassification to 450,962,738 shares immediately after the reclassification. The number of shares classified as Class S Cumulative Redeemable Preferred Stock may be decreased upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class S Cumulative Redeemable 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 S Cumulative Redeemable Preferred Stock, par value $.01 per share (the "Class S Preferred Stock") and Four Million (4,000,000) shall be the authorized number of shares of such Class S Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class S Preferred Stock, the following terms shall have the meanings indicated: "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 product of (i) the number of shares of Equity Stock within such block and (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 (without duplication) (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 S 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 and, when used in the definition of Three-Month LIBOR, which is also a day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. "CHANGE IN CONTROL" of the Corporation shall mean any transaction or series of transactions (including any sale (or functional equivalent of a sale) of all or substantially all of the assets of the Corporation or any consolidation of the Corporation with, or merger of the Corporation into, any other person, any merger of another person into the Corporation, any other business combination (including a share exchange) involving the Corporation or any tender or exchange offer) as a result of which (w) the holders of the Corporation's Class A Common Stock immediately prior to giving effect to such transaction shall no longer own shares of common stock of the surviving corporation in such transaction representing fifty percent (50%) or more of the total value of all common stock of such surviving corporation, (x) the holders of the Corporation's capital stock - 2 - immediately prior to giving effect to such transaction shall no longer own shares of capital stock of the surviving corporation in such transaction representing fifty percent (50%) or more of the total voting power of all shares of capital stock of such surviving corporation entitled to vote generally in the election of directors, (y) the holders of the Corporation's capital stock immediately prior to giving effect to such transaction shall no longer own shares of capital stock of the surviving corporation in such transaction having the right, as a group or separately, to elect collectively no less than a majority of the Board of Directors of such surviving corporation, or (z) the Corporation no longer controls the Operating Partnership or no longer owns more than sixty percent (60%) of the partnership interests in the Operating Partnership. "CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust as determined pursuant to Section 10.3(G) 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 A COMMON STOCK" shall mean the Class A Common Stock, par value $.01 per share, of the Corporation, and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "CLASS S 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 or, if the Equity Stock is not publicly traded, the fair value of a share of such Equity Stock as reasonably determined in good faith by the Board of Directors. - 3 - "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 EQUITY CAPITALIZATION" shall mean the product of the Current Market Price and the number of outstanding shares of Class A Common Stock immediately prior to (i) the "ex date" with respect to any issuance or distribution requiring such computation, (ii) the date on which shares are repurchased in the case of any repurchase of shares of Class A Common Stock (other than by means of a tender or exchange offer) requiring such computation, or (iii) the last time tenders could have been made pursuant to a tender or exchange offer (as it may be amended) requiring such computation. "CURRENT MARKET PRICE" shall mean (a) in the case of any issuance or distribution (including any Spin-Off), the average of the Closing Prices per share of Class A Common Stock on each of the 20 consecutive Trading Days ending on the day before the "ex date" with respect to the issuance or distribution requiring such computation, (b) in the case of any repurchase of shares other than by means of a tender or exchange offer, the average of the Closing Prices per share of Class A Common Stock on each of the 20 consecutive Trading Days ending on the Trading Day immediately preceding such repurchase, and (c) in the case of any tender or exchange offer, the average of the Closing Prices per share of Class A Common Stock on each of the 20 consecutive Trading Days ending on the Trading Day immediately preceding the last time tenders could have been made pursuant to such tender or exchange offer (as it may be amended). The term "ex date," when used with respect to any issuance or distribution, shall mean the first date on which the Class A Common Stock trades regular way on the NYSE or other securities exchange or in the principal market in which such shares trade, in each case without the right to receive such issuance or distribution. "DIVIDEND PAYMENT DATE" shall mean January 31, April 30, July 31, and October 31 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 PERIOD" shall mean the Initial Dividend Period and each period thereafter of three calendar months beginning on any February 1, May 1, August 1, or November 1. "DIVIDEND RATE" shall mean a floating rate, expressed as a percentage of the Liquidation Preference per annum, determined as follows: - 4 - (a) from the Issue Date through April 30, 2004, a rate equal to (x) Three-Month LIBOR plus (y) 2.75%; (b) from May 1, 2004 through and including October 31, 2004, a rate equal to (x) Three-Month LIBOR plus (y) 6.00%; (c) for the calendar month beginning November 1, 2004 at a rate equal to (x) Three-Month LIBOR plus (y) 12.60%; and (d) for each calendar month thereafter, a rate equal to (x) Three-Month LIBOR plus (y) 12.60% plus (z) the product of (i) 70 basis points (0.70%) multiplied by (ii) the number of whole calendar months elapsed between October 31, 2004 and the first day of such calendar month; provided, that, the maximum Dividend Rate at any time shall not exceed 20.00%. Notwithstanding anything to the contrary in this Article, if the Corporation shall fail to pay (i) any portion of the Repurchase Price for any shares of Class S Preferred Stock required to be repurchased as an when required pursuant to Section 5(d) of this Article or (ii) pay any portion of the Maturity Price as and when required to be paid pursuant to Section 5(e) of this Article (each such failure, a "Redemption Default"), the Dividend Rate shall, from the date of such Redemption Default until the Redemption Default has been cured in full by the Corporation, be 25.00%; PROVIDED FURTHER, in the event a Redemption Failure has occurred, the Dividend Rate shall thereafter be the rate set forth in paragraph (d); however, in such case, the multiple set forth in clause (z) of such paragraph (d) would be the product of (i) 70 basis points (0.70%) multiplied by (ii) the number of whole calendar months elapsed between the date of the Redemption Failure and the first day of the calendar month in which that relevant Dividend Payment Date occurs. To illustrate the computation of the Dividend Rate, assuming no Redemption Default has occurred, in the month of December 31, 2004, the Dividend Rate shall equal Three- Month LIBOR plus 13.30% (the sum of 12.60% plus the product of .70% and the number of calendar months (one) which elapsed between October 31, 2004 and the first day of December 2004). "DIVIDEND RATE CALCULATION AGENT" shall mean such financial institution (and any legal successor thereto) from time to time as shall be selected by the Corporation, provided such selection is approved by the vote or written consent of the holders of a majority of the outstanding shares of the Class S Preferred Stock, and shall initially mean Wachovia Bank, National Association. "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. - 5 - "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. "FAIR MARKET VALUE" shall mean, (a) in the case of any Spin-Off that is effected simultaneously with an initial public offering of securities of the same class and series as those to be distributed in such Spin-Off, the initial public offering price of such securities, (b) in the case of any other Spin-Off, the average of the closing trading price of the securities distributed in such Spin-Off for the first ten Trading Days after the effective date of such Spin-Off, and (c) in the case of any other securities, evidences of indebtedness or assets, the fair market value thereof as determined by the Board of Directors, whose determination shall be conclusive and described in a Board resolution delivered to each record holder of Class S Preferred Stock. "FUNDAMENTAL CHANGE" shall mean (i) a Change of Control of the Corporation or (ii) a Significant Distribution. "INITIAL DIVIDEND PERIOD" shall mean the period commencing on and including the Issue Date and ending on and including July 31, 2003. "INITIAL HOLDER" shall mean Terry Considine. "INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of Class S 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 S 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. "ISSUE DATE" shall mean April 30, 2003. "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, as amended. "LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class S Preferred Stock of the Corporation - 6 - 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 S 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. "MATURITY DATE' shall have the meaning set forth in paragraph (c) of Section 5 of this Article. "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, however, 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 S 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 S 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) 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, - 7 - any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity. "PROHIBITED TRANSFEREE" shall have the meaning set forth in Section 10.3(A) of this Article. "RECORD DATE" shall mean, with respect to any Dividend Payment Date, the January 15, April 15, July 15 or October 15 immediately preceding such Dividend Payment Date. "REDEMPTION DATE" shall mean, in the case of any redemption of any shares of Class S Preferred Stock pursuant to paragraph (a) of Section 5 of this Article, the date fixed for redemption of such shares. "REDEMPTION FAILURE" shall mean the failure of the Corporation to redeem or repurchase within (i) 90 days of the Issue Date, shares of preferred stock of the Corporation having an aggregate redemption or repurchase price of $48,500,000 or (ii) 180 days after the Issue Date, shares of preferred stock of the Corporation having an aggregate redemption or repurchase price of $97,000,000 (including shares referred to in clause (i)). "REDEMPTION PRICE" shall mean, with respect to any share of Class S Preferred Stock to be redeemed, 100% of the Liquidation Preference thereof, plus all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "REPURCHASE DATE" (x) for purposes of a repurchase of Shares pursuant to paragraph (d)(i) of Section 5 of this Article shall mean the date selected by the Corporation that is not less than ten (10) and no more than thirty (30) days after the date of the notice delivered to the holders of record of the Class S Preferred Stock in connection with the repurchase and (y) for purposes of a repurchase of Shares pursuant to paragraph (d)(ii) of Section 5 of this Article shall mean the date the relevant Fundamental Change is consummated. "REPURCHASE PRICE" shall have the meaning set forth in paragraph (d) of Section 5 of this Article. "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 - 8 - 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 S Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "SIGNIFICANT DISTRIBUTION" shall mean any transaction or series of transactions (excluding regularly scheduled dividends paid in an amount in accordance with past practice) in which the aggregate Fair Market Value of any cash, evidences of indebtedness, assets or securities, including shares of capital stock of any class or series, or similar equity interests, of or relating to a subsidiary or other business unit of the Corporation (a "Spin-Off"), but excluding any Junior Stock or any rights or warrants to purchase Junior Stock, (i) issued or distributed (by dividend or otherwise) by the Corporation to holders of its Class A Common Stock or (ii) paid or given in respect of shares of Class A Common Stock repurchased by the Corporation or any of its subsidiaries (including by means of any tender or exchange offer), exceeds 30% of the Common Equity Capitalization (determined as of the date of the last event requiring such computation). "THREE-MONTH LIBOR" for any Dividend Period means the rate (expressed as a percentage per annum) for deposits in U.S. dollars having a term of three months, commencing on the first day of such Dividend Period (a "Reset Date"), which appears on Page 3750 on Moneyline Telerate Inc. or any successor page (the "Telerate LIBOR Page") at approximately 11:00 a.m., London time, on the day that is two Business Days preceding such Reset Date. If such rate does not appear on the Telerate LIBOR Page, the rate for such Reset Date will be determined by reference to the rates at which deposits in U.S. dollars are offered by four major banks in the London interbank market (the "Reference Banks") at approximately 11:00 a.m., London time, on the day that is two Business Days preceding such Reset Date to prime banks in the London interbank market for a period of three months commencing from such Reset Date and in a representative amount. The Corporation shall cause its Dividend Rate Calculation Agent to request the principal London office of each of the Reference Banks to provide a quotation of such rate. If at least two such quotations are provided, the rate for such Reset Date will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate for such Reset Date will be the arithmetic mean of the rates quoted by three major banks in New York City, selected by the Corporation's Dividend Rate Calculation Agent, at approximately 11:00 a.m., New York City time, on such Reset Date for loans in U.S. dollars to leading European banks for a period of three months commencing on such Reset Date and in a representative amount. The Corporation shall promptly (or shall cause its Dividend Rate Calculation Agent promptly to) notify any holder of the Class S Preferred Stock of the Dividend Rate for any Dividend Period upon request. - 9 - "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 S 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 S Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class S Preferred Stock), whether voluntary or involuntary, whether of record ownership 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 S 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 S 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 S Preferred Stock. "TRUST" shall mean the trust created pursuant to Section 10.3(A) 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 S 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 S Preferred Stock. Such dividends shall be cumulative from the Issue Date, shall accumulate whether or not such dividends shall be authorized, whether or not there shall be assets of the Corporation legally available for the payment of such dividends, whether or not the terms and provisions of any agreement of the Corporation, - 10 - including any agreement relating to its indebtedness, prohibits such authorization or payment or provides that such authorization or payment would constitute a breach thereof or a default thereunder, and whether or not such authorization or payment shall be restricted or prohibited by law, and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on July 31, 2003, to the holders of record of the Class S Preferred Stock, as they appear on the stock records of the Corporation on the relevant 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. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Class S Preferred Stock that may be in arrears. (b) The amount of dividends payable per share of Class S Preferred Stock on each Dividend Payment Date shall be equal to the sum of the daily amounts for each day actually elapsed during such Dividend Period, which daily amounts shall be computed by dividing (1) the product of (A) the Dividend Rate in effect for each such day during such Dividend Period multiplied by (B) the Liquidation Preference of each outstanding share of Class S Preferred Stock by (2) 360. Any dividend payment made on shares of the Class S Preferred Stock shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares. The Corporation shall determine the dividend payable on each Dividend Payment Date in accordance with this Article, utilizing the Three-Month LIBOR rate supplied by the Dividend Rate Calculation Agent (which the Dividend Rate Calculation Agent shall determine in accordance with the definition of Three-Month LIBOR in this Article). Holders of Class S 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 S Preferred Stock. (c) So long as any of the shares of Class S 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 S Preferred Stock for all Dividend Periods terminating 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 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 S 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 S Preferred Stock and accumulated, accrued and unpaid on such Parity Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Parity Stock does not have a cumulative dividend). (d) So long as any of the shares of Class S Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to - 11 - 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 Class A 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 S 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 S 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 (but only to the extent that) 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 S Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25.00) per share of Class S 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 S 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 S 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 - 12 - of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Class S Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class S 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 S 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 S Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION. (a) The Corporation, at its option, may redeem shares of Class S Preferred Stock, in whole or from time to time in part (provided that the Corporation may not call for redemption a number of shares (i) which have an aggregate Liquidation Preference of less than twenty million dollars ($20,000,000) or (ii) the redemption of which would result in less than twenty million dollars ($20,000,000) in liquidation amount of Class S Preferred remaining outstanding, at any one time, at a redemption price per share redeemed payable in cash equal to (x) the Liquidation Preference per share of Class S Preferred Stock being redeemed multiplied by the following amount: (i) if the Redemption Date is on or before July 31, 2003, 97.75%; (ii) if the Redemption Date is after July 31, 2003 and on or before October 31, 2003, 98.00%; (iii) if the Redemption Date is after October 31, 2003 and on or before January 31, 2004, 98.50%; (iv) if the Redemption Date is after January 31, 2004 and on or before April 30, 2004, 99.00%; and (v) if the Redemption Date is after April 30, 2004, 100%, plus in each case, (y) an amount equal to all accumulated, accrued and unpaid dividends, if any, to and including the Redemption Date (whether or not earned or authorized). The date on which shares called for redemption pursuant to this paragraph (a) of this Section 5 (the "Redemption Date") shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than thirty (30) days nor more than sixty (60) days after the date notice of redemption is sent by the Corporation. If a Redemption Date occurs after a Record Date and on - 13 - 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 Record Date notwithstanding the redemption of such shares, and shall not be payable as part of the redemption price for such shares. (b) If full cumulative dividends on all outstanding shares of Class S Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class S Preferred Stock may be redeemed pursuant to paragraph (a) of this Section 5 unless all outstanding shares of Class S Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class S Preferred Stock, other than pursuant to a tender or exchange offer made on the same terms to all holders of shares of Class S Preferred Stock. If fewer than all the outstanding shares of Class S Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class S Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class S 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. (c) If the Corporation shall redeem shares of Class S 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 (except that if the sole record holder of the shares of Class S Preferred Stock is Wachovia Bank, National Association, or one of its affiliates, such notice may be given by telecopy to Wachovia Securities Debt Capital Markets at (704) 283-6205 (to the attention of Rex Rudy, or to such other person as may be designated from time to time)). 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 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 S 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; 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 sentence. Notice having been mailed as aforesaid, from and after the Redemption Date (provided the Corporation has available the amount of cash necessary to effect such redemption as set forth below), (i) dividends on the shares of Class S Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class S 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 S Preferred Stock of the Corporation shall cease (except the right to receive the cash payable upon such redemption, without interest thereon, upon surrender and endorsement of - 14 - their certificates if so required); provided, however, that if the Redemption Date for any shares of Class S Preferred Stock occurs after any 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 S 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 Record Date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the cash necessary to effect the 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 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 S Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class S 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 S Preferred Stock to be redeemed on any cash so set aside by the Corporation. (d) (i) Upon the occurrence of any Fundamental Change (including a Change in Control to which the Company is a party), each holder of Class S Preferred Stock shall have the right, at the holder's option, to require the Corporation to repurchase all of the shares of Class S Preferred Stock held by such holder as of the Repurchase Date at a price per share equal to $25.00 per share, plus an amount equal to accumulated, accrued and unpaid dividends, if any, to and including the Repurchase Date (whether or not earned or authorized) (the "Repurchase Price"). Within thirty (30) days of the consummation of a Fundamental Change, the Corporation shall mail to all holders of record of the Class S Preferred Stock a notice, by first-class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation (except that if the sole record holder of the shares of Class S Preferred Stock is Wachovia Bank, National Association, or an affiliate thereof such notice may be given by telecopy to Wachovia Securities Debt Capital Markets at (704) 283-6205 (to the attention of Rex Rudy, or to such other person as may be designated from time to time)), which notice shall: (w) describe the Fundamental Change and the repurchase right arising as a result thereof; (x) state the Repurchase Price; (y) state the Repurchase Date; and (z) state the place or places where certificates for such shares are to be surrendered. (ii) In addition to the obligations set forth in (i) above, the Corporation shall not complete any Fundamental Change to which it is a party unless it or, in the case of a Change in Control, the party with whom it has entered into an agreement to effect such Change in Control and any entity which controls such party has agreed to satisfy the Corporation's obligations under this paragraph (d) of this Section 5. No later than thirty (30) days prior to the consummation of a Fundamental Change (other than a Change in Control in which the Corporation is not a party), the Corporation shall mail to all holders of record of the Class S Preferred Stock a notice, by first-class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation (except - 15 - that if the sole record holder of the shares of Class S Preferred Stock is Wachovia Bank, National Association, or an affiliate thereof such notice may be given by telecopy to Wachovia Securities Debt Capital Markets at (704) 283-6205 (to the attention of Rex Rudy, or to such other person as may be designated from time to time), which notice shall: (i) describe the pending Fundamental Change and the repurchase right arising as a result thereof; (ii) state the Repurchase Price; (iii) state the Repurchase Date; and (iv) state the place or places where certificates for such shares are to be surrendered. (e) On April 30, 2043 (the "Maturity Date"), the Corporation shall repurchase all of the shares of Class S Preferred Stock on that date at a price per share equal to $25.00 per share, plus an amount equal to accumulated, accrued and unpaid dividends, if any, to and including the Maturity Date (whether or not earned or authorized) (the "Maturity Price"). Not earlier than February 1, 2043 nor later than April 15, 2043, the Corporation shall mail to all holders of record of the Class S Preferred Stock a notice, by first-class mail, postage prepaid, at such holder's address as the same appears on the stock records of the Corporation (except that if the sole record holder of the shares of Class S Preferred Stock is Wachovia Bank, National Association, or an affiliate thereof, such notice may be given by telecopy to Wachovia Securities Debt Capital Markets at (704) 283-6205 (to the attention of Rex Rudy, or to such other person as may be designated from time to time)), which notice shall state the Maturity Price and the place or places where certificates for shares must be surrendered. (f) Subject to applicable escheat laws, any such cash unclaimed at the end of two years from any Redemption Date, Repurchase Date or Maturity Date, as applicable, shall revert to the general funds of the Corporation, after which reversion the holders of shares of Class S Preferred Stock so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. (g) As promptly as practicable and in no event later than five (5) business days after the surrender of the certificates for any shares of Class S Preferred Stock to be redeemed or repurchased (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) and in the event of a repurchase pursuant to paragraph (d) of this Section 5, the Corporation (or any successor to the Corporation) shall deliver funds in an amount sufficient to satisfy its obligations under paragraph (d) to an escrow agent no later than five (5) days prior to the Repurchase Date. If fewer than all the shares of Class S Preferred Stock represented by any certificate are redeemed or repurchased, 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 S Preferred Stock that have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized but unissued shares of Class S Preferred Stock , but may not be reissued by the Corporation as Class S Preferred Stock so long as any shares of Class S Preferred Stock remain issued and outstanding. - 16 - 7. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Class S 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 S Preferred Stock ("Senior Stock"); (b) on a parity with the Class S 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 S Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock, Class O Cumulative Convertible Preferred Stock, Class P Convertible Cumulative Preferred Stock, Class Q Cumulative Preferred Stock, or Class R Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class S 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 S 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 Class A Common Stock or (ii) the holders of Class S 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 S 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 any other class or series of Parity Stock which is entitled to similar voting rights (the "Voting Preferred Stock") and the holders of shares of Class S Preferred Stock, together with the holders of shares of all other Voting Preferred Stock - 17 - 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 S Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class S 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 S 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 S 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 S Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of 20% or more of the Class S Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class S 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 20% or more of the Class S 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 S 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 S 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. The directors elected pursuant to this paragraph (a) shall each be entitled to one vote per director on any matter. (b) So long as any shares of Class S 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 S 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 any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary or the Charter of the Corporation, whether by merger, consolidation or otherwise, that materially adversely affects any voting powers, rights, preferences or privileges of the Class S Preferred Stock or the holders thereof (which shall include any amendment of the provisions of the Charter so as to increase the authorized amount of Class S Preferred Stock or to authorize any reissuance of Class S Preferred Stock redeemed or otherwise reacquired by the Corporation); provided, however, that the - 18 - amendment of the provisions of the Charter so as 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 S Preferred Stock; PROVIDED, HOWEVER, that no such vote of the holders of Class S 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, all outstanding shares of Class S Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption. Nothing contained in of this section shall require a vote of the holders of the Class S Preferred Stock in connection with the redemption, purchase or other acquisition by the Corporation of shares of stock of the Corporation not in violation of this Article. (c) So long as any shares of Class S 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 S Preferred Stock voting as a single class together with the holders of all other classes 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 (i) any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to the Bylaws of the Company that materially adversely effects any voting powers, rights, preferences or privileges of the Class S Preferred Stock or the holders thereof or (ii) effecting or validating the authorization, creation, increase in the authorized amount, or issuance of, or reclassification of any authorized stock of the Corporation into, any shares of any class or series of Senior Stock or any security convertible into or evidencing the right to purchase 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 S Preferred Stock shall be required if, at or prior to the time when such amendment, authorization, creation, increase, issuance or reclassification 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, all outstanding shares of Class S Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption. Nothing contained in of this section shall require a vote of the holders of the Class S Preferred Stock in connection with the redemption, purchase or other acquisition by the Corporation of shares of stock of the Corporation not in violation of this Article. (d) For purposes of the foregoing provisions and all other voting rights under these Articles Supplementary, each share of Class S 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 S Preferred Stock as a single class on any matter, then the Class S Preferred Stock and such other class or series shall have with respect to such matters one quarter of one vote per $25.00 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Class S 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. - 19 - 9. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any share of Class S 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 S Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class S Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class S 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 S Preferred Stock in excess of the Ownership Limit shall be void AB INITIO as to the Transfer of such shares of Class S 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 S 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 S Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class S 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 S 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 S Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class S 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 S Preferred Stock. - 20 - (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 S 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 S Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class S 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 S 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 S 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 S 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 S 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 exercise such authority in a manner that interferes with any ownership or transfer of Class S Preferred Stock that is expressly authorized pursuant to Section 10.8(C) of this Article. - 21 - 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 S Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class S 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 S 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 S 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 S 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 S 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 S 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 S 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 S 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 S 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 - 22 - vote cast by a Prohibited Transferee prior to the discovery by the Corporation that the shares of Class S 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 S 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 S Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class S Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class S 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 S 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. - 23 - 10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Class S 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 S Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record holder or 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 S 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 holder or Beneficial Owner, the number of shares of Class S Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record holder or Beneficial Owner of Class S 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 S 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 S 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 S Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class S 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 S 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. - 24 - 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 (as modified to exclude qualified trusts from treatment as individuals pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership, limited liability company, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (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 S 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 S Preferred Stock so pledged to it either as a result of the pledge or upon foreclosure. 10.9 LEGEND. Each certificate for Class S Preferred Stock shall bear substantially the following legend: The shares of Class S Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class S Cumulative Preferred Stock in excess of the - 25 - 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 S Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class S 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 S 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 S Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class S Cumulative Preferred Stock) or (ii) the shares of Class S 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. 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 S Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXX of the Charter. - 26 - IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on April 30, 2003. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Lisa Cohn /s/ Paul J. McAuliffe - --------------------------------- ----------------------------------- Lisa Cohn Paul J. McAuliffe Vice President, Assistant General Executive Vice President and Counsel and Assistant Secretary Chief Financial Officer THE UNDERSIGNED, Executive 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/ Paul J. McAuliffe ----------------------------------- Paul J. McAuliffe Executive Vice President and Chief Financial Officer - 27 - ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS T 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 6,000,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share, into a class designated as Class T 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 T Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 6,000,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 450,962,738 shares immediately prior to the reclassification to 444,962,738 shares immediately after the reclassification. The number of shares classified as Class T Cumulative Preferred Stock may be decreased upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class T 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 T Cumulative Preferred Stock (the "Class T Preferred Stock") and Six Million (6,000,000) shall be the authorized number of shares of such Class T Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class T 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 product of (i) the number of shares of Equity Stock within such block and (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 (without duplication) (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 T 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(G) 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 A COMMON STOCK" shall mean the Class A Common Stock, par value $.01 per share, of the Corporation, and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "CLASS T 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 2 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 or, if the Equity Stock is not publicly traded, the fair value of a share of such Equity Stock as reasonably determined in good faith by the Board of Directors. "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. "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 T Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class T 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 31, 2003. "INITIAL DIVIDEND PERIOD" shall mean the period commencing on and including the Issue Date and ending on and including October 14, 2003. "INITIAL HOLDER" shall mean Terry Considine. 3 "INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of Class T 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 T 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 T 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 T 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, HOWEVER, 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 T 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 4 of all shares of Equity Stock other than Class T 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) 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" shall have the meaning set forth in Section 10.3(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 T Preferred Stock, the date fixed for redemption of such shares. "REDEMPTION PRICE" shall mean, with respect to any share of Class T Preferred Stock to be redeemed, 100% of the Liquidation Preference thereof, plus all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "SENIOR STOCK" shall have the meaning set forth in paragraph (a) of Section 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 T Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. 5 "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 T 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 T Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class T Preferred Stock), whether voluntary or involuntary, whether of record ownership 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 T 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 T 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 T Preferred Stock. "TRUST" shall mean the trust created pursuant to Section 10.3(A) 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 T 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 T Preferred Stock in an amount per share equal to $0.50. 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, 2003. Each such dividend shall be payable in arrears to the holders of record of the Class T Preferred Stock, as they appear on the stock records of the Corporation at the close of business on January 1, April 1, July 1 or October 1 (each a "Record Date"), as the case may be, immediately preceding such Dividend 6 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 T Preferred Stock for the Initial Dividend Period, or any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class T 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 T 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 T Preferred Stock that may be in arrears. (c) So long as any of the shares of Class T 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 T Preferred Stock for all Dividend Periods terminating 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 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 T 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 T Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class T 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 Class A 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 T 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 T Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, 7 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 T Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class T 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 T 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 T 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 T Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class T 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 T 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 T Preferred Stock and any Parity Stock shall not be entitled to share therein. 8 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class T Preferred Stock shall not be redeemable by the Corporation prior to July 31, 2008, except as set forth in Section 10.2 of this Article. On and after July 31, 2008, the Corporation, at its option, may redeem shares of Class T Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to the Redemption Price applicable thereto. In the event of a redemption of shares of Class T Preferred Stock, if the Redemption Date occurs after a 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 the holders of record at the close of business on such Record 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 pursuant to this Section 5(a), the redemption price of the Class T 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 T Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class T Preferred Stock may be redeemed unless all outstanding shares of Class T Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class T Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class T Preferred Stock. (d) If the Corporation shall redeem shares of Class T 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 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 T 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 9 such shares are to be surrendered; 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 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 T Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class T 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 T Preferred Stock of the Corporation shall cease (except the right 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 T 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 T Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the cash necessary to effect the 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 T Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class T 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 T 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 T 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 T 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). If fewer than all the outstanding shares of Class T Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class T Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class T 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 T 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. 10 6. STATUS OF REACQUIRED STOCK. All shares of Class T Preferred Stock that have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized but unissued shares of Class T 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 T 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 T Preferred Stock ("Senior Stock"); (b) on a parity with the Class T 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 T Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock, Class O Cumulative Convertible Preferred Stock, Class P Convertible Cumulative Preferred Stock , Class Q Cumulative Preferred Stock Class R Cumulative Preferred Stock or Class S Cumulative Redeemable Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class T 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 T 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 Class A Common Stock or (ii) the holders of Class T 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 T 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 11 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 any other class or series of Parity Stock which is entitled to similar voting rights (the "Voting Preferred Stock") and the holders of shares of Class T 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 T Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class T 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 T 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 T 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 T 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 T Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class T 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 T 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 T 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 T 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 T 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 T 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 12 Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class T Preferred Stock; PROVIDED, HOWEVER, that the amendment of the provisions of the Charter so as to increase the authorized amount of Class T Preferred Stock, or 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 T 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 T 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 T 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 T 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 T Preferred Stock as a single class on any matter, then the Class T 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 T 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 T 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 T Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class T Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class T 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 13 Owning shares of Class T Preferred Stock in excess of the Ownership Limit shall be void AB INITIO as to the Transfer of such shares of Class T 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 T 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 T Preferred Stock in excess of the Initial Holder Limit shall be void AB INITIO as to the Transfer of such shares of Class T 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 T 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 T Preferred Stock in excess of the Look-Through Ownership limit shall be void AB INITIO as to the Transfer of such shares of Class T 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 T 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 T 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 T Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class T 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 T 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 T Preferred Stock in the same or any other related transaction. 14 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 T 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 T 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 exercise such authority in a manner that interferes with any ownership or transfer of Class T 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 T Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class T 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 T 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 T 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 T 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. 15 (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 T 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 T 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 T 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 T 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 T 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 T 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 T 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 T Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class T Preferred Stock on behalf of the Corporation. 16 (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class T 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 T 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 T 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 T Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record holder or 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 T 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 holder or Beneficial Owner, the number of shares of Class T Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record holder or Beneficial Owner of Class T 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 T 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 T 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. 17 (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Class T Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class T 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 T 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 (as modified to exclude qualified trusts from treatment as individuals pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership, limited liability company, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (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 T 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 T 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 T Preferred Stock) 18 following the purchase of Class T Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class T Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class T Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class T Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class T Preferred Stock shall bear substantially the following legend: "The shares of Class T Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class T 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 T Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class T 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 T 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 T Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class T Cumulative Preferred Stock) or (ii) the shares of Class T 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. 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 T Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXXI of the Charter. 19 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on July 16, 2003. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Lisa Cohn /s/ Paul J. McAuliffe - -------------------------- --------------------------------- Lisa Cohn Paul J. McAuliffe Assistant Secretary Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive 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/ Paul J. McAuliffe --------------------------------- Paul J. McAuliffe Executive Vice President and Chief Financial Officer ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS U 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 8,000,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share, into a class designated as Class U 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 U Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 8,000,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 444,962,738 shares immediately prior to the reclassification to 436,962,738 shares immediately after the reclassification. The number of shares classified as Class U Cumulative Preferred Stock may be decreased upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class U 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 U Cumulative Preferred Stock (the "Class U Preferred Stock") and Eight Million (8,000,000) shall be the authorized number of shares of such Class U Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class U 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 product of (i) the number of shares of Equity Stock within such block and (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 (without duplication) (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 U 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(G) 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 A COMMON STOCK" shall mean the Class A Common Stock, par value $.01 per share, of the Corporation, and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "CLASS U 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 2 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 or, if the Equity Stock is not publicly traded, the fair value of a share of such Equity Stock as reasonably determined in good faith by the Board of Directors. "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. "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 U Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class U 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 March 24, 2004. "INITIAL DIVIDEND PERIOD" shall mean the period commencing on and including the Issue Date and ending on and including July 14, 2004. "INITIAL HOLDER" shall mean Terry Considine. 3 "INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of Class U 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 U 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 U 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 U 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, HOWEVER, 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 U 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 4 of all shares of Equity Stock other than Class U 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) 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" shall have the meaning set forth in Section 10.3(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 U Preferred Stock, the date fixed for redemption of such shares. "REDEMPTION PRICE" shall mean, with respect to any share of Class U Preferred Stock to be redeemed, 100% of the Liquidation Preference thereof, plus all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "SENIOR STOCK" shall have the meaning set forth in paragraph (a) of Section 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 U Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. 5 "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 U 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 U Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class U Preferred Stock), whether voluntary or involuntary, whether of record ownership 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 U 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 U 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 U Preferred Stock. "TRUST" shall mean the trust created pursuant to Section 10.3(A) 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 U 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 U Preferred Stock in an amount per share equal to $0.484375. 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 July 15, 2004. Each such dividend shall be payable in arrears to the holders of record of the Class U Preferred Stock, as they appear on the stock records of the Corporation at the close of business on January 1, April 1, July 1 or October 1 (each a "Record Date"), as the case may be, immediately preceding such Dividend 6 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 U Preferred Stock for the Initial Dividend Period, or any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class U 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 U 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 U Preferred Stock that may be in arrears. (c) So long as any of the shares of Class U 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 U Preferred Stock for all Dividend Periods terminating 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 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 U 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 U Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class U 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 Class A 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 U 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 U Preferred Stock for all Dividend Periods ending on or prior to the date such dividend or distribution is declared, paid, 7 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 U Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class U 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 U 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 U 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 U Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class U 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 U 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 U Preferred Stock and any Parity Stock shall not be entitled to share therein. 8 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Class U Preferred Stock shall not be redeemable by the Corporation prior to March 24, 2009, except as set forth in Section 10.2 of this Article. On and after March 24, 2009 the Corporation, at its option, may redeem shares of Class U Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to the Redemption Price applicable thereto. In the event of a redemption of shares of Class U Preferred Stock, if the Redemption Date occurs after a 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 the holders of record at the close of business on such Record 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 pursuant to this Section 5(a), the redemption price of the Class U 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 U Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class U Preferred Stock may be redeemed unless all outstanding shares of Class U Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class U Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class U Preferred Stock. (d) If the Corporation shall redeem shares of Class U 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 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 U 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 9 such shares are to be surrendered; 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 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 U Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class U 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 U Preferred Stock of the Corporation shall cease (except the right 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 U 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 U Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the cash necessary to effect the 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 U Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class U 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 U 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 U 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 U 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). If fewer than all the outstanding shares of Class U Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class U Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class U 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 U 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. 10 6. STATUS OF REACQUIRED STOCK. All shares of Class U Preferred Stock that have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized but unissued shares of Class U 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 U 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 U Preferred Stock ("Senior Stock"); (b) on a parity with the Class U 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 U Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock, Class O Cumulative Convertible Preferred Stock, Class P Convertible Cumulative Preferred Stock , Class Q Cumulative Preferred Stock Class R Cumulative Preferred Stock or Class S Cumulative Redeemable Preferred Stock or Class T Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class U 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 U 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 Class A Common Stock or (ii) the holders of Class U 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 U 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 11 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 any other class or series of Parity Stock which is entitled to similar voting rights (the "Voting Preferred Stock") and the holders of shares of Class U 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 U Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class U 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 U 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 U 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 U 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 U Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class U 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 U 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 U 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 U 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 U 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 U 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: 12 (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 U Preferred Stock; PROVIDED, HOWEVER, that the amendment of the provisions of the Charter so as to increase the authorized amount of Class U Preferred Stock, or 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 U 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 U 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 U 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 U 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 U Preferred Stock as a single class on any matter, then the Class U 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 U 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 U 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 U Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class U Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class U 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 13 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 U Preferred Stock in excess of the Ownership Limit shall be void AB INITIO as to the Transfer of such shares of Class U 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 U 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 U Preferred Stock in excess of the Initial Holder Limit shall be void AB INITIO as to the Transfer of such shares of Class U 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 U 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 U Preferred Stock in excess of the Look-Through Ownership limit shall be void AB INITIO as to the Transfer of such shares of Class U 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 U 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 U 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 U Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class U 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 U 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 14 of the Transfer of any other share of Class U 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 U 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 U 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 exercise such authority in a manner that interferes with any ownership or transfer of Class U 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 U Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class U 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 U 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 U 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 U 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 15 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 U 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 U 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 U 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 U 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 U 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 U 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 U 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 16 Transferee may be deemed, at the option of the Corporation, to have acted as the agent of the Corporation in acquiring the Class U Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class U Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class U 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 U 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 U 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 U Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record holder or 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 U 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 holder or Beneficial Owner, the number of shares of Class U Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record holder or Beneficial Owner of Class U 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 U 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 17 holds shares of Class U 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 U Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class U 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 U 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 (as modified to exclude qualified trusts from treatment as individuals pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership, limited liability company, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (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 U Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 10.1 of 18 this Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class U 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 U Preferred Stock) following the purchase of Class U Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class U Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class U Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class U Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class U Preferred Stock shall bear substantially the following legend: "The shares of Class U Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class U 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 U Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class U 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 U 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 U Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class U Cumulative Preferred Stock) or (ii) the shares of Class U 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. 19 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 U Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXXII of the Charter. 20 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on March 17, 2004. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ LISA COHN /s/ PAUL J. MCAULIFFE - ------------------- ---------------------------- Lisa Cohn Paul J. McAuliffe Assistant Secretary Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive 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/ PAUL J. MCAULIFFE ---------------------------- Paul J. McAuliffe Executive Vice President and Chief Financial Officer ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS V 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 3,450,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share, into a class designated as Class V 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 V Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 3,450,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 436,962,738 shares immediately prior to the reclassification to 433,512,738 shares immediately after the reclassification. The number of shares classified as Class V Cumulative Preferred Stock may be decreased upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class V 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 V Cumulative Preferred Stock (the "Class V Preferred Stock") and Three Million, Four Hundred and Fifty Thousand (3,450,000) shall be the authorized number of shares of such Class V Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class V 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 product of (i) the number of shares of Equity Stock within such block and (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 (without duplication) (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 V 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(G) 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 A Common Stock" shall mean the Class A Common Stock, par value $.01 per share, of the Corporation, and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "Class V 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 or, if the Equity Stock is not publicly traded, the fair value of a share of such Equity Stock as reasonably determined in good faith by the Board of Directors. "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. "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 2 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 V Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class V 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 September 29, 2004. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including January 14, 2005. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class V 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 V 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 V 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 V 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, however, 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 V Preferred Stock of the Corporation having an Aggregate Value not in excess of the excess of (x) 8.7% of the Aggregate 3 Value of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other than Class V 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) 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" shall have the meaning set forth in Section 10.3(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 V Preferred Stock, the date fixed for redemption of such shares. "Redemption Price" shall mean, with respect to any share of Class V Preferred Stock to be redeemed, 100% of the Liquidation Preference thereof, plus all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 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 V Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, when used with respect to any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class V 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 V Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into 4 or exchangeable for Class V Preferred Stock), whether voluntary or involuntary, whether of record ownership 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 V 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 V 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 V Preferred Stock. "Trust" shall mean the trust created pursuant to Section 10.3(A) 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 V 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 V Preferred Stock in an amount per share equal to $0.50. 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 January 15, 2005. Each such dividend shall be payable in arrears to the holders of record of the Class V Preferred Stock, as they appear on the stock records of the Corporation at the close of business on January 1, April 1, July 1 or October 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) The amount of dividends payable per share of Class V Preferred Stock for the Initial Dividend Period, or any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class V 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 V 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 V Preferred Stock that may be in arrears. (c) So long as any of the shares of Class V 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 V Preferred Stock for all Dividend Periods terminating 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 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 V Preferred Stock and all dividends declared upon any other class or series of Parity Stock shall be 5 declared ratably in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Class V Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class V 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 Class A 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 V 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 V 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 V Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class V 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 V 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 V 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 V Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class V 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 6 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 V 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 V 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 V Preferred Stock shall not be redeemable by the Corporation prior to September 29, 2009, except as set forth in Section 10.2 of this Article. On and after September 29, 2009 the Corporation, at its option, may redeem shares of Class V Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to the Redemption Price applicable thereto. In the event of a redemption of shares of Class V Preferred Stock, if the Redemption Date occurs after a 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 the holders of record at the close of business on such Record 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 pursuant to this Section 5(a), the redemption price of the Class V 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 V Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class V Preferred Stock may be redeemed unless all outstanding shares of Class V Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class V Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class V Preferred Stock. (d) If the Corporation shall redeem shares of Class V 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 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 V Preferred Stock to be redeemed and, if 7 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; 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 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 V Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class V 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 V Preferred Stock of the Corporation shall cease (except the right 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 V 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 V Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the cash necessary to effect the 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 V Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class V 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 V 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 V 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 V 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). If fewer than all the outstanding shares of Class V Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class V Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class V 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 V 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. 8 6. STATUS OF REACQUIRED STOCK. All shares of Class V Preferred Stock that have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized but unissued shares of Class V 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 V 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 V Preferred Stock ("Senior Stock"); (b) on a parity with the Class V 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 V Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock, Class O Cumulative Convertible Preferred Stock, Class P Convertible Cumulative Preferred Stock, Class Q Cumulative Preferred Stock, Class R Cumulative Preferred Stock, Class S Cumulative Redeemable Preferred Stock, Class T Cumulative Preferred Stock or Class V Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class V 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 V 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 Class A Common Stock or (ii) the holders of Class V 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 V 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 any other class or series of Parity Stock which is entitled to similar voting rights (the "Voting Preferred Stock") and the holders of shares of Class V 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 9 special meeting held in place thereof, or at a special meeting of the holders of the Class V Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class V 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 V 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 V 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 V 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 V Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class V 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 V 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 V 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 V 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 V 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 V 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 V Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to increase the authorized amount of Class V Preferred Stock, or 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 V 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); 10 provided, however, that no such vote of the holders of Class V 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 V 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 V 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 V Preferred Stock as a single class on any matter, then the Class V 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 V 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 V 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 V Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class V Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class V 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 V Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class V 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 V 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 V Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class V 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 V 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 11 effective, would result in any Look-Through Entity Beneficially Owning shares of Class V Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class V 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 V 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 V 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 V Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class V 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 V 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 V 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 V 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 V 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 exercise such authority in a manner that interferes with any ownership or transfer of Class V 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") 12 (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 V Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class V 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 V 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 V 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 V 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 V 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 V 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 V 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 V 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 V 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 V 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 V Preferred Stock for the benefit of the Charitable Beneficiary. 13 (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 V Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class V Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class V 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 V 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 V 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 V Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record holder or 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 V 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 holder or Beneficial Owner, the number of 14 shares of Class V Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record holder or Beneficial Owner of Class V 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 V 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 V 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 V Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class V 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 V 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 (as modified to exclude qualified trusts from treatment as individuals pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership, limited liability company, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (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 V Preferred Stock directly owned at any time or from time to time shall not constitute a violation of Section 10.1 of this 15 Article and the pledgee shall not be subject to the Ownership Limit with respect to the Class V 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 V Preferred Stock) following the purchase of Class V Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class V Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class V Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class V Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class V Preferred Stock shall bear substantially the following legend: "The shares of Class V Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class V 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 V Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class V 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 V 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 V Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class V Cumulative Preferred Stock) or (ii) the shares of Class V 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. 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 V Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXXIII of the Charter. 16 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on September 24, 2004. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ LISA COHN /s/ PAUL J. MCAULIFFE - ------------------------- ---------------------------------- Lisa Cohn Paul J. McAuliffe Assistant Secretary Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive 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/ PAUL J. MCAULIFFE ---------------------------------- Paul J. McAuliffe Executive Vice President and Chief Financial Officer ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS W 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 1,904,762 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share, into a class designated as Class W 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 W Cumulative Convertible Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 1,904,762 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 433,512,738 shares immediately prior to the reclassification to 431,607,976 shares immediately after the reclassification. The number of shares classified as Class W Cumulative Convertible Preferred Stock may be decreased pursuant to Section 6 of Article Third of these Articles Supplementary upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class W Cumulative Convertible 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 W Cumulative Convertible Preferred Stock (the "Class W Preferred Stock") and One Million Nine Hundred Four Thousand Seven Hundred and Sixty-Two (1,904,762) shall be the authorized number of shares of such Class W Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class W 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 of any class, the product of (i) the number of shares of Equity Stock within such block and (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. "Base Rate" shall mean a quarterly dividend payment in an amount per share equal to $1.063125; provided, however, that, if the Corporation gives notice of its election to make a Dividend Increase following a Change of Control in accordance with Section 6.4(a) of the Exchange Agreement, then, from and after the date of such notice, the "Base Rate" shall mean a quarterly dividend payment in an amount per share equal to (i) for all Dividend Periods commencing after the date such notice is given, the greater of (a) $1.456875 or (b) the product of (x) $13.125 and (y) the sum of 800 basis points plus the greater of (x) the annual yield to maturity of U.S. Treasury securities with a five year maturity and (y) the annual yield to maturity of U.S. Treasury securities with a ten year maturity, in each case as compiled by and published in the most recent Federal Reserve Statistical Release H.15(519) which has become publicly available at least two business days prior to the date of such notice (or, if such Statistical Release is no longer published, any publicly available source of similar data), and (ii) for the Dividend Period in which such notice is given, a weighted average (based on the number of days in such Dividend Period occurring before and after the date of such notice) of (a) the Base Rate in effect prior thereto and (b) the Base Rate determined in accordance with the foregoing clause (i). "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (without duplication) (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 W Preferred Stock; provided that, for purposes of paragraphs (a) and (b) 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. "Change of Control" shall have the meaning set forth in the Exchange Agreement. "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 A Common Stock" shall mean the Class A Common Stock, par value $.01 per share, of the Corporation, and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "Class W 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 2 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 or, if the Equity Stock is not publicly traded, the fair value of a share of such Equity Stock as reasonably determined in good faith by the Board of Directors. "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. "Conversion Price" shall mean the conversion price per share of Class A Common Stock for which each share of Class W Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to Section 7 of this Article. The initial Conversion Price shall be $52.50 (equivalent to a conversion rate of one share of Class A Common Stock for each share of Class W Preferred Stock). "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 11:00 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 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 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 W Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class W 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. "Exchange Agreement" shall mean the Exchange Agreement, dated as of September 24, 2004, by and among Security Capital Preferred Growth Incorporated, the Corporation and AIMCO Properties, L.P. "Fair Market Value" shall mean the average of the daily Closing Prices of a share of Class A Common Stock during the twenty (20) consecutive 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 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 Closing Price. "Initial Dividend Period" shall mean the period commencing on and including October 1, 2004, and ending on and including December 31, 2004. "Initial Holder" shall mean Terry Considine. 3 "Initial Holder Limit" shall mean a number of the Outstanding shares of Class W 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 W 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. "Issue Date" shall mean September 30, 2004. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class W 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 W 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, however, 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 W 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 W 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 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) 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. 4 "Prohibited Transferee" shall have the meaning set forth in Section 10.3(a) of this Article. "Redemption Date" shall mean, in the case of any redemption of any shares of Class W Preferred Stock, the date fixed for redemption of such shares. "Redemption Price" shall mean, with respect to any share of Class W Preferred Stock to be redeemed, 102% of the Liquidation Preference thereof, plus all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "Repurchase Offer" shall have the meaning set forth in the Exchange Agreement. "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 W Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, when used with respect to any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class W 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 W Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class W Preferred Stock), whether voluntary or involuntary, whether of record ownership 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 W 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 W 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 W 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 9 of this Article. 5 3. DIVIDENDS. (a) The holders of Class W 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 W Preferred Stock equal to the greater of (i) the Base Rate, or (ii) the cash dividends declared on the number of shares of Class A Common Stock, or portion thereof, into which a share of Class W 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 Class A Common Stock, or portion thereof calculated to the fourth decimal point, into which a share of Class W 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 Class A Common Stock outstanding as of the record date for the payment of dividends on the Class A Common Stock with respect to such Dividend Period. If (A) the Corporation pays a cash dividend on the Class A Common Stock after the Dividend Payment Date for the corresponding Dividend Period and (B) the dividend on the Class W Preferred Stock for such Dividend Period calculated pursuant to clause (ii) of this paragraph (a), taking into account the Class A Common Stock dividend referenced in clause (A), exceeds the dividend previously declared on the Class W Preferred Stock for such Dividend Period, the Corporation shall pay an additional dividend to the holders of the Class W Preferred Stock on the date that the Class A 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 W 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 W 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 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) The amount of dividends payable per share of Class W Preferred Stock for the Initial Dividend Period, or any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class W 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 W 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 W Preferred Stock that may be in arrears. (c) So long as any of the shares of Class W 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 6 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 W Preferred Stock for all Dividend Periods terminating 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 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 W 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 W Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class W 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 Class A 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 (i) dividends equal to the full amount of all accumulated, accrued and unpaid dividend on all outstanding shares of Class W 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 W 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 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 W Preferred Stock. 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 in the opinion of nationally recognized REIT tax counsel 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 W Preferred Stock shall be entitled to receive Fifty Two Dollars and Fifty Cents ($52.50) per share of Class W 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 W 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 7 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 W 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 W Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class W 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 W 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 W 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 W Preferred Stock shall not be redeemable by the Corporation prior to the third anniversary of the Issue Date, except as set forth in Section 10.2 of this Article. On and after the third anniversary of the Issue Date, the Corporation, at its option, may redeem shares of Class W Preferred Stock, in whole or from time to time in part, at a price payable in cash equal to the Redemption Price applicable thereto. (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 W Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class W Preferred Stock may be redeemed unless all outstanding shares of Class W Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class W Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class W Preferred Stock. (d) If the Corporation shall redeem shares of Class W 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 recognized overnight courier 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 mailed in the manner herein provided shall be conclusively presumed to have been duly given on the day after 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 W 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; (iv) the then-current Conversion Price; (v) the Redemption Price payable on such Redemption Date; and (vi) 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 8 of business on the relevant record date as described in the next 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 W Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class W 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 W Preferred Stock of the Corporation shall cease (except the right 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 W 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 W 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 and shall not be payable as part of the Redemption Price for such shares. The Corporation's obligation to make available the cash necessary to effect the 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 W Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class W 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 W 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 W 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 W 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 W Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class W Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class W 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 W 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 W Preferred Stock that have been issued and reacquired in any manner by the Corporation (including, without limitation, shares of Class W Preferred Stock which have been surrendered for conversion) shall be returned to the status of authorized but unissued shares of Class W Preferred Stock. 9 7. CONVERSION. 7.1 CONVERSION AT HOLDERS OPTION. At any time on or after the Issue Date, holders of shares of Class W 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 W 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), in whole or in part, into the 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 the Liquidation Preference (excluding any accumulated, accrued and unpaid dividends) per share of Class W Preferred Stock by the Conversion Price (as in effect at the time and on the date provided for in paragraph (b) 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; provided, however, that the right to convert shares of Class W Preferred Stock called for redemption pursuant to Section 5 shall terminate at the close of business on the Redemption Date fixed for such redemption, unless the Corporation shall default in making payment of cash payable upon such redemption under Section 5 of this Article. (b) To convert shares of Class W Preferred Stock, the holder of the shares to be converted shall surrender the certificate representing such shares at the office of the Transfer Agent, accompanied by the funds, if any, required by the last paragraph of this subsection (b) to be paid by such holder, and shall give written notice of conversion in the form provided on such certificate representing shares of Class W Preferred Stock (or such other notice as is reasonably acceptable to the Corporation) to the Corporation at such office or agency that the holder elects to convert the shares of Class W 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 on 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 W Preferred Stock is registered, each certificate representing a share of Class W 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, but in no event later than three Business Days after the surrender of certificates representing such shares of Class W 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 W Preferred Stock in accordance with provisions of this Section 7.1, and a check or cash in respect of the cash amount payable to such holder, if any, referred to in subsection (c), below. 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 W 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 10 event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. Except as provided herein, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends (other than dividends on the Class A Common Stock the record date for which is after the conversion date and which the Corporation shall pay in the ordinary course to the record holder as of the record date) on the Class A Common Stock issued upon such conversion. Holders of Class W Preferred Stock at the close of business on a record date for the payment of dividends on the Class W Preferred Stock 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 W 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 W 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 W 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 dividend record date and the opening of business on the corresponding Dividend Payment Date, the amount of the dividend payable thereon on such Dividend Payment Date; minus (iii) an amount equal to the product of (A) the number of shares of Class A Common Stock (or fraction thereof) into which such share of Class W Preferred Stock has been converted, (B) the quarterly cash dividend per share that was most recently declared on the Class A Common Stock, determined as of the date of conversion, and (C) 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 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 W Preferred Stock. If more than one share of Class W 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 W Preferred Stock so converted. 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 W 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 11 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 (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 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 W Preferred Stock thereafter surrendered for conversion 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 W 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 7.2 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 issue, after the Issue Date, 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 7.2) 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. 12 (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 7.2)) (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, that 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) If, after the Issue Date, the Corporation shall acquire, pursuant to an issuer or self tender offer, all or any portion of the outstanding Class A Common Stock and such tender offer involves the payment of consideration per share of Class A 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 Closing Price per share of Class A 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 Class A Common Stock outstanding (including the shares acquired in the tender offer (the "Acquired Shares")) immediately prior to the Expiration Time, multiplied by (Y) the Closing Price per share of Class A 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 Class A Common Stock outstanding (less any Acquired Shares) at the Expiration Time, multiplied by (II) the Closing Price per share of Class A 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 (a)(v) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; provided, further, that any adjustment shall be required and made in accordance with the provisions of this Section 7.2 (other than this paragraph (a)(v)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of shares of Class A Common Stock. Notwithstanding any other provisions of this Section 7.2, 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 13 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 purchase or other stock-based plan maintained by the Corporation. All calculations under this Section 7.2 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a share (with .05 of a share being rounded upward), as the case may be. Anything in this paragraph (a) of this Section 7.2 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 (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 without limitation a merger, consolidation, statutory share exchange, issuer or self tender offer for at least 30% of the shares of Class A Common Stock outstanding, 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 7.2 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 W 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 W Preferred Stock was convertible immediately prior to such Transaction (without giving effect to any Conversion Price adjustment pursuant to Section 7.2(a)(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 (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 W Preferred Stock that will contain provisions enabling the holders of the Class W 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 prior to such Transaction. The provisions of this paragraph (b) shall similarly 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, an issuer or self tender offer shall have been commenced for at least 30% of the outstanding shares of Class A 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 14 to be mailed to each holder of shares of Class W 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 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 7.2. (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 W Preferred Stock at such holder's last address as shown on the stock records of the Corporation. (e) In any case in which paragraph (a) of this Section 7.2 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 W 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 paragraph (c) of Section 7.1. (f) 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 7.2. (g) If the Corporation shall take any action affecting the Class A Common Stock, other than action described in this Section 7.2, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of Class W Preferred Stock, the Conversion Price for the Class W 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 W Preferred Stock, the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of Class W 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 W Preferred Stock shall be computed as if at the time of computation all such 15 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 Class A Common Stock issued upon conversion of the shares of Class W 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 W 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 or redemption of shares of Class W 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 W 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. (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 7.2, conversion of Class W Preferred Stock pursuant to this Section 7.2 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 W 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 W 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 W Preferred Stock ("Senior Stock"); (b) on a parity with the Class W 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 W Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock, Class O Cumulative Convertible Preferred Stock, Class P Convertible Cumulative Preferred Stock, Class Q Cumulative Preferred Stock Class R Cumulative Preferred Stock, Class S Cumulative Redeemable Preferred Stock, Class T Cumulative Preferred Stock, Class U Cumulative Preferred Stock or Class V Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class W Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in 16 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 W 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 Class A Common Stock or (ii) the holders of Class W 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 either (i) for two consecutive quarterly dividend periods the Corporation fails to pay dividends on the Class A Common Stock in an amount per share at least equal to Forty-five Cents ($0.45) (subject to adjustment consistent with any adjustment of the Conversion Price pursuant to Section 7.2 of this Article) (the "Base Common Stock Dividend"), or (ii) the Corporation fails to pay a quarterly dividend payable on the Class W Preferred Stock, whether or not earned or declared, then the number of directors then constituting the Board of Directors shall be increased by one additional director and the holders of shares of Class W Preferred Stock shall be entitled to elect the additional director 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 W Preferred Stock called as hereinafter provided. Whenever (1) in the case of clause (i), the Corporation makes a quarterly dividend payment on the Class A Common Stock in an amount per share equal to or exceeding the Base Common Stock Dividend, or (2) in the case of an arrearage in dividends described in clause (ii), all arrears in dividends on the Class W 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 W Preferred Stock to elect such additional director shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future events), and the term of office of the person elected as a director by the holders of the Class W 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 W Preferred Stock, the Secretary of the Corporation may, and upon the written request of any holder of Class W Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class W Preferred Stock for the election of the director 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 W 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 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 in the director elected by the holders of the Class W Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the holders of the Class W Preferred Stock, 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) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class W 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, then the number of directors then constituting the Board of Directors shall be 17 increased by two directors (if not already increased by reason of similar types of provisions with respect to shares of any other class or series of Parity Stock which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class W 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 W Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class W 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 W 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 W 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 W 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 W Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class W 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 W 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 W 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 W 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. (c) So long as any shares of Class W 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 W Preferred Stock, voting as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class W Preferred Stock (including any amendment, alteration or repeal effected pursuant to a merger, consolidation or similar transaction) or would convert the Class W 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 W Preferred Stock; or 18 (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 W 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 W 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 W 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 W Preferred Stock as a single class on any matter, then the Class W 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 W 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 W 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 W Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class W Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class W 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 W Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class W 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 W 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 W Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class W 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 W 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 19 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 W Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class W 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 W 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 W 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 W Preferred Stock. (f) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class W 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 W 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 W 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 W 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 W 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 exercise such authority in a manner that interferes with any ownership or transfer of Class W Preferred Stock that is expressly authorized pursuant to Section 10.8(c) of this Article. 20 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 W Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class W 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 W 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 W 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 W 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 W 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 W 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 W 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 W 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 W 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 W 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 W 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 21 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 W Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class W Preferred Stock on behalf of the Corporation. (f) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class W 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 W 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 W 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 W Preferred Stock will be required to provide certain information as set out below. (a) ANNUAL DISCLOSURE. Every record holder or Beneficial Owner of shares of Class W Preferred Stock convertible into more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Equity Stock shall upon written request by the Corporation, such request to be made within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record holder or Beneficial Owner, the number of shares of Class W Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record holder or Beneficial Owner of Class W 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 W Preferred Stock as the Board of Directors, in its sole discretion, deems appropriate or necessary to 22 (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 W 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 W Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class W 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 W 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 (as modified to exclude qualified trusts from treatment as individuals pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership, limited liability company, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (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 W 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 W 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 W Preferred Stock) following the purchase of Class W Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class W Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class W Preferred Stock purchased by it as a part 23 of or in connection with such offering and with respect to any Class W Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class W Preferred Stock shall bear substantially the following legend: "The shares of Class W Cumulative Convertible Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class W 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 W Cumulative Convertible Preferred Stock). Any Person that attempts to Beneficially Own shares of Class W 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 W 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 W 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 W Cumulative Convertible Preferred Stock) or (ii) the shares of Class W 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." 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 inter-dealer quotation system. FOURTH: The terms of the Class W Cumulative Convertible Preferred Stock set forth in Article Third hereof shall become Article XXXIV of the Charter. 24 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on September 24, 2004. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ LISA COHN /s/ PAUL J. MCAULIFFE - ------------------------------ ------------------------------------ Lisa Cohn Paul J. McAuliffe Assistant Secretary Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive 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/ PAUL J. MCAULIFFE ------------------------------------ Paul J. McAuliffe Executive Vice President and Chief Financial Officer 25 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS X 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, into a class designated as Class X 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 X 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 431,607,976 shares immediately prior to the reclassification to 429,607,976 shares immediately after the reclassification. The number of shares classified as Class X Cumulative Convertible Preferred Stock may be decreased pursuant to Section 6 of Article Third of these Articles Supplementary upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class X Cumulative Convertible 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 X Cumulative Convertible Preferred Stock (the "Class X Preferred Stock") and Two Million (2,000,000) shall be the authorized number of shares of such Class X Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class X 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 of any class, the product of (i) the number of shares of Equity Stock within such block and (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. "Base Rate" shall mean (i) for the period from the Issue Date through and including March 31, 2006, a quarterly dividend payment in an amount per share equal to $0.53125, and (ii) after March 31, 2006, a quarterly dividend payment in an amount per share equal to $0.5625; provided, however, that, if the Corporation gives notice of its election to make a Dividend Increase following a Change of Control in accordance with Section 6.4(a) of the Exchange Agreement, then, from and after the date of such notice, the "Base Rate" shall mean a quarterly dividend payment in an amount per share equal to (i) for all Dividend Periods commencing after the date such notice is given, the greater of (a) $0.75 or (b) the product of (x) $6.25 and (y) the sum of 800 basis points plus the greater of (x) the annual yield to maturity of U.S. Treasury securities with a five year maturity and (y) the annual yield to maturity of U.S. Treasury securities with a ten year maturity, in each case as compiled by and published in the most recent Federal Reserve Statistical Release H.15(519) which has become publicly available at least two business days prior to the date of such notice (or, if such Statistical Release is no longer published, any publicly available source of similar data), and (ii) for the Dividend Period in which such notice is given, a weighted average (based on the number of days in such Dividend Period occurring before and after the date of such notice) of (a) the Base Rate in effect prior thereto and (b) the Base Rate determined in accordance with the foregoing clause (i). "Beneficial Ownership" shall mean, with respect to any Person, ownership of shares of Equity Stock equal to the sum of (without duplication) (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 X Preferred Stock; provided that, for purposes of paragraphs (a) and (b) 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. "Change of Control" shall have the meaning set forth in the Exchange Agreement. "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 A Common Stock" shall mean the Class A Common Stock, par value $.01 per share, of the Corporation, and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "Class X 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 2 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 or, if the Equity Stock is not publicly traded, the fair value of a share of such Equity Stock as reasonably determined in good faith by the Board of Directors. "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. "Conversion Price" shall mean the conversion price per share of Class A Common Stock for which each share of Class X Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to Section 7 of this Article. The initial Conversion Price shall be $52.50 (equivalent to a conversion rate of 0.4762 shares of Class A Common Stock for each share of Class X Preferred Stock). "Coverage Event" shall have the meaning set forth in Section 6.5(a) of the Exchange Agreement. "Dividend Payment Date" shall mean January 1, April 1, July 1 and October 1 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 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 X Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class X 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. "Exchange Agreement" shall mean the Exchange Agreement, dated as of September 29, 2004, by and among GE Capital Equity Investments, Inc., the Corporation and AIMCO Properties, L.P. "Fair Market Value" shall mean the average of the daily Closing Prices of a share of Class A Common Stock during the twenty (20) consecutive 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 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 Closing Price. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date, and ending on and including December 31, 2004. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class X 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 X Preferred Stock that are Beneficially Owned by the Initial Holder. From the 3 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. "Issue Date" shall mean September 30, 2004. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Class X 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 X 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, however, 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 X 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 X 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 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) 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" shall have the meaning set forth in Section 10.3(a) of this Article. "Redemption Date" shall mean, in the case of any redemption of any shares of Class X Preferred Stock, the date fixed for redemption of such shares. 4 "Redemption Price" shall mean, with respect to any share of Class X Preferred Stock to be redeemed, (i) if the Redemption Date is prior to March 31, 2006, 102% of the Liquidation Preference thereof, or (ii) if the Redemption Date is on or after March 31, 2006, 100% of the Liquidation Preference thereof, plus, in either case, all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "Repurchase Offer" shall have the meaning set forth in the Exchange Agreement. "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 X Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, when used with respect to any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities exchange or automated quotation system, any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Transfer" shall mean any sale, transfer, gift, assignment, devise or other disposition of a share of Class X 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 X Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class X Preferred Stock), whether voluntary or involuntary, whether of record ownership 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 X Preferred Stock). The term "Transfers" and "Transferred" shall have correlative meanings. "Transfer Agent" shall mean such transfer agent as may be designated by the Board of Directors or their designee as the transfer agent for the Class X 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 X 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 9 of this Article. 5 3. DIVIDENDS. (a) The holders of Class X 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 payable in cash in an amount per share of Class X Preferred Stock equal to the greater of (i) the Base Rate, or (ii) the cash dividends declared on the number of shares of Class A Common Stock, or portion thereof, into which a share of Class X 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 Class A Common Stock, or portion thereof calculated to the fourth decimal point, into which a share of Class X 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 Class A Common Stock outstanding as of the record date for the payment of dividends on the Class A Common Stock with respect to such Dividend Period. If (A) the Corporation pays a cash dividend on the Class A Common Stock after the Dividend Payment Date for the corresponding Dividend Period and (B) the dividend on the Class X Preferred Stock for such Dividend Period calculated pursuant to clause (ii) of this paragraph (a), taking into account the Class A Common Stock dividend referenced in clause (A), exceeds the dividend previously declared on the Class X Preferred Stock for such Dividend Period, the Corporation shall pay an additional dividend to the holders of the Class X Preferred Stock on the date that the Class A 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 X 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 January 1, 2005. Each such dividend shall be payable in arrears to the holders of record of the Class X 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. 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 X Preferred Stock for any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class X 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 X 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 X Preferred Stock that may be in arrears. (c) So long as any of the shares of Class X 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 X Preferred Stock for all Dividend Periods terminating 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 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 X Preferred Stock and all dividends declared upon any 6 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 X Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class X 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 Class A 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 (i) dividends equal to the full amount of all accumulated, accrued and unpaid dividend on all outstanding shares of Class X 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 X 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 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 X Preferred Stock. 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 in the opinion of nationally recognized REIT tax counsel 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 X Preferred Stock shall be entitled to receive Twenty Five Dollars ($25.00) per share of Class X 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 X 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 X 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 X Preferred Stock and any such other Parity Stock ratably in the same proportion as the 7 respective amounts that would be payable on such Class X 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 X 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 X 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 X Preferred Stock shall not be redeemable by the Corporation prior to March 31, 2006, except (i) as set forth in Section 10.2 of this Article, or (ii) during the 60 day period immediately following a Coverage Event. The Corporation, at its option, may redeem shares of Class X Preferred Stock, in whole or from time to time in part, at a price payable in cash equal to the Redemption Price applicable thereto, (i) prior to March 31, 2006, only during the 60 day period immediately following a Coverage Event, and (ii) at any time on or after March 31, 2006. (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 X Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class X Preferred Stock may be redeemed unless all outstanding shares of Class X Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class X Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class X Preferred Stock. (d) If the Corporation shall redeem shares of Class X 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 recognized overnight courier 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 mailed in the manner herein provided shall be conclusively presumed to have been duly given on the day after 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 X 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; (iv) the then-current Conversion Price; (v) the Redemption Price payable on such Redemption Date; and (vi) 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 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 X Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class X 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 X Preferred Stock of the Corporation shall cease (except the right to receive the cash payable upon such redemption, without interest thereon, upon 8 surrender of their certificates if so required); provided, however, that if the Redemption Date for any shares of Class X 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 X 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 and shall not be payable as part of the Redemption Price for such shares. The Corporation's obligation to make available the cash necessary to effect the 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 X Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class X 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 X 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 X 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 X 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 X Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class X Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class X 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 X 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 X Preferred Stock that have been issued and reacquired in any manner by the Corporation (including, without limitation, shares of Class X Preferred Stock which have been surrendered for conversion) shall be returned to the status of authorized but unissued shares of Class X Preferred Stock. 7. CONVERSION. 7.1 CONVERSION AT HOLDERS OPTION. At any time on or after the Issue Date, holders of shares of Class X 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 X 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), in whole or in part, into the number of fully paid and non-assessable shares of 9 Class A Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing the Liquidation Preference per share of Class X Preferred Stock by the Conversion Price (as in effect at the time and on the date provided for in paragraph (b) 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; provided, however, that the right to convert shares of Class X Preferred Stock called for redemption pursuant to Section 5 shall terminate at the close of business on the Redemption Date fixed for such redemption, unless the Corporation shall default in making payment of cash payable upon such redemption under Section 5 of this Article. (b) To convert shares of Class X Preferred Stock, the holder of the shares to be converted shall surrender the certificate representing such shares at the office of the Transfer Agent, accompanied by the funds, if any, required by the last paragraph of this subsection (b) to be paid by such holder, and shall give written notice of conversion in the form provided on such certificate representing shares of Class X Preferred Stock (or such other notice as is reasonably acceptable to the Corporation) to the Corporation at such office or agency that the holder elects to convert the shares of Class X 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 on 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 X Preferred Stock is registered, each certificate representing a share of Class X 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, but in no event later than three Business Days after the surrender of certificates representing such shares of Class X 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 X Preferred Stock in accordance with provisions of this Section 7.1, and a check or cash in respect of the cash amount payable to such holder, if any, referred to in subsection (c), below. 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 X Preferred Stock shall have been surrendered and such notice (and any applicable instruments of transfer and any required taxes) received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Class A Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date, and such conversion shall be at the Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such shares shall have been surrendered and such notice received by the Corporation. Except as provided herein, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on converted shares or for dividends (other than dividends on the Class A Common Stock the record date for which is after the conversion date and which the Corporation shall pay in the ordinary course to the record holder as of the record date) on the Class A Common Stock issued upon such conversion. Holders of Class X Preferred Stock at the close of business on a record date for the payment of dividends on the Class X Preferred Stock will be entitled to receive an amount equal to the dividend payable on such shares on the corresponding Dividend 10 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 X 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 X 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 X 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 dividend record date and the opening of business on the corresponding Dividend Payment Date, the amount of the dividend payable thereon on such Dividend Payment Date; minus (iii) an amount equal to the product of (A) the number of shares of Class A Common Stock (or fraction thereof) into which such share of Class X Preferred Stock has been converted, (B) the quarterly cash dividend per share that was most recently declared on the Class A Common Stock, determined as of the date of conversion, and (C) 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 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 X Preferred Stock. If more than one share of Class X 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 X Preferred Stock so converted. 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 X 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 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 (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 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 X Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of 11 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 X 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 7.2 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 issue, after the Issue Date, 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 7.2) 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. (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 7.2)) (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, that if the property being distributed is a publicly traded security, its value shall be calculated in accordance 12 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) If, after the Issue Date, the Corporation shall acquire, pursuant to an issuer or self tender offer, all or any portion of the outstanding Class A Common Stock and such tender offer involves the payment of consideration per share of Class A 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 Closing Price per share of Class A 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 Class A Common Stock outstanding (including the shares acquired in the tender offer (the "Acquired Shares")) immediately prior to the Expiration Time, multiplied by (Y) the Closing Price per share of Class A 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 Class A Common Stock outstanding (less any Acquired Shares) at the Expiration Time, multiplied by (II) the Closing Price per share of Class A 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 (a)(v) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; provided, further, that any adjustment shall be required and made in accordance with the provisions of this Section 7.2 (other than this paragraph (a)(v)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of shares of Class A Common Stock. Notwithstanding any other provisions of this Section 7.2, 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 purchase or other stock-based plan maintained by the Corporation. All calculations under this Section 7.2 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a share (with .05 of a share being rounded upward), as the case may be. Anything in this paragraph (a) of this Section 7.2 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 (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. (vi) 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 Class A Common Stock outstanding, 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 13 paragraph (a)(i) of this Section 7.2 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 X 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 X Preferred Stock was convertible immediately prior to such Transaction (without giving effect to any Conversion Price adjustment pursuant to Section 7.2(a)(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 (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 X Preferred Stock that will contain provisions enabling the holders of the Class X 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 prior to such Transaction. The provisions of this paragraph (b) shall similarly apply to successive Transactions. (b) 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, an issuer or self tender offer shall have been commenced for at least 30% of the outstanding shares of Class A 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 X 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 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 7.2. 14 (c) 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 X Preferred Stock at such holder's last address as shown on the stock records of the Corporation. (d) In any case in which paragraph (a) of this Section 7.2 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 X 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 paragraph (c) of Section 7.1. (e) 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 7.2. (f) If the Corporation shall take any action affecting the Class A Common Stock, other than action described in this Section 7.2, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the holders of Class X Preferred Stock, the Conversion Price for the Class X 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. (g) 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 X Preferred Stock, the full number of shares of Class A Common Stock deliverable upon the conversion of all outstanding shares of Class X 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 X 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 Class A Common Stock issued upon conversion of the shares of Class X 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 X 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. (h) 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 or redemption of shares of Class X 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 X Preferred Stock to be 15 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. (i) 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. (j) Notwithstanding anything to the contrary contained in this Section 7.2, conversion of Class X Preferred Stock pursuant to this Section 7.2 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 X 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 X 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 X Preferred Stock ("Senior Stock"); (b) on a parity with the Class X 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 X Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock, Class O Cumulative Convertible Preferred Stock, Class P Convertible Cumulative Preferred Stock, Class Q Cumulative Preferred Stock Class R Cumulative Preferred Stock, Class S Cumulative Redeemable Preferred Stock, Class T Cumulative Preferred Stock, Class U Cumulative Preferred Stock, Class V Cumulative Preferred Stock or Class W Cumulative Convertible Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class X 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 X 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 Class A Common Stock or (ii) the holders of Class X 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 either (i) for two consecutive quarterly dividend periods the Corporation fails to pay dividends on the Class A Common Stock in an amount per share at least equal to Forty-five Cents ($0.45) (subject to adjustment consistent with any adjustment of the Conversion Price pursuant 16 to Section 7.3 of this Article) (the "Base Common Stock Dividend"), or (ii) the Corporation fails to pay a quarterly dividend payable on the Class X Preferred Stock, whether or not earned or declared, then the number of directors then constituting the Board of Directors shall be increased by one additional director and the holders of shares of Class X Preferred Stock shall be entitled to elect the additional director 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 X Preferred Stock called as hereinafter provided. Whenever (1) in the case of clause (i), the Corporation makes a quarterly dividend payment on the Class A Common Stock in an amount per share equal to or exceeding the Base Common Stock Dividend, or (2) in the case of an arrearage in dividends described in clause (ii), all arrears in dividends on the Class X 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 X Preferred Stock to elect such additional director shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future events), and the term of office of the person elected as a director by the holders of the Class X 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 X Preferred Stock, the Secretary of the Corporation may, and upon the written request of any holder of Class X Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class X Preferred Stock for the election of the director 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 X 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 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 in the director elected by the holders of the Class X Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the holders of the Class X Preferred Stock, 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) If and whenever six quarterly dividends (whether or not consecutive) payable on the Class X 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, then the number of directors then constituting the Board of Directors shall be increased by two directors (if not already increased by reason of similar types of provisions with respect to shares of any other class or series of Parity Stock which is entitled to similar voting rights (the "Voting Preferred Stock")) and the holders of shares of Class X 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 X Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class X 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 X 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 X Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of directors constituting the Board of Directors shall be 17 reduced accordingly. At any time after such voting power shall have been so vested in the holders of Class X 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 X Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class X 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 X 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 X 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 X 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. (c) So long as any shares of Class X 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 X Preferred Stock, voting as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (i) any amendment, alteration or repeal of any of the provisions of, or the addition of any provision to, these Articles Supplementary, the Charter or the By-Laws of the Corporation that materially adversely affects the voting powers, rights or preferences of the holders of the Class X Preferred Stock (including any amendment, alteration or repeal effected pursuant to a merger, consolidation or similar transaction) or would convert the Class X 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 X 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 X 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 X 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 X 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 X Preferred Stock as a single class on any matter, then the Class X 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 X Preferred Stock shall not have any relative, participating, optional or other special 18 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 X 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 X Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class X Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class X 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 X Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class X 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 X 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 X Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class X 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 X 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 X Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Class X 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 X 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 X 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 19 the case may be, and the intended transferee shall acquire no rights in such shares of Class X Preferred Stock. (f) Severability on Void Transactions. A Transfer of a share of Class X 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 X 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 X 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 X 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 X 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 exercise such authority in a manner that interferes with any ownership or transfer of Class X 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 X Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class X 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 X 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 X 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 X 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 20 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 X 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 X 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 X 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 X 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 X 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 X 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 X 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 X Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class X Preferred Stock on behalf of the Corporation. (f) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class X 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 21 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 X 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 X 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 X Preferred Stock will be required to provide certain information as set out below. (a) ANNUAL DISCLOSURE. Every record holder or Beneficial Owner of shares of Class X Preferred Stock convertible into more than 5% (or such other percentage between 0.5% and 5%, as provided in the applicable regulations adopted under the Code) of the number of Outstanding shares of Equity Stock shall upon written request by the Corporation, such request to be made within 30 days after January 1 of each year, give written notice to the Corporation stating the name and address of such record holder or Beneficial Owner, the number of shares of Class X Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record holder or Beneficial Owner of Class X 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 X 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 X 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 X Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class X 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 X 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 22 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 (as modified to exclude qualified trusts from treatment as individuals pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership, limited liability company, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (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 X 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 X 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 X Preferred Stock) following the purchase of Class X Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class X Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class X Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class X Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class X Preferred Stock shall bear substantially the following legend: "The shares of Class X Cumulative Convertible Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class X 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 X Cumulative Convertible Preferred Stock). Any Person that attempts to Beneficially Own shares of Class X 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 X 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 X 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 X Cumulative Convertible Preferred Stock) or 23 (ii) the shares of Class X 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." 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 inter-dealer quotation system. FOURTH: The terms of the Class X Cumulative Convertible Preferred Stock set forth in Article Third hereof shall become Article XXXV of the Charter. 24 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on September 29, 2004. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ LISA COHN /s/ PAUL J. MCAULIFFE - ------------------- ---------------------------- Lisa Cohn Paul J. McAuliffe Assistant Secretary Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive 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/ PAUL J. MCAULIFFE ---------------------------- Paul J. McAuliffe Executive Vice President and Chief Financial Officer 25 ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY CLASS Y 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 3,450,000 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share, into a class designated as Class Y 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 Y Cumulative Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 3,450,000 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 429,607,976 shares immediately prior to the reclassification to 426,157,976 shares immediately after the reclassification. The number of shares classified as Class Y Cumulative Preferred Stock may be decreased upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Class Y 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 Y Cumulative Preferred Stock (the "Class Y Preferred Stock") and Three Million Four Hundred and Fifty Thousand (3,450,000) shall be the authorized number of shares of such Class Y Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Class Y 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 product of (i) the number of shares of Equity Stock within such block and (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 (without duplication) (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 Y 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(G) 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 A Common Stock" shall mean the Class A Common Stock, par value $.01 per share, of the Corporation, and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "Class Y 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 or, if the Equity Stock is not publicly traded, the fair value of a share of such Equity Stock as reasonably determined in good faith by the Board of Directors. "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. "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. 2 "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 Y Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Class Y 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. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including April 14, 2005. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Class Y 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 Y 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. "Issue Date" shall mean December 21, 2004. "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 Y 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 Y 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, however, 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 3 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 Y 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 Y 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) 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" shall have the meaning set forth in Section 10.3(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 Y Preferred Stock, the date fixed for redemption of such shares. "Redemption Price" shall mean, with respect to any share of Class Y Preferred Stock to be redeemed, 100% of the Liquidation Preference thereof, plus all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 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 Y Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean, when used with respect to any Equity Stock, (i) if the Equity Stock is listed or admitted to trading on the NYSE, a day on which the NYSE is open for the transaction of business, (ii) if the Equity Stock is not listed or admitted to trading on the NYSE but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which the principal national securities exchange or automated quotation system, as the case may be, on which the Equity Stock is listed or admitted to trading is open for the transaction of business, or (iii) if the Equity Stock is not listed or admitted to trading on any national securities 4 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 Y 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 Y Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Class Y Preferred Stock), whether voluntary or involuntary, whether of record ownership 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 Y 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 Y 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 Y Preferred Stock. "Trust" shall mean the trust created pursuant to Section 10.3(A) 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 Y 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 Y Preferred Stock in an amount per share equal to $0.49219. 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, 2005. Each such dividend shall be payable in arrears to the holders of record of the Class Y Preferred Stock, as they appear on the stock records of the Corporation at the close of business on January 1, April 1, July 1 or October 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) The amount of dividends payable per share of Class Y Preferred Stock for the Initial Dividend Period, or any other period shorter than a full Dividend Period, shall be computed ratably on the basis of twelve 30-day months and a 360-day year. Holders of Class Y 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 Y 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 Y Preferred Stock that may be in arrears. (c) So long as any of the shares of Class Y 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 Y Preferred Stock for all Dividend Periods terminating on or prior to the date such dividend or 5 distribution is declared, paid, set apart for payment or made, as the case may be, 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 Y 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 Y Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Class Y 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 Class A 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 Y 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 Y 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 Y Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per share of Class Y 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 Y 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 Y 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 Y Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Class Y 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 Y Preferred Stock and any Parity Stock, as provided in Section 4(a), 6 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 Y 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 Y Preferred Stock shall not be redeemable by the Corporation prior to December 21, 2009, except as set forth in Section 10.2 of this Article. On and after December 21, 2009 the Corporation, at its option, may redeem shares of Class Y Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to the Redemption Price applicable thereto. In the event of a redemption of shares of Class Y Preferred Stock, if the Redemption Date occurs after a 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 the holders of record at the close of business on such Record Date, notwithstanding the redemption of such shares, and shall not be payable as part of the redemption price for such shares. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Class Y Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class Y Preferred Stock may be redeemed unless all outstanding shares of Class Y Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class Y Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class Y Preferred Stock. (d) If the Corporation shall redeem shares of Class Y 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 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 Y 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; 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 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 Y Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Class Y 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 Y Preferred Stock of the Corporation shall cease (except the right 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 Y 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 Y Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the cash necessary to effect the 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 7 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 Y Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Class Y 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 Y 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 Y 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 Y 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). If fewer than all the outstanding shares of Class Y Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Class Y Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Class Y 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 Y 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 Y Preferred Stock that have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized but unissued shares of Class Y 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 Y 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 Y Preferred Stock ("Senior Stock"); (b) on a parity with the Class Y 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 Y Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock, Class O Cumulative Convertible Preferred Stock, Class P Convertible Cumulative Preferred Stock, Class Q Cumulative Preferred Stock, Class R Cumulative Preferred Stock, Class S Cumulative Redeemable Preferred Stock, Class T Cumulative Preferred Stock, Class U Cumulative Preferred Stock, Class V Cumulative Preferred Stock, Class W Cumulative Convertible Preferred Stock or Class X Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Class Y 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 Y 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 Class A Common Stock or (ii) the holders of Class Y 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 8 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 Y 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 any other class or series of Parity Stock which is entitled to similar voting rights (the "Voting Preferred Stock") and the holders of shares of Class Y 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 Y Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Class Y 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 Y 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 Y 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 Y 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 Y Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Class Y 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 Y 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 Y 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 Y 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 Y 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 Y 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 Y Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to increase the authorized amount of Class Y Preferred Stock, or 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 Y Preferred Stock; or 9 (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 Y 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 Y 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 Y 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 Y Preferred Stock as a single class on any matter, then the Class Y 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 Y 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 Y 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 Y Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Class Y Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class Y 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 Y Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Class Y 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 Y 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 Y Preferred Stock in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Class Y 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 Y 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 Y Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as 10 to the Transfer of such shares of Class Y 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 Y 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 Y 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 Y Preferred Stock. (F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class Y 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 Y 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 Y 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 Y 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 Y 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 exercise such authority in a manner that interferes with any ownership or transfer of Class Y 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 Y Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Class Y 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 Y 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 Y 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 11 provided in Section 10.8 of this Article, such shares of Class Y 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 Y 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 Y 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 Y 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 Y 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 Y 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 Y 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 Y 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 Y Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Class Y Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class Y 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. 12 (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 Y 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 Y 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 Y Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record holder or 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 Y 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 holder or Beneficial Owner, the number of shares of Class Y Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record holder or Beneficial Owner of Class Y 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 Y 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 Y 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 Y Preferred Stock and any Person (including the stockholder of record) that is holding shares of Class Y 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 Y 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. 13 (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code (as modified to exclude qualified trusts from treatment as individuals pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership, limited liability company, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (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 Y 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 Y 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 Y Preferred Stock) following the purchase of Class Y Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Class Y Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Class Y Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Class Y Preferred Stock purchased in connection with market making activities. 10.9 LEGEND. Each certificate for Class Y Preferred Stock shall bear substantially the following legend: "The shares of Class Y Cumulative Preferred Stock represented by this certificate are subject to restrictions on transfer. No person may Beneficially Own shares of Class Y 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 Y Cumulative Preferred Stock). Any Person that attempts to Beneficially Own shares of Class Y 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 Y 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 Y Cumulative Preferred Stock represented hereby will be void in accordance with the Charter (including the Articles Supplementary setting forth the terms of the Class Y Cumulative Preferred Stock) or (ii) the shares of Class Y 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. 14 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 Y Cumulative Preferred Stock set forth in Article Third hereof shall become Article XXXVI of the Charter. 15 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Chief Financial Officer and witnessed by its Assistant Secretary on December 16, 2004. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Lisa Cohn /s/ Paul J. McAuliffe - ---------------------------- -------------------------------- Lisa Cohn Paul J. McAuliffe Assistant Secretary Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive 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/ Paul J. McAuliffe -------------------------------- Paul J. McAuliffe Executive Vice President and Chief Financial Officer ARTICLES SUPPLEMENTARY APARTMENT INVESTMENT AND MANAGEMENT COMPANY SERIES A COMMUNITY REINVESTMENT ACT PERPETUAL 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 240 authorized but unissued shares of Class A Common Stock of the Corporation, par value $.01 per share, into a class designated as Series A Community Reinvestment Act Perpetual 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 Series A Community Reinvestment Act Perpetual Preferred Stock, par value $.01 per share, from no shares immediately prior to the reclassification to 240 shares immediately after the reclassification. The reclassification decreases the number of shares classified as Class A Common Stock from 426,157,976 shares immediately prior to the reclassification to 426,157,736 shares immediately after the reclassification. The number of shares classified as Series A Community Reinvestment Act Perpetual Preferred Stock may be decreased upon reacquisition thereof in any manner, or by retirement thereof, by the Corporation. THIRD: The terms of the Series A Community Reinvestment Act Perpetual 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 Series A Community Reinvestment Act Perpetual Preferred Stock (the "Series A CRA Preferred Stock") and Two Hundred Forty (240) shall be the authorized number of shares of such Series A CRA Preferred Stock constituting such class. 2. DEFINITIONS. For purposes of the Series A CRA 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 product of (i) the number of shares of Equity Stock within such block and (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 (without duplication) (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 Series A CRA 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 11.2(G) 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 A Common Stock" shall mean the Class A Common Stock, par value $.01 per share, of the Corporation, and such other shares of the Corporation's capital stock into which outstanding shares of such Class A Common Stock shall be reclassified. "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 2 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 or, if the Equity Stock is not publicly traded, the fair value of a share of such Equity Stock as reasonably determined in good faith by the Board of Directors. "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. "CRA" shall mean the Community Reinvestment Act of 1977, as amended from time to time. "CRA Credit Value" shall mean, for any Investment with respect to which CRA Credits are allocated to a holder of Series A CRA Preferred Stock, the book value of such Investment as of the last day of the Corporation's fiscal year immediately preceding the date on which a determination is made by the Corporation to allocate CRA Credits with respect to such Investment to such holder, multiplied by the Operating Partnership's proportionate ownership interest in the underlying Investment. "CRA Credits" shall have the meaning set forth in paragraph (a) of Section 11 of this Article. "CRA Parity Securities" shall mean securities of the Corporation, other than the Series A CRA Preferred Stock, which are entitled to receive allocations of CRA Credits. "Default Rate" shall mean, for any Dividend Period, the applicable Three-Month Rate LIBOR Rate plus 3.25%. "Dividend Payment Date" shall mean March 31, June 30, September 30, and December 31 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 March 31, June 30, September 30, and December 31 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 3 Series A CRA Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall end on and include the Redemption Date with respect to the Series A CRA Preferred Stock being redeemed. "Dividend Rate" shall mean, for any Dividend Period, a rate, expressed as a percentage of the Liquidation Preference per annum, determined as follows: (i) for the Initial Dividend Period, a rate equal to 6.75%; and (ii) for all other Dividend Periods, a rate equal to the Three-Month LIBOR Rate for such Dividend Period plus 1.25%, or such other rate as shall be determined in connection with a Remarketing pursuant to Section 7. "Dividend Rate Calculation Agent" shall mean such financial institution (and any legal successor thereto) from time to time as shall be selected by the Corporation to provide information for calculation of the Dividend Rate. "Election Notice" shall have the meaning set forth in paragraph (b) of Section 7 of this Article. "Eligible CRA Portfolio" shall mean Investments selected from time to time by the Corporation to be made available for purposes of allocating CRA Credits to holders of Series A CRA Preferred Stock. "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 11.2(A) of this Article. "Failed Remarketing" shall have the meaning set forth in paragraph (c) of Section 7 of this Article. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Fully Allocated Stockholder" shall have the meaning set forth in paragraph (b) of Section 11 of this Article. "Initial Dividend Period" shall mean the period commencing on and including the Issue Date and ending on and including September 30, 2006. "Initial Holder" shall mean Terry Considine. "Initial Holder Limit" shall mean a number of the Outstanding shares of Series A CRA 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 Series A CRA 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, 4 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. "Investments" shall have the meaning set forth in paragraph (a) of Section 11 of this Article. "Issue Date" shall mean June 29, 2006. "Junior Stock" shall have the meaning set forth in paragraph (c) of Section 8 of this Article. "Liquidation Preference" shall have the meaning set forth in paragraph (a) of Section 4 of this Article. "Look-Through Entity" shall mean a Person that is either (i) described in Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or (ii) registered under the Investment Company Act of 1940. "Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number of the Outstanding shares of Series A CRA 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 Series A CRA 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, however, 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 Series A CRA 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 Series A CRA Preferred Stock that are Beneficially Owned by the Person. 5 "Ownership Restrictions" shall mean, collectively, the Ownership Limit, as applied to Persons other than the Initial Holder or Look-Through Entities, the Initial Holder Limit, as applied to the Initial Holder, and the Look-Through Ownership Limit, as applied to Look-Through Entities. "Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8 of this Article. "Person" shall mean (a) for purposes of Section 11 of this Article, (i) an individual, corporation, partnership, estate, trust (including a trust qualifying under Section 401(a) or 501(c) of the Code), association, "private foundation," within the meaning of Section 509(a) of the Code, joint stock company or other entity, and (ii) a "group," as that term is used for purposes of Section 13(d)(3) of the Exchange Act, and (b) for purposes of the remaining Sections of this Article, any individual, firm, partnership, corporation or other entity, including any successor (by merger or otherwise) of such entity. "Prohibited Transferee" shall have the meaning set forth in Section 11.2(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 Series A CRA Preferred Stock, the date fixed for redemption of such shares. "Redemption Price" shall mean, with respect to any share of Series A CRA Preferred Stock to be redeemed, 100% of the Liquidation Preference thereof, plus all accumulated, accrued and unpaid dividends (whether or not earned or declared), if any, to the Redemption Date. "REIT" shall mean a "real estate investment trust," as defined in Section 856 of the Code. "Remarketing" shall mean a remarketing of the Series A CRA Preferred Stock pursuant to Section 7 of this Article. "Remarketing Agent" shall mean, with respect to any Remarketing, the Person selected by the Corporation to act as its agent in effecting the Remarketing. "Remarketing Date" shall mean, with respect to any Remarketing, the Dividend Payment Date selected by the Board of Directors as the date on which the Remarketing is to be completed, and the first of which shall be March 31, 2015. "Self-Delineated Assessment Area" shall have the meaning set forth in paragraph (b) of Section 11 of this Article. "Senior Stock" shall have the meaning set forth in paragraph (a) of Section 8 of this Article. 6 "Series A CRA Preferred Stock" shall have the meaning set forth in Section 1 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 Series A CRA Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Terminated Allocation" shall have the meaning set forth in paragraph (c) of Section 11 of this Article. "Three-Month LIBOR Rate" shall mean, for any Dividend Period, the rate (expressed as a percentage per annum) for deposits in U.S. dollars having a term of three months, commencing on the first day of such Dividend Period (a "Reset Date"), which appears on Page 3750 on Moneyline Telerate Inc. or any successor page (the "Telerate LIBOR Page") at approximately 11:00 a.m., London time, on the day that is two Business Days preceding such Reset Date. If such rate does not appear on the Telerate LIBOR Page, the rate for such Reset Date will be determined by reference to the rates at which deposits in U.S. dollars are offered by four major banks in the London interbank market (the "Reference Banks") at approximately 11:00 a.m., London time, on the day that is two Business Days preceding such Reset Date to prime banks in the London interbank market for a period of three months commencing from such Reset Date and in a representative amount. The Corporation shall (or cause its Dividend Rate Calculation Agent to) request the principal London office of each of the Reference Banks to provide a quotation of such rate. If at least two such quotations are provided, the rate for such Reset Date will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate for such Reset Date will be the arithmetic mean of the rates quoted by three major banks in New York City, selected by the Corporation (or its Dividend Rate Calculation Agent) at approximately 11:00 a.m., New York City time, on such Reset Date for loans in U.S. dollars to leading European banks for a period of three months commencing on such Reset Date and in a representative amount. The Corporation shall promptly (or shall cause its Dividend Rate Calculation Agent promptly to) notify any holder of the Series A CRA Preferred Stock of the Dividend Rate for any Dividend Period upon request. The Three-Month LIBOR Rate shall be rounded to the nearest one-hundredth of a percent. "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 7 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 Series A CRA 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 Series A CRA Preferred Stock or (ii) the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for Series A CRA Preferred Stock), whether voluntary or involuntary, whether of record ownership 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 Series A CRA 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 Series A CRA Preferred Stock; provided, that if the Corporation has not designated a transfer agent then the Corporation shall act as the transfer agent for the Series A CRA Preferred Stock. "Trust" shall mean the trust created pursuant to Section 11.2(A) 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. "Unallocated Stockholder" shall have the meaning set forth in paragraph (b) of Section 11 of this Article. "Voting Preferred Stock" shall have the meaning set forth in Section 9 of this Article. 3. DIVIDENDS. (a) The holders of shares of Series A CRA 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 Series A CRA Preferred Stock. 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 September 30, 2006. Each such dividend shall be payable in arrears to the holders of record of the Series A CRA Preferred Stock, as they appear on the stock records of the Corporation at the close of business on March 15, June 15, September 15 or December 15 (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. 8 (b) The amount of dividends payable per share of Series A CRA Preferred Stock on each Dividend Payment Date shall be equal to the sum of the daily amounts for each day actually elapsed during such Dividend Period (with such sum rounded to the nearest $.01), which daily amounts shall be computed by dividing (1) the product of (A) the Dividend Rate in effect for such Dividend Period, and (B) the Liquidation Preference per share of Series A CRA Preferred Stock by (2) 360. Any dividend payment made on shares of the Series A CRA Preferred Stock shall first be credited against the earliest accumulated but unpaid dividend due with respect to such shares. The Corporation shall determine the dividend payable on each Dividend Payment Date in accordance with this Article, utilizing the Three-Month LIBOR Rate determined by the Corporation (or supplied by the Dividend Rate Calculation Agent) in accordance with the definition of "Three-Month LIBOR Rate" in this Article. Holders of shares of Series A CRA 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 Series A CRA 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 Series A CRA Preferred Stock that may be in arrears. (c) So long as any of the shares of Series A CRA 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 Series A CRA Preferred Stock for all Dividend Periods terminating 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 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 Series A CRA 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 Series A CRA Preferred Stock and accumulated, accrued and unpaid on such Parity Stock. (d) So long as any of the shares of Series A CRA 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 Class A 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 9 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 Series A CRA 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 Series A CRA 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 Series A CRA Preferred Stock shall be entitled to receive Five Hundred Thousand Dollars ($500,000) per share of Series A CRA 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 Series A CRA 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 shares of Series A CRA 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 shares of Series A CRA Preferred Stock and any such other Parity Stock ratably in the same proportion as the respective amounts that would be payable on such Series A CRA 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. 10 (b) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of shares of Series A CRA 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 Series A CRA Preferred Stock and any Parity Stock shall not be entitled to share therein. 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Shares of Series A CRA Preferred Stock shall not be redeemable by the Corporation prior to June 30, 2011, except as set forth in Section 12.2 of this Article. On and after June 30, 2011 the Corporation, at its option, may redeem shares of Series A CRA Preferred Stock, in whole or from time to time in part, at a redemption price payable in cash equal to the Redemption Price applicable thereto. In the event of a redemption of shares of Series A CRA Preferred Stock, if the Redemption Date occurs after a 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 the holders of record at the close of business on such Record Date, notwithstanding the redemption of such shares, and shall not be payable as part of the Redemption Price for such shares. (b) The Redemption Date shall be selected by the Corporation, shall be specified in the notice of redemption and shall be not less than 30 days nor more than 60 days after the date notice of redemption is sent by the Corporation. (c) If full cumulative dividends on all outstanding shares of Series A CRA Preferred Stock have not been declared and paid, or declared and set apart for payment, for all past Dividend Periods, then (i) no shares of Series A CRA Preferred Stock may be redeemed unless all outstanding shares of Series A CRA Preferred Stock are simultaneously redeemed, and (ii) neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Series A CRA Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Series A CRA Preferred Stock. (d) If the Corporation shall redeem shares of Series A CRA 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 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 Series A CRA 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; 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 11 next Dividend Payment Date to the record holder at the close of business on the relevant record date as described in the next 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 Series A CRA Preferred Stock so called for redemption shall cease to accumulate or accrue on the shares of Series A CRA 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 shares of Series A CRA Preferred Stock of the Corporation shall cease (except the right 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 Series A CRA 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 Series A CRA Preferred Stock called for redemption shall be payable on such Dividend Payment Date to the holders of record of such shares at the close of business on the corresponding dividend record date notwithstanding the prior redemption of such shares. The Corporation's obligation to make available the cash necessary to effect the 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 Series A CRA Preferred Stock called for redemption, with irrevocable instructions that such cash be applied to the redemption of the shares of Series A CRA 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 Series A CRA 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 Series A CRA 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 Series A CRA 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). If fewer than all the outstanding shares of Series A CRA Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Series A CRA Preferred Stock not previously called for redemption by lot or, with respect to the number of shares of Series A CRA 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 Series A CRA 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. 12 6. STATUS OF REACQUIRED STOCK. All shares of Series A CRA Preferred Stock that have been issued and reacquired in any manner by the Corporation shall be returned to the status of authorized but unissued shares of Series A CRA Preferred Stock. 7. REMARKETING. (a) REMARKETING ON REMARKETING DATE. Unless previously redeemed in full, on March 31, 2015, and on each Remarketing Date thereafter, the Remarketing Agent will attempt to remarket the Series A CRA Preferred Stock with the lowest Dividend Rate that, in the judgment of the Remarketing Agent, will permit all outstanding shares of Series A CRA Preferred Stock to be sold at a price per share equal to the Liquidation Preference. For each Remarketing, the Corporation shall notify the Remarketing Agent at least 15 Business Days prior to the Remarketing Date as to (i) whether the new Dividend Rate should be fixed or variable and, if variable, the index to be used to calculate the variable Dividend Rate, and (ii) the period of time until the next Remarketing Date (unless there is a Failed Remarketing). If the Corporation fails to so notify the Remarketing Agent, it will be deemed to have selected (i) a variable rate for which the relevant index is the Three-Month LIBOR Rate, and (ii) a period of time until the next Remarketing Date of five years. No later than 10 Business Days prior to a Remarketing Date, the Remarketing Agent will notify holders of the Series A CRA Preferred Stock of the Dividend Rate that will become effective on such Remarketing Date and the period of time until the next Remarketing Date. (b) TENDER ON REMARKETING DATE. All shares of Series A CRA Preferred Stock must be tendered for remarketing on each Remarketing Date unless a holder thereof affirmatively elects to continue to hold all or a portion of its shares (such portion shall be in the liquidation amount of $500,000 per share or any integral multiple thereof) by delivering the following notice of non-tender to the Corporation and the Remarketing Agent no later than five Business Days prior to such Remarketing Date: NOTICE OF ELECTION TO RETAIN SERIES A COMMUNITY REINVESTMENT ACT PERPETUAL PREFERRED STOCK OF APARTMENT INVESTMENT AND MANAGEMENT COMPANY The undersigned owner of the shares of Series A Community Reinvestment Act Perpetual Preferred Stock ("Series A CRA Preferred Stock") of Apartment Investment and Management Company described below does hereby irrevocably elect to retain such shares of Series A CRA Preferred Stock in connection with the remarketing of the Series A CRA Preferred Stock to occur on ____________________ (the "Remarketing Date"). The undersigned understands that from and after the Remarketing Date, the dividend rate with respect to the shares will be determined as provided in the Articles Supplementary relating to the Series A CRA Preferred Stock. 13 Non-Tendered Shares Liquidation Amount CUSIP Number(s) A holder who affirmatively elects to hold all or a portion of its shares by timely delivering such notice of non-tender will not have its shares (or such portion) sold in the relevant Remarketing and will continue to hold all or such portion of its shares (as indicated in such notice), which will be subject to the new Dividend Rate determined in such Remarketing. Any notice of non-tender delivered to the Corporation and the Remarketing Agent will be irrevocable and may not be conditioned upon the new Dividend Rate established in the Remarketing. A holder that fails to timely deliver such required notice of non-tender to the Corporation and the Remarketing Agent at least five business days prior to the Remarketing Date shall be deemed to have elected to sell all of its shares in the Remarketing, and all such shares shall be deemed tendered for purchase in the Remarketing, notwithstanding any failure by such holder to properly deliver such shares to the Remarketing Agent for purchase. Unless a holder affirmatively elects to continue to hold its shares by timely delivering the required notice of non-tender pursuant to this Section 7, all shares of CRA Preferred Stock shall be deemed tendered for purchase in the Remarketing, notwithstanding any failure by any holder to deliver its shares to the Remarketing Agent for purchase. (c) FAILED REMARKETING. If, on any Remarketing Date, the Remarketing Agent is unable to sell all of the tendered shares of Series A CRA Preferred Stock to investors (a "Failed Remarketing"), the Dividend Rate shall be adjusted to equal the Default Rate for a period of one year, after which another Remarketing will be attempted; provided, however, that no adjustment shall be made to the Dividend Rate if it would result in a reduction in the Dividend Rate from that in effect immediately prior to the Failed Remarketing. In such case, no shares shall be sold in such Remarketing and each holder shall continue to hold its shares of CRA Preferred Stock, on which dividends will be paid at the Default Rate until the next Remarketing Date. Neither the Corporation nor the Remarketing Agent shall have any obligation to purchase any shares of Series A CRA Preferred Stock in the event of a Failed Remarketing. (d) ACCUMULATED AND UNPAID DIVIDENDS. If, on a Remarketing Date, there are any accumulated and unpaid dividends relating to past Dividend Periods, then on such Remarketing Date, the Corporation will pay to holders of the outstanding shares of Series A CRA Preferred Stock the amount of such accumulated and unpaid dividends for past Dividend Periods. (e) SELECTION OF REMARKETING AGENT. The Corporation shall appoint a qualified firm to serve as the Remarketing Agent in sufficient time to complete its obligations as described herein. 14 8. RANKING. Any class or series of capital stock of the Corporation shall be deemed to rank: (a) prior or senior to the Series A CRA 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 Series A CRA Preferred Stock ("Senior Stock"); (b) on a parity with the Series A CRA 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 Series A CRA Preferred Stock, if (i) such capital stock is Class B Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock, Class O Cumulative Convertible Preferred Stock, Class P Convertible Cumulative Preferred Stock, Class Q Cumulative Preferred Stock, Class R Cumulative Preferred Stock, Class S Cumulative Redeemable Preferred Stock, Class T Cumulative Preferred Stock, Class U Cumulative Preferred Stock, Class V Cumulative Preferred Stock, Class W Cumulative Convertible Preferred Stock, Class X Cumulative Preferred Stock or Class Y Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class of stock or series and the Series A CRA 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 Series A CRA 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 Class A Common Stock or (ii) the holders of Series A CRA 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 Series A CRA 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 any other class or series of Parity Stock 15 which is entitled to similar voting rights (the "Voting Preferred Stock") and the holders of shares of Series A CRA 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 Series A CRA Preferred Stock and the Voting Preferred Stock called as hereinafter provided. Whenever all arrears in dividends on the Series A CRA 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 Series A CRA 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 Series A CRA 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 shares of Series A CRA Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and upon the written request of any holder of Series A CRA Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Series A CRA 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 Series A CRA 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 Series A CRA 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 Series A CRA 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 Series A CRA 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 Series A CRA 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 16 holders of the Series A CRA Preferred Stock; provided, however, that the amendment of the provisions of the Charter so as to increase the authorized amount of Series A CRA Preferred Stock, or 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 shares of Series A CRA 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 shares of Series A CRA 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 Series A CRA 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 Series A CRA 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 Series A CRA Preferred Stock as a single class on any matter, then the Series A CRA Preferred Stock and such other class or series shall have with respect to such matters one vote per $100 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein or in the Charter, the Series A CRA 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 any Remarketing Agent or Transfer Agent may deem and treat the record holder of any share of Series A CRA Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation, nor any Remarketing Agent or Transfer Agent, shall be affected by any notice to the contrary. 11. RIGHTS WITH RESPECT TO CRA CREDIT ALLOCATIONS. (a) GENERAL. Holders of shares of Series A CRA Preferred Stock and other CRA Parity Securities shall be entitled to an allocation of CRA Credits. "CRA Credits" are an allocation, solely for CRA reporting purposes, of the value of assets owned directly or indirectly by the Operating Partnership ("Investments") which may be considered a "qualified investment" under the CRA, for a holder of shares of Series A CRA Preferred Stock or other CRA Parity Securities. Subject to the terms of this Section 11, each holder of a share of Series A CRA Preferred Stock shall be entitled to an allocation of CRA Credits with respect to Investments in the Eligible CRA Portfolio that have a CRA Credit Value equal to the Liquidation Preference for 17 such share of Series A CRA Preferred Stock. CRA Credit allocations shall be undertaken upon each issuance of shares of Series A CRA Preferred Stock and changes in such allocations, if any, shall be undertaken at the end of each quarter. (b) INITIAL ALLOCATIONS. Each holder of shares of Series A CRA Preferred Stock shall provide to the Corporation a certification of its Self-Delineated Assessment Area. "Self-Delineated Assessment Area" is, with respect to each holder of shares of Series A CRA Preferred Stock, such holder's geographic self-delineated assessment area or broader statewide or regional area that includes such holder's self-delineated assessment area for purposes of the CRA. The Corporation shall notify each holder of shares of Series A CRA Preferred Stock of the Investments in the Eligible CRA Portfolio with respect to which such holder will be allocated CRA Credits, which Investments shall be located in such holder's Self-Delineated Assessment Area. A holder of Shares of Series A CRA Preferred Stock which is allocated CRA Credits with respect to Investments that have a CRA Credit Value equal to the aggregate Liquidation Preference of such holder's shares of Series A CRA Preferred Stock is referred to herein as a "Fully Allocated Stockholder." A holder of shares of Series A CRA Stock Preferred that is not a Fully Allocated Stockholder is referred to herein as an "Unallocated Stockholder." (c) REPLACEMENT ALLOCATIONS. The determination of which Investments will be the basis for allocating CRA Credits to a holder of shares of Series A CRA Preferred Stock shall not be revised except as follows: (i) SALE OF ALLOCATED ASSETS. If an Investment with respect to which CRA Credits have been allocated to a holder of Series A CRA Preferred Stock is subsequently transferred (whether by sale or other disposition, including a foreclosure) prior to June 30, 2008 (a "Terminated Allocation"), then the Corporation shall (x) allocate to such holder available CRA Credits with respect to another Investment in the Eligible CRA Portfolio that is within the same Self-Delineated Assessment Area as the Investment that was transferred or another Self-Delineated Assessment Area certified in writing by such holder, or (y) if the Corporation does not have sufficient available Investments in the Eligible CRA Portfolio that is in such holder's Self - Delineated Assessment Area, the Corporation shall use its commercially reasonable efforts (which may include acquiring a new Investment) to add to the Eligible CRA Portfolio a qualifying Investment in such holders' Self-Delineated Assessment Area and allocate to such holder available CRA Credits with respect to such Investment. If a Terminated Allocation occurs after June 30, 2008, the Corporation shall have no obligation to add any Investment to the Eligible CRA Portfolio, but such holder may elect to receive an allocation of available CRA Credits with respect to an existing Investment in the Eligible CRA Portfolio, subject to the allocation priorities set forth in Section 11(d). (ii) RECLASSIFICATION UPON TRANSFER. If a Fully Allocated Stockholder transfers its shares of Series A CRA Preferred Stock, the transferee shall receive the same allocation of CRA Credits as the Fully Allocated Stockholder had prior to transfer. If an Unallocated Stockholder transfers its shares of Series A CRA Preferred Stock, the transferee shall receive (i) the same allocation of CRA Credits as the Unallocated Stockholder had prior to transfer, and (ii) the same priority that the Unallocated Stockholder had prior to transfer with respect to allocations of CRA Credits which the Unallocated Stockholder has properly requested from the Corporation but had not received prior to transfer. Subject to the allocation priorities 18 set forth in Section 11(d), a transferee shall have a one-time option to obtain a new allocation of available CRA Credits with respect to Investments in the Eligible CRA Portfolio. (iii) PERMISSIVE REALLOCATIONS; SOURCES OF AVAILABLE CRA CREDITS. The Corporation, in its sole discretion, may allow a holder of shares of Series A CRA Preferred Stock to request that CRA Credits be allocated with respect to a different Investment in the Eligible CRA Portfolio, subject to the allocation priorities set forth in Section 11(d). (iv) MECHANICS FOR ALLOCATION. The Corporation shall adopt such procedures as it deems necessary to implement the allocation of CRA Credits set forth in this Section 11. (d) ALLOCATION PRIORITIES. CRA Credits with respect to all (or a portion) of a particular Investment in the Eligible CRA Portfolio shall be available for allocation to a holder of shares of Series A CRA Preferred Stock only if and to the extent that a holder of shares of Series A CRA Preferred Stock or any CRA Parity Securities is not already entitled to receive allocations of CRA Credit with respect to such Investment (or a portion thereof). Available CRA Credits shall be allocated in accordance with the following priorities: (i) first, to Unallocated Stockholders; (ii) second, to holders of shares of Series A CRA Preferred Stock and holders of other CRA Parity Securities with Terminated Allocations prior to June 30, 2008; (iii) third, to holders of shares of Series A CRA Preferred Stock and holders of other CRA Parity Securities with Terminated Allocations on and after June 30, 2008; (iv) fourth, to a transferee of shares of Series A CRA Preferred Stock or other CRA Parity Securities; and (v) fifth, at the sole discretion of the Corporation, the balance to holders of shares of Series A CRA Preferred Stock and holders of other CRA Parity Securities who request a change in the Investment with respect to which they are allocated CRA Credits. Within each category set forth above, the Corporation shall determine the order in which holders of shares of Series A CRA Preferred Stock and holders of other CRA Parity Securities are entitled to receive allocations of CRA Credits as follows: (i) for clause (i) above, priority shall be based on the order in which holders of shares of Series A CRA Preferred Stock or holders of other CRA Parity Securities became Unallocated Stockholders; (ii) for clauses (ii) and (iii) above, priority shall be based on the order in which a holder of shares of Series A CRA Preferred Stock or a holder of other CRA Parity Securities suffered a Terminated Allocation; 19 (iii) for clause (iv) above, priority shall be based on the order in which a holder of shares of Series A CRA Preferred Stock or other CRA Parity Securities were transferred; and (iv) for clause (v) above, priority shall be based on the order in which the request for reallocation is actually received by the Corporation. (e) ALLOCATIONS WITH RESPECT TO SUBSEQUENT CRA PARITY SECURITIES. Stockholders who acquire CRA Parity Securities issued by the Corporation after the Issue Date shall have the same rights to initial allocation and a change in allocation of available CRA Credits as the holders of shares of Series A CRA Preferred Stock and holders of other CRA Parity Securities who previously purchased such securities, subject to the allocation priorities set forth in Section 11(d). 11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS. (A) GENERALLY. A holder of shares of Series A CRA Preferred Stock may not Transfer less than (i) two (2) shares of Series A CRA Preferred Stock, or (ii) in the event that the Corporation permitted a holder of Series A CRA Preferred Stock to purchase less than two (2) shares of Series A CRA Preferred Stock, the number of shares so purchased. In all events, however, if a transferor has not Transferred all of its shares of Series A CRA Preferred Stock, such transferor must retain no less than two (2) shares of Series A CRA Preferred Stock or the number of shares of Series A CRA Preferred Stock initially purchased. (B) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 11.7, from and after the Issue Date, no Person (other than the Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Series A CRA Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own shares of Series A CRA Preferred Stock in excess of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own shares of Series A CRA Preferred Stock in excess of the Look-Through Ownership Limit. (C) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in Section 11.7, from and after the Issue Date (and subject to Section 11.11), 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 Series A CRA Preferred Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of such shares of Series A CRA 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 Series A CRA Preferred Stock. (D) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in Section 11.7, from and after the Issue Date (and subject to Section 11.11), 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 Series A CRA Preferred Stock 20 in excess of the Initial Holder Limit shall be void ab initio as to the Transfer of such shares of Series A CRA 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 Series A CRA Preferred Stock. (E) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as provided in Section 11.7 from and after the Issue Date (and subject to Section 11.11), 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 Series A Series A CRA Preferred Stock in excess of the Look-Through Ownership limit shall be void ab initio as to the Transfer of such shares of Series A CRA 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 Series A CRA Preferred Stock. (F) 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 Series A CRA 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 Series A CRA Preferred Stock. (G) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Series A CRA Preferred Stock that is null and void under Sections 11.1(B), (C), (D), (E) or (F) of this Article because it would, if effective, result in (i) the ownership of Series A CRA 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 Series A CRA Preferred Stock in the same or any other related transaction. (H) 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 Series A CRA 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 21 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 Series A CRA 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 11.2 of this Article; provided, further, that the provisions of this Section 11.1(H) shall be subject to the provisions of Section 11.11 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 Series A CRA Preferred Stock that is expressly authorized pursuant to Section 11.7(C) of this Article. 11.2 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 Series A CRA Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially Own shares of Series A CRA Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is a Look-Through Entity would Beneficially Own shares of Series A CRA 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 Series A CRA 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 11.7 of this Article, such shares of Series A CRA 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. 22 (C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Series A CRA 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 11.2(E), the Prohibited Transferee shall have no rights in the Series A CRA 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 Series A CRA 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 Series A CRA 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 Series A CRA 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 Series A CRA 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 Series A CRA 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 11.2(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 11.2(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 Series A CRA Preferred Stock as to which such restrictions would, by their terms, apply, and to hold such Series A CRA Preferred Stock on behalf of the Corporation. (F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Series A CRA 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 23 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 Series A CRA 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. 11.3 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to acquire shares of Series A CRA 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 11.2 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. 11.4 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date certain record and Beneficial Owners and transferees of shares of Series A CRA Preferred Stock will be required to provide certain information as set out below. (A) ANNUAL DISCLOSURE. Every record holder or 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 Series A CRA 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 holder or Beneficial Owner, the number of shares of Series A CRA Preferred Stock Beneficially Owned, and a full description of how such shares are held. Each such record holder or Beneficial Owner of Series A CRA 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 Series A CRA 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 Series A CRA Preferred Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain the written notice described in this Section 11.4 from the Beneficial Owner. (B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a Beneficial Owner of shares of Series A CRA Preferred Stock and any Person (including the stockholder of record) that is holding shares of Series A CRA 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 24 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 Series A CRA 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. 11.5 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 11.11 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. 11.6 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. 11.7 EXCEPTIONS. The following exceptions shall apply or may be established with respect to the limitations of Section 11.1 of this Article. (A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of tax counsel or other evidence or undertaking acceptable to it, may waive the application, in whole or in part, of the Ownership Limit to a Person subject to the Ownership Limit, if such person is not an individual for purposes of Section 542(a) of the Code (as modified to exclude qualified trusts from treatment as individuals pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership, limited liability company, estate or trust. In connection with any such exemption, the Board of Directors may require such representations and undertakings from such Person and may impose such other conditions as the Board of Directors deems necessary, in its sole discretion, to determine the effect, if any, of the proposed Transfer on the Corporation's status as a REIT. (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 Series A CRA 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 Series A CRA 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 Series A CRA Preferred Stock) following the purchase of Series A CRA Preferred Stock by an underwriter that (i) is a corporation, partnership or other legal entity and (ii) participates in an offering of the Series A CRA Preferred Stock, such underwriter shall not be subject to the Ownership Limit with respect to the Series A CRA Preferred Stock purchased by it as a part of or in connection with such offering and with respect to any Series A CRA Preferred Stock purchased in connection with market making activities. 25 11.8 LEGEND. Each certificate for Series A CRA Preferred Stock shall bear substantially the following legend: "THIS SECURITY, WHICH HAS BEEN ISSUED BY APARTMENT INVESTMENT AND MANAGEMENT COMPANY (THE "CORPORATION"), HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY OTHER APPLICABLE JURISDICTION. BY ITS ACCEPTANCE HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (A "QUALIFIED INSTITUTIONAL BUYER") (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT ("RULE 144A")); AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, ONLY (A) TO THE CORPORATION OR MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER PURCHASING THIS SECURITY OR SUCH INTEREST OR PARTICIPATION FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE OF RULE 144A, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION BE AT ALL TIMES WITHIN ITS CONTROL, AND IN COMPLIANCE WITH THE SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTION. ANY TRANSFER OF THIS SECURITY MUST BE IN AN AMOUNT OF NOT LESS THAN $500,000 AND INTEGRAL MULTIPLES THEREOF, TO A TRANSFEREE PURCHASING FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT. 26 NO TRANSFER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN WILL BE PERMITTED IF SUCH TRANSFER WOULD RESULT IN A VIOLATION OF THE "OWNERSHIP LIMIT" AS DEFINED IN THE ARTICLES SUPPLEMENTARY OR OTHERWISE COULD ADVERSELY AFFECT THE STATUS OF THE CORPORATION AS A REIT. ANY TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTION TO THE RIGHTS TO THE CONTRARY TO THE CORPORATION OR ANY INTERMEDIARY THE SHARES OF SERIES A COMMUNITY REINVESTMENT ACT PERPETUAL PREFERRED STOCK (THE "CRA PREFERRED STOCK") REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER. NO PERSON MAY BENEFICIALLY OWN SHARES OF CRA 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 CRA PREFERRED STOCK). ANY PERSON THAT ATTEMPTS TO BENEFICIALLY OWN SHARES OF CRA 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 CRA 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 CRA PREFERRED STOCK REPRESENTED HEREBY WILL BE VOID IN ACCORDANCE WITH THE CHARTER (INCLUDING THE ARTICLES SUPPLEMENTARY SETTING FORTH THE TERMS OF THE CRA PREFERRED STOCK) OR (II) THE SHARES OF CRA PREFERRED STOCK REPRESENTED HEREBY WILL AUTOMATICALLY BE TRANSFERRED TO A TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES." 11.9 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. 27 11.10 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. 11.11 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 Series A Community Reinvestment Act Perpetual Preferred Stock, set forth in Article Third hereof shall become Article XXXVII of the Charter. 28 IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Executive Vice President and Treasurer and witnessed by its Assistant Secretary on June 29, 2006. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Lisa Cohn /s/ Patti K. Fielding - --------------------------------------- ---------------------------- Lisa Cohn Patti K. Fielding Senior Vice President, Assistant General Executive Vice President Counsel and Assistant Secretary THE UNDERSIGNED, Executive Vice President of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles Supplementary of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ Patti K. Fielding ----------------------------- Patti K. Fielding Executive Vice President 29 CERTIFICATE OF CORRECTION TO ARTICLES SUPPLEMENTARY OF APARTMENT INVESTMENT AND MANAGEMENT COMPANY (A MARYLAND CORPORATION) CLASS T CUMULATIVE PREFERRED STOCK 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 "Department") that: FIRST: Articles Supplementary dated July 16, 2003 of the Corporation relating to its Class T Cumulative Preferred Stock (par value $.01 per share) (the "Class T Preferred Stock") were filed with the Department on July 18, 2003, 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: (A) Article Third, Section 5(c) of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: If full cumulative dividends on all outstanding shares of Class T Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class T Preferred Stock may be redeemed unless all outstanding shares of Class T Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class T Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class T Preferred Stock. (B) Article Third, Section 5(c) of the Articles Supplementary as corrected hereby shall read as follows: If full cumulative dividends on all outstanding shares of Class T Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class T Preferred Stock may be redeemed unless all outstanding shares of Class T Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class T Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class T Preferred Stock. (C) The inaccuracy or defect in Article Third, Section 5(c) of the Articles Supplementary as previously filed was an error in transcription. THIRD: The name of each party to the document being corrected is APARTMENT INVESTMENT AND MANAGEMENT COMPANY. 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 Executive Vice President and Chief Financial Officer and witnessed by its Secretary on November 6, 2008. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Lisa R. Cohn By: /s/ Thomas M. Herzog Lisa R. Cohn, Secretary Thomas M. Herzog, Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive Vice President and Chief Financial Officer 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 the Corporation, the foregoing Certificate of Correction to be the act of the 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/ Thomas M. Herzog Thomas M. Herzog, Executive Vice President and Chief Financial Officer CERTIFICATE OF CORRECTION TO ARTICLES SUPPLEMENTARY OF APARTMENT INVESTMENT AND MANAGEMENT COMPANY (A MARYLAND CORPORATION) CLASS U CUMULATIVE PREFERRED STOCK 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 "Department") that: FIRST: Articles Supplementary dated March 17, 2004 of the Corporation relating to its Class U Cumulative Preferred Stock (par value $.01 per share) (the "Class U Preferred Stock") were filed with the Department on March 18, 2004, 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: (A) Article Third, Section 5(c) of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: If full cumulative dividends on all outstanding shares of Class U Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class U Preferred Stock may be redeemed unless all outstanding shares of Class U Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class U Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class U Preferred Stock. (B) Article Third, Section 5(c) of the Articles Supplementary as corrected hereby shall read as follows: If full cumulative dividends on all outstanding shares of Class U Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class U Preferred Stock may be redeemed unless all outstanding shares of Class U Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class U Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class U Preferred Stock. (C) The inaccuracy or defect in Article Third, Section 5(c) of the Articles Supplementary as previously filed was an error in transcription. THIRD: The name of each party to the document being corrected is APARTMENT INVESTMENT AND MANAGEMENT COMPANY. 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 Executive Vice President and Chief Financial Officer and witnessed by its Secretary on November 6, 2008. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Lisa R. Cohn By: /s/ Thomas M. Herzog Lisa R. Cohn, Secretary Thomas M. Herzog, Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive Vice President and Chief Financial Officer 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 the Corporation, the foregoing Certificate of Correction to be the act of the 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/ Thomas M. Herzog Thomas M. Herzog, Executive Vice President and Chief Financial Officer CERTIFICATE OF CORRECTION TO ARTICLES SUPPLEMENTARY OF APARTMENT INVESTMENT AND MANAGEMENT COMPANY (A MARYLAND CORPORATION) CLASS V CUMULATIVE PREFERRED STOCK 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 "Department") that: FIRST: Articles Supplementary dated September 24, 2004 of the Corporation relating to its Class V Cumulative Preferred Stock (par value $.01 per share) (the "Class V Preferred Stock") were filed with the Department on September 28, 2004, 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: (A) Article Third, Section 5(c) of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: If full cumulative dividends on all outstanding shares of Class V Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class V Preferred Stock may be redeemed unless all outstanding shares of Class V Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class V Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class V Preferred Stock. (B) Article Third, Section 5(c) of the Articles Supplementary as corrected hereby shall read as follows: If full cumulative dividends on all outstanding shares of Class V Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class V Preferred Stock may be redeemed unless all outstanding shares of Class V Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class V Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class V Preferred Stock. (C) The inaccuracy or defect in Article Third, Section 5(c) of the Articles Supplementary as previously filed was an error in transcription. THIRD: The name of each party to the document being corrected is APARTMENT INVESTMENT AND MANAGEMENT COMPANY. 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 Executive Vice President and Chief Financial Officer and witnessed by its Secretary on November 6, 2008. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Lisa R. Cohn By: /s/ Thomas M. Herzog Lisa R. Cohn, Secretary Thomas M. Herzog, Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive Vice President and Chief Financial Officer 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 the Corporation, the foregoing Certificate of Correction to be the act of the 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/ Thomas M. Herzog Thomas M. Herzog, Executive Vice President and Chief Financial Officer CERTIFICATE OF CORRECTION TO ARTICLES SUPPLEMENTARY OF APARTMENT INVESTMENT AND MANAGEMENT COMPANY (A MARYLAND CORPORATION) CLASS Y CUMULATIVE PREFERRED STOCK 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 "Department") that: FIRST: Articles Supplementary dated December 16, 2004 of the Corporation relating to its Class Y Cumulative Preferred Stock (par value $.01 per share) (the "Class Y Preferred Stock") were filed with the Department on December 17, 2004, 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: (A) Article Third, Section 5(c) of the Articles Supplementary as previously filed and to be corrected hereby reads as follows: If full cumulative dividends on all outstanding shares of Class Y Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class Y Preferred Stock may be redeemed unless all outstanding shares of Class Y Preferred Stock are simultaneously redeemed. Neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class Y Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class Y Preferred Stock. (B) Article Third, Section 5(c) of the Articles Supplementary as corrected hereby shall read as follows: If full cumulative dividends on all outstanding shares of Class Y Preferred Stock have not been declared and paid, or declared and set apart for payment, no shares of Class Y Preferred Stock may be redeemed unless all outstanding shares of Class Y Preferred Stock are simultaneously redeemed and neither the Corporation nor any affiliate of the Corporation may purchase or acquire shares of Class Y Preferred Stock, other than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Class Y Preferred Stock. (C) The inaccuracy or defect in Article Third, Section 5(c) of the Articles Supplementary as previously filed was an error in transcription. THIRD: The name of each party to the document being corrected is APARTMENT INVESTMENT AND MANAGEMENT COMPANY. 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 Executive Vice President and Chief Financial Officer and witnessed by its Secretary on November 6, 2008. WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY /s/ Lisa R. Cohn By: /s/ Thomas M. Herzog Lisa R. Cohn, Secretary Thomas M. Herzog, Executive Vice President and Chief Financial Officer THE UNDERSIGNED, Executive Vice President and Chief Financial Officer 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 the Corporation, the foregoing Certificate of Correction to be the act of the 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/ Thomas M. Herzog Thomas M. Herzog, Executive Vice President and Chief Financial Officer EX-21.1 3 d66458exv21w1.txt EX-21.1 . . . Exhibit 21.1
ENTITY NAME STATE CODE - ------------------------------------------------------------------------------------------- ----------- APARTMENT INVESTMENT AND MANAGEMENT COMPANY MD 107-145 WEST 135TH STREET ASSOCIATES LIMITED PARTNERSHIP NY 1133 FIFTEENTH STREET ASSOCIATES DC 1133 FIFTEENTH STREET FOUR ASSOCIATES (A MARYLAND LIMITED PARTNERSHIP) MD 1212 SOUTH MICHIGAN LLC IL 1-36 JAIDEE DRIVE ASSOCIATES LIMITED PARTNERSHIP CT 1625 ROSEMARIE LIMITED PARTNERSHIP CA 2100 IDLEWOOD AVENUE, L.P. NY 224 E. COMMONWEALTH APARTMENTS, A CALIFORNIA LIMITED PARTNERSHIP CA 249 ALBANY HEIGHTS LIMITED PARTNERSHIP GA 324 SOUTH HORNE STREET ASSOCIATES LIMITED PARTNERSHIP AZ 3258 BCP ASSOCIATES, L.P. TN 3971 E. BIJOU ASSOCIATES, A COLORADO LIMITED PARTNERSHIP CO 5 MILE LIMITED PARTNERSHIP MI 601 NORTH GRAND AVENUE PARTNERS LIMITED PARTNERSHIP CA 62ND STREET JOINT VENTURE IL 62ND STREET LIMITED PARTNERSHIP IL 630 EAST LINCOLN AVENUE ASSOCIATES LIMITED PARTNERSHIP NY 7400 ROOSEVELT INVESTORS PA ABBOTT ASSOCIATES LIMITED PARTNERSHIP NY ACQUISITION LIMITED PARTNERSHIP MD ACTC VI MANAGER, LLC DE AHP ACQUISITION COMPANY, LLC ME AIC REIT PROPERTIES LLC DE AIMCO 118-120 WEST 109TH STREET, LLC DE AIMCO 136-140 WEST 109TH STREET, LLC DE AIMCO 1582 FIRST AVENUE, LLC DE AIMCO 173 EAST 90TH STREET, LLC DE AIMCO 182-188 COLUMBUS AVENUE, LLC DE AIMCO 202-206 WEST 109TH STREET, LLC DE AIMCO 203-211 WEST 109TH STREET, LLC DE AIMCO 204-206 WEST 133, LLC DE AIMCO 212-214 WEST 109TH STREET, LLC DE AIMCO 2232-2240 ACP, LLC DE AIMCO 223-225 WEST 109TH STREET, LLC DE AIMCO 2247-2253 ACP, LLC DE AIMCO 2252-2258 ACP, LLC DE AIMCO 2300-2310 ACP, LLC DE AIMCO 233-235 WEST 109TH STREET, LLC DE AIMCO 237 NINTH AVENUE, LLC DE AIMCO 240 WEST 73RD STREET CO-OWNER, LLC DE AIMCO 240 WEST 73RD STREET, LLC DE AIMCO 241-251 WEST 109TH STREET, LLC DE AIMCO 2484 ACP, LLC DE AIMCO 306 EAST 89TH STREET, LLC DE AIMCO 311/313 EAST 73RD STREET, LLC DE AIMCO 322 EAST 61ST STREET, LLC DE AIMCO 452 EAST 78TH STREET PROPERTY, LLC DE AIMCO 464-466 AMSTERDAM 200-210 WEST 83RD STREET, LLC DE AIMCO 510 EAST 88TH STREET PROPERTY, LLC DE AIMCO 514 EAST 88TH STREET, LLC DE AIMCO 656 ST. NICHOLAS, LLC DE
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AIMCO/WESTRIDGE, L.L.C. DE AIMCO/WICKERTREE, INC. DE AIMCO/WICKERTREE, L.L.C. DE AIMCO/WICKERTREE, L.P. DE AIMCO/WINROCK-HOUSTON GP, LLC DE AIMCO/WINTHROP TEXAS INVESTORS GP, LLC DE AIMCO/WOODHOLLOW I, L.P. DE AIMCO/WOODHOLLOW, INC. DE AIMCO/WOODHOLLOW, L.P. DE AIMCO-GP, INC. DE AIMCO-LP TRUST DE AJ ONE LIMITED PARTNERSHIP DE AJ ONE, INC. DE AJ TWO LIMITED PARTNERSHIP DE AJ TWO, INC. DE ALABAMA PROPERTIES LTD., II AL ALABAMA PROPERTIES, LTD., V AL ALASKA HOUSE ASSOCIATES WA ALEX PLACE, LIMITED PARTNERSHIP AL ALEXANDER PLACE APARTMENTS, A LOUISIANA PARTNERSHIP IN COMMENDAM LA ALL HALLOWS ASSOCIATES, L.P. CA ALL HALLOWS PRESERVATION, L.P. CA ALLENTOWN TOWNE HOUSE LIMITED PARTNERSHIP PA ALLENTOWN-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD ALLIANCE TOWERS LIMITED PARTNERSHIP OH ALLIANCE TOWERS PRESERVATION, L.P. DE ALLISON VILLAGE ASSOCIATES, L.P. CO ALLVIEW-OXFORD LIMITED PARTNERSHIP MD ALMS HILL II LIMITED PARTNERSHIP OH AMARILLO NORTHWEST VILLAGE, LTD. TX AMBASSADOR APARTMENTS, L.P. DE AMBASSADOR CRM FLORIDA PARTNERS LIMITED PARTNERSHIP DE AMBASSADOR FLORIDA PARTNERS LIMITED PARTNERSHIP DE AMBASSADOR FLORIDA PARTNERS, INC. DE AMBASSADOR I, INC. DE AMBASSADOR I, L. P. IL AMBASSADOR II JV GP, LLC DE AMBASSADOR II JV, L.P. DE AMBASSADOR II, INC. DE AMBASSADOR III, L.P. DE AMBASSADOR IV, INC. DE AMBASSADOR IV, L.P. DE AMBASSADOR IX, INC. DE AMBASSADOR IX, L.P. DE AMBASSADOR TEXAS PARTNERS, L.P. DE AMBASSADOR TEXAS, INC. DE AMBASSADOR V, INC. DE AMBASSADOR V, L.P. DE AMBASSADOR VI, INC. DE AMBASSADOR VI, L.P. DE AMBASSADOR VII, INC. DE AMBASSADOR VII, L.P. DE AMBASSADOR VIII, INC. DE AMBASSADOR VIII, L.P. DE AMBASSADOR X, INC. DE
AMBASSADOR X, L.P. DE AMBASSADOR XI, INC. DE AMBASSADOR XI, L.P. DE AMREAL CORPORATION SC AMREAL REALTY, INC. SC ANCHORAGE PARTNERS, A TEXAS LIMITED PARTNERSHIP TX ANDERSON OAKS LIMITED PARTNERSHIP WA ANGELES INCOME PROPERTIES, LTD. 6 CA ANGELES INCOME PROPERTIES, LTD. II CA ANGELES INVESTMENT PROPERTIES, INC. CA ANGELES OPPORTUNITY PROPERTIES, LTD., A CALIFORNIA LIMITED PARTNERSHIP CA ANGELES PARTNERS VIII CA ANGELES PARTNERS X CA ANGELES PARTNERS X GP LIMITED PARTNERSHIP SC ANGELES PARTNERS XI CA ANGELES PARTNERS XII CA ANGELES PROPERTIES, INC. CA ANGELES REALTY CORPORATION CA ANGELES REALTY CORPORATION II CA ANTIOCH PRESERVATION, L.P. DE ANTON SQUARE, LTD. AL AP XI FOX RUN GP, L.L.C. SC AP XII ASSOCIATES GP, L.L.C. SC AP XII TWIN LAKE TOWERS, L.P. DE APARTMENT ASSOCIATES, LTD. TX APARTMENT CCG 17, L.L.C. SC APARTMENT CCG 17, L.P. CA APARTMENT CREEK 17A LLC CO APARTMENT LODGE 17A LLC CO APOLLO-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD APPLE RIDGE SINGLE FAMILY HOMES LIMITED PARTNERSHIP KY APPLE TREE ASSOCIATES, AN IDAHO LIMITED PARTNERSHIP ID ARC II/AREMCO PARTNERS, LTD., A CALIFORNIA LIMITED PARTNERSHIP CA ARCHERS GREEN LIMITED PARTNERSHIP VA ARISTOCRAT MANOR, LTD. AR ARKANSAS CITY APARTMENTS, LIMITED PARTNERSHIP AR ARLINGTON SENIOR HOUSING, L.P. TX ARMITAGE COMMONS ASSOCIATES IL ARROWSMITH, LTD. TX ARVADA HOUSE PRESERVATION LIMITED PARTNERSHIP CO ASHLAND MANOR LIMITED PARTNERSHIP OH ASPEN POINT, L.P. DE ASPEN-STRATFORD APARTMENT COMPANY C. NJ ASPEN-STRATFORD APARTMENTS COMPANY B NJ ATHENS GARDENS, LTD. OH ATHENS STATION, LTD. OH ATLANTA ASSOCIATES LIMITED PARTNERSHIP MA ATLANTIC IX, L.L.C. MI ATLANTIC PINES APARTMENTS, LTD. FL ATRIUM VILLAGE ASSOCIATES IL ATRIUMS OF PLANTATION JV GP, LLC DE ATRIUMS OF PLANTATION JV, L.P. DE AVON DEVELOPMENT COMPANY PA AVONDALE SIESTA POINTE APARTMENTS LIMITED PARTNERSHIP AZ AZALEA COURT INVESTMENT GROUP, BRENTWOOD LIMITED PARTNERSHIP NO. 2 AL
BAISLEY PARK ASSOCIATES LIMITED PARTNERSHIP NY BALDWIN COUNTY HOUSING, LTD. AL BALDWIN OAKS ELDERLY, LTD. NJ BALDWIN TOWERS ASSOCIATES PA BANGOR HOUSE PROPRIETARY LIMITED PARTNERSHIP ME BANNEKER, BENJAMIN PLAZA ASSOCIATES PA BANNOCK ARMS SECOND LIMITED PARTNERSHIP CA BARNESBORO ASSOCIATES, A PENNSYLVANIA LIMITED PARTNERSHIP PA BARNETT PLAZA, LTD. OH BAY PARC PLAZA APARTMENTS, L.P. DE BAYBERRY HILL, L.L.C. DE BAYHEAD VILLAGE ASSOCIATES, L.P. IN BAYVIEW HUNTERS POINT APARTMENTS, L.P. CA BAYVIEW PRESERVATION, L.P. CA BEACH-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD BEACON HILL PRESERVATION LIMITED DIVIDEND HOUSING ASSOCIATION LIMITED PARTNERSHIP MI BEDFORD HOUSE, LTD. OH BELLA GRANDE, LTD. FL BELLAIR MANOR, LTD. OH BELLERIVE ASSOCIATES LIMITED PARTNERSHIP MO BELLEVILLE MANOR APARTMENTS, LTD. KY BELLS BAY, L.P. SC BELMONT 189 ASSOCIATES NY BELOIT MATURE ADULT HOUSING, L.L.C. WI BENSALEM GARDEN ASSOCIATES LIMITED PARTNERSHIP PA BENT TREE II-OXFORD ASSOCIATES LIMITED PARTNERSHIP IN BENT TREE-OXFORD ASSOCIATES LIMITED PARTNERSHIP IN BEREA SINGLE FAMILY HOMES, LTD. KY BERKLEY LIMITED PARTNERSHIP VA BETHANY APARTMENTS LIMITED PARTNERSHIP AZ BETHEL COLUMBUS CORPORATION MD BETHEL COLUMBUS-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD BETHEL TOWERS LIMITED DIVIDEND HOUSING ASSOCIATION MI BETHLEHEM DEVELOPMENT COMPANY PA BETTER HOUSING ASSOCIATES, LIMITED PARTNERSHIP CT BEVILLE-ISLAND CLUB APARTMENTS PARTNERS, L.P. DE BEXLEY HOUSE GP, L.L.C. SC BEXLEY HOUSE, L.P. DE BIG WALNUT, L.P. DE BILTMORE APARTMENTS, LTD. OH BIRCH MANOR APARTMENTS OH BIRCH MANOR APARTMENTS - PHASE II OH BIRCH MANOR APARTMENTS, PHASE 1 LTD. OH BIRCH MANOR APARTMENTS, PHASE II LTD. OH BIRCHFIELD ASSOCIATES PA BLAKEWOOD PROPERTIES ASSOCIATES GA BLANCHARD APARTMENTS ASSOCIATES LIMITED PARTNERSHIP WA BLOOMSBURG ELDERLY ASSOCIATES PA BLUE ASH-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD BLUEWATER LIMITED DIVIDEND HOUSING ASSOCIATION MI BOLTON NORTH PRESERVATION LIMITED PARTNERSHIP DE BRANDEMERE-REO, L.P. TX BRANDERMILL-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD BRANDON-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD BRANFORD DEVELOPMENT ASSOCIATES LIMITED PARTNERSHIP CT
BRANT ROCK CONDOMINIUMS JV GP, LLC DE BRANT ROCK CONDOMINIUMS JV, L.P. DE BRIARCLIFFE-OXFORD ASSOCIATES LIMITED PARTNERSHIP MI BRIDGEWATER PARTNERS, LTD., A TEXAS LIMITED PARTNERSHIP TX BRIGHTON APARTMENTS ASSOCIATES LIMITED PARTNERSHIP NY BRIGHTON CREST, L.P. SC BRIGHTON GP, L.L.C. SC BRIGHTON MEADOWS ASSOCIATES, AN INDIANA LIMITED PARTNERSHIP IN BRIGHTWOOD MANOR ASSOCIATES PA BRINTON MANOR NO. 1 ASSOCIATES PA BRINTON TOWERS ASSOCIATES PA BRISTOL PARTNERS, L.P. MO BROAD RIVER PROPERTIES, L.L.C. DE BROADMOOR APARTMENTS ASSOCIATES LTD. PARTNERSHIP SC BROADMOOR AT CHELSEA ACQUISITION, L.P. MO BROADWAY ASSOCIATES RI BROADWAY GLEN ASSOCIATES MA BROOK RUN ASSOCIATES, L.P. IL BROOKSIDE APARTMENTS ASSOCIATES PA BROOKWOOD LIMITED PARTNERSHIP IL BROWN BUILDING DEVELOPMENT L.L.C. IL BRYDEN HOUSE LIMITED PARTNERSHIP OH BUCKHANNON MANOR ASSOCIATES LIMITED PARTNERSHIP WV BUFFALO VILLAGE ASSOCIATES LIMITED PARTNERSHIP NY BURKE II - OXFORD ASSOCIATES LIMITED PARTNERSHIP VA BURKE-OXFORD ASSOCIATES, A LIMITED PARTNERSHIP VA BURKSHIRE COMMONS APARTMENTS PARTNERS, L.P. DE BURLINGTON HOTEL BUILDING, LTD., LLLP CO BURLINGTON RIVER APARTMENTS, LIMITED PARTNERSHIP IA BURNHAM GEREL IL BURNSVILLE APARTMENTS LIMITED PARTNERSHIP MN BUTTERNUT CREEK ASSOCIATES LIMITED DIVIDEND HOUSING ASSOCIATION MI BUTTERNUT CREEK PRESERVATION LIMITED DIVIDEND HOUSING ASSOCIATION LIMITED PARTNERSHIP MI BUYERS ACCESS LLC DE BW OPERATING COMPANY, L.L.C. MA CACHE CREEK PARTNERS, L.P. CA CALHOUN BUILDERS, INC. D/B/A PATMAN SWITCH ASSOCIATES, A LOUISIANA PARTNERSHIP IN COMMENDAM LA CALIFORNIA SQUARE II LIMITED PARTNERSHIP KY CALIFORNIA SQUARE LIMITED PARTNERSHIP KY CALMARK HERITAGE PARK II LIMITED PARTNERSHIP CA CALMARK INVESTORS, LTD., A CALIFORNIA LIMITED PARTNERSHIP CA CALMARK/FORT COLLINS, INC. CA CALMARK/FORT COLLINS, LTD. CA CALVERT CITY, LTD. OH CAMARILLO-ROSEWOOD ASSOCIATES LIMITED PARTNERSHIP CA CAMBRIDGE COURT APARTMENTS, L.P. SC CAMBRIDGE HEIGHTS APARTMENTS LIMITED PARTNERSHIP MS CAMERON PARK VILLAGE LIMITED, A CALIFORNIA LIMITED PARTNERSHIP CA CAMPBELL HEIGHTS ASSOCIATES LIMITED PARTNERSHIP DC CANTERBURY GARDENS ASSOCIATES LIMITED PARTNERSHIP MI CANTERBURY GARDENS PRESERVATION LIMITED PARTNERSHIP DE CANTERBURY LIMITED PARTNERSHIP IN CANTERBURY SERVICES LLC DE
CANYON SHADOWS, L.P. CA CAPITAL HEIGHTS ASSOCIATES LIMITED PARTNERSHIP WV CAPITOL HILL ASSOCIATES CO CAPTIVA CLUB JV GP, LLC DE CAPTIVA CLUB JV, LLC DE CAROLINA ASSOCIATES LIMITED PARTNERSHIP WA CARPENTER-OXFORD ASSOCIATES II LIMITED PARTNERSHIP MD CARPENTER-OXFORD, L.L.C. MD CARRIAGE APX, A MICHIGAN LIMITED PARTNERSHIP MI CARRIAGE APX, INC. MI CARRIAGE HOUSE PRESERVATION, L.P. DE CARROLLWOOD LAKESIDE NORTH PARTNERS, LTD. FL CASA DE LAS HERMANITAS LIMITED PARTNERSHIP CA CASA QUINTANA, LTD. TX CASDEN OFFICE HOLDINGS LLC DE CASDEN PROPERTIES LLC DE CASSADY VILLAGE APARTMENTS, LTD. OH CASSELBERRY INVESTORS, L.L.C. MD CASSELBERRY-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD CASTLE PARK ASSOCIATES LIMITED PARTNERSHIP MO CASTLE ROCK JOINT VENTURE TX CASTLEWOOD ASSOCIATES, L.P. IA CAYUGA VILLAGE ASSOCIATES LIMITED PARTNERSHIP NY CCIP KNOLLS, L.L.C. DE CCIP LOFT, L.L.C. DE CCIP PALM LAKE, L.L.C. DE CCIP PLANTATION GARDENS, L.L.C. DE CCIP REGENCY OAKS, L.L.C. DE CCIP SOCIETY PARK EAST, L.L.C. DE CCIP STERLING, L.L.C. DE CCIP STERLING, L.P. PA CCIP/2 HIGHCREST, L.L.C. DE CCIP/2 VILLAGE BROOKE, L.L.C. DE CCIP/2 WINDEMERE, L.L.C. DE CCIP/2 WINDEMERE, L.P. DE CCIP/3 SANDPIPER, LLC DE CCIP/3 WILLIAMSBURG MANOR, LLC DE CCP IV ARBOURS OF HERMITAGE, LLC DE CCP IV ASSOCIATES, LTD. TX CCP IV KNOLLWOOD, LLC DE CCP/III VILLAGE GREEN GP, INC. SC CCP/IV APARTMENTS GP, L.L.C. SC CCP/IV CITADEL GP, L.L.C. SC CCP/IV RESIDENTIAL GP, L.L.C. SC CDLH AFFORDABLE, L.P. CA CEDAR TERRACE APARTMENTS, LTD. AL CENTER CITY ASSOCIATES PA CENTER SQUARE ASSOCIATES PA CENTRAL PARK TOWERS II LIMITED PARTNERSHIP KS CENTRAL PARK TOWERS LIMITED PARTNERSHIP KS CENTRAL STATION LIMITED PARTNERSHIP TN CENTRAL STROUD, LIMITED PARTNERSHIP FL CENTRAL WOODLAWN LIMITED PARTNERSHIP IL CENTRAL WOODLAWN REHABILITATION JOINT VENTURE IL CENTURY LAKESIDE PLACE, L.P. TX
CENTURY PENSION INCOME FUND XXIV, A CALIFORNIA LIMITED PARTNERSHIP CA CENTURY PROPERTIES FUND XIV L.P. CA CENTURY PROPERTIES FUND XIX, LP DE CENTURY PROPERTIES FUND XV CA CENTURY PROPERTIES FUND XVI CA CENTURY PROPERTIES FUND XVII, LP DE CENTURY PROPERTIES GROWTH FUND XXII, LP DE CENTURY STONEY GREENS, INC. CA CENTURY SUN RIVER, LIMITED PARTNERSHIP AZ CENTURY TOWER APARTMENTS, L.P. MO CHA PROPERTIES, INC. DE CHANDLER COMMONWEALTH LIMITED PARTNERSHIP AZ CHANDLER PROPERTY DEVELOPMENT ASSOCIATES LIMITED PARTNERSHIP AZ CHANTILLY PARTNERS LIMITED PARTNERSHIP VA CHAPEL HOUSING LIMITED PARTNERSHIP MD CHARLES STREET ASSOCIATES LIMITED PARTNERSHIP CT CHARLESTON-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD CHARLTON HOUSING ASSOCIATES LIMITED PARTNERSHIP MA CHARNEY ASSOCIATES LIMITED PARTNERSHIP WA CHATEAU FOGHORN LIMITED PARTNERSHIP MD CHELSEA RENAISSANCE L.P. KS CHERRYWOOD ASSOCIATES LIMITED PARTNERSHIP ID CHESAPEAKE APARTMENTS JV GP, LLC DE CHESAPEAKE APARTMENTS JV, L.P. DE CHESAPEAKE-OXFORD COUNTY ASSOCIATES, A MARYLAND LIMITED PARTNERSHIP MD CHESTNUT HILL ASSOCIATES LIMITED PARTNERSHIP DE CHESWICK-OXFORD ASSOCIATES, L.P. IN CHICKASAW-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD CHICO GARDENS LIMITED PARTNERSHIP CA CHILDRESS MANOR APARTMENTS TX CHIMNEYTOP-OXFORD ASSOCIATES L.P. IN CHURCH STREET ASSOCIATES LIMITED PARTNERSHIP IL CHURCHVIEW GARDENS LIMITED PARTNERSHIP PA CIDER MILL ASSOCIATES, A PENNSYLVANIA LIMITED PARTNERSHIP PA CIMARRON ACQUISITION, L.P. MO CITRUS GROVE JV GP, LLC DE CITRUS GROVE JV, L.P. DE CITRUS SUNSET JV GP, LLC DE CITRUS SUNSET JV, LLC DE CITY HEIGHTS DEVELOPMENT COMPANY PA CITY LINE ASSOCIATES LIMITED PARTNERSHIP VA CITY TERRACE ASSOCIATES LIMITED PARTNERSHIP NY CIVIC HOUSING ASSOCIATES I OH CIVIC HOUSING ASSOCIATES II OH CK SERVICES, INC. DE CK-GP II, INC. DE CK-LP II, INC. DE CLARKE COURT, LLC WA CLARKSDALE COMMUNITY HOUSING GROUP, LTD., A MISSISSIPPI LIMITED PARTNERSHIP MS CLARKWOOD APARTMENTS OH CLARKWOOD APARTMENTS OH CLARKWOOD APARTMENTS, LIMITED PARTNERSHIP - PHASE I OH CLARKWOOD APARTMENTS, LIMITED PARTNERSHIP - PHASE II OH CLAYTON ASSOCIATES LIMITED PARTNERSHIP WA CLEAR LAKE LAND PARTNERS, LTD. TX
CLIFFS APARTMENTS, L.P. SC CLOVERLANE FOUR CORPORATION MD CLOVERLANE FOUR-OXFORD LIMITED PARTNERSHIP MD CLOVERLANE III CORPORATION MD CLOVERLANE III-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD CLUB APARTMENT ASSOCIATES LIMITED PARTNERSHIP NC C-O CORPORATION MD COATESVILLE TOWERS PA COBBLESTONE CORNERS, L.P. TN COES POND LIMITED PARTNERSHIP MA COLCHESTER STAGE II COMPANY MI COLD SPRING SINGLE FAMILY HOMES, LTD. KY COLLEGE OAKS PARK, L.P. IL COLLEGE PARK APARTMENTS, A LIMITED PARTNERSHIP PA COLLEGE TRACE APARTMENTS, LTD. FL COLONY HOUSE APARTMENTS, LTD. CA COLUMBUS III-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD COLUMBUS JUNCTION PARK, LIMITED PARTNERSHIP IA COMBINED PROPERTIES LIMITED PARTNERSHIP WA COMFED QUALIFIED HOUSING LIMITED PARTNERS XII, A NEBRASKA LIMITED PARTNERSHIP NE COMMUNITY CIRCLE II, LTD. OH COMMUNITY CIRCLE, LTD. OH COMMUNITY DEVELOPERS OF PRINCEVILLE LIMITED PARTNERSHIP NC CONCAP CCP/IV RIVER'S EDGE PROPERTIES, INC. TX CONCAP CITADEL ASSOCIATES, LTD. TX CONCAP EQUITIES, INC. DE CONCAP HOLDINGS, INC. TX CONCAP RIVER'S EDGE ASSOCIATES, LTD. TX CONCAP VILLAGE GREEN ASSOCIATES, LTD. TX CONGRESS REALTY COMPANIES LIMITED PARTNERSHIP MA CONGRESS REALTY CORP. MA CONIFER MEDFORD OR CONNECTICUT COLONY ASSOCIATES LIMITED PARTNERSHIP GA CONSOLIDATED CAPITAL GROWTH FUND CA CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP DE CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP SERIES A DE CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP SERIES B DE CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP SERIES C DE CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2, LP DE CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2, LP SERIES A DE CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3, LP DE CONSOLIDATED CAPITAL PROPERTIES III CA CONSOLIDATED CAPITAL PROPERTIES IV, LP DE CONTINENTAL APARTMENTS MI CONTINENTAL PLAZA ASSOCIATES IL CONTINENTAL PLAZA LIMITED PARTNERSHIP IL COOPER RIVER PROPERTIES, L.L.C. DE COOPER'S POINTE CPGF 22, L.P. DE COPPER CHASE APARTMENTS JV GP, LLC DE COPPER CHASE APARTMENTS JV, L.P. DE COPPER CHASE PARTNERS L.P. IL COPPER MILL CPGF 22, L.P. DE COPPERFIELD APARTMENTS JV GP, LLC DE COPPERFIELD APARTMENTS JV, L.P. TX COPPERWOOD PRESERVATION, LP TX
CORINTH SQUARE ASSOCIATES KS COUCH-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD COUCH-OXFORD, L.L.C. MD COUNTRY CLUB WOODS, AFFORDABLE HOMES, LTD. FL COUNTRYSIDE NORTH AMERICAN PARTNERS, L.P. NJ COUNTRYVIEW ESTATES I, L.P. MO COURTS OF CICERO II L.P. IL COURTYARD-OXFORD ASSOCIATES L.P. IN COVENTRY SQUARE APARTMENTS JV GP, LLC DE COVENTRY SQUARE APARTMENTS JV, L.P. TX CPF 16 WOODS OF INVERNESS GP, L.L.C. SC CPF XIV/SUN RIVER, INC. AZ CPF XV/LAKESIDE PLACE, INC. TX CPGF 22 COOPER'S POINTE GP, L.L.C. SC CPGF 22 COPPER MILL GP, L.L.C. SC CPGF 22 HAMPTON GREENS GP, L.L.C. SC CPGF 22 WOOD CREEK GP, L.L.C. SC CRAGIN SERVICE CORPORATION IL CRC CONGRESS REALTY CORP. MA CREEKSIDE GARDENS INVESTMENT COMPANY CO CREEKSIDE INVESTMENT COMPANY ID CREEKVIEW ASSOCIATES PA CREEKWOOD APARTMENTS, LTD. AL CREEKWOOD ASSOCIATES, L.P. MO CREVENNA OAKS PRESERVATION, L.P. DE CROCKETT MANOR APARTMENTS, A LIMITED PARTNERSHIP TN CROSSINGS OF BELLEVUE JV GP, LLC DE CROSSINGS OF BELLEVUE JV, L.P. DE CROWS NEST PARTNERS, LTD., A TEXAS LIMITED PARTNERSHIP TX CRYAR HOMES, LIMITED PARTNERSHIP AL CRYSTAL SPRINGS ASSOCIATES WA CUMBERLAND COURT ASSOCIATES PA CUMMINGS MILL, LLC ME CYPRESS LANDING ASSOCIATES IL CYPRESS LANDING LIMITED PARTNERSHIP IL D & B HOUSING OPPORTUNITIES LIMITED PARTNERSHIP IV MO DALLAS-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD DAMEN COURT ASSOCIATES LIMITED PARTNERSHIP IL DARBY TOWNHOUSES ASSOCIATES PA DARBY TOWNHOUSES LIMITED PARTNERSHIP PA DARBY TOWNHOUSES PRESERVATION GENERAL PARTNER, L.L.C. DE DARBY TOWNHOUSES PRESERVATION, LP PA DAVIDSON DIVERSIFIED PROPERTIES, INC. TN DAVIDSON DIVERSIFIED REAL ESTATE I, L.P. DE DAVIDSON DIVERSIFIED REAL ESTATE II, L.P. DE DAVIDSON DIVERSIFIED REAL ESTATE III, L.P. DE DAVIDSON GP, L.L.C. SC DAVIDSON GROWTH PLUS GP CORPORATION DE DAVIDSON GROWTH PLUS GP LIMITED PARTNERSHIP DE DAVIDSON GROWTH PLUS, L.P. DE DAVIDSON III GP LIMITED PARTNERSHIP SC DAVIDSON INCOME REAL ESTATE, L.P. DE DAVIDSON PROPERTIES, INC. TN DAWSON SPRINGS, LTD. OH DAYTON III CORPORATION MD
DAYTON III-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD DAYTONA VILLAGE, LTD OH DBL PROPERTIES CORPORATION NY DECATUR MEADOWS HOUSING PARTNERS, L.P. MS DEERCROSS-OXFORD ASSOCIATES, L.P. IN DEL MORAL LIMITED PARTNERSHIP AZ DELAVAN MATURE ADULT HOUSING, L.L.C. WI DELCAR-S, LTD. TX DELHAVEN MANOR, LTD. MS DELPHIA HOUSE ASSOCIATES PA DELTA SQUARE-OXFORD LIMITED PARTNERSHIP MD DELTA SQUARE-OXFORD, L.L.C. MD DENNY PLACE LIMITED PARTNERSHIP CA DESHLER APARTMENTS ASSOCIATES LIMITED PARTNERSHIP NY DFW APARTMENT INVESTORS LIMITED PARTNERSHIP DE DFW RESIDENTIAL INVESTORS LIMITED PARTNERSHIP DE DGP VILLAGE GP, LLC DE DGP VILLAGE LAND, LLC DE DGP VILLAGE, L.P. DE DILLON PLACE ASSOCIATES LIMITED PARTNERSHIP CT DIP LIMITED PARTNERSHIP VA DIP LIMITED PARTNERSHIP II VA DISCOVERY LIMITED PARTNERSHIP MD DIVERSIFIED EQUITIES, LIMITED TN DIXON RIVER APARTMENTS, L.P. IL D-O ASSOCIATES, L.L.C. MD D-O CORPORATION MD DORAL GARDEN ASSOCIATES PA DORAL LIMITED PARTNERSHIP PA DOUGLAS STREET LANDINGS, LTD. TX DOYLE ASSOCIATES LIMITED DIVIDEND HOUSING ASSOCIATION MI DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II LIMITED PARTNERSHIP NY DRUID HILLS APARTMENTS LIMITED PARTNERSHIP SC DUKE MANOR ASSOCIATES PA DUQUESNE ASSOCIATES NO. 1 PA EAST HAVEN REAL ESTATE ASSOCIATES LIMITED PARTNERSHIP MA EAST WINDSOR 255 LIMITED PARTNERSHIP DE EAST WINDSOR 255, INC. DE EASTGATE APARTMENTS, A LIMITED PARTNERSHIP IA EASTRIDGE APARTMENTS A LIMITED PARTNERSHIP PA EASTRIDGE ASSOCIATES PA ECO VILLAGE, LTD OH EDGEWOOD ASSOCIATES WA EDGEWOOD HOUSING ASSOCIATES, L.P. GA EDGEWOOD, A LIMITED PARTNERSHIP AR EL CAZADOR LIMITED PARTNERSHIP CA EL CORONADO APTS., LTD. TX ELDERLY DEVELOPMENT WESTMINSTER, A CALIFORNIA LIMITED PARTNERSHIP CA ELDERLY HOUSING ASSOCIATES LIMITED PARTNERSHIP MD ELKHART TOWN AND COUNTRY LIMITED PARTNERSHIP IN ELM GREEN APARTMENTS LIMITED PARTNERSHIP NC ELMS COMMON ASSOCIATES CT EMPORIA LIMITED VA ENGLISH MANOR JOINT VENTURE TX EUSTIS APARTMENTS, LTD. FL
EVANGELINE VILLAGE APARTMENTS A LOUISIANA PARTNERSHIP IN COMMENDAM LA EVANSVILLE SENIOR HOUSING LIMITED PARTNERSHIP WI EVEREST INVESTORS 5, LLC CA EVEREST WINGFIELD, L.P. KS EVERETT SQUARE PLAZA ASSOCIATES MA EVERGREEN CLUB LIMITED PARTNERSHIP MA FAIR FOREST IV LIMITED PARTNERSHIP NC FAIR OAK ESTATES, LTD. FL FAIRBURN AND GORDON ASSOCIATES II LIMITED PARTNERSHIP GA FAIRBURN AND GORDON ASSOCIATES LIMITED PARTNERSHIP GA FAIRFIELD ONE-OXFORD LIMITED PARTNERSHIP MD FAIRLAWN GREEN ACQUISITION, L.P. KS FAIRMONT #1 LIMITED PARTNERSHIP DC FAIRMONT #2 LIMITED PARTNERSHIP DC FAIRMONT HILLS APARTMENTS LIMITED PARTNERSHIP WV FAIRWIND ASSOCIATES, LTD. WA FAIRWOOD ASSOCIATES CA FARMINGDALE-OXFORD ASSOCIATES LIMITED PARTNERSHIP IL FAYETTE-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD FAYETTE-OXFORD CORPORATION MD FERNWOOD LTD., LIMITED PARTNERSHIP MA FIELD ASSOCIATES RI FILLMORE PLACE APARTMENTS LIMITED PARTNERSHIP AZ FINLAY INTERESTS 2, LTD. FL FINLAY INTERESTS MT 2, LTD. FL FIRST ALEXANDRIA ASSOCIATES LIMITED PARTNERSHIP VA FIRST WINTHROP CORPORATION DE FISH CREEK PLAZA, LTD OH FISHERMAN'S LANDING APARTMENTS LIMITED PARTNERSHIP FL FISHERMAN'S LANDING JV GP, LLC DE FISHERMAN'S LANDING JV, L.P. DE FISHERMAN'S VILLAGE-OXFORD ASSOCIATES, L.P. IN FISHERMAN'S WHARF PARTNERS, A TEXAS LIMITED PARTNERSHIP TX FISHWIND CORPORATION MD FMI LIMITED PARTNERSHIP PA FONDREN COURT PARTNERS, LTD., A TEXAS LIMITED PARTNERSHIP TX FOOTHILL CHIMNEY ASSOCIATES LIMITED PARTNERSHIP GA FOREST GARDENS ASSOCIATES, A MARYLAND LIMITED PARTNERSHIP MD FOREST PARK SOUTH, LTD. FL FORT CARSON ASSOCIATES LIMITED PARTNERSHIP CO FORT COLLINS COMPANY, LTD., A CALIFORNIA LIMITED PARTNERSHIP CA FOUNTAIN PLACE PRESERVATION, L.P. DE FOUNTAIN PLACE-OXFORD ASSOCIATES, L.P. IN FOUR QUARTERS HABITAT APARTMENTS ASSOCIATES, LTD. FL FOURTH STREET APARTMENT INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP CA FOX ASSOCIATES '84 CA FOX CAPITAL MANAGEMENT CORPORATION CA FOX PARTNERS CA FOX PARTNERS II CA FOX PARTNERS III CA FOX PARTNERS IV CA FOX PARTNERS VIII CA FOX REALTY INVESTORS CA FOX RIDGE ASSOCIATES WV FOX RUN AP XI, L.P. SC
FOX RUN APARTMENTS, LTD. TX FOX STRATEGIC HOUSING INCOME PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP CA FOX VALLEY TWO-OXFORD LIMITED PARTNERSHIP MD FOX VALLEY-OXFORD LIMITED PARTNERSHIP MD FOXFIRE ASSOCIATES LIMITED PARTNERSHIP SC FOXFIRE LIMITED DIVIDEND HOUSING ASSOCIATION MI FRANKLIN CHANDLER ASSOCIATES PA FRANKLIN EAGLE ROCK ASSOCIATES PA FRANKLIN NEW YORK AVENUE ASSOCIATES PA FRANKLIN PARK LIMITED PARTNERSHIP PA FRANKLIN PHEASANT RIDGE ASSOCIATES PA FRANKLIN SQUARE SCHOOL ASSOCIATES LIMITED PARTNERSHIP MD FRANKLIN WOODS ASSOCIATES PA FRANKLIN WOODS LTD OH FREEMAN EQUITIES, LIMITED TN FRENCH EMBASSY ASSOCIATES, L.P. MO FRIENDSET HOUSING COMPANY LIMITED PARTNERSHIP NY FRIENDSHIP VILLAGE LIMITED PARTNERSHIP VA FRIO HOUSING, LTD. TX FRP LIMITED PARTNERSHIP PA G.P. MUNICIPAL HOLDINGS, L.L.C. DE GADSDEN TOWERS, LTD. AL GALLATIN ASSOCIATES PA GALLERIA PARK ASSOCIATES LIMITED PARTNERSHIP MA GARDEN COURT ASSOCIATES CA GATE MANOR APARTMENTS, LTD., A TENNESSEE LIMITED PARTNERSHIP TN GATEWAY-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD GC SOUTHEAST PARTNERS, L.P. DE GEORGETOWN 20Y APARTMENTS, L.L.C. DE GEORGETOWN MANAGEMENT, INC. CA GEORGETOWN WOODS LAND DEVELOPMENT, LP IN GEORGETOWN WOODS SENIOR APARTMENTS, L.P. IN GERMANTOWN, A LIMITED PARTNERSHIP AR GIFFORD GROVES, LTD. FL GLENARK ASSOCIATES LIMITED PARTNERSHIP RI GLENBROOK LIMITED PARTNERSHIP MA GLENDALE TERRACE LIMITED PARTNERSHIP SC GLENOAKS TOWNHOMES LIMITED PARTNERSHIP CA GLENWOOD-OXFORD HOUSING ASSOCIATION LIMITED PARTNERSHIP IN GOLDEN OAK VILLAGE LIMITED PARTNERSHIP IN GOLER METROPOLITAN APARTMENTS LIMITED PARTNERSHIP NC GOOSE HOLLOW VILLAGE LIMITED PARTNERSHIP OR GOTHAM APARTMENTS, LIMITED PARTNERSHIP MO GOVERNORS PARK APARTMENTS VII LIMITED PARTNERSHIP SC GP REAL ESTATE SERVICES II INC. DE GP SERVICES II, INC. SC GP SERVICES XV, INC. SC GP-OP PROPERTY MANAGEMENT, LLC DE GRAND MEADOWS II LIMITED DIVIDEND HOUSING ASSOCIATION LIMITEDPARTNERSHIP MI GRAND PLAZA PRESERVATION GP, LLC DE GRAND PLAZA PRESERVATION, L.P. CA GRANDVIEW PLACE LIMITED PARTNERSHIP MT GRANITE HEIGHTS, L.P. TN GRANT-KO ENTERPRISES A LIMITED PARTNERSHIP WI GREAT BASIN ASSOCIATES LIMITED PARTNERSHIP NV
GREAT BASIN ASSOCIATES LIMITED PARTNERSHIP, II NV GREAT BASIN ASSOCIATES LIMITED PARTNERSHIP, IV NV GREATER HARTFORD ASSOCIATES LIMITED PARTNERSHIP CT GREATER MESA PROPERTY ASSOCIATES LIMITED PARTNERSHIP AZ GREENBRIAR PRESERVATION, L.P. DE GREENBRIAR-OXFORD ASSOCIATES L.P. IN GREENFAIR TOWER II CALIFORNIA LIMITED PARTNERSHIP, A CALIFORNIA LIMITED PARTNERSHIP CA GREENFAIR-DCW CALIFORNIA LIMITED PARTNERSHIP, A CALIFORNIA LIMITED PARTNERSHIP CA GREEN-KO ENTERPRISES OF BARNEVELD, WISCONSIN A LIMITED PARTNERSHIP WI GREENTREE ASSOCIATES IL GREENWOOD VILLA APARTMENTS, LTD. KY GRIMES PARK APARTMENTS, LIMITED PARTNERSHIP IA GRINNELL PARK APARTMENTS, LIMITED PARTNERSHIP IA GROSVENOR HOUSE ASSOCIATES LIMITED PARTNERSHIP MD GROVE PARK VILLAS, LTD. FL GSSW-REO DALLAS, L.P. TX GSSW-REO PEBBLE CREEK, L.P. TX GSSW-REO TIMBERLINE LIMITED PARTNERSHIP TX GULF COAST HOLDINGS, LTD. AL GULF COAST PARTNERS, LTD. CA GULFPORT APARTMENTS, LTD., LIMITED PARTNERSHIP MS GULFPORT ASSOCIATES WA GWYNED PARTNERS LIMITED PARTNERSHIP PA H.R.H. PROPERTIES I, LTD. OH HAINES ASSOCIATES LIMITED PARTNERSHIP WA HALLS MILL, LTD. AL HAMLIN ESTATES LIMITED PARTNERSHIP CA HAMMOND HOUSING 1994 PARTNERS, A LOUISIANA PARTNERSHIP IN COMMENDAM LA HAMPSHIRE HOUSE APARTMENTS, LTD. OH HAMPTON HILL APARTMENTS JV GP, LLC DE HAMPTON HILL APARTMENTS JV, L.P. TX HARDIN HAMMOCK ESTATES ASSOCIATES, LTD. FL HARLAN ASSOCIATES, LTD. MO HAROLD APARTMENTS ASSOCIATES LIMITED PARTNERSHIP NY HARRIS PARK LIMITED PARTNERSHIP NY HARRISON SQUARE LIMITED PARTNERSHIP CT HASTINGS PLACE APARTMENTS JV GP, LLC DE HASTINGS PLACE APARTMENTS JV, L.P. TX HATILLO HOUSING ASSOCIATES MA HAWTHORN VILLAGE I, L.P. MO HAWTHORNE PLAZA ASSOCIATES LIMITED PARTNERSHIP MO HC/OAC, L.L.C. MD HCW GENERAL PARTNER, LIMITED PARTNERSHIP TX HCW PENSION REAL ESTATE FUND LIMITED PARTNERSHIP MA HEARTLAND PARK ELDERLY LIVING CENTER, L.P. IL HEATHERWOOD-REO, L.P. TX HEMET ESTATES AFFORDABLE, L.P. CA HENNA TOWNHOMES, LTD. TX HENRIETTA-OXFORD ASSOCIATES LIMITED PARTNERSHIP, A MARYLAND LIMITED PARTNERSHIP MD HERITAGE EAGLE VILLAS, LTD. CO HERITAGE FOREST GROVE, LTD. TX HERITAGE HOLLYBROOK, LTD. FL HERITAGE PARK II INC. DE HERITAGE PARK INVESTORS, INC. CA HERITAGE PHOENIX, LTD. FL
HERITAGE SQUARE, LTD. TX HERITAGE VILLAGE BLACKSHEAR, L.P. GA HERITAGE WILLOW GLEN, LTD. TX HHP L.P. DE HIBBEN FERRY I APARTMENT PARTNERS, L.P. DE HICKORY HEIGHTS APARTMENTS, A LIMITED PARTNERSHIP SC HICKORY HILL TOWNHOMES, LTD. KY HICKORY RIDGE ASSOCIATES, LTD. FL HIGHLAND PARK PARTNERS IL HIGHLANDS VILLAGE II, LTD. FL HIGHLAWN PLACE LIMITED PARTNERSHIP WV HIGHRIDGE ASSOCIATES, L.P. DE HILLCREST APARTMENTS L.L.C. OH HILLCRESTE PROPERTIES INC. DE HILLSBOROUGH-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD HILLSIDE VILLAGE ASSOCIATES PA HILLTOP APARTMENTS ASSOCIATES PA HILLTOP APARTMENTS, PHASE II LIMITED PARTNERSHIP MO HILLTOP APARTMENTS, PHASE I LIMITED PARTNERSHIP MO HIMBOLA MANOR - PARTNERSHIP SERVICES, INC. LTD., A PARTNERSHIP LA HINTON HOUSE ASSOCIATES LIMITED PARTNERSHIP WV HISTORIC PROPERTIES INC. DE HIVIEW GARDENS DEVELOPMENT COMPANY PA HMI PROPERTY MANAGEMENT (ARIZONA), INC. AZ HMI PROPERTY MANAGEMENT, INC. CT HOLLIDAY ASSOCIATES LIMITED PARTNERSHIP DC HOLLIDAYSBURG LIMITED PARTNERSHIP PA HOLLOWS ASSOCIATES LIMITED PARTNERSHIP NY HOLLY POINT ASSOCIATES, A KENTUCKY LIMITED PARTNERSHIP KY HOMECORP INVESTMENTS, LTD. AL HOPKINS VILLAGE PRESERVATION LIMITED PARTNERSHIP DE HOSPITALITY INNS JACKSONVILLE, LTD. II FL HOSPITALITY INNS PENSACOLA, LTD. FL HOSPITALITY INNS PENSACOLA, LTD. II FL HOUSING ASSISTANCE OF MT. DORA, LTD. FL HOUSING ASSISTANCE OF ORANGE CITY, LTD. FL HOUSING ASSISTANCE OF SEBRING, LTD. FL HOUSING ASSISTANCE OF VERO BEACH, LTD. FL HOUSING ASSOCIATES LIMITED CA HOUSING PROGRAMS CORPORATION II DE HOUSING PROGRAMS LIMITED, A CALIFORNIA LIMITED PARTNERSHIP CA HOUSING TECHNOLOGY ASSOCIATES HI HUDSON STREET APARTMENTS LIMITED PARTNERSHIP CA HUDSON TERRACE ASSOCIATES LIMITED PARTNERSHIP NY HUMMELSTOWN HOUSING ASSOCIATES PA HUNT CLUB PARTNERS, L.L.C. MD HUNT CLUB/SADDLEBROOK L.L.C. MD HUNTERS CREEK JV GP, LLC DE HUNTERS CREEK JV, LLC DE HUNTERS GLEN AP XII LIMITED PARTNERSHIP SC HUNTERS GLEN JV GP, LLC DE HUNTERS GLEN JV, L.P. DE HUNTERS GLEN PHASE V GP, L.L.C. SC HUNTINGTON HACIENDA ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP CA HUNTSVILLE PROPERTIES LIMITED PARTNERSHIP GA
HURBELL IV LTD. AL HYATTSVILLE HOUSING ASSOCIATES LIMITED PARTNERSHIP MD HYDE PARK APARTMENTS LIMITED PARTNERSHIP MO IDA TOWER PA IH, INC. DE INDIO GARDENS AFFORDABLE, L.P. CA INGRAM SQUARE APARTMENTS, LTD. TX INGRAM SQUARE PRESERVATION, L.P. TX INTEGRATED PROPERTIES, INC. RI INTOWN WEST ASSOCIATES LIMITED PARTNERSHIP CT INWOOD COLONY, LTD. TX IPGP, INC. DE IPLP ACQUISITION I LLC DE IPT I LLC DE IRONMAN HOUSING ASSOCIATION OK ISLP, LIMITED PARTNERSHIP DE ISTC CORPORATION DE IVYWOOD APARTMENTS LIMITED PARNTERSHIP OH J M PROPERTY INVESTORS 1984, L.P. DE J M PROPERTY INVESTORS 1985, L.P. DE J.W. ENGLISH SWISS VILLAGE PARTNERS, LTD., A TEXAS LIMITED PARTNERSHIP TX JACARANDA-OXFORD LIMITED PARTNERSHIP MD JACARANDA-OXFORD, L.L.C. MD JACOB'S LANDING, L.P. MO JACQUES-MILLER ASSOCIATES TN JAMES COURT ASSOCIATES ID JAMES-OXFORD LIMITED PARTNERSHIP MD JAMESTOWN TERRACE LIMITED PARTNERSHIP, A CALIFORNIA LIMITED PARTNERSHIP CA JAMESTOWN VILLAGE ASSOCIATES PA JARDINES DE MAYAGUEZ LIMITED PARTNERSHIP MD JASPER COUNTY PROPERTIES, LTD. MI JEFFERSON MEADOWS LIMITED DIVIDEND HOUSING ASSOCIATION LIMITEDPARTNERSHIP MI JENNY LIND HALL SECOND LIMITED PARTNERSHIP, A CALIFORNIA LIMITED PARTNERSHIP CA JFK ASSOCIATES LIMITED PARTNERSHIP NC JMA EQUITIES, L.P. DE JOHNSTON SQUARE ASSOCIATES MD JOHNSTON SQUARE ASSOCIATES LIMITED PARTNERSHIP MD JUPITER-I, L.P. DE JUPITER-II, L.P. DE KALMIA APARTMENTS LIMITED PARTNERSHIP SC KENDALL TOWNHOME INVESTORS, LTD. FL KENNEDY BOULEVARD ASSOCIATES PA KENNEDY BOULEVARD ASSOCIATES II, L.P. PA KENNEDY BOULEVARD ASSOCIATES III, L.P. PA KENNEDY BOULEVARD ASSOCIATES IV, L.P. PA KENNEDY BOULEVARD III GP, L.L.C. SC KENOSHA GARDENS ASSOCIATES LIMITED PARTNERSHIP OF WISCONSIN WI KENTON DEVELOPMENT CO. MO KENTON VILLAGE, LTD. OH KENTUCKY MANOR APARTMENTS, LTD. KY KENTUCKY RIVER APARTMENTS, LTD. KY KENYON HOUSE CO. WA KING-BELL ASSOCIATES LIMITED PARTNERSHIP OR KINGS ROW ASSOCIATES NJ KINGSTON GREENE ASSOCIATES LTD OH
KINSEY-OXFORD ASSOCIATES, L.P. OH KIRKMAN-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD KIRKWOOD HOUSE PRESERVATION LIMITED PARTNERSHIP DE KIWANIS MANOR, L.P. IL KOHLER GARDENS APARTMENTS CA KONA PLUS ASSOCIATES LIMITED PARTNERSHIP WA L.M. ASSOCIATES LIMITED PARTNERSHIP OH LA BROADCAST CENTER GP LLC DE LA BROADCAST CENTER QRS INC. DE LA CANYON TERRACE GP LLC DE LA CANYON TERRACE LP DE LA CANYON TERRACE QRS INC. DE LA CREEKSIDE GP LLC DE LA CREEKSIDE LP DE LA CREEKSIDE QRS INC. DE LA CRESCENT GARDENS GP LLC DE LA CRESCENT GARDENS LP DE LA CRESCENT GARDENS QRS INC. DE LA HILLCRESTE APARTMENTS LLC DE LA HILLCRESTE GP LLC DE LA HILLCRESTE LP DE LA HILLCRESTE MEZZANINE MEMBER LLC DE LA HILLCRESTE QRS INC. DE LA INDIAN OAKS GP LLC DE LA INDIAN OAKS LP DE LA INDIAN OAKS QRS INC. DE LA LAKES GP LLC DE LA LAKES LP DE LA LAKES QRS INC. DE LA LOMA ASSOCIATES LIMITED PARTNERSHIP CA LA MALIBU CANYON GP LLC DE LA MALIBU CANYON LP DE LA MALIBU CANYON QRS INC. DE LA MORADA ASSOCIATES LIMITED PARTNERSHIP DC LA NEW HAVEN PLAZA LP DE LA PARK LA BREA A LLC DE LA PARK LA BREA B LLC DE LA PARK LA BREA C LLC DE LA PARK LA BREA LLC DE LA SALLE PRESERVATION, L.P. CA LA VISTA PRESERVATION, L.P. CA LAC PROPERTIES GP I LIMITED PARTNERSHIP DE LAC PROPERTIES GP I LLC DE LAC PROPERTIES GP II LIMITED PARTNERSHIP DE LAC PROPERTIES GP III LIMITED PARTNERSHIP DE LAC PROPERTIES OPERATING PARTNERSHIP, L.P. DE LAC PROPERTIES QRS II INC. DE LAC PROPERTIES QRS III INC. DE LAC PROPERTIES SUB LLC DE LAFAYETTE LIMITED PARTNERSHIP IL LAFAYETTE MANOR ASSOCIATES LIMITED PARTNERSHIP VA LAFAYETTE SQUARE ASSOCIATES TN LAFAYETTE TERRACE ASSOCIATES IL LAFAYETTE TOWNE ELDERLY LIMITED PARTNERSHIP MO LAING VILLAGE, A LIMITED PARTNERSHIP GA
LAKE AVENUE ASSOCIATES L.P. OH LAKE CASTLETON II, L.P TX LAKE EDEN ASSOCIATES, L.P. DE LAKE FOREST APARTMENTS PA LAKE HAVASU ASSOCIATES LIMITED PARTNERSHIP AZ LAKE JUNE VILLAGE II LIMITED PARTNERSHIP TX LAKE RIDGE-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD LAKE TOWERS ASSOCIATES II LIMITED PARTNERSHIP IL LAKE WALES VILLAS, LTD. FL LAKEHAVEN I JV GP, LLC DE LAKEHAVEN I JV, L.P. DE LAKEHAVEN II JV GP, LLC DE LAKEHAVEN II JV, L.P. DE LAKERIDGE-ISLAND CLUB APARTMENTS PARTNERS, L.P. DE LAKESIDE APARTMENTS LIMITED FL LAKESIDE APARTMENTS, A LIMITED PARTNERSHIP IN LAKESIDE INVESTORS, L.L.C. MD LAKESIDE NORTH, L.L.C. MD LAKEVIEW ARMS ASSOCIATES LIMITED PARTNERSHIP NY LAKEVIEW VILLAS, LTD. FL LAKEWOOD AOPL, A TEXAS LIMITED PARTNERSHIP TX LAKEWOOD AOPL, INC. TX LANCASTER HEIGHTS MANAGEMENT CORP. CA LANDAU APARTMENTS LIMITED PARTNERSHIP SC LANDMARK (NC), LLC DE LANDMARK APARTMENTS ASSOCIATES IL LANDMARK ASSOCIATES ID LANSING-OXFORD LIMITED PARTNERSHIP MD LANTANA-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD LARGO PARTNERS, L.L.C. MD LARGO/OAC, L.L.C. MD LAS MONTANAS VILLAGE LIMITED PARTNERSHIP AZ LAS PALOMAS VILLAGE LIMITED PARTNERSHIP AZ LASALLE APARTMENTS, L.P. CA LAUDERDALE TOWERS-REO, LIMITED PARTNERSHIP TX LAWNDALE SQUARE-REO LIMITED PARTNERSHIP TX LAZY HOLLOW PARTNERS CA LEE-HY MANOR ASSOCIATES LIMITED PARTNERSHIP VA LEMAY VILLAGE LIMITED PARTNERSHIP MO LEWISBURG ASSOCIATES LIMITED PARTNERSHIP WV LEWISBURG ELDERLY ASSOCIATES PA LEXINGTON-OXFORD ASSOCIATES L.P. IN LEYDEN LIMITED PARTNERSHIP MA LIBERTY TOWERS ASSOCIATES II L.P. IL LIMA-OXFORD ASSOCIATES, L.P. IN LINCOLN MARINERS ASSOCIATES LIMITED CA LINCOLN PROPERTY COMPANY NO. 409, LTD. CA LINDEN COURT ASSOCIATES LIMITED PARTNERSHIP NY LIVINGSTON HOUSING 1994 PARTNERS, A LOUISIANA PARTNERSHIP IN COMMENDAM LA LOCK HAVEN ELDERLY ASSOCIATES PA LOCK HAVEN GARDENS ASSOCIATES PA LOCUST HOUSE ASSOCIATES LIMITED PARTNERSHIP MD LONE OAK APARTMENTS, LTD. KY LONE STAR PROPERTIES LIMITED PARTNERSHIP TX LONG CREEK-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD
LONG MEADOW LIMITED PARTNERSHIP SC LORELEI ASSOCIATES LIMITED PARTNERSHIP DC LORING TOWERS ASSOCIATES MA LORING TOWERS PRESERVATION LIMITED PARTNERSHIP DE LORING TOWERS SALEM PRESERVATION LIMITED PARTNERSHIP MA LOUIS JOLIET APARTMENTS MT, L.P. IL LOUIS JOLIET APARTMENTS, L.P. IL LUND-HILL ASSOCIATES LIMITED PARTNERSHIP WI LYNN-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD M & P DEVELOPMENT COMPANY PA MADISON PARK III ASSOCIATES MA MADISON RIVER PROPERTIES, L.L.C. DE MADISON TERRACE ASSOCIATES IL MADISONVILLE, LTD. OH MAE - SPI, L.P. DE MAE DELTA, INC. DE MAE INVESTMENTS, INC. DE MAE JMA, INC. DE MAE VENTURES, INC. DE MAERIL, INC. DE MALLARDS OF WEDGEWOOD LIMITED PARTNERSHIP WA MANDARIN TRACE APARTMENTS, LTD. FL MANGONIA RESIDENCE I, LTD. FL MANNA CREST HOMES LIMITED PARTNERSHIP OH MANOR GREEN LIMITED PARTNERSHIP WA MAPLE HILL ASSOCIATES PA MAPLE PARK EAST LIMITED PARTNERSHIP CO MAPLE PARK WEST LIMITED PARTNERSHIP CO MAQUOKETA HOUSING, L.P. IA MARINA DEL REY LIMITED DIVIDEND PARTNERSHIP ASSOCIATES MA MARINER'S COVE JV GP, LLC DE MARINER'S COVE JV, L.P. DE MARINETTE WOODS APARTMENTS ASSOCIATES LIMITED PARTNERSHIP WI MARKET VENTURES, L.L.C. DE MARSHALL PLAZA APARTMENTS, LTD.-PHASE I OH MARSHALL PLAZA APARTMENTS, LTD.-PHASE II OH MARTINEZ PARK VILLAS, LTD. CO MASHPEE UNITED CHURCH VILLAGE PARTNERSHIP MA MAUNAKEA PALMS LIMITED PARTNERSHIP HI MAUNAKEA PALMS, INC. HI MAYER BEVERLY PARK LIMITED PARTNERSHIP CA MB APARTMENTS LIMITED PARTNERSHIP IL MCZ/CENTRUM FLAMINGO II, L.L.C. DE MCZ/CENTRUM FLAMINGO III, L.L.C. DE MEADOW LAKE PHASE II, A LIMITED PARTNERSHIP AR MEADOW LAKE, A LIMITED PARTNERSHIP AR MEADOW LANE WA MEADOW VIEW ASSOCIATES L.P. IL MEADOWS LIMITED PARTNERSHIP IL MEADOWS RUN LIMITED PARTNERSHIP CO MECKLENBURG MILL ASSOCIATES, LIMITED PARTNERSHIP NC MEGAN MANOR, LIMITED PARTNERSHIP AL MELBOURNE-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD MELBOURNE-OXFORD CORPORATION MD MERCER PARTNERS, LP NJ
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OAK FOREST ASSOCIATES LIMITED PARTNERSHIP OH OAK FOREST II ASSOCIATES LIMITED PARTNERSHIP OH OAK FOREST III ASSOCIATES OH OAK HILL APARTMENTS, LTD. PA OAK HOLLOW SOUTH ASSOCIATES PA OAK PARK-OXFORD ASSOCIATES LIMITED PARTNERSHIP MI OAK VIEW SPARTANBURG LIMITED PARTNERSHIP SC OAK WOODS ASSOCIATES IL OAKBROOK ACQUISITION, L.P. MO OAKBROOK INVESTORS LIMITED PARTNERSHIP MI OAKLAND CITY WEST END ASSOCIATES LIMITED PARTNERSHIP GA OAKLAND COMPANY SC OAKRIDGE PARK APARTMENTS, LTD. MS OAKRIDGE PARK APARTMENTS, PHASE II, LTD. MS OAKVIEW APARTMENTS LIMITED PARTNERSHIP AR OAKWOOD APARTMENTS, LIMITED PARTNERSHIP - PHASE I OH OAKWOOD APARTMENTS, LIMITED PARTNERSHIP - PHASE II OH OAKWOOD ASSOCIATES OF OHIO LIMITED PARTNERSHIP OH OAKWOOD MANOR ASSOCIATES, LTD. TN OAKWOOD TRUST - PHASE I OH OAKWOOD TRUST - PHASE II OH OAMCO I, L.L.C. DE OAMCO II, L.L.C. DE OAMCO IV, L.L.C. DE OAMCO IX, L.L.C. DE OAMCO V, L.L.C. DE OAMCO VII, L.L.C. DE OAMCO VIII, L.L.C. DE OAMCO X, L.L.C. DE OAMCO XI, L.L.C. DE OAMCO XII, L.L.C. DE OAMCO XIII, L.L.C. DE OAMCO XIV, L.L.C. DE OAMCO XIX, L.L.C. DE OAMCO XIX, L.P. DE OAMCO XV, L.L.C. DE OAMCO XVI, L.L.C. DE OAMCO XVII, L.L.C. DE OAMCO XX, L.L.C. DE OAMCO XX, L.P. DE OAMCO XXI, L.L.C. DE OAMCO XXI, L.P. DE OAMCO XXII, L.L.C. DE OAMCO XXIII, L.L.C. DE OAMCO XXV, L.L.C. DE OAMCO XXVIII LIMITED PARTNERSHIP MD OCALA PLACE, LTD. FL O'DEA INVESTMENT COMPANY CA OFA PARTNERS PA OHA ASSOCIATES IL OLD FARM ASSOCIATES PA OLD FINANCIAL DISTRICT LIMITED PARTNERSHIP CA OLDE MILL INVESTORS LIMITED PARTNERSHIP DE OLIVER ASSOCIATES, A MARYLAND LIMITED PARTNERSHIP MD ONE LINWOOD ASSOCIATES, LTD. DC
ONE LYTLE PLACE APARTMENTS PARTNERS, L.P. DE ONE MADISON AVENUE ASSOCIATES, L.P. ME ONE WEST CONWAY ASSOCIATES LIMITED PARTNERSHIP MD OP PROPERTY MANAGEMENT, L.P. DE OP PROPERTY MANAGEMENT, LLC DE OPPORTUNITY ASSOCIATES 1991 L.P. IN OPPORTUNITY ASSOCIATES 1994, L.P. IN ORANGE CITY VILLAS II, LTD. FL ORANGE VILLAGE ASSOCIATES PA ORANGEBURG MANOR GA ORLEANS GARDENS, A LIMITED PARTNERSHIP SC OROCOVIX LIMITED DIVIDEND PARTNERSHIP, A LIMITED PARTNERSHIP CA ORP ACQUISITION PARTNERS LIMITED PARTNERSHIP MD ORP ACQUISITION, INC. MD ORP CORPORATION I MD ORP CORPORATION II MD ORP CORPORATION III MD ORP I ASSIGNOR CORPORATION MD ORP ONE L.L.C. MD ORP THREE L.L.C. MD ORP TWO L.L.C. MD OSHTEMO LIMITED DIVIDEND HOUSING ASSOCIATION MI OTEF II ASSOCIATES LIMITED PARTNERSHIP MD OVERBROOK PARK, LTD. OH OXFORD APARTMENT COMPANY, INC. MD OXFORD ASSOCIATES '76 LIMITED PARTNERSHIP IN OXFORD ASSOCIATES '77 LIMITED PARTNERSHIP IN OXFORD ASSOCIATES '78 LIMITED PARTNERSHIP IN OXFORD ASSOCIATES '79 LIMITED PARTNERSHIP IN OXFORD ASSOCIATES '80 LIMITED PARTNERSHIP IN OXFORD ASSOCIATES '81 LIMITED PARTNERSHIP IN OXFORD ASSOCIATES '82 LIMITED PARTNERSHIP IN OXFORD ASSOCIATES '83 LIMITED PARTNERSHIP IN OXFORD ASSOCIATES '84 LIMITED PARTNERSHIP MD OXFORD ASSOCIATES '85 LIMITED PARTNERSHIP MD OXFORD BETHESDA I LIMITED PARTNERSHIP MD OXFORD BETHESDA II LIMITED PARTNERSHIP MD OXFORD CORPORATION IN OXFORD DEVELOPMENT CORPORATION IN OXFORD DEVELOPMENT ENTERPRISES INC. IN OXFORD EQUITIES CORPORATION IN OXFORD EQUITIES CORPORATION II DE OXFORD EQUITIES CORPORATION III DE OXFORD FUND I LIMITED PARTNERSHIP MD OXFORD GENERAL PARTNERS CORPORATION DE OXFORD HOLDING CORPORATION MD OXFORD HOUSE PRESERVATION, L.P. DE OXFORD INVESTMENT CORPORATION MD OXFORD INVESTMENT II CORPORATION MD OXFORD MANAGEMENT COMPANY INC IN OXFORD MANAGERS I LIMITED PARTNERSHIP MD OXFORD MANAGERS II LIMITED PARTNERSHIP MD OXFORD NATIONAL PROPERTIES CORPORATION MD OXFORD PARTNERS I LIMITED PARTNERSHIP IN OXFORD PARTNERS II LIMITED PARTNERSHIP MD
OXFORD PARTNERS V LIMITED PARTNERSHIP MD OXFORD PARTNERS X, L.L.C. MD OXFORD REAL ESTATE HOLDINGS CORPORATION MD OXFORD REALTY FINANCIAL GROUP, INC. MD OXFORD REALTY SERVICES CORP. DE OXFORD RESIDENTIAL PROPERTIES I CORPORATION MD OXFORD RESIDENTIAL PROPERTIES I LIMITED PARTNERSHIP DE OXFORD TAX EXEMPT FUND II CORPORATION MD OXFORD TAX EXEMPT FUND II LIMITED PARTNERSHIP MD OXFORD-COLUMBIA ASSOCIATES, A MARYLAND LIMITED PARTNERSHIP MD OXFORD-KIRKWOOD ASSOCIATES, A MARYLAND LIMITED PARTNERSHIP MD OXPARC 1994, L.L.C. MD OXPARC 1995, L.L.C. MD OXPARC 1996, L.L.C. MD OXPARC 1997, L.L.C. MD OXPARC 1998, L.L.C. MD OXPARC 1999, L.L.C. MD OXPARC 2000, L.L.C. MD P&R INVESTMENT SERVICES WA P.A.C. LAND II LIMITED PARTNERSHIP OH PACHUTA, LTD. MS PACIFIC COAST PLAZA CA PACIFIC PLACE APARTMENTS, L.P. MO PALACE VIEW HOUSING LIMITED PARTNERSHIP CT PALM AIRE-ISLAND CLUB APARTMENTS PARTNERS, L.P. DE PALM BEACH-OXFORD LIMITED PARTNERSHIP MD PALM SPRINGS SENIOR AFFORDABLE, L.P. CA PALM SPRINGS SENIOR CITIZENS COMPLEX LIMITED PARTNERSHIP CA PALM SPRINGS VIEW APARTMENTS, LTD., A CALIFORNIA LIMITED PARTNERSHIP CA PALMETTO APARTMENTS, A LIMITED PARTNERSHIP SC PAMPA PARTNERSHIP LIMITED TX PANORAMA PARK APARTMENTS LIMITED PARTNERSHIP CA PANORAMA PARK PRESERVATION, L.P. CA PAP PARTNERSHIP, L.P. PA PARADISE PALMS MULTI-HOUSING LIMITED PARTNERSHIP AZ PARADISE PALMS SENIOR HOUSING LIMITED PARTNERSHIP AZ PARC CHATEAU SECTION I ASSOCIATES L.P. GA PARC CHATEAU SECTION II ASSOCIATES (L.P.) GA PARHAM-OXFORD ASSOCIATES, A MARYLAND LIMITED PARTNERSHIP MD PARK ACQUISITION, L.P. KS PARK ASSOCIATES, L.P. MO PARK CREST, LTD. FL PARK LA BREA ACQUISITION, LLC DE PARK LANE ASSOCIATES LIMITED PARTNERSHIP AZ PARK MANOR, OREG. LTD. OR PARK MEADOWS ACQUISITION, L.P. MO PARK MEADOWS MANAGEMENT, LLC DE PARK NORTH-OXFORD ASSOCIATES, A MARYLAND LIMITED PARTNERSHIP MD PARK PLACE ASSOCIATES NJ PARK PLACE PRESERVATION, L.P. MO PARK RUN APARTMENTS, LTD. TX PARK TOWNE PLACE ASSOCIATES LIMITED PARTNERSHIP DE PARK VISTA MANAGEMENT, INC. CA PARK VISTA, LTD., A CALIFORNIA LIMITED PARTNERSHIP CA PARKVIEW AFFORDABLE, L.P. CA
PARKVIEW APARTMENTS, A LIMITED PARTNERSHIP SC PARKVIEW ARMS ASSOCIATES I LIMITED PARTNERSHIP OH PARKVIEW ARMS ASSOCIATES II LIMITED PARTNERSHIP OH PARKVIEW ASSOCIATES LIMITED PARTNERSHIP CA PARKVIEW ASSOCIATES LIMITED PARTNERSHIP NY PARKVIEW DEVELOPMENT CO. MN PARKWAYS PRESERVATION, L.P. DE PARTNERS LIQUIDATING TRUST DE PARTNERSHIP 18, L.P. PA PARTNERSHIP FOR HOUSING LIMITED CA PATEE VILLAS I, L.P. MO PAVILION ASSOCIATES PA PAVILION PRESERVATION, L.P. DE PEBBLE POINT CORPORATION MD PEBBLE POINT-OXFORD ASSOCIATES, L.P. IN PENNSYLVANIA ASSOCIATES PA PENNSYLVANIA HOUSING PARTNERS PA PENVIEW ASSOCIATES, L.P. NY PEPPERMILL PLACE APARTMENTS JV GP, LLC DE PEPPERMILL PLACE APARTMENTS JV, L.P. TX PEPPERMILL VILLAGE-OXFORD ASSOCIATES L.P. IN PEPPERTREE ASSOCIATES CA PEPPERTREE VILLAGE OF AVON PARK, LIMITED FL PETERSBURG EAST SECTION 1, L.P. VA PHILLIPS TO THE FALLS, L.L.C. SD PHILLIPS VILLAGE ASSOCIATES, L.P. CA PHOENIX BROADWAY ASSOCIATES LIMITED PARTNERSHIP AZ PHOENIX VINEYARD LIMITED PARTNERSHIP AZ PINE BLUFF ASSOCIATES, A MARYLAND LIMITED PARTNERSHIP MD PINE BLUFF VILLAGE PRESERVATION LIMITED PARTNERSHIP DE PINE CREEK APARTMENTS, LTD. AL PINE HAVEN APARTMENTS, LTD. A TEXAS LIMITED PARTNERSHIP TX PINE LAKE TERRACE ASSOCIATES L.P. CA PINE TREE APARTMENTS, LTD. FL PINELLAS-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD PINERIDGE ASSOCIATES, L.P. MO PINERIDGE MANAGEMENT, INC. CA PINETREE ASSOCIATES PA PINEVIEW TERRACE I, L.P. TX PINEWOOD PARK APARTMENTS, A LIMITED PARTNERSHIP SC PINEWOOD PLACE APARTMENTS ASSOCIATES LIMITED PARTNERSHIP OH PINEWOOD, LTD. (CLARKE, L.P.) GA PINEY BRANCH ASSOCIATES LIMITED PARTNERSHIP MD PITTSFIELD NEIGHBORHOOD ASSOCIATES MA PLACID LAKE ASSOCIATES, LTD. FL PLAINS VILLAGE, LTD. TX PLAINVIEW APARTMENTS, L.P. SC PLAINVIEW GP, INC. DE PLEASANT HILL PRESERVATION, LP TX PLEASANT HILL VILLAS, LTD CO PLUMLY TOWNEHOMES, LTD. OH PLUMMER VILLAGE PRESERVATION, L.P. CA POINT VILLAGE, LTD. OH POPLAR POINTE, LIMITED PARTNERSHIP AL PORTAGE ASSOCIATES LIMITED PARTNERSHIP MI
PORTFOLIO PROPERTIES EIGHT ASSOCIATES LIMITED PARTNERSHIP DC PORTFOLIO PROPERTIES FIVE ASSOCIATES LIMITED PARTNERSHIP DC PORTFOLIO PROPERTIES SEVEN ASSOCIATES LIMITED PARTNERSHIP DC PORTFOLIO PROPERTIES TEN ASSOCIATES LIMITED PARTNERSHIP DC PORTLAND PLAZA LIMITED PARTNERSHIP KY PORTNER PLACE ASSOCIATES LIMITED PARTNERSHIP DC POST RIDGE ASSOCIATES, LTD., LIMITED PARTNERSHIP TN POST STREET ASSOCIATES LIMITED PARTNERSHIP NY PRESCOTT EQUITIES HOLDINGS LIMITED PARTNERSHIP AZ PRIDE GARDENS LIMITED PARTNERSHIP MS PRINCE STREET TOWERS LIMITED PARTNERSHIP PA PTP PROPERTIES, INC. DE PUERTO RICO MANAGEMENT, INC. CA PUL-CORAL GARDENS APARTMENTS LIMTED PARTNERSHIP AZ PULLMAN WHEELWORKS ASSOCIATES I IL PYNCHON PARTNERS II LIMITED PARTNERSHIP MA QUAIL RUN ASSOCIATES, L.P. DE QUEEN'S COURT JOINT VENTURE TN QUEENSGATE II ASSOCIATES, LIMITED PARTNERSHIP OH QUEENSTOWN APARTMENTS LIMITED PARTNERSHIP MD QUINCY AFFORDABLE HOUSING L.P. IL QUIVIRA MANAGEMENT, INC. CA QUIVIRA PLACE ASSOCIATES, L.P. KS RAMBLEWOOD LIMITED PARTNERSHIP MI RAMBLEWOOD RESIDENTIAL JV GP, LLC DE RAMBLEWOOD RESIDENTIAL JV, LLC DE RAMBLEWOOD SERVICES LLC DE RANCHO DEL MAR APARTMENTS LIMITED PARTNERSHIP AZ RANCHO TOWNHOUSES ASSOCIATES CA RANGER APARTMENTS, LTD. TX RAVENSWORTH ASSOCIATES LIMITED PARTNERSHIP MA REAL ESTATE ASSOCIATES CA REAL ESTATE ASSOCIATES II CA REAL ESTATE ASSOCIATES III CA REAL ESTATE ASSOCIATES IV CA REAL ESTATE ASSOCIATES LIMITED CA REAL ESTATE ASSOCIATES LIMITED II CA REAL ESTATE ASSOCIATES LIMITED III CA REAL ESTATE ASSOCIATES LIMITED IV CA REAL ESTATE ASSOCIATES LIMITED V CA REAL ESTATE ASSOCIATES LIMITED VI CA REAL ESTATE ASSOCIATES LIMITED VII CA REAL ESTATE EQUITY PARTNERS INC. DE REAL ESTATE EQUITY PARTNERS, L.P. DE REAL ESTATE PARTNERS LIMITED CA REDBIRD TRAILS ASSOCIATES, L.P. MO REDMOND BUILDING LIMITED PARTNERSHIP KY REEDY RIVER PROPERTIES, L.L.C. DE REGENCY PARTNERS LIMITED PARTNERSHIP OH REGENCY-NATIONAL CORPORATE TAX CREDIT, INC. II OH RESCORP DEVELOPMENT, INC. IL RESIDUAL EQUITIES, L.P. DE RHDC-1, LIMITED PARTNERSHIP IL RHDC-2, LIMITED PARTNERSHIP IL RI-15 LIMITED PARTNERSHIP DC
RICHARDS PARK APARTMENTS OH RICHARDS PARK APARTMENTS, LTD. OH RICHLAND SENIOR ASSOCIATES, A WASHINGTON LIMITED PARTNERSHIP WA RICHLIEU ASSOCIATES PA RIDGEMONT GROUP, LTD. TX RIDGEWOOD TOWERS ASSOCIATES IL RIDGEWOOD TOWERS PRESERVATION, L.P. DE RIVER FRONT APARTMENTS LIMITED PARTNERSHIP PA RIVER LOFT APARTMENTS LIMITED PARTNERSHIP PA RIVER LOFT ASSOCIATES LIMITED PARTNERSHIP MA RIVER OAKS ASSOCIATES TX RIVER REACH COMMUNITY SERVICES ASSOCIATION, INC. FL RIVER RIDGE APARTMENTS LIMITED PARTNERSHIP CT RIVER VILLAGE PRESERVATION LIMITED PARTNERSHIP DE RIVER WOOD ASSOCIATES, L.P. IN RIVER WOODS ASSOCIATES LIMITED PARTNERSHIP IL RIVERCREST APARTMENTS, L.P. SC RIVERPOINT ASSOCIATES RI RIVER'S EDGE ASSOCIATES LIMITED DIVIDEND HOUSING ASSOCIATION LIMITED PARTNERSHIP MI RIVERSIDE PARK ASSOCIATES LIMITED PARTNERSHIP DE RIVERWOODS PRESERVATION, L.P. DE RL AFFORDABLE, L.P. CA ROCK FALLS ELDERLY LIVING CENTER, L.P. IL ROCKVILLE ASSOCIATES, LTD. OH ROCKY CREEK LIMITED PARTNERSHIP OH ROLLING HILLS APARTMENTS LIMITED PARTNERSHIP PA ROOSEVELT GARDENS APARTMENTS II LIMITED PARTNERSHIP SC ROOSEVELT GARDENS LIMITED PARTNERSHIP SC ROSEWOOD APARTMENTS CORPORATION CA ROUND BARN MANOR PRESERVATION, L.P. DE ROWLAND HEIGHTS II LIMITED PARTNERSHIP CA ROYAL CREST ESTATES (MARLBORO), L.L.C. DE ROYAL DE LEON APARTMENTS, LTD. FL ROYAL PALM LAKES, LTD. FL ROYAL SHORE ASSOCIATES LIMITED PARTNERSHIP HI RUNAWAY BAY II CORPORATION MD RUNAWAY BAY II-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD RUNAWAY BAY-OXFORD ASSOCIATES L.P. IN RUTHERFORD PARK TOWNHOUSES ASSOCIATES PA SABINE HOUSING 1994 PARTNERS A LOUISIANA PARTNERSHIP IN COMMENDAM LA SAGINAW VILLAGE LIMITED PARTNERSHIP OR SALEM MANOR OREG. LTD. OR SALEM PARK, A LIMITED PARTNERSHIP AK SAN BRUNO-OXFORD LIMITED PARTNERSHIP MD SAN JOSE PRESERVATION, L.P. TX SAN JUAN DEL CENTRO, LLC DE SANDY PINES, LTD. FL SANDY SPRINGS ASSOCIATES, LIMITED GA SANS SOUCI-REO LIMITED PARTNERSHIP TX SANTA MARIA LIMITED DIVIDEND PARTNERSHIP ASSOCIATES MA SAUK-KO ENTERPRISES A LIMITED PARTNERSHIP WI SAVOY COURT ASSOCIATES LIMITED PARTNERSHIP MO SCANDIA ASSOCIATES L.P. IN SCANDIA V CORPORATION MD SCHAUMBURG-OXFORD LIMITED PARTNERSHIP MD
SEASIDE POINT PARTNERS, LTD., A TEXAS LIMITED PARTNERSHIP TX SEATTLE ROCHESTER AVENUE ASSOCIATES LIMITED PARTNERSHIP NY SEAVIEW TOWERS ASSOCIATES NY SECURED INCOME L.P. DE SECURITY MANAGEMENT INC. WA SECURITY PROPERTIES WA SECURITY PROPERTIES 73 WA SECURITY PROPERTIES 74 WA SECURITY PROPERTIES 74 II WA SECURITY PROPERTIES 74 III WA SECURITY PROPERTIES 74-A WA SECURITY PROPERTIES 75 WA SECURITY PROPERTIES 76 WA SECURITY PROPERTIES 77 WA SECURITY PROPERTIES 77A WA SECURITY PROPERTIES 78 WA SECURITY PROPERTIES 78A WA SECURITY PROPERTIES 79 WA SECURITY PROPERTIES 79-II WA SECURITY PROPERTIES 80 WA SECURITY PROPERTIES 81 WA SECURITY PROPERTIES 81-A WA SECURITY PROPERTIES FHA LIMITED PARTNERSHIP MT SEMINOLE-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD SEMINOLE-OXFORD CORPORATION MD SENCIT F/G METROPOLITAN ASSOCIATES NJ SENCIT NEW YORK AVENUE ASSOCIATES NJ SENCIT TOWNE HOUSE LIMITED PARTNERSHIP PA SENCIT-LEBANON COMPANY PA SENCIT-SELINSGROVE ASSOCIATES PA SERENDIPITY LIMITED PARTNERSHIP MT SEWARD ASSOCIATES, AN IDAHO LIMITED PARTNERSHIP ID SHAKER SQUARE, L.P. DE SHANNON MANOR APARTMENTS, A LIMITED PARTNERSHIP SC SHARON WOODS, L.P. DE SHARP-LEADENHALL ASSOCIATES, A MARYLAND LIMITED PARTNERSHIP MD SHAWNEE MEADOWS, LIMITED PARTNERSHIP OH SHELTER IV GP LIMITED PARTNERSHIP SC SHELTER PROPERTIES II LIMITED PARTNERSHIP SC SHELTER PROPERTIES IV LIMITED PARTNERSHIP SC SHELTER PROPERTIES V LIMITED PARTNERSHIP SC SHELTER PROPERTIES VI LIMITED PARTNERSHIP SC SHELTER PROPERTIES VII LIMITED PARTNERSHIP SC SHELTER REALTY II CORPORATION SC SHELTER REALTY IV CORPORATION SC SHELTER REALTY V CORPORATION SC SHELTER REALTY VI CORPORATION SC SHELTER REALTY VII CORPORATION SC SHELTER V GP LIMITED PARTNERSHIP DE SHELTER VII GP LIMITED PARTNERSHIP SC SHENANDOAH CROSSINGS, L.P. VA SHERIDAN PLAZA ASSOCIATES II L.P. IL SHERMAN TERRACE ASSOCIATES PA SHOCKOE PLACE APARTMENTS, LLC VA SHOREVIEW APARTMENTS, L.P. CA
SHOREVIEW PRESERVATION, L.P. CA SHUBUTA PROPERTIES, LTD. MS SIERRA MEADOWS, L.P. CA SIGNATURE MIDWEST, L.P. MO SIGNATURE POINT JOINT VENTURE TX SIGNATURE POINT PARTNERS, LTD. TX SILVER HILL MILL DAM ASSOCIATES LIMITED PARTNERSHIP VA SITE 10 COMMUNITY ALLIANCE ASSOCIATES LIMITED PARTNERSHIP NY SITKA III ASSOCIATES, AN IDAHO LIMITED PARTNERSHIP ID SJT ASSOCIATES, LTD., A CALIFORNIA LIMITED PARTNERSHIP CA SNI DEVELOPMENT COMPANY LIMITED PARTNERSHIP NY SOL 413 LIMITED DIVIDEND PARTNERSHIP MA SOLDOTNA ASSOCIATES, AN IDAHO LIMITED PARTNERSHIP ID SOUTH BAY VILLA PRESERVATION, L.P. CA SOUTH BRITTANY OAKS, L.P. DE SOUTH HIAWASSEE VILLAGE, LTD. FL SOUTH LA MANCHA, L.P. DE SOUTH LANDMARK PROPERTIES, L.P. TX SOUTH MILL ASSOCIATES PA SOUTH PARK APARTMENTS LIMITED PARTNERSHIP OH SOUTH PARK APARTMENTS LIMITED PARTNERSHIP OH SOUTH WINDRUSH PROPERTIES, L.P. TX SOUTHERN MISSOURI HOUSING II, L.P. MO SOUTHERN MISSOURI HOUSING VI, L.P. MO SOUTHERN MISSOURI HOUSING X, L.P. MO SOUTHERN MISSOURI HOUSING XII, L.P. MO SOUTHERN MISSOURI HOUSING XIV, L.P. MO SOUTHERN MISSOURI HOUSING XIX, L.P. MO SOUTHERN MISSOURI HOUSING XVI, L.P. MO SOUTHRIDGE-OXFORD LIMITED PARTNERSHIP MD SOUTHWEST ASSOCIATES, L.P. DE SP MID TERM INCOME FUND, LTD. WA SP PROPERTIES 1982 LIMITED PARTNERSHIP WA SP PROPERTIES 1983 LIMITED PARTNERSHIP WA SP PROPERTIES 1983 TWO LIMITED PARTNERSHIP WA SP PROPERTIES 1984 LIMITED PARTNERSHIP WA SPRING MEADOW LIMITED PARTNERSHIP MA SPRINGDALE WEST CA SPRINGFIELD FACILITIES, LLC MD SPRINGFIELD VILLAS, LTD. TX SPRINGHAVEN LIMITED PARTNERSHIP MA SPYGLASS-OXFORD ASSOCIATES L.P. IN ST. GEORGE VILLAS LIMITED PARTNERSHIP SC ST. MARY'S-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD STAFFORD STUDENT APARTMENTS, L.P. DE STANDPOINT VISTA ASSOCIATES SC STANDPOINT VISTA LIMITED PARTNERSHIP MD STEEPLECHASE (AILKEN) LIMITED PARTNERSHIP SC STEEPLECHASE JV GP, LLC DE STEEPLECHASE JV, LLC DE STERLING CREST JOINT VENTURE TN STERLING GROVE L.P. TX STERLING TOWERS ASSOCIATES II LIMITED PARTNERSHIP IL STERLING VILLAGE AFFORDABLE, L.P. CA STEWARTOWN ASSOCIATES LIMITED PARTNERSHIP MD
STIRLING COURT APARTMENTS JV GP, LLC DE STIRLING COURT APARTMENTS JV, L.P. TX STONE POINTE VILLAGE LIMITED PARTNERSHIP IN STONEGATE PARK APARTMENTS, LTD. TX STONEY GREENS, L.L.C. SC STRATEGIC CAPITAL ALLIANCE LIMITED PARTNERSHIP AZ STRATFORD VILLAGE REALTY TRUST MA STRAWBRIDGE SQUARE APARTMENTS PARTNERS, L.P. DE STRAWBRIDGE SQUARE ASSOCIATES LIMITED PARTNERSHIP VA STRAWBRIDGE SQUARE PRESERVATION, L.P. DE STRUM AFFORDABLE HOUSING, LLC WI STUYVESANT LIMITED DIVIDEND HOUSING ASSOCIATION MI SUBSIDIZED HOUSING PARTNERS CA SUGAR RIVER MILLS ASSOCIATES MA SUGARBERRY APARTMENTS CORPORATION CA SUMMER CROSSINGS 40, A LIMITED PARTNERSHIP CA SUMMIT OAKS PRESERVATION, L.P. DE SUMMIT TAX CREDIT PROPERTIES I, L.P. DE SUMMIT TAX CREDIT PROPERTIES II, L.P. DE SUMMIT TAX CREDIT PROPERTIES III, L.P. DE SUN GARDEN PLAZA ASSOCIATES, L.P. CA SUN LAKE JV GP, LLC DE SUN LAKE JV, LTD. FL SUN TERRACE ASSOCIATES AZ SUNBURY DOWNS APARTMENTS JV GP, LLC DE SUNBURY DOWNS APARTMENTS JV, L.P. TX SUNRISE ASSOCIATES LIMITED PARTNERSHIP IL SUNSET SILVER BOW APARTMENTS MT SUNTREE PRESERVATION LIMITED PARTNERSHIP DE SUNTREE-OXFORD ASSOCIATES LIMITED DIVIDEND HOUSING ASSOCIATION MI SUSQUEHANNA VIEW LIMITED PARTNERSHIP PA SWIFT CREEK APARTMENTS, A LIMITED PARTNERSHIP SC SYCAMORE CREEK ASSOCIATES, L.P. DE TAMARAC PINES PRESERVATION, LP TX TAUNTON GREEN ASSOCIATES MA TAUNTON II ASSOCIATES MA TEB MUNICIPAL TRUST II NY TENNESSEE TRUST COMPANY TN TENNTRUCO, INC. NC TERAN LIMITED PARTNERSHIP AZ TERRA II LIMITED DIVIDEND HOUSING ASSOCIATION MI TERRACE INVESTORS LIMITED PARTNERSHIP TX TERRY MANOR PRESERVATION, L.P. CA TEXAS APARTMENT INVESTORS DE TEXAS BIRCHWOOD APARTMENTS, L.P. TX TEXAS BROOK APARTMENTS, L.P. TX TEXAS KIRNWOOD APARTMENTS, L.P. TX TEXAS MELODY APARTMENTS, L.P. TX TEXAS RESIDENTIAL INVESTORS LIMITED PARTNERSHIP DE TEXAS-ESTRADA APARTMENTS L.P. TX THE BLUFFS DEVELOPMENT LIMITED PARTNERSHIP IN THE BRANFORD GROUP LIMITED PARTNERSHIP CT THE FONDREN COURT JOINT VENTURE TX THE GLENS, A KANSAS LIMITED PARTNERSHIP KS THE GLENS, A LIMITED PARTNERSHIP SC
THE HOUSTON RECOVERY FUND JV GP, LLC DE THE HOUSTON RECOVERY FUND JV, L.P. TX THE LOFTS AT ALBUQUERQUE HIGH LIMITED PARTNERSHIP NM THE NATIONAL HOUSING PARTNERSHIP DC THE NATIONAL HOUSING PARTNERSHIP II TRUST NY THE NATIONAL HOUSING PARTNERSHIP-II LIMITED PARTNERSHIP DC THE NEW FAIRWAYS, L.P. DE THE OAK PARK PARTNERSHIP LIMITED PARTNERSHIP IL THE OAKS APARTMENTS, LTD. AL THE PARK AT CEDAR LAWN, LTD., A TEXAS LIMITED PARTNERSHIP TX THE ROGERS PARK PARTNERSHIP, LTD. IL THE TAILORED LADY APARTMENTS PARTNERSHIP PA THE TERRACES ASSOCIATES L.P. IN THE TRAILS GP LIMITED PARTNERSHIP SC THE TRAILS, L.P. SC THE TWENTYNINE PALMS LIMITED PARTNERSHIP CA THE VILLA LIMITED PARTNERSHIP WI THE VILLAGE OF KAUFMAN, LTD. TX THE WOODLANDS LIMITED MI THE WOODS ASSOCIATES IL THIBODAUX HOUSING 1994 PARTNERS, A LOUISIANA PARTNERSHIP IN COMMENDAM LA THREE FOUNTAINS LIMITED MI TIDEWATER-OXFORD LIMITED PARTNERSHIP MD TIMBER RIDGE JV GP, LLC DE TIMBER RIDGE JV, L.P. DE TIMBERLAKE APARTMENTS LIMITED PARTNERSHIP TX TOMPKINS TERRACE ASSOCIATES LIMITED PARTNERSHIP NY TOMPKINS TERRACE PRESERVATION, L.P. DE TOMPKINS TERRACE, INC. NY TORRES DEL PLATA I LIMITED PARTNERSHIP DE TORRES DEL PLATA II LIMITED PARTNERSHIP DE TORRIES CHASE ACQUISITION, L.P. KS TOWER OF DAVID LIMITED PARTNERSHIP SD TOWN & COUNTRY CLUB APARTMENTS MT TOWN ONE - PHASE II LIMITED PARTNERSHIP SD TOWN ONE LIMITED PARTNERSHIP SD TOWN VIEW TOWERS I LIMITED PARTNERSHIP TN TOWNSHIP AT HIGHLANDS LLC DE TRADEWINDS EAST ASSOCIATES, LIMITED DIVIDEND HOUSING ASSOCIATION MI TRADEWINDS HAMMOCKS, LTD. FL TRAIL RIDGE APARTMENTS LIMITED PARTNERSHIP KS TRAVIS ONE-OXFORD LIMITED PARTNERSHIP MD TREESLOPE APARTMENTS, A LIMITED PARTNERSHIP SC TRINITY APARTMENTS JV GP, LLC DE TRINITY APARTMENTS JV, L.P. DE TRINITY PLACE COMMUNITY URBAN REDEVELOPMENT CORPORATION OH TROON APARTMENTS LIMITED PARTNERSHIP NC TRUMAN TOWERS, L.P. MO TUJUNGA GARDENS LIMITED PARTNERSHIP CA TURNBUERRY-REO, L.P. TX TWELFTH STREET APARTMENTS, L.P. IL TWIN GABLES ASSOCIATES LIMITED PARTNERSHIP OH TWIN OAKS VILLAS, LTD. FL TWO WINTHROP LIMITED PARTNERSHIP MD TYRONE ELDERLY LIMITED PARTNERSHIP PA
U. S. REALTY I CORPORATION SC U. S. REALTY PARTNERS LIMITED PARTNERSHIP DE U.S. SHELTER LIMITED PARTNERSHIP SC UNDERWOOD ASSOCIATES LIMITED PARTNERSHIP CT UNDERWOOD-OXFORD ASSOCIATES LIMITED PARTNERSHIP ONE CT UNITED FRONT HOMES MA UNITED HOUSE ASSOCIATES PA UNITED HOUSING PARTNERS - ELMWOOD, LTD. AL UNITED HOUSING PARTNERS CUTHBERT LIMITED PARTNERSHIP GA UNITED HOUSING PARTNERS MORRISTOWN LIMITED PARTNERSHIP TN UNITED HOUSING PARTNERS-CARBONDALE, L.P. TN UNITED INVESTORS INCOME PROPERTIES (A MISSOURI LIMITED PARTNERSHIP) MO UNITED INVESTORS REAL ESTATE, INC. DE UNIVERSITY CITY HOUSING NEIGHBORHOOD RESTORATIONS LIMITED PARTNERSHIP IV PA UNIVERSITY PLAZA ASSOCIATES PA UNIVERSITY WOODS II ASSOCIATES LIMITED PARTNERSHIP OH UPCOUNTRY LIMITED PARTNERSHIP NC UPTOWN VILLAGE, LIMITED OH URBANA VILLAGE, LTD. OH URBANIZACION MARIA LOPEZ HOUSING COMPANY LIMITED PARTNERSHIP NY USS DEPOSITARY, INC. SC UTOPIA ACQUISITION, L.P. MO VALEBROOK ASSOCIATES MA VALLEY OAKS SENIOR HOUSING ASSOCIATES CA VAN NUYS ASSOCIATES LIMITED PARTNERSHIP MA VAN NUYS PRESERVATION MT, L.P. CA VAN NUYS PRESERVATION, L.P. CA VERDES DEL ORIENTE PRESERVATION, L.P. CA VICTORIA ARMS APARTMENTS LIMITED PARTNERSHIP MO VICTORY SQUARE APARTMENTS LIMITED PARTNERSHIP OH VILLA DE GUADALUPE PRESERVATION, L.P. CA VILLA DEL NORTE ASSOCIATES TX VILLA DEL NORTE II ASSOCIATES TX VILLA DEL SOL ASSOCIATES LIMITED PARTNERSHIP CA VILLA FLORENTINA, A CALIFORNIA LIMITED PARTNERSHIP CA VILLA LA PAZ JV GP, LLC DE VILLA LA PAZ JV, L.P. DE VILLA NOVA, LIMITED PARTNERSHIP TN VILLAGE APARTMENT, LTD. TN VILLAGE EAST TOWERS LIMITED PARTNERSHIP MO VILLAGE OAKS-OXFORD ASSOCIATES, A MARYLAND LIMITED PARTNERSHIP MD VILLAGE SOUTH ASSOCIATES OH VINEVILLE TOWERS ASSOCIATES LIMITED PARTNERSHIP GA VIRGINIA PARK MEADOWS LIMITED DIVIDEND HOUSING ASSOCIATION LIMITEDPARTNERSHIP MI VISTA DEL LAGOS JOINT VENTURE AZ VISTA HOUSING ASSOCIATES CA VISTA PARK CHINO LIMITED PARTNERSHIP CA VISTULA HERITAGE VILLAGE LIMITED PARTNERSHIP OH VMS APARTMENT PORTFOLIO ASSOCIATES II CA VMS APARTMENT PORTFOLIO ASSOCIATES III CA WAI ASSOCIATES LIMITED PARTNERSHIP TX WALNUT CREEK PARTNERS, LIMITED OH WALNUT HILLS ASSOCIATES, LTD. I OH WALNUT HILLS PRESERVATION, L.P. DE WALNUT SPRINGS JV GP, LLC DE
WALNUT SPRINGS JV, L.P. DE WALTON-PERRY LIMITED MI WARNER CENTER/MGP INC. DE WARREN HEIGHTS APARTMENTS LIMITED PARTNERSHIP OH WASCO ARMS CA WASHINGTON CHINATOWN ASSOCIATES LIMITED PARTNERSHIP DC WASHINGTON SQUARE WEST PRESERVATION, L.P. DE WASH-WEST PROPERTIES PA WATERFORD APARTMENTS JV GP, LLC DE WATERFORD APARTMENTS JV, L.P. TX WATERFORD TOWNHOMES LIMITED PARTNERSHIP OH WATERFORD VILLAGE, L.L.C. DE WATERGATE II ASSOCIATES NY WATERS LANDING PARTNERS, L.L.C. MD WAYCROSS, L.P. GA WAYNESBORO LIMITED PARTNERSHIP MS WEDGEWOOD CLUB ESTATES LIMITED PARTNERSHIP WA WEST LAFAYETTE, LTD. OH WEST LAKE ARMS LIMITED PARTNERSHIP DE WEST VIRGINIAN MANOR ASSOCIATES LIMITED PARTNERSHIP WV WESTBURY GROUP, LTD. TX WESTBURY INVESTORS LIMITED PARTNERSHIP DE WESTCHESTER-OXFORD LIMITED PARTNERSHIP MI WESTCHESTER-OXFORD, L.L.C. MD WESTGATE (SPARTANBURG) LIMITED PARTNERSHIP SC WESTGATE APARTMENTS GA WESTGATE APARTMENTS LIMITED PARTNERSHIP MN WESTGATE APARTMENTS, LTD. AL WESTLAND APARTMENTS, LTD. AL WESTMINISTER PROPERTIES, LTD. WA WESTMINSTER COMMONS ASSOCIATES LIMITED PARTNERSHIP VA WESTMINSTER OAKS PRESERVATION, L.P. DE WESTRIDGE-OXFORD LIMITED PARTNERSHIP MD WESTWICK II LIMITED PARTNERSHIP MS WESTWOOD PRESERVATION, L.P. DE WESTWOOD TERRACE PRESERVATION, L.P. DE WESTWOOD TERRACE SECOND LIMITED PARTNERSHIP IL WF-AC TAX CREDIT FUND I, L.P. DE WF-AC TAX CREDIT FUND I, LLC DE WF-AC TAX CREDIT FUND II, L.P. DE WF-AC TAX CREDIT FUND III, L.P. DE WHITE CLIFF APARTMENTS LIMITED PARTNERSHIP OH WHITEFIELD PLACE PRESERVATION, LP TX WHITNEY YOUNG MANOR PRESERVATION, L.P. CO WICKFORD ASSOCIATES LIMITED PARTNERSHIP NC WILDER RICHMAN HISTORIC PROPERTIES II, L.P. DE WILDERNESS TRAIL, LTD. OH WILIKINA PARK LIMITED PARTNERSHIP HI WILKES TOWERS LIMITED PARTNERSHIP NC WILLIAMSBURG ACQUISITION, L.P. MO WILLIAMSBURG LIMITED PARTNERSHIP IL WILLIAMSBURG-OXFORD LIMITED PARTNERSHIP MD WILLIAMSON TOWERS ASSOCIATES LIMITED PARTNERSHIP WV WILLOW COURT LIMITED PARTNERSHIP MT WILLOW WOOD LIMITED PARTNERSHIP CA
WINCHESTER SINGLE FAMILY HOMES, LTD. KY WIND DRIFT CORPORATION MD WIND DRIFT-OXFORD ASSOCIATES, L.P. IN WINDING BROOK ASSOCIATES IN WINDMILL RUN ASSOCIATES, LTD. TX WINDRIDGE-OXFORD ASSOCIATES LIMITED PARTNERSHIP MD WINDSOR CROSSINGS LIMITED PARTNERSHIP NJ WINNSBORO ARMS LIMITED PARTNERSHIP SC WINONA ASSOCIATES LIMITED PARTNERSHIP WA WINROCK-HOUSTON ASSOCIATES LIMITED PARTNERSHIP DE WINROCK-HOUSTON LIMITED PARTNERSHIP DE WINTER GARDEN PRESERVATION, L.P. MO WINTHROP APARTMENT INVESTORS LIMITED PARTNERSHIP MD WINTHROP TEXAS INVESTORS LIMITED PARTNERSHIP MD WL/OAC, L.L.C. MD WMOP PARTNERS, L.P. DE WOLF RIDGE, LTD. AL WOOD CREEK CPGF 22, L.P. DE WOODCREST APARTMENTS, LTD. OK WOODCREST APARTMENTS, LTD. TX WOODCROFT II LIMITED PARTNERSHIP NC WOODLAKE ASSOCIATES WA WOODLAND APARTMENTS, A LIMITED PARTNERSHIP SC WOODLAND HILLS PRESERVATION LIMITED PARTNERSHIP MI WOODMERE ASSOCIATES, L.P. DE WOODS EDGE CORPORATION MD WOODS EDGE-OXFORD ASSOCIATES, L.P. IN WOODS MORTGAGE ASSOCIATES PA WOODS OF INVERNESS CPF 16, L.P. DE WOODSHIRE JV GP, LLC DE WOODSHIRE JV, L.P. DE WOODSIDE VILLAS OF ARCADIA, LTD. FL WOODWAY OFFICE PARTNERS, LTD., A TEXAS LIMITED PARTNERSHIP TX WORCESTER EPISCOPAL HOUSING COMPANY LIMITED PARTNERSHIP MA WRC-87A CORPORATION DE WYNNEFIELD LINCOLN GROVE LIMITED PARTNERSHIP NC WYNTRE BROOKE ASSOCIATES PA YACHT CLUB AT BRICKELL, LLC FL YADKIN ASSOCIATES LIMITED PARTNERSHIP NC YELLOW CREEK GLEN FAMILY HOUSING LIMITED PARTNERSHIP IL YORKTREE JV GP, LLC DE YORKTREE JV, L.P. DE YORKVIEW ESTATES, LTD. OH ZELOTES HOLMES LIMITED PARTNERSHIP NC ZICKLER ASSOCIATES LIMITED PARTNERSHIP IN ZIMCO CORPORATION I MD ZIMCO CORPORATION II MD ZIMCO CORPORATION IV MD ZIMCO I LIMITED PARTNERSHIP MD ZIMCO II L.L.C. MD ZIMCO II LIMITED PARTNERSHIP MD ZIMCO IV LIMITED PARTNERSHIP MD ZIMCO IX L.L.C. MD ZIMCO V L.L.C. MD ZIMCO VII L.L.C. MD
ZIMCO VIII L.L.C. MD ZIMCO X L.L.C. MD ZIMCO XI L.L.C. MD ZIMCO XIII L.L.C. MD ZIMCO XIV L.L.C. MD ZIMCO XIX L.L.C. MD ZIMCO XV L.L.C. MD ZIMCO XVI L.L.C. MD ZIMCO XVII L.L.C. MD ZIMCO XVIII L.L.C. MD ZIMCO XX L.L.C. MD ZIMCO XXI L.L.C. MD ZIMCO XXII L.L.C. MD ZIMCO XXV L.L.C. MD ZIMCO XXVI L.L.C. MD ZIMCO XXVII L.L.C. MD ZIMCO XXXII LIMITED PARTNERSHIP MD ZIMCO XXXIII L.L.C. MD ZIMCO/BETHEL CORPORATION IX MD ZIMCO/BLUE ASH CORPORATION MD ZIMCO/CHANTILLY CORPORATION MD ZIMCO/COUCH CORPORATION MD ZIMCO/DAYTON CORPORATION X MD ZIMCO/DEERCROSS CORPORATION MD ZIMCO/DELTA SQUARE CORPORATION MD ZIMCO/FAYETTE CORPORATION MD ZIMCO/FISHERMAN'S VILLAGE CORPORATION MD ZIMCO/GWYNEDD CORPORATION MD ZIMCO/MELBOURNE CORPORATION MD ZIMCO/MONROE CORPORATION XI MD ZIMCO/PEBBLE POINT CORPORATION MD ZIMCO/RUNAWAY BAY CORPORATION XIII MD ZIMCO/SEMINOLE CORPORATION MD ZIMCO/WIND DRIFT CORPORATION MD ZIMCO/WOODS EDGE CORPORATION MD
EX-23.1 4 d66458exv23w1.txt EX-23.1 Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in the Registration Statements listed below of Apartment Investment and Management Company and in the related Prospectuses of our reports dated February 26, 2009 with respect to the consolidated financial statements and schedule of Apartment Investment and Management Company, and the effectiveness of internal control over financial reporting of Apartment Investment and Management Company, included in this Annual Report (Form 10-K) for the year ended December 31, 2008. Form S-3 (No. 333-828) Form S-3 (No. 333-8997) Form S-3 (No. 333-17431) Form S-3 (No. 333-20755) Form S-3 (No. 333-4546) Form S-3 (No. 333-36531) Form S-3 (No. 333-36537) Form S-3 (No. 333-4542) Form S-8 (No. 333-4550) Form S-8 (No. 333-4548) Form S-8 (No. 333-14481) Form S-8 (No. 333-36803) Form S-8 (No. 333-41719) Form S-4 (No. 333-49075) Form S-3 (No. 333-47201) Form S-8 (No. 333-57617) Form S-4 (No. 333-60663) Form S-8 (No. 333-70409) Form S-3 (No. 333-69121) Form S-3 (No. 333-75109) Form S-4 (No. 333-60355) Form S-8 (No. 333-75349) Form S-3 (No. 333-77257) Form S-3 (No. 333-77067) Form S-3 (No. 333-81689) Form S-3 (No. 333-92743) Form S-3 (No. 333-31718) Form S-3 (No. 333-50742) Form S-4 (No. 333-51154) Form S-3 (No. 333-52808) Form S-3 (No. 333-64460) Form S-3 (No. 333-71002) Form S-3 (No. 333-73162) Form S-3 (No. 333-86200) Form S-3 (No. 333-101735) Form S-3 (No. 333-130735) Form S-4 (No. 333-90590-01) Form S-4 (No. 333-90588-01) Form S-4 (No. 333-136801) Form S-8 (No. 333-142466) Form S-8 (No. 333-142467) Form S-3 (No. 333-150342) Form S-3ASR (333-150341-01) Denver, Colorado February 26, 2009 EX-31.1 5 d66458exv31w1.txt EX-31.1 Exhibit 31.1 CHIEF EXECUTIVE OFFICER CERTIFICATION I, Terry Considine, certify that: 1. I have reviewed this annual report on Form 10-K of Apartment Investment and Management Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 27, 2009 /s/ Terry Considine -------------------------------------------- Terry Considine Chairman or the Board and Chief Executive Officer EX-31.2 6 d66458exv31w2.txt EX-31.2 Exhibit 31.2 CHIEF FINANCIAL OFFICER CERTIFICATION I, Thomas M. Herzog, certify that: 1. I have reviewed this annual report on Form 10-K of Apartment Investment and Management Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 27, 2009 /s/ Thomas M. Herzog -------------------------------------------- Thomas M. Herzog Executive Vice President and Chief Financial Officer EX-32.1 7 d66458exv32w1.txt EX-32.1 Exhibit 32.1 CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Apartment Investment and Management Company (the "Company") on Form 10-K for the period ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Terry Considine, as Chief Executive Officer of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Terry Considine - ------------------------------------------------- Terry Considine Chairman of the Board and Chief Executive Officer February 27, 2009 EX-32.2 8 d66458exv32w2.txt EX-32.2 Exhibit 32.2 CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Apartment Investment and Management Company (the "Company") on Form 10-K for the period ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas M. Herzog, as Chief Financial Officer of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Thomas M. Herzog - ---------------------------------------------------- Thomas M. Herzog Executive Vice President and Chief Financial Officer February 27, 2009 EX-99.1 9 d66458exv99w1.txt EX-99.1 Exhibit 99.1 Agreement Regarding Disclosure of Long-Term Debt Instruments In reliance upon Item 601(b)(4)(iii)(A) of Regulation S-K, Apartment Investment and Management Company, a Maryland corporation (the "Company"), has not filed as an exhibit to its Annual Report on Form 10-K for the period ended December 31, 2008, any instrument with respect to long-term debt not being registered where the total amount of securities authorized thereunder does not exceed ten 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 and Exchange Commission upon request. APARTMENT INVESTMENT AND MANAGEMENT COMPANY By: /s/ Thomas M. Herzog ---------------------------------------------------- Thomas M. 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