1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 16,NOVEMBER 25, 1998
REGISTRATION NO. 333-61409
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 12
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO PROPERTIES, L.P.
(Exact name of co-registrant as specified in its charter)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY -- MARYLAND APARTMENT INVESTMENT AND MANAGEMENT COMPANY -- 84-1259577
AIMCO PROPERTIES, L.P. -- DELAWARE AIMCO PROPERTIES, L.P. -- 84-1275621
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
1873 SOUTH BELLAIRE STREET, 17TH FLOOR PETER K. KOMPANIEZ
DENVER, COLORADO 80222 VICE CHAIRMAN AND PRESIDENT
(303) 757-8101 1873 SOUTH BELLAIRE STREET, 17TH FLOOR
(Address, including zip code, and telephone number, DENVER, COLORADO 80222
including area code, of registrants' principal executive (303) 757-8101
offices) (Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------
Copies to:
JONATHAN L. FRIEDMAN SUSAN J. SUTHERLAND
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 SOUTH GRAND AVENUE 919 THIRD AVENUE
LOS ANGELES, CALIFORNIA 90071 NEW YORK, NEW YORK 10022
(213) 687-5000 (212) 735-3000
---------------------
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) UNIT(2) PRICE(1)(2) REGISTRATION FEE(3)
- ---------------------------------------------------------------------------------------------------------------------------------
Apartment Investment and Management Company:
Debt Securities(4).........................
Preferred Stock, par value $.01 per
share(4).................................
Class A Common Stock, par value $.01 per
share(4)................................. $1,000,000,000 $1,000,000,000
Warrants(4)(5).............................
Guarantees(4)(6)...........................
- ---------------------------------------------------------------------------------------------------------------------------------
AIMCO Properties, L.P.:
Debt Securities............................ $500,000,000 $500,000,000
- ---------------------------------------------------------------------------------------------------------------------------------
Total................................ $1,500,000,000 $1,500,000,000 $442,500
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
(1) The aggregate initial offering price of the securities (collectively, the
"Securities") registered hereby will not exceed $1,500,000,000. Such amount
represents the principal amount of any Debt Securities issued at their
principal amount, the issue price rather than the principal amount of any
Debt Securities issued at an original issue discount, the liquidation
preference (or, if different, the issue price) of any Preferred Stock, the
issue price of any Class A Common Stock or Warrants and the exercise price
of any Warrants or convertible Securities. Any Securities registered
hereunder may be sold separately, together as units with other Securities
registered hereunder, or upon exercise or conversion of any such Securities.
(2) The proposed maximum offering price per unit will be determined, from time
to time, by the Registrants in connection with the offering of the
Securities hereunder.
(3) Calculated pursuant to Rule 457(o), of the Securities Act, based on the
maximum aggregate offering price of all the Securities. Pursuant to Rule 429
the prospectus included in this registration statement also relates to
$268,168,000 of Debt Securities, Preferred Stock, Class A Common Stock and
Warrants of Apartment Investment and Management Company, which were
previously registered in an earlier Registration Statement (No. 333-26415).
A filing fee of $81,263 was paid previously in connection with the earlier
registration statement for such securities and is being carried forward. In
the event any of such previously registered securities are offered prior to
the effective date of this Registration Statement, they will not be included
in the Prospectus constituting a part hereof.
(4) Subject to footnote (1), there is being registered hereunder such
indeterminate principal amount of Debt Securities, such indeterminate number
of shares of Preferred Stock, such indeterminate number of shares of Class A
Common
Stock, such indeterminate number of Warrants to purchase Debt Securities,
Preferred Stock and Common Stock, such indeterminate principal amount of
Guarantees, and such indeterminate principal amount of Debt Securities, or
number of an indeterminate principal amountshares of Preferred Stock or Common Stock as may be issued from time
to time by Apartment Investment and Management Company, including Securities
issued upon
conversion of, or in exchange for, or upon exercise of, Warrants or convertible or
exchangeable Debt Securities or Preferred Stock.Stock or Warrants (including any
securities issuable upon stock splits and similar transactions pursuant to
Rule 416 under the Securities Act).
(5) Represents Warrants to purchase Debt Securities, Preferred Stock or Class A
Common Stock which may be issued by Apartment Investment and Management
Company.
(6) Represents Guarantees by AIMCO of Debt Securities of AIMCO Properties, L.P.
No separate consideration will be received for any Guarantee.
---------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
THE PROSPECTUS INCLUDED IN THIS REGISTRATION STATEMENT IS A COMBINED
PROSPECTUS THAT ALSO RELATES TO APARTMENT INVESTMENT AND MANAGEMENT COMPANY'S
REGISTRATION STATEMENT ON FORM S-3 (NO. 333-26415).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
PROSPECTUS
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
$1,268,168,000
DEBT SECURITIES
PREFERRED STOCK
CLASS A COMMON STOCK
WARRANTS
GUARANTEES
AIMCO PROPERTIES, L.P.
$500,000,000
DEBT SECURITIES
Apartment Investment and Management Company, a Maryland corporation
("AIMCO") which has elected to be taxed for federal income tax purposes as a
real estate investment trust (a "REIT"), may offer from time to time (i) senior,
senior subordinated or subordinated debt securities (the "AIMCO Debt
Securities") consisting of debentures, notes and/or other unsecured evidences of
indebtedness, (ii) shares of its preferred stock, par value $.01 per share (the
"Preferred Stock"), (iii) shares of its Class A Common Stock, par value $.01 per
share (the "Class A Common Stock"), and (iv) Warrants to purchase AIMCO Debt
Securities, Preferred Stock or Class A Common Stock, as shall be designated by
AIMCO at the time of the offering (the "Warrants"). AIMCO Properties, L.P., a
Delaware limited partnership and a subsidiary of AIMCO (the "AIMCO Operating
Partnership"), may offer from time to time senior, senior subordinated or
subordinated debt securities (the "OP Debt Securities" and, together with the
AIMCO Debt Securities, the "Debt Securities") consisting of debentures, notes
and/or other unsecured evidences of indebtedness, which may or may not be fully
and unconditionally guaranteed by AIMCO (any such guarantees being referred to
herein as "Guarantees"). The AIMCO Debt Securities, the Preferred Stock, the
Class A Common Stock, the Warrants and the Guarantees are collectively referred
to herein as the "AIMCO Securities" and will have an aggregate initial offering
price of up to $1,268,168,000. The OP Debt Securities will have an aggregate
initial offering price of up to $500,000,000. The AIMCO Securities and the OP
Securities (collectively, the "Securities") may be offered separately or
together (in any combination) and as separate series, in any case, in amounts,
at prices and on terms to be determined at the time of sale.
To the extent not otherwise described herein, the form in which the
Securities are to be issued, and the terms of such Securities, including without
limitation, their specific designation, aggregate principal amount or aggregate
initial offering price, maturity, if any, rate and times of payment of interest
or dividends, if any, redemption, conversion, exchange and sinking fund terms,
if any, voting or other rights, if any, exercise price and detachability, if
any, and other specific terms will be set forth in a Prospectus Supplement (the
"Prospectus Supplement"), together with the terms of offering of such
Securities. If so specified in the applicable Prospectus Supplement, Debt
Securities of a series may be issued in whole or in part in the form of one or
more temporary or permanent global securities. The Prospectus Supplement will
also contain information, as applicable, about certain material United States
Federal income tax considerations relating to the particular Securities offered
thereby. The Prospectus Supplement will also contain information, where
applicable, as to any listing on a national securities exchange of the
Securities covered by such Prospectus Supplement.
The Securities may be offered directly, through agents designated from time
to time by AIMCO or the AIMCO Operating Partnership, or to or through
underwriters or dealers. If any agents or underwriters are involved in the sale
of any of the Securities, their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them, will be set forth, or
will be calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Securities may be sold without
delivery of the applicable Prospectus Supplement describing the method and terms
of the offering of such Securities.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED
UNDER "RISK FACTORS" SET FORTH IN THE APPLICABLE PROSPECTUS SUPPLEMENT.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
OctoberNovember , 1998
3
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING
AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU
SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER
THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS.
TABLE OF CONTENTS
AIMCO and the AIMCO Operating Partnership................... 1
Use of Proceeds............................................. 1
Ratio of Earnings to Fixed Charges.......................... 2
Description of AIMCO Debt Securities........................ 3
Description of OP Debt Securities........................... 10
Description of Preferred Stock.............................. 16
Description of Class A Common Stock......................... 1920
Description of Other Classes of Outstanding Stock...........................................Stock........... 23
Description of Warrants..................................... 3132
Plan of Distribution........................................ 3233
Certain Federal Income Tax Consequences..................... 3435
Other Tax Consequences...................................... 4445
Where You Can Find More Information......................... 4445
Legal Matters............................................... 4546
Experts..................................................... 4546
4
AIMCO AND THE AIMCO OPERATING PARTNERSHIP
AIMCO, a Maryland corporation formed on January 10, 1994, is a
self-administered and self-managed REIT engaged in the ownership, acquisition,
development, expansion and management of multi-family apartment properties. As
of October 1,31, 1998, through our controlling interests in the AIMCO Operating
Partnership and other limited partnerships and limited liability companies
(collectively, the "Subsidiary Partnerships"), we owned or managed 396,090386,430
apartment units in 2,3032,240 properties located in 49 states, the District of
Columbia and Puerto Rico. Based on apartment unit data compiled as of January 1,
1998 by the National Multi Housing Council, we believe that, as of October 1,31,
1998, AIMCO waswe were the largest owner and manager of multifamily apartment properties
in the United States. As of October 1,31, 1998, through its controlling interests in the AIMCO Operating
Partnership and other limited partnerships and limited liability companies
(collectively, the "Subsidiary Partnerships") and other subsidiaries, AIMCOwe:
- owned or controlled 58,49562,955 units in 209241 apartment properties,properties;
- held an equity interest in 239,879168,746 units in 1,335897 apartment properties,properties; and
- managed 97,716154,729 units in 7591,102 apartment properties for third party
owners and affiliates.
SubstantiallyWe conduct substantially all of theour operations of AIMCO are conducted through the AIMCO Operating
Partnership and its subsidiaries. As of October 1, 1998, AIMCO,
through itsPartnership. Our wholly owned subsidiaries,subsidiary, AIMCO-GP, Inc., (the "General Partner")
is the sole general partner of the AIMCO Operating Partnership (the "General Partner"),Partnership. Through the
General Partner and another of our wholly owned subsidiaries, AIMCO-LP, Inc.,
a limited partner in the AIMCO Operating Partnership
(the "Special Limited Partner"), heldas of October 31, 1998, we owned approximately
an 89% interest in the AIMCO Operating Partnership. The principal executive offices ofGenerally, when we refer to
"we" or "us" in this Prospectus, we are referring to AIMCO, and the AIMCO Operating
Partnership, the management companies and their respective subsidiaries.
Our principal executive offices are located at 1873 South Bellaire Street,
Denver, Colorado 80222, and theirour telephone number is (303) 757-8101.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, AIMCO
and the AIMCO Operating Partnership intend to use the net proceeds from the sale
of the Securities for working capital and general corporate purposes, which may
include the repayment or refinancing of outstanding indebtedness, the financing
of future acquisitions (which may include acquisitions of real properties,
interests therein or real estate-related securities) and the financing of
improvements or expansion of properties. Pending the use thereof, AIMCO and the
AIMCO Operating Partnership intend to invest any net proceeds in short-term,
interest-bearing securities. Neither AIMCO nor the AIMCO Operating Partnership
will receive any proceeds from the registered resale of any Securities pursuant
to this Prospectus.
1
5
RATIO OF EARNINGS TO FIXED CHARGES
The table below reflects AIMCO's ratios of earnings to fixed charges and
ratios of earnings to combined fixed charges and preferred stock dividends for
the following periods: (i) the sixnine months ended JuneSeptember 30, 1998 and 1997,
(ii) the years ended December 31, 1997, 1996 and 1995, (iii) the period January
10, 1994 to December 31, 1994, (iv) the period January 1, 1994 to July 28, 1994,
and (v) the year ended December 31, 1993. The ratios of earnings to fixed
charges and the ratios of earnings to combined fixed charges and partnership
preferred unit distributions for the AIMCO Operating Partnership are the same as
the ratios of earnings to fixed charges and the ratios of earnings to combined
fixed charges and preferred stock dividends, respectively, for such periods.
AIMCO
AIMCO PREDECESSORS(1)
------------------------------------------------- -------------------
FOR THE FOR THE
PERIOD PERIOD FOR THE
FOR THE SIXNINE JAN. 10, JAN. 1, YEAR
MONTHS ENDED FOR THE YEARS ENDED 1994 TO 1994 TO ENDED
JUNESEPTEMBER 30, DECEMBER 31, DEC. 31, JULY 28, DEC. 31,
------------- --------------------- --------- -------- --------
1998 1997 1997 1996 1995 1994 1994(3) 1993
----- ----- ----- ----- ----- --------- -------- --------
Ratio of earnings to fixed charges(2).... 2.0:1.8:1 1.6:1 2.3:1.5:1 1.6:1 2.1:1 5.8:1 N/A 1.2:1
Ratio of earnings to combined fixed
charges and preferred stock
dividends(4)(5)........................ 1.6:1.4:1 1.6:1.5:1 2.2:1.5:1 1.6:1 1.5:1 2.0:1 N/A 1.2:1
- ---------------
(1) On July 29, 1994, AIMCO completed its initial public offering of 9,075,000
shares of Class A Common Stock. On such date, AIMCO and Property Asset
Management, L.L.C., and its affiliated companies and PDI Realty Enterprises,
Inc. (collectively, the "AIMCO Predecessors") engaged in a business
combination and consummated a series of related transactions which enabled
AIMCO to continue and to expand the property management and related
businesses of the AIMCO Predecessors.
(2) The ratio of earnings to fixed charges for AIMCO was computed by dividing
earnings by fixed charges. For this purpose, "earnings" consists of income
before minority interest plus fixed charges (other than any interest which
has been capitalized); and "fixed charges" consists of interest expense
(including amortization of loan costs) and interest which has been
capitalized. The ratio of earnings to fixed charges for the AIMCO
Predecessors was computed by dividing earnings by fixed charges. For this
purpose, "earnings" consists of income (loss) before extraordinary items and
income taxes plus fixed charges and "fixed charges" consists of interest
expense (including amortization of loan costs).
(3) The earnings of the AIMCO Predecessors for the period from January 1, 1994
to July 28, 1994 were inadequate to cover fixed charges by $1,463,000.
(4) The ratio of earnings to combined fixed charges and preferred stock
dividends for AIMCO was computed by dividing earnings by the total of fixed
charges and preferred stock dividends. For this purpose, "earnings" consists
of income before minority interest plus fixed charges (other than any
interest which has been capitalized); "fixed charges' consists of interest
expense (including amortization of loan costs) and interest which has been
capitalized; and "preferred stock dividends' consists of the amount of
pre-tax earnings that would be required to cover preferred stock dividend
requirements.
(5) The AIMCO Predecessors did not have any shares of preferred stock
outstanding during the period from January 1, 1993 through July 28, 1994.
2
6
DESCRIPTION OF AIMCO DEBT SECURITIES
GENERAL
The following description sets forth certain general terms and provisions
of the AIMCO Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the AIMCO Debt Securities offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply to
the AIMCO Debt Securities so offered will be described in the Prospectus
Supplement relating to such AIMCO Debt Securities.
The AIMCO Debt Securities may be issued, from time to time, in one or more
series, and will constitute either senior AIMCO Debt Securities ("Senior AIMCO
Debt Securities"), senior subordinated AIMCO Debt Securities ("Senior
Subordinated AIMCO Debt Securities") or subordinated AIMCO Debt Securities
("Subordinated AIMCO Debt Securities"). Senior AIMCO Debt Securities may be
issued under an Indenture (the "Senior AIMCO Debt Securities Indenture") to be
entered into between AIMCO and a trustee to be named in the applicable
Prospectus Supplement. The Senior Subordinated AIMCO Debt Securities may be
issued from time to time under an Indenture (the "Senior Subordinated AIMCO Debt
Securities Indenture") to be entered into between AIMCO and a trustee to be
named in the applicable Prospectus Supplement. The Subordinated AIMCO Debt
Securities may be issued from time to time under an Indenture (the "Subordinated
AIMCO Debt Securities Indenture") to be entered into between AIMCO and a trustee
to be named in the applicable Prospectus Supplement. The AIMCO Debt Securities
may be convertible or non-convertible.
The Senior AIMCO Debt Securities Indenture, the Senior Subordinated AIMCO
Debt Securities Indenture, and the Subordinated AIMCO Debt Securities Indenture
are referred to herein individually as an "AIMCO Indenture" and, collectively,
as the "AIMCO Indentures." Forms of the AIMCO Indentures are filed as exhibits
to the Registration Statement of which this Prospectus is a part. The AIMCO
Indentures will be subject to and governed by the Trust Indenture Act of 1939,
as amended (the "TIA"). Capitalized terms used in this section which are not
otherwise defined in this Prospectus shall have the meanings set forth in the
AIMCO Indenture to which they relate. The statements made under this heading
relating to the AIMCO Debt Securities and the AIMCO Indentures are summaries of
the material provisions of the AIMCO Debt Securities and the AIMCO Indentures,
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the AIMCO Indentures and the
AIMCO Debt Securities, including the definitions therein of certain terms.
The AIMCO Debt Securities will be direct, unsecured obligations of AIMCO.
The AIMCO Indentures do not limit the aggregate principal amount of AIMCO Debt
Securities that may be issued thereunder and provide that AIMCO Debt Securities
may be issued thereunder from time to time in one or more series. Under the
AIMCO Indentures, AIMCO will have the ability to issue AIMCO Debt Securities
with terms different from those of AIMCO Debt Securities previously issued,
without the consent of the holders of previously issued series of AIMCO Debt
Securities, in an aggregate principal amount determined by AIMCO.
The applicable Prospectus Supplement or Prospectus Supplements relating to
any Senior Subordinated AIMCO Debt Securities or Subordinated AIMCO Debt
Securities will set forth the aggregate amount of outstanding indebtedness, as
of the most recent practicable date, that by the terms of such AIMCO Debt
Securities would be senior to such AIMCO Debt Securities and any limitation on
the issuance of additional senior indebtedness.
AIMCO Debt Securities may be issued and sold at a discount below their
principal amount ("AIMCO Discount Securities"). Special United States Federal
income tax considerations applicable to AIMCO Debt Securities issued with
original issue discount, including AIMCO Discount Securities, will be described
in more detail in any applicable Prospectus Supplement. Even if AIMCO Debt
Securities are not issued at a discount below their principal amount, such AIMCO
Debt Securities may, for United States Federal income tax purposes, be deemed to
have been issued with "original issue discount" ("OID") because of certain
interest payment characteristics. In addition, special United States Federal tax
considerations or other restrictions or terms applicable to any AIMCO Debt
Securities offered exclusively to United States aliens or
3
7
denominated in a currency other than United States dollars will be set forth in
a Prospectus Supplement relating thereto.
The applicable Prospectus Supplement or Prospectus Supplements will
describe, among other things, the following terms of the AIMCO Debt Securities
offered thereby (the "Offered AIMCO Debt Securities"): (i) the title of the
Offered AIMCO Debt Securities; (ii) any limit on the aggregate principal amount
of the Offered AIMCO Debt Securities; (iii) whether the Offered AIMCO Debt
Securities may be represented initially by an AIMCO Debt Security in temporary
or permanent global form, and if so, the initial Depositary with respect to such
temporary or permanent global AIMCO Debt Security and whether and the
circumstances under which beneficial owners of interests in any such temporary
or permanent global AIMCO Debt Security may exchange such interests for AIMCO
Debt Securities of such series and of like tenor of any authorized form and
denomination; (iv) the price or prices at which the Offered AIMCO Debt
Securities will be issued; (v) the date or dates on which the principal of the
Offered AIMCO Debt Securities is payable or the method of determination thereof;
(vi) the place or places where and the manner in which the principal of and
premium, if any, and interest, if any, on such Offered AIMCO Debt Securities
will be payable and the place or places where such Offered AIMCO Debt Securities
may be presented for transfer and, if applicable, conversion or exchange; (vii)
the rate or rates at which the Offered AIMCO Debt Securities will bear interest,
or the method of calculating such rate or rates, if any, and the date or dates
from which such interest, if any, will accrue; (viii) the dates, if any, on
which any interest on the Offered AIMCO Debt Securities will be payable, and the
regular record date for any interest payable on any Offered AIMCO Debt
Securities; (ix) the right or obligation, if any, of AIMCO to redeem or purchase
AIMCO Debt Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a holder thereof, the conditions, if any, giving
rise to such right or obligation, and the period or periods within which, and
the price or prices at which and the terms and conditions upon which AIMCO Debt
Securities of the series shall be redeemed or purchased, in whole or part, and
any provisions for the remarketing of such AIMCO Debt Securities; (x) whether
such Offered AIMCO Debt Securities are convertible or exchangeable into other
debt securities of AIMCO or equity securities of AIMCO, and, if so, the terms
and conditions upon which such conversion or exchange will be effected,
including the initial conversion or exchange price or rate and any adjustments
thereto, the conversion or exchange period and other conversion or exchange
provisions; (xi) any terms applicable to such Offered AIMCO Debt Securities
which are AIMCO Discount Securities, including the issue price thereof and the
rate or rates at which original issue discount will accrue; (xii) if other than
the principal amount thereof, the portion of the principal amount of the Offered
AIMCO Debt Securities which will be payable upon declaration or acceleration of
the maturity thereof pursuant to an event of default; (xiii) any deletions from,
modifications of or additions to the events of default or covenants of AIMCO
with respect to such Offered AIMCO Debt Securities that are not inconsistent
with this Prospectus; (xiv) any special United
States Federal income tax considerations applicable to the Offered AIMCO Debt
Securities; and (xv)(xiv) any other terms of the Offered AIMCO Debt Securities not
inconsistent with the provisions of the AIMCO Indenture. The applicable
Prospectus Supplement will also describe the following terms of any series of
Senior Subordinated AIMCO Debt Securities or Subordinated AIMCO Debt Securities
offered hereby in respect of which this Prospectus is being delivered: (a) the
rights, if any, to defer payments of interest on the Senior Subordinated AIMCO
Debt Securities or Subordinated AIMCO Debt Securities of such series by
extending the interest payment period, and the duration of such extensions, and
(b) the subordination terms of the Senior Subordinated AIMCO Debt Securities or
Subordinated AIMCO Debt Securities of such series. The foregoing is not intended to be an exclusive
list of the terms that may be applicable to any Offered AIMCO Debt Securities
and shall not limit in any respect the ability of AIMCO to issue AIMCO Debt
Securities with terms different from or in addition to those described above or
elsewhere in this Prospectus provided that such terms are not inconsistent with
this Prospectus. Any such Prospectus
Supplement will also describe any special provisions for the payment of
additional amounts with respect to the Offered AIMCO Debt Securities.
Since the operations of AIMCO are currently conducted principally through
its subsidiaries, AIMCO's cash flow and its consequent ability to service debt,
including the AIMCO Debt Securities, will be dependent, in large part, upon the
earnings of its subsidiaries and the distribution of those earnings to AIMCO,
whether by dividends, loans or otherwise. The payment of dividends and the
making of loans and advances to AIMCO by the subsidiaries may be subject to
statutory or contractual restrictions, are contingent upon the earnings of 4
8
those
subsidiaries and are subject to various business considerations. Any right of
AIMCO to receive assets of any of the subsidiaries upon their liquidation or
reorganization (and the consequent right of the holders of the AIMCO Debt
Securities to participate in those assets) will be effectively subordinated to
the claims of that subsidiary's creditors (including trade creditors), except to
the extent that AIMCO is recognized as a creditor
4
8
of such subsidiary, in which case the claims of AIMCO would still be subordinate
to any security interests in the assets of such subsidiary and any indebtedness
of such subsidiary senior to that held by AIMCO.
CONVERTIBILITY
No series of AIMCO Debt Securities that may be issued and sold pursuant
hereto will be convertible into, or exchangeable for, other securities or
property, except as set forth in the applicable Prospectus Supplement, which
will set forth the terms and conditions upon which such conversion or exchange
may be effected, including the initial conversion or exchange rate and any
adjustments thereto, the conversion or exchange period and any other conversion
or exchange provisions.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The AIMCO Debt Securities of a series may be issued solely as registered
AIMCO Debt Securities. AIMCO Debt Securities of a series may be issuable in
whole or in part in the form of one or more global AIMCO Debt Securities, as
described below under "Global Debt Securities." Unless otherwise indicated in an
applicable Prospectus Supplement, AIMCO Debt Securities will be issuable in
denominations of $1,000 and integral multiples thereof. AIMCO Debt Securities of
any series will be exchangeable for other AIMCO Debt Securities of the same
series of any authorized denominations and of a like aggregate principal amount
and tenor.
AIMCO Debt Securities may be presented for exchange as provided above and,
unless otherwise indicated in an applicable Prospectus Supplement, may be
presented for registration of transfer, at the office or agency of AIMCO
designated as registrar or co-registrar with respect to such series of AIMCO
Debt Securities, without service charge and upon payment of any taxes,
assessments or other governmental charges as described in the AIMCO Indenture.
Such transfer or exchange will be effected on the books of the registrar or any
other transfer agent appointed by AIMCO upon such registrar or transfer agent,
as the case may be, being satisfied with the documents of title and identity of
the person making the request. AIMCO intends to initially appoint the trustee
for the particular series of Offered AIMCO Debt Securities as the registrar for
such Offered AIMCO Debt Securities and the name of any different or additional
registrar designated by AIMCO with respect to the Offered AIMCO Debt Securities
will be included in the Prospectus Supplement relating thereto. If a Prospectus
Supplement refers to any transfer agents (in addition to the registrar)
designated by AIMCO with respect to any series of AIMCO Debt Securities, AIMCO
or the may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any such transfer agent acts,
except that AIMCO will be required to maintain a transfer agent in the Borough
of Manhattan, the City of New York. AIMCO may at any time designate additional
transfer agents with respect to any series of AIMCO Debt Securities.
In the event of any partial redemption of AIMCO Debt Securities of any
series, AIMCO will not be required to (i) issue, register the transfer of or
exchange AIMCO Debt Securities of that series during a period beginning at the
opening of business 15 days before any selection of AIMCO Debt Securities of
that series to be redeemed and ending at the close of business on the day of
mailing of the relevant notice of redemption; or (ii) register the transfer of
or exchange any AIMCO Debt Security, or portion thereof, called for redemption,
except the unredeemed portion of any AIMCO Debt Security being redeemed in part.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of, and interest, if any, on, AIMCO Debt Securities will be made at
the office of such paying agent or paying agents as AIMCO may designate from
time to time, except that, at the option of AIMCO, payment of principal or
interest may be made by check or by wire transfer to an account maintained by
the payee. Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on AIMCO Debt Securities will be made to
the person in whose name such AIMCO Debt Security is registered at the close of
business on the regular record date for such interest.
5
9
Unless otherwise indicated in an applicable Prospectus Supplement, the
trustee for the Offered AIMCO Debt Securities will be designated as AIMCO's sole
paying agent for payments with respect to the Offered AIMCO Debt Securities. Any
other paying agents initially designated by AIMCO for the Offered AIMCO Debt
Securities will be named in an applicable Prospectus Supplement. AIMCO may at
any time designate
5
9 additional paying agents or rescind the designation of any
paying agent or approve a change in the office through which any paying agent
acts, except that AIMCO will be required to maintain a paying agent in the
Borough of Manhattan, The City of New York.
All moneys paid by AIMCO to a paying agent for the payment of principal of,
or interest, if any, on, any AIMCO Debt Security which remains unclaimed at the
end of two years after such principal or interest shall have become due and
payable will be repaid to AIMCO, and the holder of such AIMCO Debt Security or
any coupon will thereafter look only to AIMCO for payment thereof.
GLOBAL DEBT SECURITIES
The AIMCO Debt Securities of a series may be issued in whole or in part in
global form. An AIMCO Debt Security in global form will be deposited with, or on
behalf of, a depositary, which will be identified in the applicable Prospectus
Supplement. A global AIMCO Debt Security may be issued only in registered form
and in either temporary or permanent form. An AIMCO Debt Security in global form
may not be transferred except as a whole to the depositary for such AIMCO Debt
Security or to a nominee or successor of such depositary. If any AIMCO Debt
Securities of a series are issuable in global form, the applicable Prospectus
Supplement will describe the circumstances, if any, under which beneficial
owners of interests in any such global AIMCO Debt Security may exchange such
interests for definitive AIMCO Debt Securities of such series and of like tenor
and principal amount in any authorized form and denomination, the manner of
payment of principal of and interest, if any, on any such global AIMCO Debt
Security and the specific terms of the depositary arrangement with respect to
any such global AIMCO Debt Security.
MERGERS AND SALES OF ASSETS
AIMCO may not consolidate with or merge into any other person or convey,
transfer or lease its properties and assets substantially as an entirety to
another person, unless, among other things, (i) the resulting, surviving or
transferee person (if other than AIMCO) is organized and existing under the laws
of the United States, any state thereof or the District of Columbia and such
person expressly assumes all obligations of AIMCO under the AIMCO Debt
Securities and the AIMCO Indenture, and (ii) immediately after giving effect to
such transaction, no default or event of default shall have occurred or be
continuing under the AIMCO Indenture. Upon the assumption of AIMCO's obligations
by a person to whom such properties or assets are conveyed, transferred or
leased, subject to certain exceptions, AIMCO shall be discharged from all
obligations under the AIMCO Debt Securities and the AIMCO Indenture.
EVENTS OF DEFAULT
Each AIMCO Indenture provides that, if an Event of Default specified
therein shall have occurred and be continuing, with respect to each series of
the AIMCO Debt Securities outstanding thereunder individually, the trustee or
the holders of not less than 25% in aggregate principal amount of the
outstanding AIMCO Debt Securities of such series may declare the principal
amount (or, if any of the AIMCO Debt Securities of such series are AIMCO
Discount Securities, such portion of the principal amount of such AIMCO Debt
Securities as may be specified by the terms thereof) of the AIMCO Debt
Securities of such series to be immediately due and payable. Under certain
circumstances, the holders of a majority in aggregate principal amount of the
outstanding AIMCO Debt Securities of such series may rescind such a declaration.
Under each AIMCO Indenture, an event of default is defined as, with respect
to each series of AIMCO Debt Securities outstanding thereunder individually, any
of the following: (i) default in payment of the principal of any AIMCO Debt
Securities of such series; (ii) default in payment of any interest on any AIMCO
Debt Securities of such series when due, continuing for 30 days (or 60 days, in
the case of Senior Subordinated AIMCO Debt Securities or Subordinated AIMCO Debt
Securities); (iii) default by AIMCO
6
10
in compliance with other agreements in the AIMCO Debt Securities of such series
or the AIMCO Indenture relating to the AIMCO Debt Securities of such series upon
the receipt by AIMCO of notice of such default given by the trustee for such
AIMCO Debt Securities or the holders of at least 25% in aggregate principal
amount of the outstanding AIMCO Debt Securities of such series and AIMCO's
failure to cure such default
6
10 within 60 days after receipt by AIMCO of such
notice; (iv) certain events of bankruptcy or insolvency; and (v) any other event
of default set forth in an applicable Prospectus Supplement with respect to the
AIMCO Debt Securities of such series.
The trustee shall give notice to holders of the AIMCO Debt Securities of
any continuing default known to the trustee within 90 days after the occurrence
thereof; provided, that the trustee may withhold such notice, as to any default
other than a payment default, if it determines in good faith that withholding
the notice is in the interests of the holders.
The holders of a majority in principal amount of the outstanding AIMCO Debt
Securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee with respect to the AIMCO Debt Securities of such
series; provided that such direction shall not be in conflict with any law or
the Indenture and subject to certain other limitations. Before proceeding to
exercise any right or power under the AIMCO Indenture at the direction of such
holders, the trustee shall be entitled to receive from such holders reasonable
security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in complying with any such direction.
With respect to each series of AIMCO Debt Securities, no holder will have any
right to pursue any remedy with respect to the AIMCO Indenture or such AIMCO
Debt Securities, unless (i) such holder shall have previously given the trustee
written notice of a continuing event of default with respect to the AIMCO Debt
Securities of such series; (ii) the holders of at least 25% in aggregate
principal amount of the outstanding AIMCO Debt Securities of such series shall
have made a written request to the trustee to pursue such remedy; (iii) such
holder or holders have offered to the trustee reasonable indemnity satisfactory
to the trustee; (iv) the holders of a majority in aggregate principal amount of
the outstanding AIMCO Debt Securities of such series have not given the trustee
a direction inconsistent with such request within 60 days after receipt of such
request; and (v) the trustee shall have failed to comply with the request within
such 60-day period.
Notwithstanding the foregoing, the right of any holder of any AIMCO Debt
Securities to receive payment of the principal of and interest in respect of
such AIMCO Debt Securities on the date specified in such AIMCO Debt Securities
as the fixed date on which an amount equal to the principal of such AIMCO Debt
Securities or an installment of principal thereof or interest thereon is due and
payable (the "stated maturity" or "stated maturities") or to institute suit for
the enforcement of any such payments shall not be impaired or adversely affected
without such holder's consent. The holders of at least a majority in aggregate
principal amount of the outstanding AIMCO Debt Securities of any series may
waive an existing default with respect to such series and its consequences,
other than (i) any default in any payment of the principal of, or interest on,
any AIMCO Debt Securities of such series or (ii) any default in respect of
certain covenants or provisions in the AIMCO Indenture which may not be modified
without the consent of the holder of each of the outstanding AIMCO Debt
Securities of such series affected as described in "Modification and Waiver,"
below.
Each AIMCO Indenture provides that AIMCO shall deliver to the trustee
within 120 days after the end of each fiscal year of AIMCO an officers'
certificate stating whether or not the signers know of any default that occurred
during such period.
MODIFICATION AND WAIVER
AIMCO and the trustee may execute a supplemental indenture without the
consent of the holders of the AIMCO Debt Securities (i) to add to the covenants,
agreements and obligations of AIMCO for the benefit of the holders of all the
AIMCO Debt Securities of any series or to surrender any right or power conferred
in the AIMCO Indenture upon AIMCO; (ii) to evidence the succession of another
corporation, partnership or other Person to AIMCO and the assumption by such
corporation, partnership or other Person of the obligations of
7
11
AIMCO under the AIMCO Indenture and the AIMCO Debt Securities; (iii) to
establish the form or terms of AIMCO Debt Securities of any series as permitted
by the AIMCO Indenture; (iv) to provide for the acceptance of appointment under
the AIMCO Indenture of a successor trustee with respect to the AIMCO Debt
Securities of one or more series and to add to or change any provisions of the
AIMCO Indenture as shall
7
11 be necessary to provide for or facilitate the
administration of the trusts by more than one trustee; (v) to cure any
ambiguity, defect or inconsistency; (vi) to add to, change or eliminate any
provisions (which addition, change or elimination may apply to one or more
series of AIMCO Debt Securities), provided that any such addition, change or
elimination does not (a) apply to any AIMCO Debt Securities of any series
created prior to the execution of such supplemental indenture that is entitled
to the benefit of such provision or (b) modify the rights of the holder of any
such AIMCO Debt Securities with respect to such provision; (vii) to secure the
AIMCO Debt Securities; or (viii) to make any other change that does not
adversely affect the rights of any holder of AIMCO Debt Securities.
Each AIMCO Indenture provides that, with the consent of the holders of not
less than a majority in aggregate principal amount of the outstanding AIMCO Debt
Securities of the series affected by such supplemental indenture, AIMCO and the
trustee may also execute a supplemental indenture to add provisions to, or
change in any manner or eliminate any provisions of, the AIMCO Indenture with
respect to such series of AIMCO Debt Securities or modify in any manner the
rights of the holders of the AIMCO Debt Securities of such series; provided that
no such supplemental indenture will, without the consent of the holder of each
such outstanding AIMCO Debt Security affected thereby (i) change the stated
maturity of the principal of, or any installment of principal or interest on,
any such AIMCO Debt Security or any premium payable upon redemption or
repurchase thereof, or reduce the amount of principal of any AIMCO Debt Security
that is an AIMCO Discount Security and that would be due and payable upon
declaration of acceleration of maturity thereof; (ii) reduce the principal
amount of, or the rate of interest on, any such AIMCO Debt Security; (iii)
change the place or currency of payment of principal or interest, if any, on any
such AIMCO Debt Security; (iv) impair the right to institute suit for the
enforcement of any payment on or with respect to any such AIMCO Debt Security;
(v) reduce the above-stated percentage of holders of AIMCO Debt Securities of
any series necessary to modify or amend the AIMCO Indenture for such AIMCO Debt
Securities; (vi) modify the foregoing requirements or reduce the percentage in
principal amount of outstanding AIMCO Debt Securities of any series necessary to
waive any covenant or past default; or (vii) in the case of Senior Subordinated
AIMCO Debt Securities or Subordinated AIMCO Debt Securities, amend or modify any
of the provisions of such AIMCO Indenture relating to subordination of the AIMCO
Debt Securities in any manner adverse to the holders of such AIMCO Debt
Securities. Holders of not less than a majority in principal amount of the
outstanding AIMCO Debt Securities of any series may waive certain past defaults
and may waive compliance by AIMCO with certain of the restrictive covenants
described above with respect to the AIMCO Debt Securities of such series.
DISCHARGE AND DEFEASANCE
Unless otherwise indicated in an applicable Prospectus Supplement, each
AIMCO Indenture provides that AIMCO may satisfy and discharge obligations
thereunder with respect to the AIMCO Debt Securities of any series by delivering
to the trustee for cancellation all outstanding AIMCO Debt Securities of such
series or depositing with the trustee, after such outstanding AIMCO Debt
Securities have become due and payable, cash sufficient to pay at stated
maturity all of the outstanding AIMCO Debt Securities of such series and paying
all other sums payable under the AIMCO Indenture with respect to such series.
In addition, unless otherwise indicated in an applicable Prospectus
Supplement, each AIMCO Indenture provides that: AIMCO, (a) shall be discharged
from its obligations in respect of the AIMCO Debt Securities of such series
("defeasance and discharge"), or (b) may cease to comply with certain
restrictive covenants ("covenant defeasance"), including those described under
"Mergers and Sales of Assets," and any such omission shall not be an event of
default with respect to the AIMCO Debt Securities of such series, in each case,
at any time prior to the stated maturity or redemption thereof, when AIMCO has
irrevocably deposited with the trustee, in trust, (i) sufficient funds to pay
the principal of and interest to stated maturity (or redemption) on, the AIMCO
Debt Securities of such series, or (ii) such amount of direct obligations of, or
8
12
obligations the principal of (and premium, if any) and interest on which are
fully guaranteed by, the government of the United States and which are not
subject to prepayment, redemption or call, as will, together with the
predetermined and certain income to accrue thereon without consideration of any
reinvestment thereof, be sufficient to pay when due the principal of (and
premium, if any) and interest to stated maturity
8
12 (or redemption) on, the AIMCO
Debt Securities of such series. Upon such defeasance and discharge, the holders
of the AIMCO Debt Securities of such series shall no longer be entitled to the
benefits of the AIMCO Indenture, except for the purposes of registration of
transfer and exchange of the AIMCO Debt Securities of such series and
replacement of lost, stolen or mutilated AIMCO Debt Securities and shall look
only to such deposited funds or obligations for payment. In addition, under
present law such defeasance and discharge is likely to be treated as a
redemption of the AIMCO Debt Securities of that series prior to maturity in
exchange for such money or United States government obligations. In that event,
each holder would generally recognize, at the time of defeasance, gain or loss
measured by the difference between the amount of such money and the fair market
value of the United States government obligations deemed received and such
holder's tax basis in the AIMCO Debt Securities deemed surrendered. Thereafter,
each holder would likely be treated as if such holder held an undivided interest
in the money (or investments made therewith) or the United States government
obligations (or investments made with interest received therefrom), would
generally be subject to tax liability in respect of interest income and/or
original issue discount, if applicable, thereon and would recognize any gain or
loss upon any disposition, including redemption, of such assets or obligations.
Although tax might be owed, the holder of a defeased AIMCO Debt Security would
not receive any cash until the maturity or an earlier redemption of the AIMCO
Debt Security (except for current payments of interest on the AIMCO Debt
Securities of that issue). Such tax treatment could affect the purchase price
that a holder would receive upon the sale of the AIMCO Debt Securities. Holders
are urged to consult their own tax advisors with respect to the tax treatment of
defeasance of any AIMCO Debt Securities.
THE TRUSTEES
The trustee for any AIMCO Debt Securities will be named in the applicable
Prospectus Supplement. Each trustee will be permitted to engage in other
transactions with AIMCO and each of its subsidiaries; however, if a trustee
acquires any conflicting interest, it must eliminate such conflict or resign.
9
13
DESCRIPTION OF OP DEBT SECURITIES
GENERAL
The following description sets forth certain general terms and provisions
of the OP Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the OP Debt Securities offered by any Prospectus Supplement
and the extent, if any, to which such general provisions may apply to the OP
Debt Securities so offered will be described in the Prospectus Supplement
relating to such OP Debt Securities.
The OP Debt Securities may be issued by the AIMCO Operating Partnership,
from time to time, in one or more series, and will constitute either senior OP
Debt Securities ("Senior OP Debt Securities"), senior subordinated OP Debt
Securities ("Senior Subordinated OP Debt Securities") or subordinated OP Debt
Securities ("Subordinated OP Debt Securities"). Senior OP Debt Securities may be
issued under an Indenture (the "Senior OP Debt Securities Indenture") to be
entered into betweenamong the AIMCO Operating Partnership, AIMCO (as guarantor, as
applicable) and a trustee to be named in the applicable Prospectus Supplement.
The Senior Subordinated OP Debt Securities may be issued from time to time under
an Indenture (the "Senior Subordinated OP Debt Securities Indenture") to be
entered into betweenamong the AIMCO Operating Partnership, AIMCO (as guarantor, as
applicable) and a trustee to be named in the applicable Prospectus Supplement.
The Subordinated OP Debt Securities may be issued from time to time under an
Indenture (the "Subordinated OP Debt Securities Indenture") to be entered into
betweenamong the AIMCO Operating Partnership, AIMCO (as guarantor, as applicable) and a
trustee to be named in the applicable Prospectus Supplement. The OP Debt
Securities will be non-convertible. AIMCO will fully and unconditionally
guarantee the payment obligations on all OP Debt Securities unless, at the time
of sale, at least one nationally recognized statistical rating organization (as
that term is used in Rule 15c 3-1(c)(2)(vi)(F) under the Securities Exchange Act
of 1934) has rated such OP Debt Securities in one of its generic rating
categories which signifies investment grade.
The Senior OP Debt Securities Indenture, the Senior Subordinated OP Debt
Securities Indenture, and the Subordinated OP Debt Securities Indenture are
referred to herein individually as an "OP Indenture" and, collectively, as the
"OP Indentures." Forms of the OP Indentures are filed as exhibits to the
Registration Statement of which this Prospectus is a part. The OP Indentures
will be subject to and governed by the Trust Indenture Act of 1939, as amended
(the "TIA").TIA. Capitalized terms used in this
section which are not otherwise defined in this Prospectus shall have the
meanings set forth in the OP Indenture to which they relate. The statements made
under this heading relating to the OP Debt Securities and the OP Indentures are
summaries of the material provisions of the OP Debt Securities and the OP
Indentures, do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all the provisions of the OP Indentures and
the OP Debt Securities, including the definitions therein of certain terms.
The OP Debt Securities will be direct, unsecured obligations of the AIMCO
Operating Partnership. The OP Indentures do not limit the aggregate principal
amount of OP Debt Securities that may be issued thereunder and provide that OP
Debt Securities may be issued thereunder from time to time in one or more
series. Under the OP Indentures, the AIMCO Operating Partnership will have the
ability to issue OP Debt Securities with terms different from those of OP Debt
Securities previously issued, without the consent of the holders of previously
issued series of OP Debt Securities, in an aggregate principal amount determined
by the AIMCO Operating Partnership.
The applicable Prospectus Supplement or Prospectus Supplements relating to
any Senior Subordinated OP Debt Securities or Subordinated OP Debt Securities
will set forth the aggregate amount of outstanding indebtedness, as of the most
recent practicable date, that by the terms of such OP Debt Securities would be
senior to such OP Debt Securities and any limitation on the issuance of
additional senior indebtedness.
OP Debt Securities may be issued and sold at a discount below their
principal amount ("OP Discount Securities"). Special United States Federal
income tax considerations applicable to OP Debt Securities issued with original
issue discount, including OP Discount Securities, will be described in more
detail in any applicable Prospectus Supplement. Even if OP Debt Securities are
not issued at a discount below their principal amount, such OP Debt Securities
may, for United States Federal income tax purposes, be deemed to
10
14
have been issued with "original issue discount" ("OID")OID because of certain interest payment characteristics.
10
14
In addition, special United States Federal tax considerations or other
restrictions or terms applicable to any OP Debt Securities offered exclusively
to United States aliens or denominated in a currency other than United States
dollars will be set forth in a Prospectus Supplement relating thereto.
The applicable Prospectus Supplement or Prospectus Supplements will
describe, among other things, the following terms of the OP Debt Securities
offered thereby (the "Offered OP Debt Securities"): (i) the title of the Offered
OP Debt Securities; (ii) any limit on the aggregate principal amount of the
Offered OP Debt Securities; (iii) whether the Offered OP Debt Securities may be
represented initially by an OP Debt Security in temporary or permanent global
form, and if so, the initial Depositary with respect to such temporary or
permanent global OP Debt Security and whether and the circumstances under which
beneficial owners of interests in any such temporary or permanent global OP Debt
Security may exchange such interests for OP Debt Securities of such series and
of like tenor of any authorized form and denomination; (iv) the price or prices
at which the Offered OP Debt Securities will be issued; (v) the date or dates on
which the principal of the Offered OP Debt Securities is payable or the method
of determination thereof; (vi) the place or places where and the manner in which
the principal of and premium, if any, and interest, if any, on such Offered OP
Debt Securities will be payable and the place or places where such Offered OP
Debt Securities may be presented for transfer; (vii) the rate or rates at which
the Offered OP Debt Securities will bear interest, or the method of calculating
such rate or rates, if any, and the date or dates from which such interest, if
any, will accrue; (viii) the dates, if any, on which any interest on the Offered
OP Debt Securities will be payable, and the regular record date for any interest
payable on any Offered OP Debt Securities; (ix) the right or obligation, if any,
of the AIMCO Operating Partnership to redeem or purchase OP Debt Securities of
the series pursuant to any sinking fund or analogous provisions or at the option
of a holder thereof, the conditions, if any, giving rise to such right or
obligation, and the period or periods within which, and the price or prices at
which and the terms and conditions upon which OP Debt Securities of the series
shall be redeemed or purchased, in whole or part, and any provisions for the
remarketing of such OP Debt Securities; (x) any terms applicable to such Offered
OP Debt Securities which are OP Discount Securities, including the issue price
thereof and the rate or rates at which original issue discount will accrue; (xi)
if other than the principal amount thereof, the portion of the principal amount
of the Offered OP Debt Securities which will be payable upon declaration or
acceleration of the maturity thereof pursuant to an event of default; (xii) any
deletions from, modifications of or additions to the events of default or
covenants of the AIMCO Operating Partnership with respect to such Offered OP
Debt Securities that are not inconsistent with this Prospectus; (xiii) any
special United States Federal income tax considerations applicable to the
Offered OP Debt Securities; (xiv)(xiii) whether the Offered OP Debt Securities will
be guaranteed by AIMCO and the terms of any such Guarantee; and (xv)(xiv) any other
terms of the Offered OP Debt Securities not inconsistent with the provisions of
the OP Indenture. The applicable Prospectus Supplement will also describe the
following terms of any series of Senior Subordinated OP Debt Securities or
Subordinated OP Debt Securities offered hereby in respect of which this
Prospectus is being delivered: (a) the rights, if any, to defer payments of
interest on the Senior Subordinated OP Debt Securities or Subordinated OP Debt
Securities of such series by extending the interest payment period, and the
duration of such extensions, and (b) the subordination terms of the Senior
Subordinated OP Debt Securities or Subordinated OP Debt Securities of such
series. The foregoing is not intended to be an exclusive list of the terms that
may be applicable to any Offered OP Debt Securities and shall not limit in any
respect the ability of the AIMCO Operating Partnership to issue OP Debt
Securities with terms different from or in addition to those described above or
elsewhere in this Prospectus provided that such terms are not inconsistent with
this Prospectus. Any such Prospectus Supplement will also describe any special provisions
for the payment of additional amounts with respect to the Offered OP Debt
Securities.
Since the operations of the AIMCO Operating Partnership is currently
conducted principally through its respective subsidiaries, the AIMCO Operating
Partnership's cash flow and its consequent ability to service debt, including
the OP Debt Securities, will be dependent, in large part, upon the earnings of
the subsidiaries and the distribution of those earnings to the AIMCO Operating
Partnership, whether by dividends, loans or otherwise. The payment of dividends
and the making of loans and advances to the AIMCO Operating Partnership by its
subsidiaries may be subject to statutory or contractual restrictions, are
contingent upon the earnings of those subsidiaries and are subject to various
business considerations. Any right of the AIMCO Operating Partnership to receive
assets of any of its subsidiaries upon their liquidation or reorganization (and
11
15
the consequent right of the holders of the OP Debt Securities to participate in
those assets) will be effectively subordinated to the claims of that
subsidiary's creditors (including trade creditors), except to the extent that
the AIMCO Operating Partnership is recognized as a creditor of such subsidiary,
in which case the claims of
11
15
the AIMCO Operating Partnership would still be subordinate to any security
interests in the assets of such subsidiary and any indebtedness of such
subsidiary senior to that held by the AIMCO Operating Partnership.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The OP Debt Securities of a series may be issued solely as registered OP
Debt Securities. OP Debt Securities of a series may be issuable in whole or in
part in the form of one or more global OP Debt Securities, as described below
under "Global Debt Securities." Unless otherwise indicated in an applicable
Prospectus Supplement, OP Debt Securities will be issuable in denominations of
$1,000 and integral multiples thereof. OP Debt Securities of any series will be
exchangeable for other OP Debt Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor.
OP Debt Securities may be presented for exchange as provided above and,
unless otherwise indicated in an applicable Prospectus Supplement, may be
presented for registration of transfer, at the office or agency of the AIMCO
Operating Partnership designated as registrar or co-registrar with respect to
such series of OP Debt Securities, without service charge and upon payment of
any taxes, assessments or other governmental charges as described in the OP
Indenture. Such transfer or exchange will be effected on the books of the
registrar or any other transfer agent appointed by the AIMCO Operating
Partnership upon such registrar or transfer agent, as the case may be, being
satisfied with the documents of title and identity of the person making the
request. The AIMCO Operating Partnership intends to initially appoint the
trustee for the particular series of Offered OP Debt Securities as the registrar
for such Offered OP Debt Securities and the name of any different or additional
registrar designated by the AIMCO Operating Partnership with respect to the
Offered OP Debt Securities will be included in the Prospectus Supplement
relating thereto. If a Prospectus Supplement refers to any transfer agents (in
addition to the registrar) designated by the AIMCO Operating Partnership with
respect to any series of OP Debt Securities, the AIMCO Operating Partnership may
at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent acts, except that
the AIMCO Operating Partnership will be required to maintain a transfer agent in
the Borough of Manhattan, the City of New York. The AIMCO Operating Partnership
may at any time designate additional transfer agents with respect to any series
of OP Debt Securities.
In the event of any partial redemption of OP Debt Securities of any series,
the AIMCO Operating Partnership will not be required to (i) issue, register the
transfer of or exchange OP Debt Securities of that series during a period
beginning at the opening of business 15 days before any selection of OP Debt
Securities of that series to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption; or (ii) register the
transfer of or exchange any OP Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any OP Debt Security being redeemed
in part.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of, and interest, if any, on, OP Debt Securities will be made at
the office of such paying agent or paying agents as the AIMCO Operating
Partnership may designate from time to time, except that, at the option of the
AIMCO Operating Partnership, payment of principal or interest may be made by
check or by wire transfer to an account maintained by the payee. Unless
otherwise indicated in an applicable Prospectus Supplement, payment of any
installment of interest on OP Debt Securities will be made to the person in
whose name such OP Debt Security is registered at the close of business on the
regular record date for such interest.
Unless otherwise indicated in an applicable Prospectus Supplement, the
trustee for the Offered OP Debt Securities will be designated as the AIMCO
Operating Partnership's sole paying agent for payments with respect to the
Offered OP Debt Securities. Any other paying agents initially designated by the
AIMCO Operating Partnership for the Offered OP Debt Securities will be named in
an applicable Prospectus 12
16
Supplement. The AIMCO Operating Partnership may at any
time designate additional paying agents or rescind the designation of any paying
agent or approve a change in the office through which any paying agent
12
16
acts, except that the AIMCO Operating Partnership will be required to maintain a
paying agent in the Borough of Manhattan, The City of New York.
All moneys paid by the AIMCO Operating Partnership to a paying agent for
the payment of principal of, or interest, if any, on, any OP Debt Security which
remains unclaimed at the end of two years after such principal or interest shall
have become due and payable will be repaid to the AIMCO Operating Partnership,
and the holder of such OP Debt Security or any coupon will thereafter look only
to the AIMCO Operating Partnership for payment thereof.
GUARANTEES
If the AIMCO Operating Partnership issues any OP Debt Securities that are
rated below investment grade at the time of issuance, AIMCO will fully and
unconditionally guarantee, on a senior or subordinated basis, the due and
punctual payment of principal of, premium, if any, and interest on such OP Debt
Securities, and the due and punctual payment of any sinking fund payments
thereon, when and as the same shall become due and payable, whether at a
maturity date, by declaration of acceleration, call for redemption or otherwise.
The applicability and terms of any such Guarantees relating to a series of OP
Debt Securities will be set forth in the Prospectus Supplement relating to such
OP Debt Securities.
GLOBAL DEBT SECURITIES
The OP Debt Securities of a series may be issued in whole or in part in
global form. An OP Debt Security in global form will be deposited with, or on
behalf of, a depositary, which will be identified in the applicable Prospectus
Supplement. A global OP Debt Security may be issued only in registered form and
in either temporary or permanent form. An OP Debt Security in global form may
not be transferred except as a whole to the depositary for such OP Debt Security
or to a nominee or successor of such depositary. If any OP Debt Securities of a
series are issuable in global form, the applicable Prospectus Supplement will
describe the circumstances, if any, under which beneficial owners of interests
in any such global OP Debt Security may exchange such interests for definitive
OP Debt Securities of such series and of like tenor and principal amount in any
authorized form and denomination, the manner of payment of principal of and
interest, if any, on any such global OP Debt Security and the specific terms of
the depositary arrangement with respect to any such global OP Debt Security.
MERGERS AND SALES OF ASSETS
The AIMCO Operating Partnership may not consolidate with or merge into any
other person or convey, transfer or lease its properties and assets
substantially as an entirety to another person, unless, among other things, (i)
the resulting, surviving or transferee person (if other than the AIMCO Operating
Partnership) is organized and existing under the laws of the United States, any
state thereof or the District of Columbia and such person expressly assumes all
obligations of the AIMCO Operating Partnership under the OP Debt Securities and
the OP Indenture, and (ii) immediately after giving effect to such transaction,
no default or event of default shall have occurred or be continuing under the OP
Indenture. Upon the assumption of the AIMCO Operating Partnership's obligations
by a person to whom such properties or assets are conveyed, transferred or
leased, subject to certain exceptions, the AIMCO Operating Partnership shall be
discharged from all obligations under the OP Debt Securities and the OP
Indenture.
EVENTS OF DEFAULT
Each OP Indenture provides that, if an Event of Default specified therein
shall have occurred and be continuing, with respect to each series of the OP
Debt Securities outstanding thereunder individually, the trustee or the holders
of not less than 25% in aggregate principal amount of the outstanding OP Debt
Securities of such series may declare the principal amount (or, if any of the OP
Debt Securities of such series are OP Discount Securities, such portion of the
principal amount of such OP Debt Securities as may be 13
17
specified by the terms
thereof) of the OP Debt Securities of such series to be immediately due and
payable.
13
17
Under certain circumstances, the holders of a majority in aggregate principal
amount of the outstanding OP Debt Securities of such series may rescind such a
declaration.
Under each OP Indenture, an event of default is defined as, with respect to
each series of OP Debt Securities outstanding thereunder individually, any of
the following: (i) default in payment of the principal of any OP Debt Securities
of such series; (ii) default in payment of any interest on any OP Debt
Securities of such series when due, continuing for 30 days (or 60 days, in the
case of Senior Subordinated OP Debt Securities or Subordinated OP Debt
Securities); (iii) default by the AIMCO Operating Partnership in compliance with
its other agreements in the OP Debt Securities of such series (including, in the
case of AIMCO, any related Guarantee) or the OP Indenture relating to the OP
Debt Securities of such series (including, in the case of AIMCO, any related
Guarantee) upon the receipt by the AIMCO Operating Partnership of notice of such
default given by the trustee for such OP Debt Securities or the holders of at
least 25% in aggregate principal amount of the outstanding OP Debt Securities of
such series and the AIMCO Operating Partnership's failure to cure such default
within 60 days after receipt by the AIMCO Operating Partnership of such notice;
(iv) certain events of bankruptcy or insolvency; and (v) any other event of
default set forth in an applicable Prospectus Supplement with respect to the OP
Debt Securities of such series.
The trustee shall give notice to holders of the OP Debt Securities of any
continuing default known to the trustee within 90 days after the occurrence
thereof; provided, that the trustee may withhold such notice, as to any default
other than a payment default, if it determines in good faith that withholding
the notice is in the interests of the holders.
The holders of a majority in principal amount of the outstanding OP Debt
Securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee with respect to the OP Debt Securities of such
series; provided that such direction shall not be in conflict with any law or
the OP Indenture and subject to certain other limitations. Before proceeding to
exercise any right or power under the OP Indenture at the direction of such
holders, the trustee shall be entitled to receive from such holders reasonable
security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in complying with any such direction.
With respect to each series of OP Debt Securities, no holder will have any right
to pursue any remedy with respect to the OP Indenture or such OP Debt
Securities, unless (i) such holder shall have previously given the trustee
written notice of a continuing event of default with respect to the OP Debt
Securities of such series; (ii) the holders of at least 25% in aggregate
principal amount of the outstanding OP Debt Securities of such series shall have
made a written request to the trustee to pursue such remedy; (iii) such holder
or holders have offered to the trustee reasonable indemnity satisfactory to the
trustee; (iv) the holders of a majority in aggregate principal amount of the
outstanding OP Debt Securities of such series have not given the trustee a
direction inconsistent with such request within 60 days after receipt of such
request; and (v) the trustee shall have failed to comply with the request within
such 60-day period.
Notwithstanding the foregoing, the right of any holder of any OP Debt
Securities to receive payment of the principal of and interest in respect of
such OP Debt Securities on the date specified in such OP Debt Securities as the
fixed date on which an amount equal to the principal of such OP Debt Securities
or an installment of principal thereof or interest thereon is due and payable
(the "stated maturity" or "stated maturities") or to institute suit for the
enforcement of any such payments shall not be impaired or adversely affected
without such holder's consent. The holders of at least a majority in aggregate
principal amount of the outstanding OP Debt Securities of any series may waive
an existing default with respect to such series and its consequences, other than
(i) any default in any payment of the principal of, or interest on, any OP Debt
Securities of such series or (ii) any default in respect of certain covenants or
provisions in the OP Indenture which may not be modified without the consent of
the holder of each of the outstanding OP Debt Securities of such series affected
as described in "Modification and Waiver," below.
Each OP Indenture provides that the AIMCO Operating Partnership shall
deliver to the trustee within 120 days after the end of each fiscal year of the
AIMCO Operating Partnership an officers' certificate stating whether or not the
signers know of any default that occurred during such period.
14
18
MODIFICATION AND WAIVER
The AIMCO Operating Partnership and the trustee may execute a supplemental
indenture without the consent of the holders of the OP Debt Securities (i) to
add to the covenants, agreements and obligations of the AIMCO Operating
Partnership for the benefit of the holders of all the OP Debt Securities of any
series or to surrender any right or power conferred in the OP Indenture upon the
AIMCO Operating Partnership; (ii) to evidence the succession of another
corporation, partnership or other Person to the AIMCO Operating Partnership and
the assumption by such corporation, partnership or other Person of the
obligations of the AIMCO Operating Partnership, under the OP Indenture and the
OP Debt Securities; (iii) to establish the form or terms of OP Debt Securities
of any series as permitted by the OP Indenture; (iv) to provide for the
acceptance of appointment under the OP Indenture of a successor trustee with
respect to the OP Debt Securities of one or more series and to add to or change
any provisions of the OP Indenture as shall be necessary to provide for or
facilitate the administration of the trusts by more than one trustee; (v) to
cure any ambiguity, defect or inconsistency; (vi) to add to, change or eliminate
any provisions (which addition, change or elimination may apply to one or more
series of OP Debt Securities), provided that any such addition, change or
elimination does not (a) apply to any OP Debt Securities of any series created
prior to the execution of such supplemental indenture that is entitled to the
benefit of such provision or (b) modify the rights of the holder of any such OP
Debt Securities with respect to such provision; (vii) to secure the OP Debt
Securities; or (viii) to make any other change that does not adversely affect
the rights of any holder of OP Debt Securities.
Each OP Indenture provides that, with the consent of the holders of not
less than a majority in aggregate principal amount of the outstanding OP Debt
Securities of the series affected by such supplemental indenture, the AIMCO
Operating Partnership and the Trustee may also execute a supplemental indenture
to add provisions to, or change in any manner or eliminate any provisions of,
the OP Indenture with respect to such series of OP Debt Securities or modify in
any manner the rights of the holders of the OP Debt Securities of such series;
provided that no such supplemental indenture will, without the consent of the
holder of each such outstanding OP Debt Security affected thereby (i) change the
stated maturity of the principal of, or any installment of principal or interest
on, any such OP Debt Security or any premium payable upon redemption or
repurchase thereof, or reduce the amount of principal of any OP Debt Security
that is an OP Discount Security and that would be due and payable upon
declaration of acceleration of maturity thereof; (ii) reduce the principal
amount of, or the rate of interest on, any such OP Debt Security; (iii) change
the place or currency of payment of principal or interest, if any, on any such
OP Debt Security; (iv) impair the right to institute suit for the enforcement of
any payment on or with respect to any such OP Debt Security; (v) reduce the
above-stated percentage of holders of OP Debt Securities of any series necessary
to modify or amend the OP Indenture for such OP Debt Securities; (vi) modify the
foregoing requirements or reduce the percentage in principal amount of
outstanding OP Debt Securities of any series necessary to waive any covenant or
past default; or (vii) in the case of Senior Subordinated OP Debt Securities or
Subordinated OP Debt Securities, amend or modify any of the provisions of such
OP Indenture relating to subordination of the OP Debt Securities in any manner
adverse to the holders of such OP Debt Securities. Holders of not less than a
majority in principal amount of the outstanding OP Debt Securities of any series
may waive certain past defaults and may waive compliance by the AIMCO Operating
Partnership with certain of the restrictive covenants described above with
respect to the OP Debt Securities of such series.
DISCHARGE AND DEFEASANCE
Unless otherwise indicated in an applicable Prospectus Supplement, each OP
Indenture provides that the AIMCO Operating Partnership may satisfy and
discharge obligations thereunder with respect to the OP Debt Securities of any
series by delivering to the trustee for cancellation all outstanding OP Debt
Securities of such series or depositing with the trustee, after such outstanding
OP Debt Securities have become due and payable, cash sufficient to pay at stated
maturity all of the outstanding OP Debt Securities of such series and paying all
other sums payable under the OP Indenture with respect to such series.
In addition, unless otherwise indicated in an applicable Prospectus
Supplement, each OP Indenture provides that: the AIMCO Operating Partnership (a)
shall be discharged from its obligations in respect of the
15
19
OP Debt Securities of such series ("defeasance and discharge"), or (b) may cease
to comply with certain restrictive covenants ("covenant defeasance"), including
those described under "Mergers and Sales of Assets," and any such omission shall
not be an event of default with respect to the OP Debt Securities of such
series, in each case, at any time prior to the stated maturity or redemption
thereof, when the AIMCO Operating Partnership has irrevocably deposited with the
trustee, in trust, (i) sufficient funds to pay the principal of and interest to
stated maturity (or redemption) on, the OP Debt Securities of such series, or
(ii) such amount of direct obligations of, or obligations the principal of (and
premium, if any) and interest on which are fully guaranteed by, the government
of the United States and which are not subject to prepayment, redemption or
call, as will, together with the predetermined and certain income to accrue
thereon without consideration of any reinvestment thereof, be sufficient to pay
when due the principal of (and premium, if any) and interest to stated maturity
(or redemption) on, the OP Debt Securities of such series. Upon such defeasance
and discharge, the holders of the OP Debt Securities of such series shall no
longer be entitled to the benefits of the OP Indenture, except for the purposes
of registration of transfer and exchange of the OP Debt Securities of such
series and replacement of lost, stolen or mutilated OP Debt Securities and shall
look only to such deposited funds or obligations for payment. In addition, under
present law such defeasance and discharge is likely to be treated as a
redemption of the OP Debt Securities of that series prior to maturity in
exchange for such money or United States government obligations. In that event,
each holder would generally recognize, at the time of defeasance, gain or loss
measured by the difference between the amount of such money and the fair market
value of the United States government obligations deemed received and such
holder's tax basis in the OP Debt Securities deemed surrendered. Thereafter,
each holder would likely be treated as if such holder held an undivided interest
in the money (or investments made therewith) or the United States government
obligations (or investments made with interest received therefrom), would
generally be subject to tax liability in respect of interest income and/or
original issue discount, if applicable, thereon and would recognize any gain or
loss upon any disposition, including redemption, of such assets or obligations.
Although tax might be owed, the holder of a defeased OP Debt Security would not
receive any cash until the maturity or an earlier redemption of the OP Debt
Security (except for current payments of interest on the OP Debt Securities of
that issue). Such tax treatment could affect the purchase price that a holder
would receive upon the sale of the OP Debt Securities. Holders are urged to
consult their own tax advisors with respect to the tax treatment of defeasance
of any OP Debt Securities.
THE TRUSTEES
The trustee for any OP Debt Securities will be named in the applicable
Prospectus Supplement. Each trustee will be permitted to engage in other
transactions with the AIMCO Operating Partnership and each of their
subsidiaries; however, if a trustee acquires any conflicting interest, it must
eliminate such conflict or resign.
DESCRIPTION OF PREFERRED STOCK
GENERAL
Under its Articles of Incorporation, as amended and supplemented from time
to time (the "Charter"), AIMCO may issue, from time to time, shares of one or
more series or classes of Preferred Stock. The following description sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. The particular terms of any series of
Preferred Stock that may be issued and sold pursuant hereto, and the extent, if
any, to which such general provisions may apply to the series of Preferred Stock
so offered will be described in the Prospectus Supplement relating to such
Preferred Stock. The following summary of the material provisions of the
Preferred Stock does not purport to be complete and is subject to, and is
qualified in its entirety by express reference to, articles supplementary
relating to a specific series of the Preferred Stock, which will be in the form
filed as an exhibit to or incorporated by reference in the Registration
Statement of which this Prospectus is a part at or prior to the time of issuance
of such series of Preferred Stock.
As of October 1,November 15, 1998, the Charter authorizes the issuance of 510,750,000
shares of capital stock, of which 750,000 shares are classified as Class B
Preferred Stock, all of which are issued and outstanding,
16
20
2,760,000 shares are classified as Class C Preferred Stock, of which 2,400,000
shares are issued and outstanding, 4,600,000 shares are classified as Class D
Preferred Stock, of which 4,200,000 shares are issued and outstanding,
10,000,000 shares are classified as Class E Preferred Stock, of which up8,406,955
shares were issued to 8,945,921former Insignia stockholders and 0.5 million shares will be
issuedwere
reserved for options and warrants, in the aggregate, pursuant to the October 1,
1998 merger of Insignia Financial Group, Inc. ("Insignia") into AIMCO, 4,050,004,050,000
shares are classified as Class G Preferred Stock, all of which are issued and
outstanding, and 2,300,000 shares are classified as Class H Preferred Stock, of
which 2,000,000 shares are issued and outstanding.outstanding, and 2,000,000 shares are
classified as Class J Preferred Stock, of which 1,250,000 shares are issued and
outstanding (including 250,000 shares which are held by the AIMCO Operating
Partnership). See "Outstanding"Description of Other Classes of Outstanding Stock." The Board
of Directors of AIMCO (the "AIMCO Board") is authorized to issue shares of
Preferred Stock, in one or more classes or subclasses, and may classify and
reclassify any of its unissued capital stock into shares of Preferred Stock by
setting or changing in any one or more respects the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of such shares of capital
stock including, but not limited to, ownership restrictions consistent with the
Ownership Limit (defined below) with respect to each series or class of capital
stock, and the number of shares constituting each series or class, and to
increase or
16
20 decrease the number of shares of any such series or class, to the
extent permitted by the Maryland General Corporation Law (the "MGCL") and the
Charter.
The AIMCO Board shall be authorized to determine for each series of
Preferred Stock, and the Prospectus Supplement shall set forth with respect to
each series that may be issued and sold pursuant hereto: (i) the designation of
such shares and the number of shares that constitute such series, (ii) the
dividend rate (or the method of calculation thereof), if any, on the shares of
such series and the priority as to payment of dividends with respect to other
classes or series of capital stock of AIMCO, (iii) the dividend periods (or the
method of calculation thereof), (iv) the voting rights of the shares, (v) the
liquidation preference and the priority as to payment of such liquidation
preference with respect to other classes or series of capital stock of AIMCO and
any other rights of the shares of such series upon any liquidation or winding-up
of AIMCO, (vi) whether or not and on what terms the shares of such series will
be subject to redemption or repurchase at the option of AIMCO, (vii) whether and
on what terms the shares of such series will be convertible into or exchangeable
for other debt or equity securities of AIMCO, (viii) whether the shares of such
series of Preferred Stock will be listed on a securities exchange, (ix) any
special United States federal income tax considerations applicable to such
series, and (x) the other rights and privileges and any qualifications,
limitations or restrictions of such rights or privileges of such series not
inconsistent with the Charter and the MGCL.
CONVERTIBILITY
No series of Preferred Stock that may be issued and sold pursuant hereto
will be convertible into, or exchangeable for, other securities or property,
except as set forth in the applicable Prospectus Supplement, which will set
forth the terms and conditions upon which such conversion or exchange may be
effected, including the initial conversion or exchange rate and any adjustments
thereto, the conversion or exchange period and any other conversion or exchange
provisions.
DIVIDENDS
Holders of shares of Preferred Stock, shall be entitled to receive, when
and as declared by the AIMCO Board, out of funds of AIMCO legally available
therefor, an annual cash dividend payable at such dates and at such rates, if
any, per share per annum as set forth in the applicable Prospectus Supplement.
Unless otherwise set forth in the applicable Prospectus Supplement, each
series of Preferred Stock that may be issued and sold pursuant hereto, will rank
junior as to dividends to any Preferred Stock that may be issued in the future
that is expressly senior as to dividends to the Preferred Stock. If at any time
AIMCO has failed to pay accrued dividends on any such senior shares at the time
such dividends are payable, AIMCO may not pay any dividend on the Preferred
Stock or redeem or otherwise repurchase shares of Preferred Stock until such
accumulated but unpaid dividends on such senior shares have been paid or set
aside for payment in full by AIMCO.
17
21
Unless otherwise set forth herein or in the applicable Prospectus
Supplement relating to any class or series of Preferred Stock that may be issued
and sold pursuant hereto, no dividends (other than dividends payable in Class A
Common Stock or Class B Common Stock (collectively, the "Common Stock") or other
capital stock ranking junior to the Preferred Stock of any series as to
dividends and upon liquidation) shall be declared or paid or set aside for
payment, nor shall any other distribution be declared or made upon the Common
Stock, or any other capital stock of AIMCO ranking junior to or on a parity with
the Preferred Stock of such series as to dividends, nor shall any Common Stock
or any other capital stock of AIMCO ranking junior to or on a parity with the
Preferred Stock of such series as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by AIMCO (except by conversion into or exchange for other capital
stock of AIMCO ranking junior to the Preferred Stock of such series as to
dividends and upon liquidation) unless (i) if such series of Preferred Stock has
a cumulative dividend, full cumulative dividends on the Preferred Stock of such
series have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for all past dividend periods
and the then current dividend period and (ii) if such series of Preferred Stock
does not have a cumulative dividend, full dividends on the Preferred Stock of
such series have been or contemporaneously are declared and paid or declared and
a sum sufficient for the payment thereof set apart for payment for the then
current dividend period; provided, however, that any monies theretofore
deposited in any sinking fund with respect to any Preferred Stock in compliance
with the provisions of such sinking fund may thereafter be applied to the
purchase or redemption of such Preferred Stock in accordance with the terms of
such sinking fund, regardless of whether at the time of such application full
cumulative dividends upon shares of the Preferred Stock outstanding on the last
dividend payment date shall have been paid or declared and set apart for
payment; and 17
21
provided, further, that any such junior or parity preferred stock
or Common Stock may be converted into or exchanged for stock of AIMCO ranking
junior to the Preferred Stock as to dividends.
The amount of dividends payable for the initial dividend period or any
period shorter than a full dividend period shall be computed on the basis of a
360-day year of twelve 30-day months. Accrued but unpaid dividends will not bear
interest.
CONVERTIBILITY
No series of Preferred Stock that may be issued and sold pursuant hereto
will be convertible into, or exchangeable for, other securities or property,
except as set forth in the applicable Prospectus Supplement, which will set
forth the terms and conditions upon which such conversion or exchange may be
effected, including the initial conversion or exchange rate and any adjustments
thereto, the conversion or exchange period and any other conversion or exchange
provisions.
REDEMPTION AND SINKING FUND
No series of Preferred Stock that may be issued and sold pursuant hereto
will be redeemable or be entitled to receive the benefit of a sinking fund,
except as set forth in the applicable Prospectus Supplement, which will set
forth the terms and conditions thereof, including the dates and redemption
prices of any such redemption, any conditions thereto, and any other redemption
or sinking fund provisions.
LIQUIDATION RIGHTS
Unless otherwise set forth herein or in the applicable Prospectus
Supplement, in the event of any liquidation, dissolution or winding up of AIMCO,
the holders of shares of each series of Preferred Stock that may be issued and
sold pursuant hereto are entitled to receive out of assets of AIMCO available
for distribution to stockholders, before any distribution of assets is made to
holders of: (i) any other shares of Preferred Stock ranking junior to such
series of Preferred Stock as to rights upon liquidation, dissolution or winding
up; and (ii) shares of Common Stock, liquidating distributions per share in the
amount of the liquidation preference specified in the applicable Prospectus
Supplement for such series of Preferred Stock plus any dividends accrued and
accumulated but unpaid to the date of final distribution; but the holders of
each series of Preferred Stock will not be entitled to receive the liquidating
distribution of, plus such dividends on, such shares until the liquidation
preference of any shares of AIMCO's capital stock ranking senior to such series
of the Preferred Stock as to the rights upon liquidation, dissolution or winding
up shall have been paid (or a sum set aside therefor sufficient to provide for
payment) in full. If upon any liquidation, dissolution or winding up of AIMCO,
the amounts payable with respect to the Preferred Stock, and any other Preferred
Stock ranking as to any such distribution on a parity with the Preferred Stock
are not paid in full, the holders of the Preferred Stock and such other parity
preferred stock will share ratably in any such distribution of assets in
proportion to the full respective preferential amount to which they are
entitled. Unless otherwise specified in
18
22
a Prospectus Supplement for a series of Preferred Stock, after payment of the
full amount of the liquidating distribution to which they are entitled, the
holders of shares of Preferred Stock will not be entitled to any further
participation in any distribution of assets by AIMCO. Neither a consolidation or
merger of AIMCO with another corporation nor a sale of securities shall be
considered a liquidation, dissolution or winding up of AIMCO.
VOTING RIGHTS
Holders of Preferred Stock that may be issued and sold pursuant hereto will
not have any voting rights except as set forth below or in the applicable
Prospectus Supplement or as otherwise from time to time required by law.
Whenever dividends on any applicable series of Preferred Stock or any other
class or series of stock ranking on a parity with the applicable series of
Preferred Stock with respect to the payment of dividends shall be in arrears for
the equivalent of six quarterly dividend periods, whether or not consecutive,
the holders of shares of such series of Preferred Stock (voting separately as a
class with all other series of Preferred Stock then entitled to such voting
rights) will be entitled to vote for the election of two of the authorized
number of
18
22 directors of AIMCO at the next annual meeting of stockholders and at
each subsequent meeting until all dividends accumulated on such series of
Preferred Stock shall have been fully paid or set apart for payment. The term of
office of all directors elected by the holders of such Preferred Stock shall
terminate immediately upon the termination of the right of the holders of such
Preferred Stock to vote for directors. Unless otherwise set forth in the
applicable Prospectus Supplement, holders of shares of Preferred Stock that may
be issued and sold pursuant hereto will have one vote for each share held.
So long as any shares of any series of Preferred Stock remain outstanding,
AIMCO shall not, without the consent of holders of at least two-thirds of the
shares of such series of Preferred Stock outstanding at the time, voting
separately as a class with all other series of Preferred Stock of AIMCO upon
which like voting rights have been conferred and are exercisable, (i) issue or
increase the authorized amount of any class or series of stock ranking prior to
the outstanding Preferred Stock as to dividends or upon liquidation or (ii)
amend, alter or repeal the provisions of the Charter relating to such series of
Preferred Stock, whether by merger, consolidation or otherwise, so as to
materially adversely affect any power, preference or special right of such
series of Preferred Stock or the holders thereof; provided, however, that any
increase in the amount of the authorized Common Stock or authorized Preferred
Stock or any increase or decrease in the number of shares of any series of
Preferred Stock or the creation and issuance of other series of Common Stock or
Preferred Stock ranking on a parity with or junior to Preferred Stock as to
dividends and upon liquidation, dissolution or winding up shall not be deemed to
materially adversely affect such powers, preferences or special rights.
MISCELLANEOUS
The holders of Preferred Stock will have no preemptive rights. The
Preferred Stock that may be issued and sold pursuant hereto, upon issuance
against full payment of the purchase price therefor, will be fully paid and
nonassessable. Shares of Preferred Stock redeemed or otherwise reacquired by
AIMCO shall resume the status of authorized and unissued shares of Preferred
Stock undesignated as to series, and shall be available for subsequent issuance.
There are no restrictions on repurchase or redemption of the Preferred Stock
while there is any arrearage on sinking fund installments except as may be set
forth in an applicable Prospectus Supplement. Payment of dividends on, and the
redemption or repurchase of, any series of Preferred Stock may be restricted by
loan agreements, indentures and other agreements entered into by AIMCO. The
accompanying Prospectus Supplement will describe any material contractual
restrictions on such dividend payments.
NO OTHER RIGHTS
The shares of a series of Preferred Stock that may be issued and sold
pursuant hereto will not have any preferences, voting powers or relative,
participating, optional or other special rights except as set forth above or in
the applicable Prospectus Supplement or the Charter or as otherwise required by
law.
19
23
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for each series of Preferred Stock that
may be issued and sold pursuant hereto will be designated in the applicable
Prospectus Supplement.
DESCRIPTION OF CLASS A COMMON STOCK
GENERAL
As of October 1,November 15, 1998, the Charter authorizes the issuance of up to
510,750,000 shares of capital stock with a par value of $.01 per share, of which
486,027,500484,027,500 shares were classified as Class A Common Stock and 262,500 shares
were classified as Class B Common Stock. As of September 30,November 15, 1998, there were
47,987,09248,130,525 shares of Class A Common Stock issued and outstanding and 162,500
share of Class B Common Stock issued and outstanding. The Class A Common Stock
is traded on the NYSE under the symbol "AIV." BankBoston, N.A. serves as
transfer agent and registrar of the Class A Common Stock.
19
23
Holders of the Class A Common Stock are entitled to receive dividends, when
and as declared by the AIMCO Board, out of funds legally available therefor. The
holders of shares of Class A Common Stock, upon any liquidation, dissolution or
winding up of AIMCO, are entitled to receive ratably any assets remaining after
payment in full of all liabilities of AIMCO and the liquidation preferences of
preferred stock. The shares of Class A Common Stock (which vote with the Class B
Common Stock) possess ordinary voting rights for the election of directors of
AIMCO (the "Directors" and, collectively, the "AIMCO Board") and in respect of
other corporate matters, each share entitling the holder thereof to one vote.
Holders of shares of Class A Common Stock do not have cumulative voting rights
in the election of Directors, which means that holders of more than 50% of the
shares of Class A Common Stock voting for the election of Directors can elect
all of the Directors if they choose to do so and the holders of the remaining
shares cannot elect any Directors. Holders of shares of Class A Common Stock do
not have preemptive rights, which means they have no right to acquire any
additional shares of Class A Common Stock that may be issued by AIMCO at a
subsequent date.
RESTRICTIONS ON TRANSFER
For AIMCO to qualify as a REIT under the Internal Revenue Code of 1986, as
amended (the "Code"), not more than 50% in value of its outstanding capital
stock may be owned, directly or indirectly, by five or fewer individuals (as
defined in the Code to include certain entities) during the last half of a
taxable year and the shares of capital stock must be beneficially owned by 100
or more persons during at least 335 days of a taxable year of 12 months or
during a proportionate part of a shorter taxable year. Because the AIMCO Board
believes that it is essential for AIMCO to continue to qualify as a REIT and to
provide additional protection for AIMCO's stockholders in the event of certain
transactions, the AIMCO Board has adopted provisions of the Charter restricting
the acquisition of shares of Common Stock.
Subject to certain exceptions specified in the Charter, no holder may own,
or be deemed to own by virtue of various attribution and constructive ownership
provisions of the Code and Rule 13d-3 under the Exchange Act, more than 8.7% (or
15% in the case of certain pension trusts described in the Code, investment
companies registered under the Investment Company Act of 1940 and Mr. Considine)
of the outstanding shares of Common Stock. For purposes of calculating the
amount of stock owned by a given individual, the individual's Common Stock and
Partnership Common Units ("OP Units") of the AIMCO Operating Partnership are
aggregated. Under certain conditions, the AIMCO Board may waive the Ownership
Limit. However, in no event may such holder's direct or indirect ownership of
Common Stock exceed 9.8% of the total outstanding shares of Common Stock. As a
condition of such waiver, the AIMCO Board may require opinions of counsel
satisfactory to it and/or an undertaking from the applicant with respect to
preserving the REIT status of AIMCO. If shares of Common Stock in excess of the
Ownership Limit, or shares of Common Stock which would cause the REIT to be
beneficially owned by fewer than 100 persons, or which would result in AIMCO
being "closely held," within the meaning of Section 856(h) of the Code, or which
would otherwise result in AIMCO failing to qualify as a REIT, are issued or
transferred to any person, such issuance or transfer shall be null and void to
the intended transferee, and the intended transferee would acquire no rights to
the
20
24
stock. Shares of Common Stock transferred in excess of the Ownership Limit or
other applicable limitations will automatically be transferred to a trust for
the exclusive benefit of one or more qualifying charitable organizations to be
designated by AIMCO. Shares transferred to such trust will remain outstanding,
and the trustee of the trust will have all voting and dividend rights pertaining
to such shares. The trustee of such trust may transfer such shares to a person
whose ownership of such shares does not violate the Ownership Limit or other
applicable limitation. Upon a sale of such shares by the trustee, the interest
of the charitable beneficiary will terminate, and the sales proceeds would be
paid, first, to the original intended transferee, to the extent of the lesser of
(a) such transferee's original purchase price (or the market value of such
shares on the date of the violative transfer if purportedly acquired by gift or
devise) and (b) the price received by the trustee, and, second, any remainder to
the charitable beneficiary. In addition, shares of stock held in such trust are
purchasable by AIMCO for a 90-day period at a price equal to the lesser of the
price paid for the stock by the original intended transferee (or the original
market value of such shares if purportedly acquired by gift or devise) and the
market price for the stock on the date that AIMCO determines to purchase the
stock. The 90-day period commences on the date of the violative transfer or the
date that the AIMCO Board determines
20
24 in good faith that a violative transfer has
occurred, whichever is later. All certificates representing shares of Common
Stock bear a legend referring to the restrictions described above.
All persons who own, directly or by virtue of the attribution provisions of
the Code and Rule 13d-3 under the Exchange Act, more than a specified percentage
of the outstanding shares of Common Stock must file a written statement or an
affidavit with AIMCO containing the information specified in the Charter within
30 days after January 1 of each year. In addition, each stockholder shall upon
demand be required to disclose to AIMCO in writing such information with respect
to the direct, indirect and constructive ownership of shares as the AIMCO Board
deems necessary to comply with the provisions of the Code applicable to a REIT
or to comply with the requirements of any taxing authority or governmental
agency.
The ownership limitations may have the effect of precluding acquisition of
control of AIMCO by a third party unless the AIMCO Board determines that
maintenance of REIT status is no longer in the best interests of AIMCO.
BUSINESS COMBINATIONS
Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland
corporation and any person who beneficially owns 10% or more of the voting power
of the corporation's shares or an affiliate or associate of the corporation who,
at any time within the two-year period prior to the date in question, was the
beneficial owner of 10% or more of the voting power of the then-outstanding
voting stock of the corporation (an "Interested Stockholder") or an affiliate or
associate thereof are prohibited for five years after the most recent date on
which the Interested Stockholder became an Interested Stockholder. Thereafter,
any such business combination must be recommended by the board of directors of
the corporation and approved by the affirmative vote of at least (a) 80% of the
votes entitled to be cast by holders of outstanding voting shares of the
corporation, voting together as a single voting group, and (b) two-thirds of the
votes entitled to be cast by holders of outstanding voting shares of the
corporation other than shares held by the Interested Stockholder or an affiliate
or associate of the Interested Stockholder with whom the business combination is
to be effected, unless, among other conditions, the corporation's stockholders
receive a minimum price (as defined in the MGCL) for their shares and the
consideration is received in cash or in the same form as previously paid by the
Interested Stockholder for its shares. For purposes of determining whether a
person is an Interested Stockholder of AIMCO, ownership of OP Units will be
treated as beneficial ownership of the shares of Common Stock which may be
issued in exchange for the OP Units when such OP Units are tendered for
redemption. The business combination statute could have the effect of
discouraging offers to acquire AIMCO and of increasing the difficulty of
consummating any such offer. These provisions of the MGCL do not apply, however,
to business combinations that are approved or exempted by the board of directors
of the corporation prior to the time that the Interested Stockholder becomes an
Interested Stockholder. The AIMCO Board has not passed such a resolution.
21
25
CONTROL SHARE ACQUISITIONS
The MGCL provides that "control shares" of a Maryland corporation acquired
in a "control share acquisition" have no voting rights except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares of stock owned by the acquiror or by officers or directors who
are employees of the corporation. "Control shares" are voting shares of stock
that, if aggregated with all other shares of stock previously acquired by that
person, would entitle the acquiror to exercise voting power in electing
directors within one of the following ranges of voting power: (i) one-fifth or
more but less than one-third, (ii) one-third or more but less than a majority or
(iii) a majority of all voting power. Control shares do not include shares the
acquiring person is then entitled to vote as a result of having previously
obtained stockholder approval. For purposes of determining whether a Person is
an Interested Stockholder of AIMCO, ownership of OP Units will be treated as
beneficial ownership of the shares of Common Stock which may be issued in
exchange for the OP Units when such OP Units are tendered for redemption.
21
25
A "control share acquisition" means the acquisition of control shares,
subject to certain exceptions. A person who has made or proposes to make a
control share acquisition, upon satisfaction of certain conditions (including an
undertaking to pay expenses), may compel the corporation's board of directors to
call a special meeting of stockholders, to be held within 50 days of demand, to
consider the voting rights of the shares. If no request for a meeting is made,
the corporation may itself present the question at any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an "acquiring person statement" as required by the statute,
then, subject to certain conditions and limitations, the corporation may redeem
any or all of the control shares (except those for which voting rights have
previously been approved) for fair value determined, without regard to the
absence of voting rights, as of the date of the last control share acquisition
or of any meeting of stockholders at which the voting rights of such shares were
considered and not approved. If voting rights for control shares are approved at
a stockholders meeting and the acquiror becomes entitled to vote a majority of
the shares entitled to vote, all other stockholders may exercise appraisal
rights. The fair value of the shares as determined for purposes of the appraisal
rights may not be less than the highest price per share paid in the control
share acquisition, and certain limitations and restrictions otherwise applicable
to the exercise of dissenters' rights do not apply in the context of a control
share acquisition.
The control share acquisition statute does not apply to shares acquired in
a merger, consolidation or share exchange if the corporation is a party to the
transaction, or to acquisitions approved or exempted by the corporation's
articles of incorporation or bylaws prior to the control share acquisition. No
such exemption appears in the Charter or in AIMCO's bylaws (the "Bylaws"). The
control share acquisition statute could have the effect of discouraging offers
to acquire AIMCO and of increasing the difficulty of consummating any such
offer.
22
26
DESCRIPTION OF OTHER CLASSES OF OUTSTANDING STOCK
CLASS B PREFERRED STOCK
On August 4, 1997, AIMCO issued 750,000 shares of its Class B Preferred
Stock to an institutional investor (the "Preferred Share Investor") for $75.0
million. The Class B Preferred Stock has an aggregate liquidation value of $75
million and, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of AIMCO, ranks (a) prior or senior to the Class A
Common Stock, the Class B Common Stock, the Class E Preferred Stock, and any
other class or series of capital stock of AIMCO if the holders of the Class B
Preferred Stock shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding-up in preference or
priority to the holders of shares of such class or series ("Class B Junior
Stock"), (b) on a parity with the Class C Preferred Stock, the Class D Preferred
Stock, the Class G Preferred Stock and the Class H Preferred Stock and with any
other class or series of capital stock of AIMCO if the holders of such class or
series of stock and the Class B Preferred Stock shall be entitled to the receipt
of dividends or 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 ("Class B Parity Stock") and (c) junior to any class or
series of capital stock of AIMCO if the holders of such class or series shall be
entitled to the receipt of dividends or amounts distributable upon liquidation,
dissolution or winding-up in preference or priority to the holders of the Class
B Preferred Stock ("Class B Senior Stock"). Holders of the Class B Preferred
Stock are entitled to receive, when, as and if declared by the AIMCO Board,
quarterly cash dividends per share equal to the greater of (i) $1.78125 (the
"Base Rate") and (ii) the cash dividends declared on the number of shares of
Class A Common Stock into which one share of Class B Preferred Stock is
convertible. On or after August 4, 1998, each share of Class B Preferred Stock
may be converted at the option of the holder into 3.28407 shares of Class A
Common Stock, subject to certain anti-dilution adjustments. AIMCO may redeem any
or all of the Class B Preferred Stock on or after August 4, 2002 at a redemption
price of $100 per share, plus unpaid dividends accrued on the shares redeemed.
Holders of Class B Preferred Stock, voting as a class with the holders of
all Class B Parity Stock, will be entitled to elect (i) two directors of AIMCO
if six quarterly dividends (whether or not consecutive) on the Class B Preferred
Stock or any Class B Parity Stock are in arrears, and (ii) one director of AIMCO
if for two consecutive quarterly dividend periods AIMCO fails to pay at least
$0.4625 in dividends on the Class A Common Stock and, in any such case, the
number of directors constituting the AIMCO Board shall be increased by one or
two, as the case may be (if not already increased by reason of similar types of
provisions with respect to shares of Class B Parity Stock). The affirmative vote
of the holders of two-thirds of the outstanding shares of Class B Preferred
Stock will be required to amend the Charter in any manner that would adversely
affect the rights of the holders of Class B Preferred Stock, and to approve the
issuance of any capital stock that ranks senior to the Class B Preferred Stock
with respect to payment of dividends or upon liquidation, dissolution, winding
up or otherwise. If the IRS were to make a final determination that AIMCO does
not qualify as a REIT in accordance with Sections 856 through 860 of the Code,
the Base Rate for the quarterly cash dividends on the Class B Preferred Stock
would increase to $3.03125 per share.
The agreement pursuant to which AIMCO issued the Class B Preferred Stock
(the "Preferred Share Purchase Agreement") provides that the Preferred Share
Investor may require AIMCO to repurchase such investor's Class B Preferred Stock
in whole or in part at a price of 105% of the liquidation preference thereof,
plus accrued and unpaid dividends on the purchased shares, if (i) AIMCO shall
fail to continue to be taxed as a REIT pursuant to Sections 856 through 860 of
the Code, or (ii) upon the occurrence of a change of control (as defined in the
Preferred Share Purchase Agreement). The Preferred Share Purchase Agreement also
provides that, so long as the Preferred Share Investor owns Class B Preferred
Stock with an aggregate liquidation preference of at least $18.75 million,
neither AIMCO, the AIMCO Operating Partnership nor any subsidiary of AIMCO may
issue preferred securities or incur indebtedness for borrowed money if
immediately following such issuance and after giving effect thereto and the
application of the net proceeds therefrom, AIMCO's ratio of aggregate
consolidated earnings before interest, taxes, depreciation and amortization to
23
27
aggregate consolidated fixed charges for the four fiscal quarters immediately
preceding such issuance would be less than 1.5 to 1.
Subject to certain exceptions specified in the provisions of the Charter
establishing the terms of the Class B Preferred Stock, no holder may own, or be
deemed to own by virtue of various attribution and constructive ownership
provisions of the Code and Rule 13d-3 under the Exchange Act, shares of Class B
Preferred Stock with a value in excess of the excess of (i) 8.7% (or 15% in the
case of certain pension trusts described in the Code, investment companies
registered under the Investment Company Act of 1940 and Mr. Considine) of the
aggregate value of all shares of capital stock of AIMCO over (ii) the aggregate
value of all shares of capital stock of AIMCO other than Class B Preferred Stock
that are owned by such holder (the "Class B Preferred Ownership Limit"). Under
certain conditions, the AIMCO Board may waive such ownership limit. As a
condition of such waiver, the AIMCO Board may require opinions of counsel
satisfactory to it and/or an undertaking from the applicant with respect to
preserving the REIT status of AIMCO. If shares of Class B Preferred Stock in
excess of the Class B Preferred Ownership Limit, or shares of Class B Preferred
Stock which would result in AIMCO being "closely held," within the meaning of
Section 856(h) of the Code, or which would otherwise result in AIMCO failing to
qualify as a REIT, are issued or transferred to any person, such issuance or
transfer will be null and void to the intended transferee, and the intended
transferee would acquire no rights to the stock. Shares of Class B Preferred
Stock transferred in excess of the Class B Preferred Ownership Limit or other
applicable limitations will automatically be transferred to a trust for the
exclusive benefit of one or more qualifying charitable organizations to be
designated by AIMCO. Shares transferred to such trust will remain outstanding,
and the trustee of the trust will have all voting and dividend rights pertaining
to such shares. The trustee of such trust may transfer such shares to a person
whose ownership of such shares does not violate the Class B Preferred Ownership
Limit or other applicable limitation. Upon a sale of such shares by the trustee,
the interest of the charitable beneficiary will terminate, and the sales
proceeds would be paid, first, to the original intended transferee, to the
extent of the lesser of (a) such transferee's original purchase price (or the
market value of such shares on the date of the violative transfer if purportedly
acquired by gift or devise) and (b) the price received by the trustee, and,
second, any remainder to the charitable beneficiary. In addition, shares of
stock held in such trust are purchasable by AIMCO for a 90-day period at a price
equal to the lesser of the price paid for the stock by the original intended
transferee (or the original market value of such shares if purportedly acquired
by gift or devise) and the market price for the stock on the date that AIMCO
determines to purchase the stock. The 90-day period commences on the date of the
violative transfer or the date that the AIMCO Board determines in good faith
that a violative transfer has occurred, whichever is later. All certificates
representing shares of Class B Preferred Stock bear a legend referring to the
restrictions described above.
CLASS C PREFERRED STOCK
On December 23, 1997, AIMCO issued 2,400,000 shares of Class C Preferred
Stock in an underwritten public offering for net proceeds of approximately $57.9
million. The Class C Preferred Stock, with respect to dividend rights and rights
upon liquidation, dissolution or winding up of AIMCO, ranks (a) prior or senior
to the Class A Common Stock, the Class B Common Stock, the Class E Preferred
Stock and any other class or series of capital stock of AIMCO if the holders of
the Class C Preferred Stock shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding-up in preference
or priority to the holders of shares of such class or series ("Class C Junior
Stock"), (b) on a parity with the Class B Preferred Stock, the Class D Preferred
Stock, the Class G Preferred Stock and the Class H Preferred Stock and with any
other class or series of capital stock of AIMCO if the holders of such class or
series of stock 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
of one over the other ("Class C Parity Stock") and (c) junior to any class or
series of capital stock of AIMCO if the holders of such class or series shall be
entitled to the receipt of dividends or amounts distributable upon liquidation,
dissolution or winding up in preference or priority to the holders of the Class
C Preferred Stock ("Class C Senior Stock").
24
28
Holders of Class C Preferred Stock are entitled to receive cash dividends
at the rate of 9% per annum of the $25 liquidation preference (equivalent to
$2.25 per annum per share). Such dividends are cumulative from the date of
original issue, and are payable quarterly on or before January 15, April 15,
July 15 and October 15 of each year. Upon any liquidation, dissolution or
winding up of AIMCO, before payment or distribution by AIMCO shall be made to or
set apart for the holders of any shares of Class C Junior Stock, the holders of
Class C Preferred Stock shall be entitled to receive a liquidation preference of
$25 per share (the "Class C Liquidation Preference"), plus an amount equal to
all accumulated, accrued and unpaid dividends to the date of final distribution
to such holders; but such holders shall not be entitled to any further payment.
If proceeds available for distribution shall be insufficient to pay the
preference described above and any liquidating payments on any other shares of
any class or series of Class C Parity Stock, then such proceeds shall be
distributed among the holders of Class C Preferred Stock and any such other
Class C 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 Class C
Parity Stock if all amounts payable thereon were paid in full.
On and after December 23, 2002, AIMCO may redeem shares of Class C
Preferred Stock, in whole or in part, at a cash redemption price equal to 100%
of the Class C Liquidation Preference plus all accrued and unpaid dividends to
the date fixed for redemption. The Class C Preferred Stock has no stated
maturity and will not be subject to any sinking find or mandatory redemption
provisions.
Holders of shares of Class C Preferred Stock have no voting rights, except
that if distributions on Class C Preferred Stock or any series or class of Class
C Parity Stock shall be in arrears for six or more quarterly periods, the number
of directors constituting the AIMCO Board shall be increased by two and the
holders of Class C Preferred Stock (voting together as a single class with all
other shares of Class C Parity Stock which are entitled to similar voting
rights) will be entitled to vote for the election of the two additional
directors of AIMCO at any annual meeting of stockholders or at a special meeting
of the holders of the Class C Preferred Stock called for such purpose. The
affirmative vote of the holders of two thirds of the outstanding shares of Class
C Preferred Stock will be required to amend the Charter in any manner that would
adversely affect the rights of the holders of Class C Preferred Stock, and to
approve the issuance of any capital Stock that ranks senior to the Class C
Preferred Stock with respect to payment of dividends or upon liquidation,
dissolution, winding up or otherwise.
There are ownership restrictions applicable to the Class C Preferred Stock
that are similar to those for the Class B Preferred Stock.
CLASS D PREFERRED STOCK
On February 19, 1998, AIMCO issued 4,200,000 shares of Class D Preferred
Stock in an underwritten public offering for net proceeds of approximately
$101.5 million. The Class D Preferred Stock, with respect to dividend rights and
rights upon liquidation, dissolution or winding up of AIMCO, ranks (a) prior or
senior to the Class A Common Stock, the Class B Common Stock, the Class E
Preferred Stock and any other class or series of capital stock of AIMCO if the
holders of the Class D Preferred Stock shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding-up in preference or priority to the holders of shares of such class or
series ("Class D Junior Stock"), (b) on a parity with the Class B Preferred
Stock, the Class C Preferred Stock, the Class G Preferred Stock and the Class H
Preferred Stock and with any other class or series of capital stock of AIMCO if
the holders of such class or series of stock 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 of one over the other ("Class D Parity Stock") and (c)
junior to any class or series of capital stock of AIMCO if the holders of such
class or series shall be entitled to the receipt of dividends or amounts
distributable upon liquidation, dissolution or winding up in preference or
priority to the holders of the Class D Preferred Stock ("Class D Senior Stock").
Holders of Class D Preferred Stock are entitled to receive cash dividends
at the rate of 8 3/4% per annum of the $25 liquidation preference (equivalent to
$2.1875 per annum per share). Such dividends are cumulative from the date of
original issue, and are payable quarterly on or before January 15, April 15,
July 15 and
25
29
October 15 of each year. Upon any liquidation, dissolution or winding up of
AIMCO, before payment or distribution by AIMCO shall be made to or set apart for
the holders of any shares of Class D Junior Stock, the holders of Class D
Preferred Stock shall be entitled to receive a liquidation preference of $25 per
share (the "Class D Liquidation Preference"), plus an amount equal to all
accumulated, accrued and unpaid dividends to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment. If
proceeds available for distribution shall be insufficient to pay the preference
described above and any liquidating payments on any other shares of any class or
series of Class D Parity Stock, then such proceeds shall be distributed among
the holders of Class D Preferred Stock and any such other Class D 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 Class D Parity Stock if all
amounts payable thereon were paid in full.
On and after February 19, 2003, AIMCO may redeem shares of Class D
Preferred Stock, in whole or in part, at a cash redemption price equal to 100%
of the Class D Liquidation Preference plus all accrued and unpaid dividends to
the date fixed for redemption. The Class D Preferred Stock has no stated
maturity and will not be subject to any sinking fund or mandatory redemption
provisions.
Holders of shares of Class D Preferred Stock have no voting rights, except
that if distributions on Class D Preferred Stock or any series or class of Class
D Parity Stock shall be in arrears for six or more quarterly periods, the number
of directors constituting the AIMCO Board shall be increased by two and the
holders of Class D Preferred Stock (voting together as a single class with all
other shares of Class D Parity Stock which are entitled to similar voting
rights) will be entitled to vote for the election of the two additional
directors of AIMCO at any annual meeting of stockholders or at a special meeting
of the holders of the Class D Preferred Stock called for the purpose. The
affirmative vote of the holders of two-thirds of the outstanding shares of Class
D Preferred Stock will be required to amend the Charter in any manner that would
adversely affect the rights of the holders of Class D Preferred Stock, and to
approve the issuance of any capital stock that ranks senior to the Class D
Preferred Stock with respect to payment of dividends or upon liquidation,
dissolution, winding up or otherwise.
There are ownership restrictions applicable to the Class D Preferred Stock
that are similar to those for the Class B Preferred Stock.
CLASS E PREFERRED STOCK
On October 1, 1998, Insignia was merged into AIMCO. As merger
consideration, AIMCO will issuehas issued to former Insignia stockholders up to 8,945,9218,406,955 shares
of Class E Preferred Stock.Stock and reserved 0.5 million shares for options and
warrants, in the aggregate. The Class E Preferred Stock (a) after January 15,
1999 ranks prior to Class A Common Stock and Class B Common Stock, and any other
class or series of capital stock of AIMCO if holders of the Class E Preferred
Stock are to be entitled to the receipt of dividends or of amounts distributable
upon liquidation, dissolution, and winding-up in preference or priority to the
holders of shares of such class or series ("Class E Junior Stock"), (b) ranks on
a parity with any class or series of capital stock of AIMCO if the holders of
such class or series of stock and the Class E Preferred Stock shall be entitled
to the receipt of dividends and of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective amounts of accrued
and unpaid dividends per share or liquidation preferences, without preference or
priority one over the other ("Class E Parity Stock") and (c) ranks junior to 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 and any other
class or series of capital stock of AIMCO if the holders of such class or series
shall be entitled to the receipt of dividends or amounts distributable upon
liquidation, dissolution or winding up in preference or priority to the holders
of the Class E Preferred Stock ("Class E Senior Stock").
On any date (each, a "Dividend Payment Date") on which cash dividends are
paid on the Class A Common Stock prior to the Call Date (as defined below),
holders of Class E Preferred Stock shall be entitled to receive cash dividends
payable in an amount per share of Class E Preferred Stock equal to the per share
dividend payable on Class A Common Stock on such Dividend Payment Date. Such
dividends shall be cumulative from the date of original issue, and shall be
payable quarterly in arrears on the Dividend Payment Dates, commencing on the
first Dividend Payment Date after the date of original issue. Holders of Class E
26
30
Preferred Stock will be entitled to receive the same cash dividends per share as
holders of Class A Common Stock. In addition, holders of Class E Preferred Stock
on the record date for payment to be set by AIMCO's board of directors will be
entitled to receive a special dividend in an aggregate amount of $50 million
(the "Special Dividend"). Upon any liquidation, dissolution or winding up of
AIMCO, before payment or distribution by AIMCO shall be made to or set apart for
the holders of any shares of Class E Junior Stock, the holders of Class E
Preferred Stock shall be entitled to receive a liquidation preference of $1 per
share plus the Special Dividend if such dividend is unpaid on the date of the
final distribution to such holders (collectively, the "Class E Liquidation
Preference"), and thereafter each share of Class E Preferred Stock shall have
the same rights with respect to assets of AIMCO as one share of Class A Common
Stock.
On any date which the Special Dividend, or any portion thereof, is paid
(which may be declared by the AIMCO Board in its sole discretion), the holders
of Class E Preferred Stock shall be entitled to receive an amount per share of
Class E Preferred Stock equal to the Special Dividend divided by the Series E
Conversion Ratio (as defined in the Insignia Merger Agreement). After January
15, 1999, if any portion of the Special Dividend or any other dividend has yet
to be declared and paid to the holders of Class E Preferred Stock, no dividends
may be declared or paid or set apart for payment by AIMCO on its common stock.
On the close of business on the day on which the Special Dividend (or any
remaining unpaid portion thereof) is paid to the holders of the Class E
Preferred Stock, each share of Class E Preferred Stock will be automatically
converted into one share of Class A Common Stock without any action on the part
of AIMCO or the holder of such share (the "Conversion Date"). If AIMCO at any
time following the consummation of the Insignia merger pays a dividend or makes
a distribution, subdivides, combines, reclassifies, issues rights, options or
warrants or makes any other distribution in securities in relation to its
outstanding Class A Common Stock, then AIMCO will contemporaneously do the same
with respect to the Class E Preferred Stock.
On or after October 1, 2018, AIMCO may redeem shares of Class E Preferred
Stock, in whole or in part, at a cash redemption price equal to the sum of (i)
the greater of (A) the Current Market Price (as defined in the Insignia Merger
Agreement) of the Class A Common Stock on the date specified for redemption by
AIMCO in a notice sent to holders of Class E Preferred Stock (the "Call Date")
or (B) the AIMCO Index Price (as defined in the Insignia Merger Agreement), but
determined without giving effect to the limitation of $38.00 per share, plus
(ii) all accrued and unpaid dividends to the Call Date. The Class E Preferred
Stock has no stated maturity and will not be subject to any sinking fund or
mandatory redemption provisions.
Holders of shares of Class E Preferred Stock are entitled to one-half
( 1/2) of one vote with respect to all matters in which holders of Class A
Common Stock are entitled to vote thereon. In addition, if any portion of the
Special Dividend has yet to be declared and paid to the holders of Class E
Preferred Stock on January 15, 1999, or if distributions on Class E Preferred
Stock or any series or class of Preferred Stock of AIMCO shall be in arrears for
six or more quarterly periods, the number of directors constituting the AIMCO
Board of Directors shall be increased by two (without duplication of any
increase made pursuant to the terms of any other series of preferred stock of
AIMCO) and the holders of Class E Preferred Stock (voting together as a single
class with all other shares of Class E Parity Stock which are entitled to
similar voting rights) will be entitled to vote for the election of the
additional directors of AIMCO. Such right shall continue until full cumulative
dividends for all past dividend periods on all shares of Preferred Stock of
AIMCO, including any shares of Class E Preferred Stock, have been paid or
declared and set apart for payment.
CLASS G PREFERRED STOCK
On July 15, 1998, AIMCO issued 4,050,000 shares of its Class G Preferred
Stock in an underwritten public offering for net proceeds of approximately $98.0
million. The Class G Preferred Stock, with respect to dividend rights and rights
upon liquidation, dissolution or winding up of AIMCO, ranks (a) prior or senior
to the Class A Common Stock, the Class B Common Stock, the Class E Preferred
Stock and any other class or series of capital Stock of AIMCO if the holders of
the Class G Preferred Stock shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding-up in preference
or priority to the holders of shares of such class or series ("Class G Junior
Stock"), (b) on a parity with the Class B Preferred Stock, the Class C Preferred
Stock, the Class D Preferred Stock and the Class H Preferred Stock
27
31
and with any other class or series of capital stock of AIMCO if the holders of
such class or series of stock 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 of one over the other ("Class G Parity Stock") and (c) junior to any
class or series of capital stock of AIMCO if the holders of such class or series
shall be entitled to the receipt of dividends or amounts distributable upon
liquidation, dissolution or winding-up in preference or priority to the holders
of the Class G Preferred Stock ("Class G Senior Stock").
Holders of Class G Preferred Stock are entitled to receive cash dividends
at the rate of 9 3/8% per annum of the $25 liquidation preference (equivalent to
$2.34375 per annum per share). Such dividends are cumulative from the date of
original issue, and are payable quarterly on or before January 15, April 15,
July 15 and October 15 of each year, commencing October 15, 1998. Upon any
liquidation, dissolution or winding up of AIMCO, before payment or distribution
by AIMCO shall be made to or set apart for the holders of any shares of Class G
Junior Stock, the holders of Class G Preferred Stock shall be entitled to
receive a liquidation preference of $25 per share (the "Class G Liquidation
Preference"), plus an amount equal to all accumulated, accrued and unpaid
dividends to the date of final distribution to such holders; but such holders
shall not be entitled to any further payment. If proceeds available for
distribution shall be insufficient to pay the preference described above and any
liquidating payments on any other shares of any class or series of Class G
Parity Stock, then such proceeds shall be distributed among the holders of Class
G Preferred Stock and any such other Class G Parity Stock ratably in the same
proportion as the respective amount that would be payable on such Class G
Preferred Stock and any such other Class G Parity Stock if all amounts payable
thereon were paid in full.
On and after July 15, 2008, AIMCO may redeem shares of Class G Preferred
Stock, in whole or in part, at a cash redemption price equal to 100% of the
Class G Liquidation Preference plus all accrued and unpaid dividends to the date
fixed for redemption. The Class G Preferred Stock has no stated maturity and
will not be subject to any sinking fund or mandatory redemption provisions.
Holders of shares of Class G Preferred Stock have no voting rights, except
that if distributions on Class G Preferred Stock or any series or class of Class
G Parity Stock shall be in arrears for six or more quarterly periods, the number
of directors constituting the AIMCO Board shall be increased by two and the
holders of Class G Preferred Stock (voting together as a single class with all
other shares of Class G Parity Stock, which are entitled to similar voting
rights) will be entitled to vote for the election of the two additional
directors of AIMCO at any annual meeting of stockholders or at a special meeting
of the holders of the Class G Preferred Stock called for the purpose. The
affirmative vote of the holders of two-thirds of the outstanding shares of Class
G Preferred Stock will be required to amend the Charter in any manner that would
adversely affect the rights of the holders of Class G Preferred Stock, and to
approve the issuance of any capital Stock that ranks senior to the Class G
Preferred Stock with respect to payment of dividends or upon liquidation,
dissolution, winding up or otherwise.
There are ownership restrictions applicable to the Class G Preferred Stock
that are similar to those for the Class B Preferred Stock.
CLASS H PREFERRED STOCK
On August 14, 1998, AIMCO issued 2,000,000 shares of its Class H Preferred
Stock in an underwritten public offering for net proceeds of approximately $48.1
million. The Class H Preferred Stock, with respect to dividend rights and rights
upon liquidation, dissolution or winding up of AIMCO, ranks (a) prior or senior
to the Class A Common Stock, the Class B Common Stock, the Class E Preferred
Stock and any other class or series of capital Stock of AIMCO if the holders of
the Class H Preferred Stock shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding-up in preference
or priority to the holders of shares of such class or series ("Class H Junior
Stock"), (b) on a parity with the Class B Preferred Stock, the Class C Preferred
Stock, the Class D Preferred Stock and the Class G Preferred Stock and with any
other class or series of capital stock of AIMCO if the holders of such class or
series of stock and the Class H Preferred Stock shall be entitled to the receipt
of dividends and of amounts distributable upon
28
32
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 ("Class H Parity Stock") and (c)
junior to any class or series of capital stock of AIMCO if the holders of such
class or series shall be entitled to the receipt of dividends or amounts
distributable upon liquidation, dissolution or winding-up in preference or
priority to the holders of the Class H Preferred Stock ("Class H Senior Stock").
Holders of Class H Preferred Stock are entitled to receive cash dividends
at the rate of 9 1/2% per annum of the $25 liquidation preference (equivalent to
$2.375 per annum per share). Such dividends are cumulative from the date of
original issue, and are payable quarterly on or before January 15, April 15,
July 15 and October 15 of each year, commencing October 15, 1998. Upon any
liquidation, dissolution or winding up of AIMCO, before payment or distribution
by AIMCO shall be made to or set apart for the holders of any shares of Class H
Junior Stock, the holders of Class H Preferred Stock shall be entitled to
receive a liquidation preference of $25 per share (the "Class H Liquidation
Preference"), plus an amount equal to all accumulated, accrued and unpaid
dividends to the date of final distribution to such holders; but such holders
shall not be entitled to any further payment. If proceeds available for
distribution shall be insufficient to pay the preference described above and any
liquidating payments on any other shares of any class or series of Class H
Parity Stock, then such proceeds shall be distributed among the holders of Class
H Preferred Stock and any such other Class H Parity Stock ratably in the same
proportion as the respective amount that would be payable on such Class H
Preferred Stock and any such other Class H Parity Stock if all amounts payable
thereon were paid in full.
On and after August 14, 2003, AIMCO may redeem shares of Class H Preferred
Stock, in whole or in part, at a cash redemption price equal to 100% of the
Class H Liquidation Preference plus all accrued and unpaid dividends to the date
fixed for redemption. The Class H Preferred Stock has no stated maturity and
will not be subject to any sinking fund or mandatory redemption provisions.
Holders of shares of Class H Preferred Stock have no voting rights, except
that if distributions on Class H Preferred Stock or any series or class of Class
H Parity Stock shall be in arrears for six or more quarterly periods, the number
of directors constituting the AIMCO Board shall be increased by two and the
holders of Class H Preferred Stock (voting together as a single class with all
other shares of Class H Parity Stock, which are entitled to similar voting
rights) will be entitled to vote for the election of the two additional
directors of AIMCO at any annual meeting of stockholders or at a special meeting
of the holders of the Class H Preferred Stock called for the purpose. The
affirmative vote of the holders of two-thirds of the outstanding shares of Class
H Preferred Stock will be required to amend the Charter in any manner that would
adversely affect the rights of the holders of Class H Preferred Stock, and to
approve the issuance of any capital Stockstock that ranks senior to the Class H
Preferred Stock with respect to payment of dividends or upon liquidation,
dissolution, winding up or otherwise.
There are ownership restrictions applicable to the Class H Preferred Stock
that are similar to those for the Class B Preferred Stock.
CLASS J PREFERRED STOCK
On November 6, 1998, AIMCO issued 1,000,000 shares of its Class J Preferred
Stock in a private placement for net proceeds of approximately $100 million. In
addition, on the same date, AIMCO issued 250,000 shares of Class J Preferred
Stock to the AIMCO Operating Partnership in a private placement in exchange for
250,000 of the AIMCO Operating Partnership's Class J Partnership Preferred
Units. Any other class or series of capital stock of AIMCO ranks (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
("Class J 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 Preferred Stock,
Class C Preferred Stock, Class D
29
33
Preferred Stock, Class G Preferred Stock, or Class H Preferred Stock of AIMCO,
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 ("Class J 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 is Class A Common Stock or Class B
Common Stock of AIMCO, (ii) such capital stock is Class E Preferred Stock of
AIMCO or (iii) the holders of Class J 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 ("Class J Junior Stock").
Holders of Class J Preferred Stock are entitled to receive cash dividends
at the rate of 7% per annum of the $100 liquidation preference (equivalent to $7
per annum per share) for the period beginning on November 6, 1998 and lasting
until November 15, 1998, 8% per annum of the $100 liquidation preference
(equivalent to $8 per annum per share) for the period beginning on and including
November 15, 1998 and lasting until November 15, 1999, 9% per annum of the $100
liquidation preference (equivalent to $9 per annum per share) for the period
beginning on and including November 15, 1999 and lasting until November 15,
2000, and 9 1/2% per annum of the $100 liquidation preference (equivalent to
$9.50 per annum per share) thereafter. Such dividends are cumulative from
November 6, 1998 and are payable quarterly generally on the date dividends are
paid on the Class A Common Stock with respect to dividend periods ending on
February 15, May 15, August 15 and November 15 of each year. Upon any
liquidation, dissolution or winding up of AIMCO, before payment or distribution
by AIMCO shall be made to or set apart for the holders of any shares of Class J
Junior Stock, the holders of Class J Preferred Stock shall be entitled to
receive a liquidation preference of $100 per share (the "Class J Liquidation
Preference"), plus an amount equal to all accumulated, accrued and unpaid
dividends to the date of final distribution to such holders; but such holders
shall not be entitled to any further payment. If proceeds available for
distribution shall be insufficient to pay the preference described above and any
liquidating payments on any other shares of any class or series of Class J
Parity Stock, then such proceeds shall be distributed among the holders of Class
J Preferred Stock and any such other Class J Parity Stock ratably in the same
proportion as the respective amount that would be payable on such Class J
Preferred Stock and any such other Class J Parity Stock if all amounts payable
thereon were paid in full.
The Class J Preferred Stock is not redeemable, except in the event of a
violation of any of the ownership restrictions. AIMCO has the right to require
that all or part of the outstanding Class J Preferred Stock be converted into
Class A Common Stock at a conversion price (the "Conversion Price") of $40
(equivalent to a conversion rate of 2.5 shares of Class A Common Stock for each
share of Class J Preferred Stock) (a) at any time after November 6, 2002, if the
market price of the Class A Common Stock in the five most recent trading days is
equal to or greater than $40 or, (b) at any time on or prior to November 6,
2002, if the Internal Rate of Return (as defined in the Charter) exceeds 12.5%.
Holders of shares of Class J Preferred Stock also may at their option convert
any or all of such shares into the number of shares of Class A Common Stock
obtained by dividing the Class J Liquidation Preference (excluding any
accumulated accrued and unpaid dividends) per share of Class J Preferred Stock
by the Conversion Price. The Conversion Price is subject to adjustment from time
to time under certain circumstances.
Holders of shares of Class J Preferred Stock have no voting rights, except
that if distributions on Class J Preferred Stock or any series or class of Class
J Parity Stock shall be in arrears for six or more quarterly periods, the number
of directors constituting the AIMCO Board shall be increased by two and the
holders of Class J Preferred Stock (voting together as a single class with all
other shares of Class J Parity Stock, which are entitled to similar voting
rights) will be entitled to vote for the election of the two additional
directors of AIMCO at any annual meeting of stockholders or at a special meeting
of the holders of the Class J Preferred Stock called for the purpose. The
affirmative vote of the holders of two-thirds of the outstanding shares of Class
J Preferred Stock will be required to amend the Charter in any manner that would
adversely affect the rights of the holders of Class J Preferred Stock and to
approve the issuance of any capital stock that ranks
30
34
senior to the Class J Preferred Stock with respect to payment of dividends or
upon liquidation, dissolution, winding up or otherwise.
There are ownership restrictions applicable to the Class J Preferred Stock
that are similar to those for the Class B Preferred Stock.
CLASS B COMMON STOCK
In connection with the initial formation of AIMCO, Terry Considine, Peter
Kompaniez, Steven Ira and Robert P. Lacy (a former officer of AIMCO) acquired an
aggregate of 650,000 shares of Class B Common Stock. The Charter, which
initially authorized 750,000 shares of Class B Common Stock, was amended in June
1998 to authorize 262,500 shares of Class B Common Stock, of which 162,500
shares were issued and outstanding as of October 1, 1998. The Class B Common
Stock does not have voting or dividend rights and, unless converted into Class A
Common Stock, as described below, is subject to repurchase by AIMCO as described
below. As of December 31 of each of the years 1994 through 1998 (each, a
"Year-End Testing Date"), a number of the shares of Class B Common Stock
outstanding as of such date (the "Eligible Class B Shares") become eligible for
automatic conversion (subject to the Ownership Limit) into an equal number of
shares of Class A Common Stock (subject to adjustment upon the occurrence of
certain events in respect of the Class A Common Stock, including stock
dividends, subdivisions, combinations and reclassifications). Once Class B
Common Stock has been converted into Class A Common Stock, holders of such
shares of
29
33 converted Class A Common Stock will have voting and dividend rights of
Class A Common Stock generally. Once converted or forfeited, the Class B Common
Stock may not be reissued by AIMCO.
The Eligible Class B Shares convert to Class A Common Stock if (i) AIMCO's
Funds from Operations Per Share (as defined below) reaches certain annual and
cumulative growth targets and (ii) the average market price for a share of Class
A Common Stock for a 90 calendar day period beginning on any day on or after the
October 1 immediately preceding the relevant Year-End Testing Date equals or
exceeds a specified target price. "Funds from Operations Per Share" or "FFO Per
Share" means, for any period, (i) net income (loss), computed in accordance with
generally accepted accounting principles, excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures, less any
preferred stock dividend payments, divided by (ii) the sum of (a) the number of
shares of the Class A Common Stock outstanding on the last day of such period
(excluding any shares of the Class A Common Stock into which shares of the Class
B Common Stock shall have been converted as a result of the conversion of shares
of the Class B Common Stock on the last day of such period) and (b) the number
of shares of the Class A Common Stock issuable to acquire units of limited
partnership that (x) may be tendered for redemption in any limited partnership
in which AIMCO serves as general partner and (y) are outstanding on the last day
of such period.
Set forth below for each of the remaining Year-End Testing Dates is (i) the
number of shares of Class B Common Stock that become Eligible Class B Shares as
of such date, (ii) the annual FFO Per Share growth target (as a percentage
increase in FFO Per Share from the prior year), (iii) the cumulative FFO Per
Share growth target (in FFO Per Share) and (iv) the average market price target:
ANNUAL FFO PER CUMULATIVE FFO PER
ELIGIBLE CLASS B SHARE GROWTH SHARE GROWTH AVERAGE MARKET
YEAR-END TESTING DATE SHARES(1) TARGET TARGET PRICE TARGET
--------------------- ---------------- -------------- ------------------ --------------
December 31, 1998........ 162,500 8.5% $2.760 $26.373
- ---------------
(1) Assumes that only the shares of Class B Common Stock outstanding as of
December 31, 1997 remain outstanding until converted into shares of Class A
Common Stock.
Any Class B Common Stock that has not been converted into Class A Common
Stock following December 31, 1998 will be subject to repurchase by AIMCO at a
price of $0.10 per share. Class B Common Stock is also subject to automatic
conversion upon the occurrence of certain events, including a change of control
(as defined in the Charter). The AIMCO Board may increase the number of shares
which are eligible for conversion as of any Year-End Testing Date and may, under
certain circumstances, accelerate the
31
35
conversion of outstanding Class B Common Stock at such time and in such amount
as it may determine appropriate.
All of the 65,000 shares of Class B Common Stock eligible for conversion as
of the December 31, 1994 Year-End Testing Date, all of the 130,000 shares of
Class B Common Stock eligible for conversion as of the December 31, 1995
Year-End Testing Date, all of the 130,000 shares of Class B Common Stock
eligible for conversion as of December 31, 1996 and all of the 162,500 shares of
Class B Common Stock eligible for conversion as of December 31, 1997, have been
converted into shares of Class A Common Stock. As of October 1, 1998, the
outstanding Class B Common Stock was held as follows: 93,428 shares by Mr.
Considine, 41,438 shares by Mr. Kompaniez, 13,821 shares by Mr. Ira and 13,813
shares by Mr. Lacy.
30
34
DESCRIPTION OF WARRANTS
GENERAL
AIMCO may issue, together with other Securities registered herein or
separately, warrants for the purchase of Debt Securities, Preferred Stock or
Class A Common Stock (the "Warrants"). The Warrants may be issued under a
Warrant Agreement (each, a "Warrant Agreement") to be entered into between AIMCO
and a bank or trust company, as warrant agent (the "Warrant Agent"), as set
forth in the applicable Prospectus Supplement relating to any or all Warrants in
respect of which this Prospectus is being delivered. The Warrant Agent will act
solely as an agent of AIMCO in connection with the Warrants of a particular
series and will not assume any obligation or relationship of agency or trust for
or with any holders or beneficial owners of Warrants. The Warrant Agreement for
each Warrant, including the forms of certificates representing the Warrants
("Warrant Certificates"), will be filed as an exhibit to, or incorporated by
reference in, the Registration Statement of which this Prospectus forms a part
at or prior to the time of the issuance of such Warrants.
The following description sets forth certain general terms and provisions
of the Warrants to which any Prospectus Supplement may relate. The particular
terms of the Warrants to which any Prospectus Supplement may relate and the
extent, if any, to which such general provisions may apply to the Warrants so
offered will be described in the applicable Prospectus Supplement. Capitalized
terms used in this section which are not otherwise defined in this Prospectus
shall have the meanings set forth in the Warrant Agreement and Warrant
Certificate. The following summary of the material provisions of the Warrants,
Warrant Agreement and Warrant Certificate does not purport to be complete and is
subject to, and is qualified in its entirety by express reference to, all the
provisions of the Warrant Agreement and Warrant Certificate, including the
definitions therein of certain terms.
Reference is made to the applicable Prospectus Supplement for the terms of
Warrants in respect of which this Prospectus is being delivered, the Warrant
Agreement relating to such Warrants and the Warrant Certificates representing
such Warrants, including the following: (i) the designation, aggregate principal
amount and terms of the Debt Securities of AIMCO or the designation and terms of
the Preferred Stock, if any, purchasable upon exercise of such Warrants; (ii)
the procedures and conditions relating to the exercise of such Warrants; (iii)
the designation and terms of any related Securities with which such Warrants are
issued and the number of such Warrants issued with each such Security; (iv) the
date, if any, on and after which such Warrants and the related Securities will
be separately transferable; (v) the offering price of the Warrants, if any; (vi)
the principal amount of Debt Securities of AIMCO or the number of shares of
Preferred Stock or Common Stock purchasable upon exercise of each Warrant and
the price at which such principal amount of Debt Securities of AIMCO or shares
of Preferred Stock or Class A Common Stock may be purchased upon such exercise,
or the method of determining such number and price; (vii) the date on which the
right to exercise such Warrants shall commence and the date on which such right
shall expire; (viii) a discussion of United States Federal income tax
considerations applicable to the ownership or exercise of such Warrants; (ix)
whether the Warrants represented by the Warrant Certificates will be issued in
registered or bearer form,
32
36
and, if registered, where they may be transferred and registered; (x) call
provisions of such Warrants, if any; and (xi) any other terms of the Warrants.
Warrant Certificates will be exchangeable for new Warrant Certificates of
different denominations and Warrants may be exercised at the corporate trust
office of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement. Prior to the exercise of their Warrants, holders of
Warrants will not have any of the rights of holders of the Securities
purchasable upon such exercise and will not be entitled to payments of principal
of (or premium, if any) or interest, if any, on the Debt Securities of AIMCO
purchasable upon such exercise or to any dividend payments or voting rights that
holders of the Preferred Stock or Common Stock purchasable upon such exercise
may be entitled to.
Each Warrant will entitle the holder to purchase for cash such principal
amount of Debt Securities of AIMCO, or such number of shares of Preferred Stock
or Class A Common Stock, at such exercise price as shall, in each case, be set
forth in, or be determinable as set forth in, the applicable Prospectus
Supplement
31
35 relating to the Warrants offered thereby. Unless otherwise specified
in the applicable Prospectus Supplement, Warrants may be exercised at any time
up to 5:00 p.m. New York City time on the expiration date set forth in the
applicable Prospectus Supplement. After 5:00 p.m. New York City time on the
expiration date, unexercised Warrants will become void.
Warrants may be exercised as set forth in the applicable Prospectus
Supplement relating to the Warrants. Upon receipt of payment and the Warrant
Certificate properly completed and duly executed at the corporate trust office
of the Warrant Agent on any other office indicated in the applicable Prospectus
Supplement, AIMCO will, as soon as practicable, forward the Securities
purchasable upon such exercise. If less than all of the Warrants represented by
such Warrant Certificate are exercised, a new Warrant Certificate will be issued
for the remaining amount of Warrants.
PLAN OF DISTRIBUTION
AIMCO or the AIMCO Operating Partnership may sell the Securities to one or
more underwriters for public offering and sale by them or may sell the
Securities to investors directly or through agents or dealers. Any such
underwriter, agent or dealer involved in the offer and sale of the Securities
will be named in the applicable Prospectus Supplement.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, or from time to time at market prices prevailing at the
time of sale, at prices related to the prevailing market prices at the time of
sale or at negotiated prices. AIMCO or the AIMCO Operating Partnership also may,
from time to time, authorize underwriters acting as AIMCO's or the AIMCO
Operating Partnership's agents to offer and sell the Securities upon the terms
and conditions set forth in the applicable Prospectus Supplement. In connection
with the sale of Securities, underwriters may be deemed to have received
compensation from AIMCO or the AIMCO Operating Partnership in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of Securities for whom they may act as agent. Underwriters may sell
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions (which may be changed from
time to time) from the underwriters and/or commissions from the purchasers for
whom they may act as agent.
Any underwriting compensation paid by AIMCO or the AIMCO Operating
Partnership to underwriters or agents in connection with the offering of
Securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be set forth in the applicable
Prospectus Supplement. Underwriters, dealers and agents participating in the
distribution of the Securities may be deemed to be underwriters under the
Securities Act, and any discounts and commissions received by them and any
profit realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Underwriters,
dealers and agents may be entitled under agreements entered into with AIMCO or
the AIMCO Operating Partnership, to indemnification against and contribution
toward certain civil liabilities, including liabilities under the Securities
Act.
33
37
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, AIMCO or the AIMCO Operating Partnership will sell
such Securities to such dealer, as principal. The dealer may then resell such
Securities to the public at varying prices to be determined by such dealer at
the time of resale.
If so indicated in the applicable Prospectus Supplement, AIMCO or the AIMCO
Operating Partnership will authorize dealers acting as AIMCO's or the AIMCO
Operating Partnership's agents to solicit offers by certain institutions to
purchase Securities from AIMCO or the AIMCO Operating Partnership at the public
offering price set forth in such Prospectus Supplement pursuant to Delayed
Delivery Contracts ("Contracts") providing for payment and delivery on the date
or dates stated in such Prospectus Supplement. Each Contract will be for an
amount not less than, and the aggregate principal amount or number of Securities
sold pursuant to Contracts shall not be less nor more than, the respective
amounts or numbers stated in the applicable Prospectus Supplement. Institutions
with whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions, but will, in all cases, be
subject to the approval of AIMCO or the AIMCO 32
36
Operating Partnership. The terms andSuch
Contracts will not be subject to any conditions except (a) the purchase by an
institution of the Securities covered by its Contracts shall not at the time of
delivery be prohibited under the laws of any Contractsjurisdiction in the United States
to which such institution is subject and (b) if the Securities are being sold to
underwriters, AIMCO or the AIMCO Operating Partnership shall have sold to such
underwriters the total principal amount or number of the Securities less the
principal amount or number thereof covered by the Contracts. The Prospectus
Supplement will be set forth in any Prospectus Supplement relating to the Securities being offered.commission payable for solicitation of such
Contracts. Agents and underwriters will have no responsibility in respect of the
delivery or performance of Contracts.
Until the distribution of the Securities offered pursuant to any Prospectus
Supplement is completed, the Commission's rules may limit the ability of any
underwriter participating in such distribution to bid for and purchase the
Securities offered thereby and other securities of AIMCO or the AIMCO Operating
Partnership. As an exception to these rules, the underwriters are permitted to
engage in certain transactions that stabilize or maintain the price of such
securities. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of such securities. If any such
underwriter creates a short position in such securities in connection with the
offering, such underwriter may reduce such short position by purchasing
securities.
In general, bids for or purchases of a security for the purpose of
stabilization or to reduce a short position could cause the price of the
security to be higher than it might otherwise be in the absence of such bids or
purchases.
Neither AIMCO nor the AIMCO Operating Partnership nor any underwriter
participating in any distribution makes any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of the offered Securities or other securities of AIMCO or
the AIMCO Operating Partnership. In addition, neither AIMCO nor the AIMCO
Operating Partnership nor any such underwriter makes any representation that
such underwriter will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.
Certain of the underwriters, if any, and their affiliates may be customers
of, engage in transactions with and perform services for AIMCO or the AIMCO
Operating Partnership in the ordinary course of business.
The Securities may or may not be listed on a national securities exchange.
No assurances can be given that there will be a market for any of the
Securities.
3334
3738
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax consequences
resulting from the acquisition of, holding, exchanging, and otherwise disposing
of Securities. This discussion is based upon the Code, regulations promulgated
by the U.S. Treasury Department (the "Treasury Regulations"), rulings issued by
the Internal Revenue Service (the "IRS"), and judicial decisions, all in effect
as of the date of this Prospectus and all of which are subject to change,
possibly retroactively. Such summary is also based on the assumptions that the
operation of AIMCO, the AIMCO Operating Partnership and the Subsidiary
Partnerships will be in accordance with their respective organizational
documents and partnership agreements. This summary is for general information
only and does not purport to discuss all aspects of federal income taxation
which may be important to a particular investor in light of its investment or
tax circumstances, or to certain types of investors subject to special tax rules
(including financial institutions, broker-dealers, insurance companies, and,
except to the extent discussed below, tax-exempt organizations and foreign
investors, as determined for United States federal income tax purposes). This
summary assumes that investors will hold their Securities as "capital assets"
(generally, property held for investment). No advance ruling has been or will be
sought from the IRS regarding any matter discussed in this Prospectus.
THE FEDERAL INCOME TAX TREATMENT OF HOLDERS OF SECURITIES DEPENDS IN SOME
INSTANCES ON DETERMINATIONS OF FACT AND INTERPRETATIONS OF COMPLEX PROVISIONS OF
FEDERAL INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY MAY BE
AVAILABLE. ACCORDINGLY, EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS TAX ADVISOR
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF ACQUIRING,
HOLDING, EXCHANGING, OR OTHERWISE DISPOSING OF SECURITIES AND OF AIMCO'S
ELECTION TO BE SUBJECT TO TAX, FOR FEDERAL INCOME TAX PURPOSES, AS A REAL ESTATE
INVESTMENT TRUST.
GENERAL
The REIT provisions of the Code are highly technical and complex. The
following summary sets forth certain aspects of the provisions of the Code that
govern the federal income tax treatment of a REIT and its stockholders. This
summary is qualified in its entirety by the applicable Code provisions, Treasury
Regulations, and administrative and judicial interpretations thereof, all of
which are subject to change, possibly retroactively.
AIMCO has elected to be taxed as a REIT under the Code commencing with its
taxable year ending December 31, 1994, and AIMCO intends to continue such
election. In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP
("Counsel"), commencing with the AIMCO's initial taxable year ended December 31,
1994, AIMCO was organized in conformity with the requirements for qualification
as a REIT, and its proposed method of operation, and its actual method of
operation since its formation, will enable it to meet the requirements for
qualification and taxation as a REIT under the Code. It must be emphasized that
this opinion is based and conditioned upon certain assumptions and
representations made by AIMCO as to factual matters (including representations
of AIMCO concerning its business and properties as set forth in this
Prospectus). The opinion is expressed as of its date and Counsel has no
obligation to advise holders of Securities of any subsequent change in the
matters stated, represented or assumed or any subsequent change in the
applicable law. Moreover, such qualification and taxation as a REIT depends upon
AIMCO's ability to meet, through actual annual operating results, distribution
levels and diversity of stock ownership, the various qualification tests imposed
under the Code as discussed below, the results of which will not be reviewed by
Counsel. Accordingly, no assurance can be given that the actual results of
AIMCO's operation for any tax year will satisfy such requirements. See
"-- Failure to Qualify." An opinion of counsel is not binding on the IRS, and no
assurance can be given that the IRS will not challenge AIMCO's eligibility for
taxation as a REIT.
Provided AIMCO qualifies for taxation as a REIT, it will generally not be
subject to federal corporate income tax on its net income that is currently
distributed to its stockholders. This treatment substantially eliminates the
"double taxation" (at the corporate and stockholder levels) that generally
results from
3435
3839
investment in a corporation. However, notwithstanding AIMCO's qualification as a
REIT, AIMCO will be subject to federal income tax as follows: First, AIMCO will
be taxed at regular corporate rates on any undistributed REIT taxable income,
including undistributed net capital gains. Second, under certain circumstances,
AIMCO may be subject to the "alternative minimum tax" on its items of tax
preference. Third, if AIMCO has net income from prohibited transactions (which
are, in general, certain sales or other dispositions of property held primarily
for sale to customers in the ordinary course of business other than foreclosure
property), such income will be subject to a 100% tax. Fourth, if AIMCO should
fail to satisfy the 75% gross income test or the 95% gross income test (as
discussed below), but has nonetheless maintained its qualification as a REIT
because certain other requirements have been met, it will be subject to a 100%
tax on an amount equal to (a) the gross income attributable to the greater of
the amount by which AIMCO fails the 75% or 95% test multiplied by (b) a fraction
intended to reflect AIMCO's profitability. Fifth, if AIMCO should fail to
distribute during each calendar year at least the sum of (i) 85% of its REIT
ordinary income for such year, (ii) 95% of its REIT capital gain net income for
such year (other than certain long-term capital gains that AIMCO elects to
retain and pay the tax thereon), and (iii) any undistributed taxable income from
prior periods, AIMCO would be subjected to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed. Sixth, if AIMCO
acquires assets from a subchapter C corporation in a transaction in which the
adjusted tax basis of the assets in the hands of AIMCO is determined by
reference to the adjusted tax basis of such assets in the hands of the
subchapter C corporation, under Treasury Regulations not yet promulgated, the
subchapter C corporation would be required to recognize any net Built-In Gain
(as defined below) that would have been realized if the Subchapter C corporation
had liquidated on the day before the date of the transfer. Pursuant to IRS
Notice 88-19, AIMCO may elect, in lieu of the treatment described above, to be
subject to tax if it recognizes gain on the disposition of any such assets
during the ten-year period beginning on the day on which it acquires such assets
at the highest regular corporate tax rate on such gain to the extent of the
excess, if any, of the fair market value over the adjusted basis of such asset
as of the beginning of the ten-year period ("Built-in Gain"). AIMCO intends to
make such an election and, therefore, will be taxed at the highest regular
corporate rate on such Built-in Gain if, and to the extent, such assets are sold
within the specified ten-year period. It should be noted that AIMCO has acquired
(and may in the future acquire) a significant amount of assets with Built-in
Gain and a taxable disposition by AIMCO of these assets within ten years of
their acquisitions would subject AIMCO to tax under the foregoing rule. Seventh,
AIMCO could be subject to foreign taxes on its investments and activities in
foreign jurisdictions. In addition, AIMCO could also be subject to tax in
certain situations and on certain transactions not presently contemplated.
Requirements for Qualification
The Code defines a REIT as a corporation, trust or association (1) that is
managed by one or more trustees or directors; (2) the beneficial ownership of
which is evidenced by transferable shares, or by transferable certificates of
beneficial interest; (3) which would be taxable as a domestic corporation, but
for the special Code provisions applicable to REITs; (4) that is neither a
financial institution nor an insurance company subject to certain provisions of
the Code; (5) the beneficial ownership of which is held by 100 or more persons;
(6) in which, during the last half of each taxable year, not more than 50% in
value of the outstanding stock is owned, directly or indirectly, by five or
fewer individuals (as defined in the Code to include certain entities); and (7)
which meets certain other tests described below (including with respect to the
nature of its income and assets). The Code provides that conditions (1) through
(4) must be met during the entire taxable year, and that condition (5) must be
met during at least 335 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months. AIMCO's Charter
provides certain restrictions regarding transfers of its shares, which
provisions are intended to assist AIMCO in satisfying the share ownership
requirements described in conditions (5) and (6) above.
To monitor AIMCO's compliance with the share ownership requirements, AIMCO
is required to maintain records regarding the actual ownership of its shares. To
do so, AIMCO must demand written statements each year from the record holders of
certain percentages of its stock in which the record holders are to disclose the
actual owners of the shares (i.e., the persons required to include in gross
income the dividends paid by AIMCO). A list of those persons failing or refusing
to comply with this demand must be maintained
3536
3940
as part of AIMCO's records. A stockholder who fails or refuses to comply with
the demand must submit a statement with its tax return disclosing the actual
ownership of the shares and certain other information.
In addition, a corporation may not elect to become a REIT unless its
taxable year is the calendar year. AIMCO satisfies this requirement.
Ownership of Partnership Interests
In the case of a REIT that is a partner in a partnership, Treasury
Regulations provide that the REIT is deemed to own its proportionate share of
the partnership's assets and to earn its proportionate share of the
partnership's income. In addition, the assets and gross income of the
partnership retain the same character in the hands of the REIT for purposes of
the gross income and asset tests applicable to REITs as described below. Thus,
AIMCO's proportionate share of the assets, liabilities and items of income of
the Subsidiary Partnerships in which it has ownership interests will be treated
as assets, liabilities and items of income of AIMCO for purposes of applying the
REIT requirements described herein. A summary of certain rules governing the
federal income taxation of partnerships and their partners is provided below in
"Tax Aspects of AIMCO's Investments in Partnerships."
Income Tests
In order to maintain qualification as a REIT, AIMCO annually must satisfy
two gross income requirements. First, at least 75% of AIMCO's gross income
(excluding gross income from "prohibited transactions," i.e., certain sales of
property held primarily for sale to customers in the ordinary course of
business) for each taxable year must be derived directly or indirectly from
investments relating to real property or mortgages on real property (including
"rents from real property" and, in certain circumstances, interest) or from
certain types of temporary investments. Second, at least 95% of AIMCO's gross
income (excluding gross income from prohibited transactions) for each taxable
year must be derived from such real property investments, and from dividends,
interest and gain from the sale or disposition of stock or securities (or from
any combination of the foregoing).
Rents received by AIMCO through the Subsidiary Partnerships will qualify as
"rents from real property" in satisfying the gross income requirements described
above, only if several conditions are met, including the following. If rent
attributable to personal property leased in connection with a lease of real
property is greater than 15% of the total rent received under the lease, then
the portion of rent attributable to such personal property will not qualify as
"rents from real property." Moreover, for rents received to qualify as "rents
from real property," the REIT generally must not operate or manage the property
or furnish or render services to the tenants of such property, other than
through an "independent contractor" from which the REIT derives no revenue.
However, AIMCO (or its affiliates) is permitted to directly perform services
that are "usually or customarily rendered" in connection with the rental of
space for occupancy only and are not otherwise considered rendered to the
occupant of the property. In addition, AIMCO (or its affiliates) may provide
non-customary services to tenants of its properties without disqualifying all of
the rent from the property if the payment for such services does not exceed 1%
of the total gross income from the property. For purposes of this test, the
income received from such non-customary services is deemed to be at least 150%
of the direct cost of providing the services.
Various affiliates of AIMCO that manage the Managed Properties
(collectively, the "Management Subsidiaries") receive management fees and other
income. A portion of such fees and other income accrue to AIMCO through
distributions from the Management Subsidiaries that will be classified as
dividend income to the extent of the earnings and profits of the Management
Subsidiaries. Such distributions will generally qualify under the 95% gross
income test but not under the 75% gross income test.
If AIMCO fails to satisfy one or both of the 75% or 95% gross income tests
for any taxable year, it may nevertheless qualify as a REIT for such year if it
is entitled to relief under certain provisions of the Code. These relief
provisions will be generally available if AIMCO's failure to meet such tests was
due to reasonable cause and not due to willful neglect, AIMCO attaches a
schedule of the sources of its income to its return, and any incorrect
information on the schedule was not due to fraud with intent to evade tax. It is
not possible,
3637
4041
however, to state whether in all circumstances AIMCO would be entitled to the
benefit of these relief provisions. If these relief provisions are inapplicable
to a particular set of circumstances involving AIMCO, AIMCO will not qualify as
a REIT. As discussed above in "-- General," even where these relief provisions
apply, a tax is imposed with respect to the excess net income.
Asset Tests
AIMCO, at the close of each quarter of its taxable year, must also satisfy
three tests relating to the nature of its assets. First, at least 75% of the
value of AIMCO's total assets must be represented by real estate assets
(including its allocable share of real estate assets held by the Subsidiary
Partnerships), certain stock or debt instruments purchased by AIMCO with new
capital, cash, cash items and U.S. government securities. Second, not more than
25% of AIMCO's total assets may be represented by securities other than those in
the 75% asset class. Third, of the investments included in the 25% asset class,
the value of any one issuer's securities owned by AIMCO may not exceed 5% of the
value of AIMCO's total assets, and AIMCO may not own more than 10% of any one
issuer's outstanding voting securities.
AIMCO indirectly owns interests in the Management Subsidiaries. As set
forth above, the ownership of more than 10% of the voting securities of any one
issuer by a REIT or the investment of more than 5% of the REIT's total assets in
any one issuer's securities is prohibited by the asset tests. AIMCO believes
that its indirect ownership interests in the Management Subsidiaries qualify
under the asset tests set forth above. However, no independent appraisals have
been obtained to support AIMCO's conclusions as to the value of the AIMCO
Operating Partnership's total assets and the value of the AIMCO Operating
Partnership's interest in the Management Subsidiaries and these values are
subject to change in the future. Accordingly, there can be no assurance that the
IRS will not contend that the AIMCO Operating Partnership's ownership interests
in the Management Subsidiaries disqualifies AIMCO from treatment as a REIT.
AIMCO's indirect interests in the AIMCO Operating Partnership and other
Subsidiary Partnerships are held through wholly owned corporate subsidiaries of
AIMCO organized and operated as "qualified REIT subsidiaries" within the meaning
of the Code. Qualified REIT subsidiaries are not treated as separate entities
from their parent REIT for federal income tax purposes. Instead, all assets,
liabilities and items of income, deduction and credit of each qualified REIT
subsidiary are treated as assets, liabilities and items of AIMCO. Each qualified
REIT subsidiary therefore is not subject to federal corporate income taxation,
although it may be subject to state or local taxation. In addition, AIMCO's
ownership of the voting stock of each qualified REIT subsidiary does not violate
the general restriction against ownership of more than 10% of the voting
securities of any issuer.
Annual Distribution Requirements
AIMCO, in order to qualify as a REIT, is required to distribute dividends
(other than capital gain dividends) to its stockholders in an amount at least
equal to (A) the sum of (i) 95% of AIMCO's "REIT taxable income" (computed
without regard to the dividends paid deduction and AIMCO's net capital gain) and
(ii) 95% of the net income (after tax), if any, from foreclosure property, minus
(B) the sum of certain items of noncash income. Such distributions must be paid
in the taxable year to which they relate, or in the following taxable year if
declared before AIMCO timely files its tax return for such year and if paid with
or before the first regular dividend payment after such declaration. To the
extent that AIMCO distributes at least 95%, but less than 100%, of its "REIT
taxable income," as adjusted, it will be subject to tax thereon at ordinary
corporate tax rates. AIMCO may elect to retain, rather than distribute, its net
long-term capital gains and pay tax on such gains. In such a case, AIMCO's
stockholders would include their proportionate share of such undistributed
long-term capital gains in income and receive a credit for their share of the
tax paid by AIMCO. AIMCO's stockholders would then increase the adjusted basis
of their AIMCO shares by the difference between the designated amounts included
in their long-term capital gains and the tax deemed paid with respect to their
shares. If AIMCO should fail to distribute during each calendar year at least
the sum of (i) 85% of its REIT ordinary income for such year and (ii) 95% of its
REIT capital gain net income for such year (excluding retained long-term capital
gains), and (iii) any undistributed taxable income from prior periods, AIMCO
would be subject to a 4% excise tax on the excess of such required distribution
over the
3738
4142
amounts actually distributed. AIMCO believes that it has made, and intends to
make, timely distributions sufficient to satisfy this annual distribution
requirement.
It is possible that AIMCO, from time to time, may not have sufficient cash
to meet the 95% distribution requirement due to timing differences between (i)
the actual receipt of cash (including receipt of distributions from the AIMCO
Operating Partnership) and (ii) the inclusion of certain items in income by
AIMCO for federal income tax purposes. In the event that such timing differences
occur, in order to meet the 95% distribution requirement, AIMCO may find it
necessary to arrange for short-term, or possibly long-term, borrowings or to pay
dividends in the form of taxable distributions of property.
Under certain circumstances, AIMCO may be able to rectify a failure to meet
the distribution requirement for a year by paying "deficiency dividends" to
stockholders in a later year, which may be included in AIMCO's deduction for
dividends paid for the earlier year. Thus, AIMCO may be able to avoid being
taxed on amounts distributed as deficiency dividends; however, AIMCO will be
required to pay interest and a penalty based on the amount of any deduction
taken for deficiency dividends.
Distributions of Acquired Earnings and Profits
The Code provides that when a REIT acquires a corporation that is currently
a subchapter C corporation (i.e., a corporation without a REIT election), the
REIT may qualify as a REIT only if, as of the close of the year of acquisition,
the REIT has no "earnings and profits" acquired from such subchapter C
corporation. If AIMCO succeeds to the earnings and profits of a subchapter C
corporation in connection with an acquisition of its assets or otherwise, AIMCO
must distribute such earnings and profits effective on or before December 31, of
the year of such acquisition. Any adjustments to the subchapter C corporation's
income for taxable years ending on or before the closing of such acquisition by
AIMCO, including as a result of an examination of its returns by the IRS and the
receipt of certain indemnity or other payments, could affect the calculation of
its earnings and profits. Furthermore, the determination of earnings and profits
requires the resolution of certain technical tax issues with respect to which
there is no authority directly on point and, consequently, the proper treatment
of these issues for earnings and profits purposes is not free from doubt. There
can be no assurance that the IRS will not examine the tax returns of a
subchapter C corporation acquired by AIMCO and propose adjustments to increase
its taxable income and therefore its earnings and profits. In this regard, the
IRS can consider all taxable years of the subchapter C corporation as open for
review for purposes of determining the amount of its earnings and profits.
AIMCO's failure to distribute an amount equal to the earnings and profits
acquired from a subchapter C corporation effective on or before December 31, of
the year of such acquisition, would result in AIMCO's failure to qualify as a
REIT.
Failure to Qualify
If AIMCO fails to qualify for taxation as a REIT in any taxable year, and
the relief provisions do not apply, AIMCO will be subject to tax (including any
applicable alternative minimum tax) on its taxable income at regular corporate
rates. Distributions to stockholders in any year in which AIMCO fails to qualify
will not be deductible by AIMCO nor will they be required to be made. In such
event, to the extent of current and accumulated earnings and profits, all
distributions to stockholders will be taxable as ordinary income, and, subject
to certain limitations of the Code, corporate distributees may be eligible for
the dividends received deduction. Unless AIMCO is entitled to relief under
specific statutory provisions, AIMCO would also be disqualified from taxation as
a REIT for the four taxable years following the year during which qualification
was lost. It is not possible to state whether in all circumstances AIMCO would
be entitled to such statutory relief.
TAX ASPECTS OF AIMCO'S INVESTMENTS IN PARTNERSHIPS
General
Substantially all of AIMCO's investments are held indirectly through the
AIMCO Operating Partnership. In general, partnerships are "pass-through"
entities that are not subject to federal income tax. Rather, partners are
allocated their proportionate shares of the items of income, gain, loss,
deduction and credit of a partnership, and are potentially subject to tax
thereon, without regard to whether the partners receive a
3839
4243
distribution from the partnership. AIMCO will include in its income its
proportionate share of the foregoing partnership items for purposes of the
various REIT income tests and in the computation of its REIT taxable income.
Moreover, for purposes of the REIT asset tests, AIMCO will include its
proportionate share of assets held by the Subsidiary Partnerships. See
"-- Certain Federal Income Tax Consequences -- General -- Ownership of
Partnership Interests."
Entity Classification
AIMCO's direct and indirect investment in partnerships involves special tax
considerations, including the possibility of a challenge by the IRS of the
status of any of the Subsidiary Partnerships as a partnership (as opposed to an
association taxable as a corporation) for federal income tax purposes. If any of
these entities were treated as an association for federal income tax purposes,
it would be subject to an entity-level tax on its income. In such a situation,
the character of AIMCO's assets and items of gross income would change and could
preclude AIMCO from satisfying the asset tests and the income tests (see
"-- Certain Federal Income Tax Consequences -- Asset Tests" and "-- Certain
Federal Income Tax Consequences -- Income Tests"), and in turn could prevent
AIMCO from qualifying as a REIT. See "-- Certain Federal Income Tax
Consequences -- Failure to Qualify" above for a discussion of the effect of
AIMCO's failure to meet such tests for a taxable year. In addition, any change
in the status of any of the Subsidiary Partnerships for tax purposes might be
treated as a taxable event, in which case AIMCO might incur a tax liability
without any related cash distributions.
Tax Allocations with Respect to the Properties
Under the Code and the Treasury Regulations, income, gain, loss and
deduction attributable to appreciated or depreciated property that is
contributed to a partnership in exchange for an interest in the partnership must
be allocated in a manner such that the contributing partner is charged with, or
benefits from, respectively, the unrealized gain or unrealized loss associated
with the property at the time of the contribution. The amount of such unrealized
gain or unrealized loss is generally equal to the difference between the fair
market value of the contributed property at the time of contribution, and the
adjusted tax basis of such property at the time of contribution (a "Book - Tax
Difference"). Such allocations are solely for federal income tax purposes and do
not affect the book capital accounts or other economic or legal arrangements
among the partners. The AIMCO Operating Partnership was formed by way of
contributions of appreciated property (including certain of the properties AIMCO
owns or controls). Consequently, allocations must be made in a manner consistent
with these requirements. Where a partner contributes cash to a partnership that
holds appreciated property, the Treasury Regulations provide for a similar
allocation of such items to the other partners. These rules apply to the
contribution by AIMCO to the AIMCO Operating Partnership of the cash proceeds
received in any offerings of its stock.
In general, certain holders of interests in the AIMCO Operating Partnership
will be allocated lower amounts of depreciation deductions for tax purposes and
increased taxable income and gain on the sale by the AIMCO Operating Partnership
or other Subsidiary Partnerships of the contributed properties. This will tend
to eliminate the Book-Tax Difference over the life of these partnerships.
However, the special allocations do not always entirely rectify the Book-Tax
Difference on an annual basis or with respect to a specific taxable transaction
such as a sale. Thus, the carryover basis of the contributed properties in the
hands of the AIMCO Operating Partnership or other Subsidiary Partnerships may
cause AIMCO to be allocated lower depreciation and other deductions, and
possibly greater amounts of taxable income in the event of a sale of such
contributed assets in excess of the economic or book income allocated to it as a
result of such sale. This may cause AIMCO to recognize taxable income in excess
of cash proceeds, which might adversely affect AIMCO's ability to comply with
the REIT distribution requirements. See "-- Certain Federal Income Tax
Consequences -- Annual Distribution Requirements."
With respect to any property purchased or to be purchased by any of the
Subsidiary Partnerships (other than through the issuance of AIMCO Operating
Partnership Units) subsequent to the formation of AIMCO, such property will
initially have a tax basis equal to its fair market value and the special
allocation provisions described above will not apply.
3940
4344
Sale of the Properties
AIMCO's share of any gain realized by the AIMCO Operating Partnership or
other Subsidiary Partnership on the sale of any property held as inventory or
primarily for sale to customers in the ordinary course of business will be
treated as income from a prohibited transaction that is subject to a 100%
penalty tax. See "-- Certain Federal Income Tax Consequences -- General." Under
existing law, whether property is held as inventory or primarily for sale to
customers in the ordinary course of a partnership's trade or business is a
question of fact that depends on all the facts and circumstances with respect to
the particular transaction. The AIMCO Operating Partnership and the other
Subsidiary Partnerships intend to hold the Owned Properties for investment with
a view to long-term appreciation, to engage in the business of acquiring,
developing, owning and operating the Owned Properties and to make such
occasional sales of the Owned Properties, including peripheral land, as are
consistent with AIMCO's investment objectives.
TAXATION OF MANAGEMENT SUBSIDIARIES
A portion of the amounts to be used to fund distributions to stockholders
is expected to come from distributions made by the Management Subsidiaries to
the AIMCO Operating Partnership and interest paid by the Management Subsidiaries
on certain notes held by the AIMCO Operating Partnership. In general, the
Management Subsidiaries pay federal, state and local income taxes on their
taxable income at normal corporate rates. Any federal, state or local income
taxes that the Management Subsidiaries are required to pay will reduce AIMCO's
cash flow from operating activities and its ability to make payments to holders
of its securities.
TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS
Distributions
Provided AIMCO qualifies as a REIT, distributions made to AIMCO's taxable
domestic stockholders out of current or accumulated earnings and profits (and
not designated as capital gain dividends) will be taken into account by them as
ordinary income and will not be eligible for the dividends received deduction
for corporations. Distributions (and retained long-term capital gains) that are
designated as capital gain dividends will be taxed as long-term capital gains
(to the extent that they do not exceed AIMCO's actual net capital gain for the
taxable year) without regard to the period for which the stockholder has held
its stock. However, corporate stockholders may be required to treat up to 20% of
certain capital gain dividends as ordinary income. In addition, net capital
gains attributable to the sale of depreciable real property held for more than
12 months is subject to a 25% maximum federal income tax rate to the extent of
previously claimed real property depreciation deductions.
Distributions in excess of current and accumulated earnings and profits
will not be taxable to a stockholder to the extent that they do not exceed the
adjusted basis of the stockholder's shares in respect of which the distributions
were made, but rather will reduce the adjusted basis of such shares. To the
extent that such distributions exceed the adjusted basis of a stockholder's
shares in respect of which the distributions were made, they will be included in
income as long-term capital gain (or short-term capital gain if the shares have
been held for one year or less) provided that the shares are a capital asset in
the hands of the stockholder. In addition, any dividend declared by AIMCO in
October, November or December of any year and payable to a stockholder of record
on a specified date in any such month shall be treated as both paid by AIMCO and
received by the stockholder on December 31 of such year, provided that the
dividend is actually paid by AIMCO during January of the following calendar
year. Stockholders may not include in their individual income tax returns any
net operating losses or capital losses of AIMCO.
Dispositions of AIMCO Stock
In general, under the recently enacted Internal Revenue Service
Restructuring and Reform Act of 1988, capital gains recognized by individuals
and other non-corporate stockholders upon the sale or disposition of shares of
AIMCO stock will be subject to a maximum federal income tax rate of 20% if the
AIMCO stock is held for more than 12 months and will be taxed at ordinary income
rates if the AIMCO stock is held for
4041
4445
12 months or less. Capital losses recognized by a stockholder upon the
disposition of AIMCO stock held for more than one year at the time of
disposition will be a long-term capital loss. In addition, any loss upon a sale
or exchange of shares of AIMCO stock by a stockholder who has held such shares
for six months or less (after applying certain holding period rules) will be
treated as a long-term capital loss to the extent of distributions from AIMCO
required to be treated by such stockholder as long-term capital gain.
A redemption of the Preferred Stock will be treated under Section 302 of
the Code as a dividend subject to tax at ordinary income tax rates (to the
extent of AIMCO's current or accumulated earnings and profits), unless the
redemption satisfies certain tests set forth in Section 302(b) of the Code
enabling the redemption to be treated as a sale or exchange of the Preferred
Stock. The redemption will satisfy such test if it (i) is "substantially
disproportionate" with respect to the holder (which will not be the case if only
the Preferred Stock is redeemed, since it generally does not have voting
rights), (ii) results in a "complete termination" of the holder's stock interest
in AIMCO, or (iii) is "not essentially equivalent to a dividend" with respect to
the holder, all within the meaning of Section 302(b) of the Code. In determining
whether any of these tests have been met, shares considered to be owned by the
holder by reason of certain constructive ownership rules set forth in the Code,
as well as shares actually owned, must generally be taken into account. Because
the determination as to whether any of the alternative tests of Section 302(b)
of the Code is satisfied with respect to any particular holder of the Preferred
Stock will depend upon the facts and circumstances as of the time the
determination is made, prospective investors are advised to consult their own
tax advisors to determine such tax treatment. If a redemption of the Preferred
Stock is treated as a distribution that is taxable as a dividend, the amount of
the distribution would be measured by the amount of cash and the fair market
value of any property received by the stockholders. The stockholder's adjusted
tax basis in such redeemed Preferred Stock would be transferred to the holder's
remaining stockholdings in AIMCO. If, however, the stockholder has no remaining
stockholdings in AIMCO, such basis may, under certain circumstances, be
transferred to a related person or it may be lost entirely.
TAXATION OF FOREIGN STOCKHOLDERS
The following is a discussion of certain anticipated U.S. federal income
and estate tax consequences of the ownership and disposition of AIMCO stock
applicable to Non-U.S. Holders of AIMCO stock. A "Non-U.S. Holder" is any person
other than (i) a citizen or resident of the United States, (ii) a corporation or
partnership created or organized in the United States or under the laws of the
United States or of any state thereof or the District of Columbia, (iii) an
estate whose income is includible in gross income for U.S. federal income tax
purposes regardless of its source or (iv) a trust if a United States court is
able to exercise primary supervision over the administration of such trust and
one or more United States fiduciaries have the authority to control all
substantial decisions of such trust. The discussion is based on current law and
is for general information only. The discussion addresses only certain and not
all aspects of U.S. federal income and estate taxation.
Ordinary Dividends
The portion of dividends received by Non-U.S. Holders payable out of
AIMCO's earnings and profits which are not attributable to capital gains of
AIMCO and which are not effectively connected with a U.S. trade or business of
the Non-U.S. Holder will be subject to U.S. withholding tax at the rate of 30%
(unless reduced by treaty). In general, Non-U.S. Holders will not be considered
engaged in a U.S. trade or business solely as a result of their ownership of
AIMCO stock. In cases where the dividend income from a Non-U.S. Holder's
investment in AIMCO stock is (or is treated as) effectively connected with the
Non-U.S. Holder's conduct of a U.S. trade or business, the Non-U.S. Holder
generally will be subject to U.S. tax at graduated rates, in the same manner as
U.S. Holders are taxed with respect to such dividends (and may also be subject
to the 30% branch profits tax in the case of a Non-U.S. Holder that is a
corporation).
Non-Dividend Distributions
Unless AIMCO stock constitutes a United States Real Property Interest (a
"USRPI") within the meaning of the Foreign Investment in Real Property Tax Act
of 1980 ("FIRPTA"), distributions by AIMCO
4142
4546
which are not dividends out of the earnings and profits of AIMCO will not be
subject to U.S. income or withholding tax. If it cannot be determined at the
time a distribution is made whether or not such distribution will be in excess
of current and accumulated earnings and profits, the distribution will be
subject to withholding at the rate applicable to dividends. However, the
Non-U.S. Holder may seek a refund of such amounts from the IRS if it is
subsequently determined that such distribution was, in fact, in excess of
current and accumulated earnings and profits of AIMCO. If AIMCO stock
constitutes a USRPI, such distributions will be subject to 10% withholding and
may be taxed pursuant to FIRPTA at a rate of 35% to the extent such
distributions exceed a stockholder's basis in his or her AIMCO stock.
Capital Gain Dividends
Under FIRPTA, a distribution made by AIMCO to a Non-U.S. Holder, to the
extent attributable to gains from dispositions of USRPIs such as the properties
beneficially owned by AIMCO ("USRPI Capital Gains"), will be considered
effectively connected with a U.S. trade or business of the Non-U.S. Holder and
subject to U.S. income tax at the rates applicable to U.S. individuals or
corporations, without regard to whether such distribution is designated as a
capital gain dividend. In addition, AIMCO will be required to withhold tax equal
to 35% of the amount of dividends to the extent such dividends constitute USRPI
Capital Gains. Distributions subject to FIRPTA may also be subject to a 30%
branch profits tax in the hands of a Non-U.S. Holder that is a corporation.
Dispositions of AIMCO Stock
Unless AIMCO stock constitutes a USRPI, a sale of such stock by a Non-U.S.
Holder generally will not be subject to U.S. taxation under FIRPTA. The stock
will not constitute a USRPI if AIMCO is a "domestically controlled REIT." A
domestically controlled REIT is a REIT in which, at all times during a specified
testing period, less than 50% in value of its shares is held directly or
indirectly by Non-U.S. Holders. AIMCO believes that it is, and it expects to
continue to be, a domestically controlled REIT and, therefore, the sale of AIMCO
stock should not be subject to taxation under FIRPTA. Because AIMCO's Class A
Common Stock, Class C Preferred Stock, Class D Preferred Stock, Class G
Preferred Stock and Class H Preferred Stock are publicly traded, however, no
assurance can be given that AIMCO will continue to be a domestically controlled
REIT.
If AIMCO does not constitute a domestically controlled REIT, a Non-U.S.
Holder's sale of stock generally will still not be subject to tax under FIRPTA
as a sale of a USRPI provided that (i) the stock is "regularly traded" (as
defined by applicable Treasury Regulations) on an established securities market
(e.g., the NYSE, on which AIMCO stock is listed) and (ii) the selling Non-U.S.
Holder held 5% or less of AIMCO's outstanding stock at all times during a
specified testing period.
If gain on the sale of stock of AIMCO were subject to taxation under
FIRPTA, the Non-U.S. Holder would be subject to the same treatment as a U.S.
stockholder with respect to such gain (subject to applicable alternative minimum
tax and a special alternative minimum tax in the case of nonresident alien
individuals) and the purchaser of the stock could be required to withhold 10% of
the purchase price and remit such amount to the IRS.
Gain from the sale of AIMCO stock that would not otherwise be subject to
FIRPTA will nonetheless be taxable in the United States to a Non-U.S. Holder in
two cases: (i) if the Non-U.S. Holder's investment in the AIMCO stock is
effectively connected with a U.S. trade or business conducted by such Non-U.S.
Holder, the Non-U.S. Holder will be subject to the same treatment as a U.S.
stockholder with respect to such gain, or (ii) if the Non-U.S. Holder is a
nonresident alien individual who was present in the United States for 183 days
or more during the taxable year and has a "tax home" in the United States, the
nonresident alien individual will be subject to a 30% tax on the individual's
capital gain.
Estate Tax
AIMCO stock owned or treated as owned by an individual who is not a citizen
or resident (as specially defined for U.S. federal estate tax purposes) of the
United States at the time of death will be includible in the
4243
4647
individual's gross estate for U.S. federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise. Such individual's estate may be
subject to U.S. federal estate tax on the property includible in the estate for
U.S. federal estate tax purposes.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
AIMCO will report to its U.S. stockholders and to the IRS the amount of
distributions paid during each calendar year, and the amount of tax withheld, if
any. Under the backup withholding rules, a stockholder may be subject to backup
withholding at the rate of 31% with respect to distributions paid unless such
holder (i) is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact or (ii) provides a taxpayer identification
number, certifies as to no loss of exemption from backup withholding, and
otherwise complies with the applicable requirements of the backup withholding
rules. A stockholder who does not provide AIMCO with his correct taxpayer
identification number also may be subject to penalties imposed by the IRS. Any
amount paid as backup withholding will be creditable against the stockholder's
income tax liability. In addition, AIMCO may be required to withhold a portion
of capital gain distributions to any Non-U.S. Holders who fail to certify their
foreign status to AIMCO. The IRS has issued final Treasury Regulations regarding
the withholding, backup withholding and information reporting rules as applied
to Non-U.S. Holders. Those final Treasury Regulations alter the current system
of backup withholding compliance and will be effective for payments made after
December 31, 1999. Prospective investors in Securities should consult their tax
advisors regarding the application of these Treasury Regulations.
TAXATION OF TAX-EXEMPT STOCKHOLDERS
Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts ("Exempt Organizations"),
generally are exempt from federal income taxation. However, they are subject to
taxation on their unrelated business taxable income ("UBTI"). While many
investments in real estate generate UBTI, the IRS has ruled that dividend
distributions from a REIT to an exempt employee pension trust do not constitute
UBTI, provided that the shares of the REIT are not otherwise used in an
unrelated trade or business of the exempt employee pension trust. Based on that
ruling, amounts distributed by AIMCO to Exempt Organizations should generally
not constitute UBTI. However, if an Exempt Organization finances its acquisition
of the AIMCO stock with debt, a portion of its income from AIMCO will constitute
UBTI pursuant to the "debt-financed property" rules. Furthermore, social clubs,
voluntary employee benefit associations, supplemental unemployment benefit
trusts, and qualified group legal services plans that are exempt from taxation
under paragraphs (7), (9), (17) and (20), respectively, of Section 501(c) of the
Code are subject to different UBTI rules, which generally will require them to
characterize distributions from AIMCO as UBTI. In addition, in certain
circumstances, a pension trust that owns more than 10% of AIMCO's stock is
required to treat a percentage of the dividends from AIMCO as UBTI (the "UBTI
Percentage"). The UBTI Percentage is the gross income derived by AIMCO from an
unrelated trade or business (determined as if AIMCO were a pension trust)
divided by the gross income of AIMCO for the year in which the dividends are
paid. The UBTI rule applies to a pension trust holding more than 10% of AIMCO's
stock only if (i) the UBTI Percentage is at least 5%, (ii) AIMCO qualifies as a
REIT by reason of the modification of the 5/50 Rule that allows the
beneficiaries of the pension trust to be treated as holding shares of AIMCO in
proportion to their actuarial interest in the pension trust, and (iii) either
(A) one pension trust owns more than 25% of the value of AIMCO's stock or (B) a
group of pension trusts each individually holding more than 10% of the value of
AIMCO's stock collectively owns more that 50% of the value of AIMCO's stock. The
restrictions on ownership and transfer of AIMCO's stock should prevent an Exempt
Organization from owning more than 10% of the value of AIMCO's stock.
4344
4748
OTHER TAX CONSEQUENCES
POSSIBLE LEGISLATIVE OR OTHER ACTIONS AFFECTING REITS
The rules dealing with federal income taxation are constantly under review
by persons involved in the legislative process and by the IRS and the U.S.
Treasury Department. Changes to the federal laws and interpretations thereof
could adversely affect an investment in AIMCO or the AIMCO Operating
Partnership. For example, a proposal issued by President Clinton on February 2,
1998, if enacted into law, may adversely affect the ability of AIMCO to expand
the present activities of its Management Subsidiaries. It cannot be predicted
whether, when, in what forms, or with what effective dates, the tax laws
applicable to AIMCO or the AIMCO Operating Partnership, or an investment in
AIMCO or the AIMCO Operating Partnership, will be changed.
STATE, LOCAL AND FOREIGN TAXES
The AIMCO Operating Partnership and its partners and AIMCO and its
stockholders may be subject to state, local or foreign taxation in various
jurisdictions, including those in which it or they transact business, own
property or reside. It should be noted that the AIMCO Operating Partnership owns
properties located in a number of states and local jurisdictions, and the AIMCO
Operating Partnership may be required to file income tax returns in some or all
of those jurisdictions. The state, local or foreign tax treatment of the AIMCO
Operating Partnership and its partners and of AIMCO and its stockholders may not
conform to the federal income tax consequences discussed above. Consequently,
prospective investors should consult their own tax advisors regarding the
application and effect of state, local and foreign tax laws on an investment in
the Securities.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
at the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed.
- Apartment Investment and Management Company's Annual Report on Form
10-K/A for the year ended December 31, 1997;
- Apartment Investment and Management Company's Quarterly Reports on Form
10-Q/A and Form 10-Q for the quarters ended March 31, 1998, June 30, 1998
and JuneSeptember 30, 1998, respectively;
- Apartment Investment and Management Company's Current Reports on Form
8-K, dated December 23, 1997 (and Amendment No. 1 thereto filed February
6, 1998 and Amendment No. 2 thereto filed May 22, 1998), January 31,
1998, March 17, 1998 (and Amendment No. 1 thereto filed April 3, 1998,
Amendment No. 2 thereto filed June 22, 1998, Amendment No. 3 thereto
filed July 2, 1998, Amendment No. 4 thereto filed August 6, 1998,
Amendment No. 5 thereto filed September 4, 1998 and Amendment No. 6
thereto filed September 25, 1998), September 2, 1998, and October 1, 1998;1998,
October 19, 1998 and November 2, 1998 (and Amendment No. 1 thereto filed
November 24, 1998);
45
49
- the description of Apartment Investment and Management Company's capital
stock contained in its Registration Statement on Form 8-A (File No.
1-13232) filed July 19, 1994, including any amendment or reports filed for
the purpose of updating such description;
and
44
48
- AIMCO Properties, L.P.'s Registration Statement on Form 10, dated
September 4, 1998, including Amendment No. 1 thereto filed October 16,
1998 and Amendment No. 2 thereto filed October 28, 1998; and
- AIMCO Properties, L.P.'s Current Report on Form 8-K, dated November 2,
1998.
You may request a copy of these filings, at no cost, by writing or calling
us at the following address and telephone number:
Corporate Secretary
Apartment Investment and Management Company
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222
(303) 757-8101
LEGAL MATTERS
Certain tax matters will be passed upon for AIMCO by Skadden, Arps, Slate,
Meagher & Flom LLP, Los Angeles, California.LLP. The validity of the Securities offered hereby will be passed
upon for AIMCO by Piper & Marbury L.L.P., Baltimore, Maryland and for the AIMCO
Operating Partnership by Skadden, Arps, Slate, Meagher & Flom LLP, Los Angeles, California.LLP.
EXPERTS
The consolidated financial statements of AIMCO included in AIMCO's Annual
Report on Form 10-K/A for the year ended December 31, 1997, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. The consolidated
financial statements of the AIMCO Operating Partnership as of December 31, 1997
and 1996 and for each of the three years in the period ended December 31, 1997
included in the AIMCO Operating Partnership's Registration Statement on Form 10
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference. The
consolidated financial statements of Ambassador Apartments, Inc. as of December
31, 1997 and 1996, and for each of the three years in the period ended December
31, 1997 included in AIMCO's Current Report on Form 8-K dated March 17, 1998 (as
amended on April 3, 1998), and the consolidated financial statements of
Ambassador Apartments, Inc. as of December 31, 1996 and 1995, and for each of
the two years in the period ended December 31, 1996 and the period from August
31, 1994 through December 31, 1994, and the combined financial statements of
Prime Properties (Predecessor to Ambassador Apartments, Inc.) for the period
from January 1, 1994 through August 30, 1994, included in Amendment No. 1 to
AIMCO's Current Report on Form 8-K dated December 23, 1997, filed on February 6,
1998, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their reports thereon included therein and incorporated herein by reference.
The consolidated financial statements of Insignia Financial Group, Inc. as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997 included in AIMCO's Current Report on Form 8-K dated March 17,
1998 (and Amendment No. 1 thereto filed April 3, 1998), have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. The Combined Historical
Summary of Gross Income and Direct Operating Expenses of Cirque Apartment
Communities for the year ended December 31, 1997 included in AIMCO's Current
Report on Form 8-K dated November 2, 1998 (and Amendment No. 1 thereto filed
November 24, 1998) and included in AIMCO Properties, L.P.'s Current Report on
Form 8-K dated November 2, 1998 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements and
46
50
combined historical summary are incorporated herein by reference in reliance
upon such reports given upon the authority of such firm as experts in accounting
and auditing.
The Combined Historical Summary of Gross Income and Direct Operating
Expenses of Realty Investment Apartment Communities I for the year ended
December 31, 1997 included in AIMCO's Current Report on Form 8-K dated November
2, 1998 and included in AIMCO Properties, L.P.'s Current Report on Form 8-K
dated November 2, 1998 have been audited by Beers & Cutler PLLC, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. The Combined Historical Summary of Gross Income and Direct
Operating Expenses of Realty Investment Apartment Communities II for the year
ended December 31, 1997 included in AIMCO's Current Report on Form 8-K dated
November 2, 1998 and included in AIMCO Properties, L.P.'s Current Report on Form
8-K dated November 2, 1998 have been audited by Beers & Cutler PLLC, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such Combined Historical Summaries are incorporated herein
by reference in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
Any financial statements and schedules hereafter filed by AIMCO or the
AIMCO Operating Partnership pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act and incorporated herein by reference in this Prospectus that
have been examined and are the subject of a report by independent accountants
will be so incorporated herein by reference in reliance upon such reports given
and upon the authority of such firms as experts in accounting and auditing to
the extent covered by consents filed with the Commission.
4547
4951
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTIONS.
The estimated expenses, other than underwriting discounts and commissions,
in connection with the offering of the Securities, are as follows:
Registration Fee -- Securities and Exchange Commission...... $442,500
Printing and Engraving Expenses............................. 125,000
Legal Fees and Expenses (other than Blue Sky)............... 100,000
Accounting Fees and Expenses................................ 75,000
Blue Sky Fees and Expenses (including fees of counsel)...... 20,000
Trustee's and registrar's fees and expenses................. 5,000
Miscellaneous............................................... 10,000
--------
TOTAL............................................. $777,500
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
AIMCO
AIMCO's Charter limits the liability of AIMCO's directors and officers to
AIMCO and its stockholders to the fullest extent permitted from time to time by
Maryland law. Maryland law presently permits the liability of directors and
officers to a corporation or its stockholders for money damages to be limited,
except (i) to the extent that it is proved that the director or officer actually
received an improper benefit or profit in money, property or services for the
amount of the benefit or profit in money, property or services actually
received, or (ii) if a judgment or other final adjudication is entered in a
proceeding based on a finding that the director's or officer's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. This provision
does not limit the ability of AIMCO or its stockholders to obtain other relief,
such as an injunction or rescission.
AIMCO's Charter and Bylaws require AIMCO to indemnify its directors and
officers and permits AIMCO to indemnify certain other parties to the fullest
extent permitted from time to time by Maryland law. The MGCL permits a
corporation to indemnify its directors, officers and certain other parties
against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which they may be
made a party by reason of their service to or at the request of the corporation,
unless it is established that (i) the act or omission of the indemnified party
was material to the matter giving rise to the proceeding and (x) was committed
in bad faith or (y) was the result of active and deliberate dishonesty, (ii) the
indemnified party actually received an improper personal benefit in money,
property or services or (iii) in the case of any criminal proceeding, the
indemnified party had reasonable cause to believe that the act or omission was
unlawful. Indemnification may be made against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by the director or officer
in connection with the proceeding; provided, however, that if the proceeding is
one by or in the right of the corporation, indemnification may not be made with
respect to any proceeding in which the director or officer has been adjudged to
be liable to the corporation. In addition, a director or officer may not be
indemnified with respect to any proceeding charging improper personal benefit to
the director or officer in which the director or officer was adjudged to be
liable on the basis that personal benefit was improperly received. The
termination of any proceeding by conviction, or upon a plea of nolo contendere
or its equivalent, or an entry of any order of probation prior to judgment,
creates a rebuttable presumption that the director or officer did not meet the
requisite standard of conduct required for indemnification to be permitted. It
is the position of the Commission that indemnification of directors and officers
for liabilities arising under the Securities Act is against public policy and is
unenforceable pursuant to Section 14 of the Securities Act.
II-1
5052
AIMCO has entered into agreements with certain of its officers, pursuant to
which AIMCO has agreed to indemnify such officers to the fullest extent
permitted by applicable law.
THE AIMCO OPERATING PARTNERSHIP
The AIMCO Operating Partnership Agreement requires the AIMCO Operating
Partnership to indemnify itsthe directors and officers of the General Partner (each
an "Indemnitee") to the fullest extent authorized by applicable law against any
and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, attorney's fees and other legal fees and
expenses), judgments, fines, settlements and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the AIMCO
Operating Partnership. Such indemnification continues after the Indemnitee
ceases to be a director or officer. The right to indemnification includes the
right to be paid by the AIMCO Operating Partnership the expenses incurred in
defending any proceeding in advance of its final disposition upon the delivery
of an undertaking by or on behalf of the Indemnitee to repay all amounts
advanced if a final judicial decision is rendered that such Indemnitee did not
meet the standard of conduct permitting indemnification under the AIMCO
Operating Partnership Agreement or applicable law.
The AIMCO Operating Partnership maintains insurance, at its expense, to
protect against any liability or loss, regardless of whether any director or
officer is entitled to indemnification under the AIMCO Operating Partnership
Agreement or applicable law.
ITEM 16. EXHIBITS.
*1.1 -- Form of Underwriting Agreement for Debt Securities of
Apartment Investment and Management Company.
*1.2 -- Form of Underwriting Agreement for Preferred Stock of
Apartment Investment and Management Company.
*1.3 -- Form of Underwriting Agreement for Class A Common Stock of
Apartment Investment and Management Company.
*1.4 -- Form of Underwriting Agreement for Warrants to purchase
Securities of Apartment Investment and Management Company.
*1.5 -- Form of Underwriting Agreement for Debt Securities of AIMCO
Properties, L.P.
****4.1 -- Form of Senior Debt Securities Indenture for Apartment
Investment and Management Company (including form of Note).
****4.2 -- Form of Senior Subordinated Debt Securities Indenture for
Apartment Investment and Management Company (including form
of Note).
****4.3 -- Form of Subordinated Debt Securities Indenture for Apartment
Investment and Management Company (including form of Note).
*4.4 --4.4 Form of Senior Debt Securities Indenture for AIMCO
Properties, L.P. (including form of Note)
*4.5 --4.5 Form of Senior Subordinated Debt Securities Indenture for
AIMCO Properties, L.P. (including form of Note)
*4.6 --4.6 Form of Subordinated Debt Securities Indenture for AIMCO
Properties, L.P. (including form of Note)
****4.7 -- Form of Warrant Agreement (including form of Warrant
Certificate) for Apartment Investment and Management
Company.
*4.8 -- Form of Preferred Stock Certificate for Apartment Investment
and Management Company.
**4.9 -- Specimen certificate for Class A Common Stock of Apartment
Investment and Management Company.
II-2
5153
*5.1 --5.1 Opinion of Piper & Marbury L.L.P. regarding the validity of
the securities of Apartment Investment and Management
Company offered hereby.
*5.2 --5.2 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding the validity of the securities of AIMCO
Properties, L.P. offered hereby.
*8.1 --8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding tax matters.
***12.1 -- Computation of ratio of earnings to fixed charges.
***12.2 -- Computation of ratio of earnings to combined fixed charges
and preferred stock dividends.
23.1 -- Consent of Ernst & Young LLP Denver, Colorado,Dallas, Texas, dated October 14,November
20, 1998.
23.2 -- Consent of Ernst & Young LLP Chicago, Illinois, dated
October 14,November 20, 1998.
23.3 -- Consent of Ernst & Young LLP Greenville, South Carolina,
dated October 14,November 20, 1998.
*23.4 --23.4 Consent of Beers & Cutler PLLC, dated November 20, 1998.
23.5 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in opinions filed as Exhibit 5.2 and Exhibit 8.1).
*23.5 --23.6 Consent of Piper & Marbury L.L.P. (included in opinion filed
as Exhibit 5.1).
****24.1 -- Power of Attorney for Apartment Investment and Management
Company.
****24.2 -- Power of Attorney for AIMCO Properties, L.P.
*25.1 --25.1 Statement of Eligibility and Qualification of Trustee under
the Senior Debt Securities Indenture for Apartment
Investment and Management Company.
*25.2 --25.2 Statement of Eligibility and Qualification of Trustee under
the Senior Subordinated Debt Securities Indenture for
Apartment Investment and Management Company.
*25.3 --25.3 Statement of Eligibility and Qualification of Trustee under
the Subordinated Debt Securities Indenture for Apartment
Investment and Management Company.
*25.4 --25.4 Statement of Eligibility and Qualification of Trustee under
the Senior Debt Securities Indenture for AIMCO Properties,
L.P.
*25.5 --25.5 Statement of Eligibility and Qualification of Trustee under
the Senior Subordinated Debt Securities Indenture for AIMCO
Properties, L.P.
*25.6 --25.6 Statement of Eligibility and Qualification of Trustee under
the Subordinated Debt Securities Indenture for AIMCO
Properties, L.P.
- ---------------
* To be filed by amendment or incorporated by reference prior to the offering
of Securities.
** Incorporated by reference from AIMCO's Registration Statement on Form 8-A
filed on July 19, 1994.
*** Incorporated by reference from Amendment No. 5 to AIMCO's Form 8-K dated
March 17, 1998, filed September 4, 1998.
**** Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
II-3
52
changes in volume and price represent no more than a 20% change in the
maximum aggregate
II-3
54
offering price set forth in the "Calculation of Registration Fee" table
in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by either registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrants' annual reports pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrants of expenses incurred
or paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrants hereby undertake to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Securities Act.
II-4
5355
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrantApartment
Investment and Management Company certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on this Form S-3 and has
duly caused this Amendment No. 2 to the Registration Statement on Form S-3 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Denver, State of Colorado, on the 16th25th day of October, 1998November, 1998.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ TERRY CONSIDINE
----------------------------------
Terry Considine
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement on Form S-3 has been signed below by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ TERRY CONSIDINE Chairman of the Board and Chief October 16, 1998
- ----------------------------------------------------- Executive Officer (Principal
Terry Considine Executive Officer)
* Vice Chairman, President and October 16, 1998
- ----------------------------------------------------- Director
Peter K. Kompaniez
* Senior Vice President and Chief October 16, 1998
- ----------------------------------------------------- Financial Officer (Principal
Troy D. Butts Financial Officer and Accounting
Officer)
* Director October 16, 1998
- -----------------------------------------------------
Richard S. Ellwood
* Director October 16, 1998
- -----------------------------------------------------
J. Landis Martin
* Director October 16, 1998
- -----------------------------------------------------
Thomas L. Rhodes
* Director October 16, 1998
- -----------------------------------------------------
John D. Smith
*By: /s/ TERRY CONSIDINE
-------------------------------
Terry Considine
Attorney-in-Fact
II-5
54
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on this Form S-3 and has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, State of Colorado, on the 16th
day of October, 1998.
AIMCO PROPERTIES, L P
By: AIMCO-GP, INC.
its General Partner
By: /s/ TERRY CONSIDINE
----------------------------------
Terry Considine,
Chairman and Chief Executive
Officer
of the General Partner
Pursuant to the requirements of the Securities Act of 1933, this AmendmentNo. 2 to the Registration Statement on Form S-3 has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ TERRY CONSIDINE Chairman and Chief Executive October 16,November 25, 1998
- ----------------------------------------------------- Officer
Terry Considine
* Vice Chairman and President November 25, 1998
- -----------------------------------------------------
Peter K. Kompaniez
* Senior Vice President and Chief November 25, 1998
- ----------------------------------------------------- Financial Officer
Troy D. Butts
* Director November 25, 1998
- -----------------------------------------------------
Richard S. Ellwood
* Director November 25, 1998
- -----------------------------------------------------
J. Landis Martin
* Director November 25, 1998
- -----------------------------------------------------
Thomas L. Rhodes
* Director November 25, 1998
- -----------------------------------------------------
John D. Smith
*By: /s/ TERRY CONSIDINE
-------------------------------
Terry Considine
Attorney-in-Fact
II-5
56
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AIMCO
Properties, L.P. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on this Form S-3 and has duly caused
this Amendment No. 2 to the Registration Statement on Form S-3 to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Denver,
State of Colorado, on the 25th day of November, 1998.
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
its General Partner
By: /s/ TERRY CONSIDINE
----------------------------------
Terry Considine,
Chairman and Chief Executive
Officer
of the General Partner
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement on Form S-3 has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ TERRY CONSIDINE Chairman and Chief Executive November 25, 1998
- ----------------------------------------------------- Officer of the General
Terry Considine Partner
(Principal Executive
Officer)
* Vice Chairman and President of October 16,November 25, 1998
- ----------------------------------------------------- of the General Partner
Peter K. Kompaniez
* Senior Vice President and October 16,November 25, 1998
- ----------------------------------------------------- Chief Financial Officer of
Troy D. Butts the General Partner
(Principal Financial Officer
and Accounting Officer)
*By: /s/ TERRY CONSIDINE
-------------------------------
Terry Considine
Attorney-in-Fact
II-6
5557
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
*1.1 -- Form of Underwriting Agreement for Debt Securities of
Apartment Investment and Management Company.
*1.2 -- Form of Underwriting Agreement for Preferred Stock of
Apartment Investment and Management Company.
*1.3 -- Form of Underwriting Agreement for Class A Common Stock of
Apartment Investment and Management Company.
*1.4 -- Form of Underwriting Agreement for Warrants to purchase
Securities of Apartment Investment and Management Company.
*1.5 -- Form of Underwriting Agreement for Debt Securities of AIMCO
Properties, L.P.
****4.1 -- Form of Senior Debt Securities Indenture for Apartment
Investment and Management Company (including form of Note).
****4.2 -- Form of Senior Subordinated Debt Securities Indenture for
Apartment Investment and Management Company (including form
of Note).
****4.3 -- Form of Subordinated Debt Securities Indenture for Apartment
Investment and Management Company (including form of Note).
*4.4 --4.4 Form of Senior Debt Securities Indenture for AIMCO
Properties, L.P. (including form of Note)
*4.5 --4.5 Form of Senior Subordinated Debt Securities Indenture for
AIMCO Properties, L.P. (including form of Note)
*4.6 --4.6 Form of Subordinated Debt Securities Indenture for AIMCO
Properties, L.P. (including form of Note)
****4.7 -- Form of Warrant Agreement (including form of Warrant
Certificate) for Apartment Investment and Management
Company.
*4.8 -- Form of Preferred Stock Certificate for Apartment Investment
and Management Company.
**4.9 -- Specimen certificate for Class A Common Stock of Apartment
Investment and Management Company.
*5.1 --5.1 Opinion of Piper & Marbury L.L.P. regarding the validity of
the securities of Apartment Investment and Management
Company offered hereby.
*5.2 --5.2 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding the validity of the securities of AIMCO
Properties, L.P. offered hereby.
*8.1 --8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding tax matters.
***12.1 -- Computation of ratio of earnings to fixed charges.
***12.2 -- Computation of ratio of earnings to combined fixed charges
and preferred stock dividends.
23.1 -- Consent of Ernst & Young LLP Denver, Colorado,Dallas, Texas, dated October 14,November
20, 1998.
23.2 -- Consent of Ernst & Young LLP Chicago, Illinois, dated
October 14,November 20, 1998.
23.3 -- Consent of Ernst & Young LLP Greenville, South Carolina,
dated October 14,November 20, 1998.
*23.4 --23.4 Consent of Beers & Cutler PLLC, dated November 20, 1998.
23.5 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in opinions filed as Exhibit 5.2 and Exhibit
8.1).
*23.5 -- Consent of Piper & Marbury L.L.P. (included in opinion filed as Exhibit 5.1)5.2 and Exhibit 8.1).
5658
EXHIBIT
NUMBER DESCRIPTION
------- -----------
23.6 Consent of Piper & Marbury L.L.P. (included in opinion filed
as Exhibit 5.1).
****24.1 -- Power of Attorney for Apartment Investment and Management
Company.
****24.2 -- Power of Attorney for AIMCO Properties, L.P.
*25.1 --25.1 Statement of Eligibility and Qualification of Trustee under
the Senior Debt Securities Indenture for Apartment
Investment and Management Company.
*25.2 --25.2 Statement of Eligibility and Qualification of Trustee under
the Senior Subordinated Debt Securities Indenture for
Apartment Investment and Management Company.
*25.3 --25.3 Statement of Eligibility and Qualification of Trustee under
the Subordinated Debt Securities Indenture for Apartment
Investment and Management Company.
*25.4 --25.4 Statement of Eligibility and Qualification of Trustee under
the Senior Debt Securities Indenture for AIMCO Properties,
L.P.
*25.5 --25.5 Statement of Eligibility and Qualification of Trustee under
the Senior Subordinated Debt Securities Indenture for AIMCO
Properties, L.P.
*25.6 --25.6 Statement of Eligibility and Qualification of Trustee under
the Subordinated Debt Securities Indenture for AIMCO
Properties, L.P.
- ---------------
* To be filed by amendment or incorporated by reference prior to the offering
of Securities.
** Incorporated by reference from AIMCO's Registration Statement on Form 8-A
filed on July 19, 1994.
*** Incorporated by reference from Amendment No. 4 to AIMCO's Form 8-K dated
March 17, 1998, filed August 6, 1998.
**** Previously filed.