FOURTH AMENDMENT TO THE SECOND
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P.
This FOURTH AMENDMENT TO THE SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., dated as of March 25, 1998 (this
"Amendment"), is being executed by AIMCO-GP, Inc., a Delaware corporation (the
"General Partner"), as the general partner of AIMCO Properties, L.P., a Delaware
limited partnership (the "Partnership"), pursuant to the authority conferred on
the General Partner by Section 7.3.C(7) of the Second Amended and Restated
Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29,
1994 (the "Agreement"). Capitalized terms used, but not otherwise defined
herein, shall have the respective meanings ascribed thereto in the Agreement.
WHEREAS, pursuant to Section 4.2.A of the Agreement, the General Partner is
authorized to cause the Partnership to issue Partnership Units with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties as the General Partner shall determine and as shall be
set forth in a written document attached to and made an exhibit to the
Agreement; and
WHEREAS, the General Partner has determined that it is in the best
interests of the Partnership to issue up to 15,000 units of a new class of
Partnership Units in consideration of capital contributions to the Partnership
of $138 per unit.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Agreement is hereby amended by the addition of a new exhibit,
entitled "EXHIBIT I," in the form attached hereto, which shall be attached to
and made a part of the Agreement.
2. Each Person to whom the General Partner shall initially cause the
Partnership to issue any of the Partnership Units described on EXHIBIT I shall
be admitted to the Partnership as a Limited Partner with the rights of holders
of the Partnership Units set forth on EXHIBIT I. The General Partner shall
amend EXHIBIT A to the Agreement to reflect the admittance of each such Person
as a Limited Partner and the issuance of such Partnership Units to each such
Person.
3. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Agreement shall remain unmodified and continue
in full force and
effect and, except as amended hereby, all of the terms, covenants, provisions
and conditions of the Agreement are hereby ratified and confirmed in all
respects.
IN WITNESS WHEREOF, this Amendment has been executed as of the date first
written above.
GENERAL PARTNER:
AIMCO-GP, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------------
Name:
Title:
EXHIBIT I
PARTNERSHIP UNIT DESIGNATION
OF THE
CLASS I HIGH PERFORMANCE PARTNERSHIP UNITS
OF AIMCO PROPERTIES, L.P.
1. NUMBER OF UNITS AND DESIGNATION.
A class of Partnership Units is hereby designated as "Class I High
Performance Partnership Units," and the number of Partnership Units initially
constituting such class shall be fifteen thousand (15,000), subject to
adjustment at the Class I High Performance Valuation Date, as provided in
Section 3 hereof.
2. DEFINITIONS.
For purposes of this Partnership Unit Designation, the following terms
shall have the meanings indicated in this Section 2. Capitalized terms used and
not otherwise defined herein shall have the meanings assigned thereto in the
Agreement.
"AIMCO EQUITY CAPITALIZATION" shall mean the quotient obtained by dividing
(i) the sum of the AIMCO Market Values for each trading day included in the
Measurement Period, by (ii) the number of trading days included in the
Measurement Period.
"AIMCO MARKET VALUE" shall mean, for any date, the product of (i) the
number of REIT Shares and Partnership Units (other than Partnership Preferred
Units) outstanding as of the close of business on such date, multiplied by (ii)
the Value of a REIT Share on such date.
"AIMCO TOTAL RETURN" shall mean the Total Return of the REIT Shares for the
Measurement Period.
"AGREEMENT" shall mean the Second Amended and Restated Agreement of Limited
Partnership of the Partnership, as amended.
"CHANGE OF CONTROL" shall mean the occurrence of any of the following
events:
(i) an acquisition (other than directly from the Previous General
Partner) of any voting securities of the Previous General Partner (the "Voting
Securities) by any "person" (as the term "person" is used for purposes of
Section 13(d) or Section
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14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
immediately after which such person has "beneficial ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) ("Beneficial
Ownership") of 20% or more of the combined voting power of the Previous General
Partner's then outstanding Voting Securities; provided, however, in determining
whether a Change in Control has occurred, Voting Securities that are acquired in
a Non-Control Acquisition (as hereinafter defined) shall not constitute an
acquisition that would cause a Change in Control. "Non-Control Acquisition"
shall mean an acquisition by (A) an employee benefit plan (or a trust forming a
part thereof) maintained by (1) the Previous General Partner or (2) any
corporation, partnership or other person of which a majority of its voting power
or its equity securities or equity interest is owned directly or indirectly by
the Previous General Partner or in which the Previous General Partner serves as
a general partner or manager (a "Subsidiary"), (B) the Previous General Partner
or any Subsidiary, or (C) any person in connection with a Non-Control
Transaction (as hereinafter defined);
(ii) the individuals who constitute the Board of Directors of the
Previous General Partner as of January 1, 1998 (the "Incumbent Board") cease for
any reason to constitute at least two-thirds (2/3) of the Board of Directors;
provided, however, that if the election, or nomination for election by the
Previous General Partner's stockholders, of any new director was approved by a
vote of at least two-thirds (2/3) of the Incumbent Board, such new director
shall be considered as a member of the Incumbent Board; provided, further, that
no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "election contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) (an "Election Contest") or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board of
Directors (a "Proxy Contest") including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest; or
(iii) approval by stockholders of the Previous General Partner of:
(A) a merger, consolidation, share exchange or reorganization involving the
Previous General Partner, unless (1) the stockholders of the Previous General
Partner, immediately before such merger, consolidation, share exchange or
reorganization, own, directly or indirectly immediately following such merger,
consolidation, share exchange or reorganization, at least 80% of the combined
voting power of the outstanding voting securities of the corporation that is the
successor in such merger, consolidation, share exchange or reorganization (the
"Surviving Company") in substantially the same proportion as their ownership of
the Voting Securities immediately before such merger, consolidation, share
exchange or reorganization, (2) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for such merger, consolidation, share exchange or reorganization constitute at
least two-thirds (2/3) of the
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members of the board of directors of the Surviving Company, and (3) no persons
(other than the Previous General Partner or any Subsidiary, any employee benefit
plan (or any trust forming a part thereof) maintained by the Previous General
Partner, the Surviving Company or any Subsidiary, or any person who, immediately
prior to such merger, consolidation, share exchange or reorganization had
Beneficial Ownership of 15% or more of the then outstanding Voting Securities
has Beneficial Ownership of 15% or more of the combined voting power of the
Surviving Company's then outstanding voting securities (a transaction described
in clauses (1) through (3) is referred to herein as a "Non-Control
Transaction"); (B) a complete liquidation or dissolution of the Previous General
Partner; or (C) an agreement for the sale or other disposition of all or
substantially all of the assets of the Previous General Partner to any person
(other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change of Control shall not be deemed to
occur solely because any person (a "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Previous General
Partner that, by reducing the number of Voting Securities outstanding, increases
the proportional number of shares Beneficially Owned by such Subject Person,
provided that if a Change of Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities by the Previous
General Partner, and after such share acquisition by the Previous General
Partner, such Subject Person becomes the Beneficial Owner of any additional
Voting Securities that increases the percentage of the then outstanding Voting
Securities Beneficially Owned by such Subject Person, then a Change of Control
shall occur.
"CLASS I HIGH PERFORMANCE CASH AMOUNT" shall mean, as of any date, the
lesser of (i) an amount of cash equal to the product of the amount that a Holder
would receive in respect of each Class I High Performance Partnership Unit if
the Partnership sold all of its properties at their fair market value (which may
be determined by reference to the Value of a REIT Share), paid all of its debts
and distributed the remaining proceeds to the Partners as provided in Section
13.2 of the Agreement, determined as of the applicable Valuation Date, or (ii)
in the case of a Declination followed by a Public Offering Funding, the Public
Offering Funding Amount.
"CLASS I HIGH PERFORMANCE PARTNERSHIP UNIT" shall mean a Partnership Unit
with the designations, preferences and relative, participating, optional or
other special rights, powers and duties as are set forth in this EXHIBIT I.
"CLASS I HIGH PERFORMANCE VALUATION DATE" shall mean the earlier to occur
of (i) January 1, 2001, or (ii) the date on which a Change of Control occurs.
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"DETERMINATION DATE" shall mean (i) when used with respect to any dividend
or other distribution, the date fixed for the determination of the holders of
the securities entitled to receive such dividend or distribution, or, if a
dividend or distribution is paid or made without fixing such a date, the date of
such dividend or distribution, and (ii) when used with respect to any split,
subdivision, reverse stock split, combination or reclassification of securities,
the date upon which such split, subdivision, reverse stock split, combination or
reclassification becomes effective.
"EXCESS RETURN" shall mean the amount (measured as a percentage), if any,
by which (i) the AIMCO Total Return exceeds (ii) the Hurdle Rate of Return.
"EX-DATE" shall mean (i) when used with respect to any dividend or
distribution, the first date on which the securities on which the dividend or
distribution is payable trade regular way on the relevant exchange or in the
relevant market without the right to receive such dividend or distribution, and
(ii) when used with respect to any split, subdivision, reverse stock split,
combination or reclassification of securities, the first date on which the
securities trade regular way on such exchange or in such market to reflect such
split, subdivision, reverse stock split, combination or reclassification
becoming effective.
"EXTRAORDINARY DISTRIBUTION" shall mean the distribution by the Previous
General Partner, by dividend or otherwise, to all holders of its REIT Shares of
evidences of its indebtedness or assets (including securities) other than cash.
"HURDLE RATE OF RETURN" shall mean the greater of (x) 115% of the Industry
Total Return, or (y) 30% (or, if the Class I High Performance Valuation Date is
not January 1, 2001, a percentage equal to the return over the Measurement
Period that, if compounded annually over three years, would result in a
cumulative return of 30%).
"INDUSTRY TOTAL RETURN" shall mean the Total Return of the securities
included in the Industry Peer Group Index for the Measurement Period, with such
average determined in a manner consistent with the manner in which such index is
calculated; PROVIDED, HOWEVER, that if such Total Return would be less than zero
without giving effect to the reinvestment of dividends, then the "Industry Total
Return" shall be equal to zero.
"INDUSTRY PEER GROUP INDEX" shall mean the Xxxxxx Xxxxxxx XXXX Index or any
other similar industry index approved by the Board of Directors of the Previous
General Partner.
"MEASUREMENT PERIOD" shall mean the period from and including January 1,
1998 to but excluding the Class I High Performance Valuation Date.
"PARTNERSHIP" shall mean AIMCO Properties, L.P., a Delaware limited
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partnership.
"TOTAL RETURN" shall mean, for any security and for any period, the
cumulative total return for such security over such period, as measured by (i)
the sum of (A) the cumulative amount of dividends paid in respect of such
security for such period (assuming that all dividends other than Extraordinary
Distributions are reinvested in such security as of the payment date for such
dividend based on the security price on the dividend payment date), and (B) an
amount equal to (1) the security price at the end of such period, minus (2) the
security price at the beginning of such period, divided by (ii) the security
price at the beginning of the measurement period; PROVIDED, HOWEVER, that if the
foregoing calculation results in a negative number, the "Total Return" shall be
equal to zero.
"VALUE" shall have the meaning set forth in the Agreement, except that
Value shall be determined by reference to the average of the daily market prices
for twenty (20) consecutive trading days rather than ten (10) consecutive
trading days.
3. ADJUSTMENT OF UNITS AT CLASS I HIGH PERFORMANCE VALUATION DATE.
(a) If, on the Class I High Performance Valuation Date there is any
Excess Return, then, from and after such date, each Class I High Performance
Partnership Unit shall, without any action on the part of the Partnership, the
General Partner or the Holder thereof, be automatically adjusted to equal a
number of Class I High Performance Partnership Units equal to the quotient
obtained by dividing (x) the product of (A) 15% of the Excess Return, multiplied
by (B) the AIMCO Equity Capitalization, by (y) the product of (A) 15,000 and (B)
the Value of a REIT Share on the Class I High Performance Valuation Date. For
illustrative purposes, examples of the calculation of such adjustment are set
forth in ANNEX I hereto.
(b) If, on the Class I High Performance Valuation Date there is no
Excess Return, then, from and after such date, each Class I High Performance
Partnership Units shall, without any action on the part of the Partnership, the
General Partner or the Holder thereof, be automatically adjusted to equal 1/100
of a Class I High Performance Partnership Unit.
4. DISTRIBUTIONS.
On and after the Class I High Performance Valuation Date, the Holders of
Class I High Performance Partnership Units shall be entitled to receive
distributions (other than distributions upon liquidation) if, as, when and in
the same amounts and of the same type as may be paid to Holders of Partnership
Common Units as if each Holder of Class I High Performance Partnership Units
held an equal number of Partnership Common Units
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originally issued on the Class I High Performance Valuation Date.
5. ALLOCATIONS.
(a) From and after the Class I High Performance Valuation Date, Net Income
and Net Loss shall be allocated to each of the Holders of Class I High
Performance Partnership Units as if each such Holder was the Holder of an equal
number of Partnership Common Units originally issued on the Class I High
Performance Valuation Date.
(b) In the event that the Partnership disposes of all or substantially all
of its assets in a transaction that will lead to a liquidation of the
Partnership pursuant to Article XIII of the Agreement, then, notwithstanding
Section 6.3.C of the Agreement, each Holder of Class I High Performance
Partnership Units shall be specifically allocated items of Partnership income
and gain in an amount sufficient to cause the Capital Account of such Holder to
be equal to that of a Holder of an equal number of Partnership Common Units.
6. REDEMPTION.
Upon the occurrence of a Change of Control, and subject to the applicable
requirements of Federal securities laws and any securities exchange or quotation
system rules or regulations, each Holder of Class I High Performance Partnership
Units shall have the redemption rights of Qualifying Parties set forth in
Section 8.6 of the Agreement, except that (i) all references therein to
"Redeemable Units" or "Partnership Common Units" shall be deemed to be
references to Class I High Performance Partnership Units, (ii) the first
Twelve-Month Period applicable to all Class I High Performance Partnership Units
shall be deemed to have passed, (iii) all references therein to "Cash Amount"
shall be deemed to be references to the Class I High Performance Cash Amount,
and (iv) in the event that the Previous General Partner elects to acquire Class
I High Performance Partnership Units that have been tendered for Redemption, the
Previous General Partner shall acquire each such Class I High Performance
Partnership Unit in exchange for a number of REIT Shares equal to the quotient
obtained by dividing the Class I High Performance Cash Amount by the Value of a
REIT Share, determined as of the applicable Valuation Date.
7. STATUS OF REACQUIRED UNITS.
All Class I High Performance Partnership Units which shall have been issued
and reacquired in any manner by the Partnership shall be deemed cancelled and no
longer outstanding.
8. RESTRICTIONS ON OWNERSHIP AND TRANSFER.
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The restrictions on Transfer set forth in Sections 11.1.B and 11.3.A of the
Agreement shall not apply to Transfers of Class I High Performance Partnership
Units. Prior to the Class I High Performance Valuation Date, the Class I High
Performance Partnership Units shall be owned and held solely by SMP I, L.L.C., a
Delaware limited liability company ("SMP"), Xxxxxxx X. Xxxxxxx, X. Xxxxxx
Xxxxxx, Xxxxxx X. Xxxxxx and Xxxx X. Xxxxx. On or after the Class I High
Performance Valuation Date, the Class I High Performance Partnership Units may
be Transferred (i) by SMP to (a) any Person who is a member (a "Member") of SMP
immediately prior to such transfer, (b) a Family Member of a Member, (c) a
Controlled Entity of a Member, (c) any Person with respect to whom the Member
constitutes a Controlled Entity, (d) upon the death of a Member, by will or by
the laws of descent and distribution to any Qualified Transferee, and (ii) by
any other Person to (a) a Family Member of a such Person, (b) a Controlled
Entity of such Person, (c) any other Person with respect to whom such Person
constitutes a Controlled Entity, (d) upon the death of such Person, by will or
by the laws of descent and distribution to any Qualified Transferee,
9. VOTING RIGHTS.
The definition of "Majority in Interest of the Limited Partners" in the
Agreement is hereby amended to read in its entirety as follows:
"MAJORITY IN INTEREST OF THE LIMITED PARTNERS" means Limited Partners
(other than (i) the Special Limited Partner and (ii) any Limited Partner
fifty percent (50%) or more of whose equity is owned, directly or
indirectly, by the (a) General Partner or (b) any REIT as to which the
General Partner is a "qualified REIT subsidiary" (within the meaning of
Code Section 856(i)(2))) holding more than fifty percent (50%) of the
outstanding Partnership Common Units and Class I High Performance
Partnership Units held by all Limited Partners (other than (i) the Special
Limited Partner and (ii) any Partner fifty percent (50%) or more of whose
equity is owned, directly or indirectly, by (a) the General Partner or (b)
any REIT as to which the General Partner is a "qualified REIT subsidiary"
(within the meaning of Code Section 856(i)(2))).
10. ADJUSTMENTS.
(a) In the event of any Extraordinary Distribution occurring on or after
January 1, 1998, for purposes of determining the Value of a REIT Share or the
AIMCO Total Return, each price of a REIT Share determined as of a date on or
after the Ex-Date for such Extraordinary Distribution shall be adjusted by
multiplying such price by a fraction (i) the numerator of which shall be the
price of a REIT Share on the date immediately prior to such Ex-Date, and (ii)
the denominator of which shall be (A) the
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price of a REIT Share on the date immediately prior to such Ex-Date, minus (B)
the fair market value on the date fixed for such determination of the portion of
the evidences of indebtedness or assets so distributed applicable to one REIT
Share (as determined by the General Partner, whose determination shall be
conclusive); PROVIDED FURTHER, that such amount shall be so adjusted for each
such Extraordinary Distribution occurring on or after January 1, 1998.
(b) In the event that, on or after January 1, 1998, the Previous General
Partner (i) declares or pays a dividend on its outstanding REIT Shares in REIT
Shares or makes a distribution to all holders of its outstanding REIT Shares in
REIT Shares, (ii) splits or subdivides its outstanding REIT Shares, (iii)
effects a reverse stock split or otherwise combines its outstanding REIT Shares
into a smaller number of REIT Shares, or (iv) otherwise reclassifies its
outstanding REIT Shares, then, for purposes of determining the Value of a REIT
Share or the AIMCO Total Return, each price of a REIT Share determined as of a
date on or after the Ex-Date for such transaction shall be adjusted by
multiplying such price by a fraction (x) the numerator of which shall be the
number of REIT Shares issued and outstanding on the Determination Date for such
dividend, distribution, split, subdivision, reverse stock split, combination or
reclassification (assuming for such purposes that such dividend, distribution,
split, subdivision, reverse split or combination has occurred as of such time)
and (y) the denominator of which shall be the actual number of REIT Shares
(determined without the above assumption) issued and outstanding on the
Determination Date for such dividend, distribution, split, subdivision, reverse
stock split, combination or reclassification.
(c) The General Partner shall have authority to appropriately adjust the
AIMCO Market Value, the AIMCO Total Return or the Value of a REIT Share if any
other transaction or circumstance occurs or arises that would have an
inequitable result.
11. GENERAL.
The ownership of Class I High Performance Partnership Units may (but need
not, in the sole and absolute discretion of the General Partner) be evidenced by
one or more certificates. The General Partner shall amend EXHIBIT A to the
Agreement from time to time to the extent necessary to reflect accurately the
issuance of, and subsequent conversion, redemption, or any other event having an
effect on the ownership of, Class I High Performance Partnership Units.
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ANNEX I TO
EXHIBIT I
NUMERICAL EXAMPLES OF THE CALCULATION OF THE ADJUSTMENT TO THE NUMBER
OF CLASS I HIGH PERFORMANCE PARTNERSHIP UNITS ON THE CLASS I HIGH
PERFORMANCE VALUATION DATE
The following table illustrates the adjustment that would be made on the
Class I High Performance Valuation Date to the number of Class I High
Performance Units under different circumstances. Except as otherwise indicated,
it is assumed, for purposes of the illustration, that: (i) the Class I High
Performance Valuation Date is January 1, 2001; (ii) the AIMCO Total Return is
14% per year; (iii) the Industry Total Return is 10% per year; and (iv) the
weighted average market value of outstanding equity (Common Stock and
Partnership Units, other than Partnership Preferred Units) during the
Measurement Period is $3,000,000,000 (assumptions (i) - (iv) are referred to as
the "Base Case").
(1) (2) (3) (4) (5) (6)
----- ------ ----- ----- ------ -----
Cumulative Total Return Over Three Years:
Company Common Stock 48.2% 119.7% 48.2% 48.2% 119.7% 26.0%
Peer Group Index 32.4% 32.4% 71.2% 0% 32.4% 3.0%
115% of Peer Group Index 38.1% 38.1% 83.7% 0% 38.1% 3.5%
Minimum Return 30% 30% 30% 30% 30% 30%
Excess Return 10.1% 81.6% 0% 18.2% 81.6% 0%
Weighted Average Market Value of
Outstanding Equity (millions) $3,000 $4,000 $3,000 $3,000 $10,000 $4,000
Excess Shareholder Return (millions) $303 $3,264 $0 $546 $8,160 $0
Value of High Performance Units (millions) $45.4 $489.6 $0 $81.9 $1,224.0 $0
Value of a REIT Share $50 $70 $50 $50 $70 $40
Adjusted Number of Class I High Performance Units:
Total 908,000 6,994,286 0 1,638,000 17,485,714 0
Per Unit Adjustment 60.5 466.3 0 109.2 1,165.7 0
(1) Base Case.
(2) Base Case, except that the Company Common Stock has a 30% annual Total
Return and the weighted average market value of outstanding equity is $4
billion.
(3) Base Case, except that the Peer Group Index has a 20% annual Total Return.
(4) Base Case, except that the Peer Group Index has a negative annual Total
Return of 10%.
(5) Base Case, except that the Company Common Stock has a 30% annual Total
Return and the weighted average market value of outstanding equity is $10
billion.
(6) Base Case, except that the Company Common Stock has an 8% annual Total
Return, the Peer Group Index has a 1% annual Total Return and the weighted
average market value of outstanding equity is $4 billion.
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