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Exhibit 10.1

         EXCHANGE AGREEMENT

DATED AS OF SEPTEMBER 24, 2004

AMONG

SECURITY CAPITAL PREFERRED GROWTH INCORPORATED,

APARTMENT INVESTMENT AND MANAGEMENT COMPANY

AND

AIMCO PROPERTIES, L.P.

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Table of Contents

 
   
   
  Page

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I.
 
PURCHASE AND SALE OF SHARES
 
1
 
 
1.1
 
Exchange of Shares
 
1
 
 
1.2
 
Closing
 
1
II.
 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
2
 
 
2.1
 
Organization, Good Standing and Qualification
 
2
 
 
2.2
 
Power, Authority and Enforceability
 
2
 
 
2.3
 
Capitalization
 
2
 
 
2.4
 
Valid Issuance of Shares
 
3
 
 
2.5
 
Compliance with Other Instruments
 
3
 
 
2.6
 
Exchange Exempt Under the Securities Act
 
3
 
 
2.7
 
Financial Statements
 
3
 
 
2.8
 
Exchange Act Compliance
 
4
 
 
2.9
 
No Material Adverse Changes
 
4
 
 
2.10
 
Litigation
 
4
 
 
2.11
 
Title to Properties; Leasehold Interests
 
4
 
 
2.12
 
Environmental Compliance
 
5
 
 
2.13
 
Taxes
 
6
 
 
2.14
 
Insurance
 
6
 
 
2.15
 
Employees; ERISA
 
7
 
 
2.16
 
Legal Compliance
 
7
 
 
2.17
 
Governmental Consent
 
7
 
 
2.18
 
Investment Company
 
7
 
 
2.19
 
Internal Controls
 
7
 
 
2.20
 
Class N Preferred Stock
 
7
III.
 
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
 
8
 
 
3.1
 
Power, Authority and Enforceability
 
8
 
 
3.2
 
Compliance with Other Instruments
 
8
 
 
3.3
 
Ownership Limitations
 
8
 
 
3.4
 
Title to Shares
 
8
 
 
3.5
 
No Commission
 
8
IV.
 
CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT CLOSING
 
9              

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4.1
 
Class W Preferred Articles Supplementary
 
9
 
 
4.2
 
Representations and Warranties
 
9
 
 
4.3
 
Performance
 
9
 
 
4.4
 
No Material Adverse Change
 
9
 
 
4.5
 
Opinion of Company Counsel
 
9
 
 
4.6
 
Limited Waiver of Ownership Limitations
 
9
 
 
4.7
 
Amendment to Operating Partnership Agreement
 
9
 
 
4.8
 
Officer's Certificate
 
9
 
 
4.9
 
Proceedings
 
10
 
 
4.10
 
No Injunction
 
10
V.
 
CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
 
10
 
 
5.1
 
Representations and Warranties
 
10
 
 
5.2
 
Performance
 
10
 
 
5.3
 
Amendment to Operating Partnership Agreement
 
10
 
 
5.4
 
No Injunction
 
10
 
 
5.5
 
Release by Investor
 
11
VI.
 
COVENANTS
 
11
 
 
6.1
 
Filing of Exchange Act Reports
 
11
 
 
6.2
 
Consultation and Related Rights
 
11
 
 
6.3
 
Maintenance of REIT Status
 
12
 
 
6.4
 
Change of Control
 
13
 
 
6.5
 
Fixed Charge Coverage; Limitation on Issuance of Additional Preferred Shares and
Indebtedness
 
14
 
 
6.6
 
No Public Disclosure
 
15
 
 
6.7
 
Participation Rights
 
15
 
 
6.8
 
Favorable Treatment
 
16
 
 
6.9
 
Ownership Restriction
 
17
 
 
6.10
 
Listing of Common Shares
 
17
 
 
6.11
 
Operating Partnership Securities
 
17
 
 
6.12
 
Additional Class W Preferred Shares
 
17
 
 
6.13
 
Parity Stock
 
17
VII.
 
MISCELLANEOUS
 
18
 
 
7.1
 
Survival of Warranties and Covenants
 
18
 
 
7.2
 
Successors and Assigns
 
18              

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7.3
 
Acknowledgment
 
18
 
 
7.4
 
Governing Law
 
18
 
 
7.5
 
Counterparts
 
18
 
 
7.6
 
Titles and Subtitles
 
18
 
 
7.7
 
Notices
 
19
 
 
7.8
 
Finder's Fees
 
19
 
 
7.9
 
Expenses
 
20
 
 
7.10
 
Amendments and Waivers
 
20
 
 
7.11
 
Severability
 
20
 
 
7.12
 
Entire Agreement
 
20

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EXHIBITS

Exhibit A   Class W Preferred Articles Supplementary
Exhibit B-1
 
Form of Opinion of Company Counsel
Exhibit B-2
 
Form of Tax Opinion of Company Counsel
Exhibit C
 
Form of Opinion of Piper Rudnick LLP
Exhibit D
 
Form of Resolution
Exhibit E
 
Form of Release
Exhibit F
 
Form of Fixed Charge Coverage Calculation
Exhibit G
 
Form of Fixed Charge Coverage Certificate

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EXCHANGE AGREEMENT

        This EXCHANGE AGREEMENT (this "Agreement") is made as of the 24th day of
September, 2004 by and among Apartment Investment and Management Company, a
Maryland corporation (the "Company"), AIMCO Properties, L.P., a Delaware limited
partnership (the "Operating Partnership"), and Security Capital Preferred Growth
Incorporated, a Maryland corporation (the "Investor").

WITNESSETH

        WHEREAS, the Company has previously issued and sold to the Investor, and
the Investor has previously purchased from the Company, 1,904,762 shares of
Class O Cumulative Convertible Preferred Stock, $.01 par value per share, of the
Company (the "Class O Preferred Shares"); and

        WHEREAS, the Company has authorized the issuance of 1,904,762 shares of
a new class of preferred stock, par value $.01 per share, designated as "Class W
Cumulative Convertible Preferred Stock" (the "Class W Preferred Shares"), the
terms of which shall be as set forth in the Class W Articles Supplementary (the
"Class W Preferred Articles Supplementary") in substantially the form of
Exhibit A hereto, in accordance with and subject to the terms and conditions set
forth herein; and

        WHEREAS, the Company desires to issue, and the Investor desires to
acquire, the Class W Preferred Shares in exchange for the Class O Preferred
Shares, in a transaction exempt from registration under the Securities Act of
1933, as amended (the "Securities Act"), by Section 3(a)(9) thereunder, on the
terms and subject to the conditions set forth in this Agreement.

        NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements and warranties herein contained, the parties hereby agree
as follows:

I.     PURCHASE AND SALE OF SHARES.

1.1   Exchange of Shares.

        (a)   The Company shall adopt and file with the State Department of
Assessments and Taxation of Maryland (the "SDAT") on or before the Closing Date
(as defined below) the Class W Preferred Articles Supplementary.

        (b)   Subject to the terms and conditions of this Agreement, the Company
agrees to issue to the Investor (or one or more of its affiliates) and the
Investor (either directly or through one or more of its affiliates) agrees to
acquire from the Company at the Closing (as defined below), 1,904,762 Class W
Preferred Shares in exchange for the 1,904,762 issued and outstanding Class O
Preferred Shares held by the Investor, in a transaction exempt from registration
under the Securities Act by Section 3(a)(9) of the Securities Act.

1.2   Closing.

        The closing (the "Closing") of the purchase and sale of the Class W
Preferred Shares shall take place at the offices of Mayer, Brown, Rowe & Maw
LLP, 190 South LaSalle Street, Chicago, Illinois 60603 at 9:00 a.m., Chicago
time, on September 30, 2004, or at such other location, date and time as may be
agreed upon by the Company and the Investor (such date and time being
hereinafter referred to as the "Closing Date"). At the Closing, (a) the Company
shall (i) issue and deliver to the Investor a stock certificate or certificates
in definitive form, registered in the name of the Investor, representing the
Class W Preferred Shares being acquired by the Investor hereunder and (ii) shall
pay an amount equal to all accrued and unpaid dividends, whether or not
declared, to and including the date of Closing, on the Class O Preferred Shares
in immediately available funds and (b) the Investor shall deliver to the
Company, certificates evidencing the Class O Preferred Shares held by the
Investor, endorsed in blank or accompanied by duly executed stock powers in
exchange for the certificates evidencing the Class W Preferred Shares.

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II.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

        Each of the Company and the Operating Partnership represents and
warrants, as of the date of this Agreement and as of the Closing Date, that:

2.1   Organization, Good Standing and Qualification.

        (a)   The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Maryland with full
power and authority to own, lease and operate its properties and conduct its
business as now being conducted, and has been duly qualified to transact
business and is in good standing under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any business, so as to require
such qualification, except where the failure to so qualify would not have a
Material Adverse Effect. "Material Adverse Effect" means any material adverse
effect on the operations, assets, business, affairs, properties, or financial
condition of the Company and its subsidiaries taken as a whole or any event or
condition that would materially impair the Company's ability to perform its
obligations under this Agreement.

        (b)   The Operating Partnership has been duly formed and is validly
existing as a limited partnership in good standing under the Delaware Revised
Uniform Limited Partnership Act with partnership power and authority to own,
lease and operate its properties and conduct its business as now being conducted
and has been duly qualified to transact business and is in good standing under
the laws of each jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, except where the failure to
so qualify would not have a Material Adverse Effect.

        (c)   Each subsidiary of the Company that constitutes a "significant
subsidiary" (the "Subsidiaries") as defined in Rule 1-02 of Regulation S-X of
the Securities and Exchange Commission (the "Commission") has been duly
organized or formed and is validly existing and in good standing under the laws
of their respective jurisdictions of incorporation or formation and has full
power and authority to own, lease and operate its properties and to conduct its
business as now being conducted, and each Subsidiary has been duly qualified to
transact business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any business, so
as to require such qualification, except where the failure to be in good
standing or to so qualify would not have a Material Adverse Effect. None of the
Company's other subsidiaries individually or in the aggregate constitute a
"Significant Subsidiary" as defined in Rule 1-02 of Regulation S-X.

2.2   Power, Authority and Enforceability.

        (a)   The Company has all requisite power and authority, and, prior to
the Closing Date, shall have taken all required action necessary, to execute,
deliver and perform this Agreement and to issue the Class W Preferred Shares as
herein provided.

        (b)   This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors' rights
generally, and (ii) laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.

2.3   Capitalization.

        Subject to the Company's adoption of the Class W Preferred Articles
Supplementary and the adoption of Articles Supplementary relating to the
Company's Class V Cumulative Preferred Stock, the authorized capital stock of
the Company consists of (a) 436,962,738 shares of the Company's Class A

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Common Stock, par value $.01 per share (the "Common Stock"); and (b) 73,624,762
shares of the Company's Preferred Stock, par value $.01 per share. All of the
issued and outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and are nonassessable.

2.4   Valid Issuance of Shares.

        The Class W Preferred Shares which are being acquired by the Investor
hereunder, when issued, sold and delivered in accordance with the terms hereof
in exchange for the Class O Preferred Shares, will be duly and validly issued,
fully paid and nonassessable and will be issued in compliance with all
applicable federal and state securities laws. The shares of Common Stock
issuable upon the conversion of the Class W Preferred Shares (the "Common
Shares") issued hereunder will be duly and validly reserved for such issuance
(based upon the initial conversion price thereof) and, when issued upon such
conversion in accordance with the Class W Preferred Articles Supplementary, will
be duly and validly issued, fully paid and nonassessable and will be issued in
compliance with all applicable federal and state securities laws.

2.5   Compliance with Other Instruments.

        The execution, delivery and performance of this Agreement by the Company
and the Operating Partnership and the consummation by the Company and the
Operating Partnership of the transactions contemplated hereby do not (i) result
in a violation of the Company's Charter, as amended to date (the "Charter"), or
the Company's Amended and Restated Bylaws, as amended to date (the "Bylaws"),
(ii) subject to the effectiveness of the amendment referred to in Sections 4.7
and 5.3, result in a violation of the Operating Partnership's Agreement of
Limited Partnership, or (iii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree applicable to the Company, any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect or impair
the Company's ability to perform in all material respects its obligations under
this Agreement).

2.6   Exchange Exempt Under the Securities Act.

        Assuming the accuracy of the Investor's representation in Section 3.5
hereof, the exchange of the Class W Preferred Shares for the Class O Preferred
Shares as contemplated by this Agreement is exempt from registration under the
Securities Act in reliance upon Section 3(a)(9) of the Securities Act.

2.7   Financial Statements.

        The financial statements and supporting schedules included in the
Company's periodic filings filed pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), are complete and correct in all material
respects and present fairly the consolidated financial position of the Company
and its consolidated Subsidiaries as of the dates specified and the consolidated
results of their operations for the periods specified; such financial statements
were prepared in conformity with generally accepted accounting principles
applied on a consistent basis during the periods involved, except as indicated
therein or in the notes thereto.

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2.8   Exchange Act Compliance.

        The Company has timely filed all documents required to be filed with the
Commission pursuant to the Securities Act and the Exchange Act. All such
documents, when so filed, complied in form and substance with such acts and did
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

2.9   No Material Adverse Changes.

        Since the date that the Company filed its most recent annual report on
Form 10-K pursuant to the Exchange Act, except as stated in, or contemplated by,
such annual report or by any other report filed by the Company under the
Exchange Act since such date through the date hereof (collectively, the
"Exchange Act Reports") or this Agreement: (i) there has been no material
adverse change in the business, operations or financial condition, of the
Company and its Subsidiaries considered as one enterprise, or in the earnings or
the ability to continue to conduct business in the usual and ordinary course of
the Company and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business; (ii) except for the transactions
contemplated by this Agreement or disclosed in the Exchange Act Reports, there
has been no material transaction entered into by the Company or any of its
Subsidiaries other than (a) transactions in the ordinary course of business or
(b) transactions which are not material in relation to the Company and its
Subsidiaries considered as one enterprise; (iii) there have not been any changes
in the capital stock (except as set forth in Section 2.3) or any material
increases in the debt of the Company or any of its Subsidiaries; and (iv) there
has been no actual or, to the knowledge of the Company, threatened revocation
of, or default under, any material contract to which the Company, the Operating
Partnership or any other of the Company's subsidiaries is a party, which could
reasonably be expected to result in a Material Adverse Effect.

2.10 Litigation.

        Except as set forth in any Exchange Act Report, there is no action, suit
or proceeding (whether or not purportedly on behalf of the Company or any of its
Subsidiaries) before or by any court or governmental agency or body, domestic or
foreign, now pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries, which either alone or in the
aggregate, could reasonably be expected to have a Material Adverse Effect or
materially impair the Company's consummation of the transactions contemplated by
this Agreement or the compliance by the Company with the terms, conditions and
provisions of the Class W Preferred Shares.

2.11 Title to Properties; Leasehold Interests.

        (a)   Except as disclosed in the Exchange Act Reports, or except to the
extent that the inaccuracy of any of the following, either individually or in
the aggregate, would not have a Material Adverse Effect: (i) the Company,
through one or more Subsidiaries, has good and marketable title to all real
properties and all other assets that are required for the effective operation of
the Company's business in the manner in which they currently are operated, in
each case, subject only to Permitted Exceptions (as herein defined); (ii) all
leases under which the Company, or any of its Subsidiaries leases any property
that is material to the business of the Company and its Subsidiaries taken as a
whole is in full force and effect, and neither the Company nor any such
Subsidiary is in default in any material respect of any of the terms or
provisions of any of such leases and to the Company's knowledge no claim has
been asserted by anyone adverse to any such entity's rights as lessee under any
of such leases, or affecting or questioning any such entity's right to the
continued possession or use of the properties under any such leases or asserting
a default under any such leases; and (iii) all liens, charges or encumbrances on
or affecting any of the property and assets of the Company and its Subsidiaries
which

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are required to be disclosed in the Company's periodic reports filed pursuant to
Exchange Act are disclosed therein.

        (b)   As used in this Agreement, "Permitted Exceptions" means: (i) real
estate taxes and assessments not yet delinquent; (ii) covenants, restrictions,
easements and other similar agreements, provided that the same are not violated
in any material respect by existing improvements or the current use and
operation of the Company's or any Subsidiary's property; (iii) zoning laws,
ordinances and regulations, building codes, rules and other governmental laws,
regulations, rules and orders affecting any of the Company's or any Subsidiary's
property, provided that the same are not violated in any material respect by
existing improvements or the current use and operation of such property;
(iv) any imperfection of title which does not materially and adversely affect
the current use, operation or enjoyment of any of the Company's or any
Subsidiary's real property and does not render title to such real property
unmarketable or uninsurable and does not materially impair the value of such
property; and (v) mortgage financing disclosed in any Exchange Act Report.

2.12 Environmental Compliance.

        (a)   Except as disclosed in any Exchange Act Report, the Company and
each of its Subsidiaries has complied and is in compliance in all material
respects with all Environmental Statutes (as hereinafter defined), except where
noncompliance would not reasonably be expected to have a Material Adverse
Effect.

        (b)   Neither the Company nor any of its Subsidiaries intends to use any
real property owned or occupied by any such party for the purpose of handling,
burying, storing, retaining, refining, transporting, processing, manufacturing,
generating, producing, spilling, seeping, leaking, escaping, leaching, pumping,
pouring, emitting, emptying, discharging, injecting, dumping, transferring or
otherwise disposing of or dealing with Hazardous Materials (except as may be
incidental to the ordinary use of such property by the Company and its
Subsidiaries consistent with past practice).

        (c)   Except as would not, individually or in the aggregate, have a
Material Adverse Effect, neither the Company nor any of its Subsidiaries is
aware of any seepage, leak, escape, leach, discharge, injection, release,
emission, spill, pumping, pouring, emptying or dumping of Hazardous Materials
into waters on or adjacent to any real property owned or occupied by any such
party, or onto lands from which Hazardous Materials might reasonably be expected
to seep, flow or drain into such waters.

        (d)   Except as would not, individually or in the aggregate, have a
Material Adverse Effect, the Company is not aware of any occurrence or
circumstance that, with notice or passage of time or both, would give rise to a
claim under or pursuant to any federal, state or local Environmental Statute
pertaining to Hazardous Materials on or originating from any real property owned
or occupied by the Company or any of its Subsidiaries arising out of the conduct
of any such party, including without limitation pursuant to any Environmental
Statute.

        (e)   No land owned by the Company or any of its Subsidiaries is
included or to the knowledge of the Company proposed for inclusion on the
National Priorities List issued pursuant to CERCLA (as hereinafter defined) by
the United States Environmental Protection Agency (the "EPA") and has not
otherwise been publicly identified by the EPA by notice to the Company as a
potential CERCLA site or included or, to the knowledge of the Company, proposed
for inclusion on any list or inventory issued pursuant to any other
Environmental Statute or issued by any other Governmental Authority (as
hereinafter defined).

        (f)    As used herein, "Hazardous Material" shall include without
limitation any flammable explosives, radioactive materials, hazardous materials,
hazardous wastes, toxic substances or related materials, asbestos or any
hazardous material as defined by any federal, state or local environmental law,
ordinance, rule or regulation, including without limitation the Comprehensive
Environmental

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Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601
et seq. ("CERCLA"), the Hazardous Materials Transportation Act, as amended,
49 U.S.C. §§ 1801 et seq., the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. §§ 9601 et seq., the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq., the Toxic Substances
Control Act, 15 U.S.C. §§ 2601 et seq., the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. §§ 136 et seq., the Clean Air Act, 42 U.S.C. §§ 7401
et seq., the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C.
§§ 1251 et seq., the Safe Drinking Water Act, 42 U.S.C. §§ 300F to 300j-11, and
the Occupational Safety and Health Act, 29 U.S.C. §§ 651 et seq., as any of the
above statutes may be amended from time to time, and in the regulations adopted
and publications promulgated pursuant to each of the foregoing (individually, an
"Environmental Statute") or by any federal, state or local governmental
authority having or claiming jurisdiction over the properties and assets
described in the Company's periodic reports filed pursuant to the Exchange Act
(a "Governmental Authority").

2.13 Taxes.

        (a)   The Company and its Subsidiaries have filed or caused to be filed
all federal, state, local, foreign and other tax returns, reports, information
returns and statements (except for returns, reports, information returns and
statements the failure to file which will not result in any Material Adverse
Effect) required to be filed by them. The Company and its Subsidiaries have paid
or caused to be paid all taxes (including interest and penalties) that are shown
as due and payable on such returns or claimed in writing by any taxing authority
to be due and payable with respect to such returns, except those which are being
contested by them in good faith by appropriate proceedings and in respect of
which adequate reserves are being maintained on their books in accordance with
generally accepted accounting principles consistently applied. The Company and
its Subsidiaries do not have any material liabilities for taxes other than those
incurred in the ordinary course of business and in respect of which adequate
reserves are being maintained by it in accordance with generally accepted
accounting principles consistently applied. Federal and state income tax returns
for the Company and its Subsidiaries are not currently under examination or
audit by the Internal Revenue Service or state authorities except that various
state income tax returns of the Company and/or subsidiaries are currently under
examination. No deficiency assessment with respect to or proposed adjustment of
the Company's or any of its Subsidiaries' federal, state, local, foreign or
other tax returns is pending or, to the best of the Company's or any of its
Subsidiaries' knowledge, threatened in writing. There is no tax lien, whether
imposed by any federal, state, local or other tax authority, outstanding against
the assets, properties or business of the Company other than statutory liens in
respect of taxes that are not delinquent. There are no applicable taxes, fees or
other governmental charges payable by the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the issuance by
the Company of the Class W Preferred Shares or the Common Shares.

        (b)   The Company is a real estate investment trust and has qualified to
be taxed as a real estate investment trust pursuant to Sections 856 through 860
of the Internal Revenue Code, as amended (the "Code"), for its taxable years
ended December 31, 1994 through December 31, 2003, and the Company expects under
present law to so qualify for the fiscal year ending December 31, 2004 and in
the future.

2.14 Insurance.

        The Company and its Subsidiaries each carry or is entitled to the
benefits of insurance in such amounts and covering such risks as is reasonably
sufficient under the circumstances or is customary in the industry and all such
insurance is in full force and effect.

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2.15 Employees; ERISA.

        There is no strike or work stoppage existing or, to the knowledge of the
Company, threatened against the Company or its Subsidiaries. The Company does
not have any knowledge as to any intentions of any key employee or any group of
employees to leave the employ of the Company where such departure would have a
Material Adverse Effect. The Company is in compliance with all applicable laws
relating to the employment of labor, including provisions relating to wages,
hours, equal opportunity, collective bargaining and the payment of Social
Security and other taxes, and with ERISA, except where the failure to so comply
would not have a Material Adverse Effect.

2.16 Legal Compliance.

        (a)   The Company has complied with all applicable laws, rules,
regulations, orders, licenses, judgments, writs, injunctions, decrees or demands
of any court or administrative body, domestic or foreign, or of any other
governmental agency or instrumentality, domestic or foreign, except to the
extent that failure to comply would not have a Material Adverse Effect. The
Company has all necessary permits, licenses and other authorizations required to
conduct its business as currently conducted, and as proposed to be conducted,
except where the failure to have such permits, licenses and authorizations would
not have a Material Adverse Effect.

        (b)   Except as disclosed in any Exchange Act Report, there are no
adverse orders, judgments, writs, injunctions, decrees or demands of any court
or administrative body, domestic or foreign, or of any other governmental agency
or instrumentality, domestic or foreign, outstanding against the Company which
are reasonably likely to result in a Material Adverse Effect.

2.17 Governmental Consent.

        Other than such consents, approvals, authorizations, declarations and
filings as have already been obtained or made or which will be made at or prior
to the Closing Date, no consent, approval or authorization of, or declaration or
filing with, any governmental authority on the part of the Company is required
for the valid execution and delivery of this Agreement or performance hereunder
or the valid offer, issue and delivery of the Class W Preferred Shares pursuant
to this Agreement and the Class W Preferred Articles Supplementary.

2.18 Investment Company.

        The Company is not an investment company, as defined in the Investment
Company Act of 1940, as amended, nor controlled by an investment company.

2.19 Internal Controls.

        The Company for itself and on behalf of each Subsidiary maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

2.20 Class N Preferred Stock.

        The Company has not amended the terms of the Company's Class N
Convertible Cumulative Preferred Stock (the "Class N Preferred Stock") since the
issuance of the Class N Preferred Stock. The

7

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Company has not issued any securities in exchange for, or repurchased or
otherwise acquired, any or all of the previously issued shares of Class N
Preferred Stock.

III.  REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.

        The Investor represents and warrants, as of the date of this Agreement
and as of the Closing Date, that:

3.1   Power, Authority and Enforceability.

        (a)   The Investor has the requisite power and authority, and has taken
all required action necessary, to execute, deliver and perform this Agreement
and to acquire the Class W Preferred Shares hereunder.

        (b)   This Agreement has been duly executed and delivered by the
Investor and constitutes the legal, valid and binding obligation of the Investor
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.

3.2   Compliance with Other Instruments.

        The execution, delivery and performance of this Agreement by the
Investor and the consummation by the Investor of the transactions contemplated
hereby do not (i) result in a violation of the Investor's constituent documents
or (ii) conflict with, or constitute a default under (or an event which with
notice or lapse of time or both would become a default), or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Investor is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
applicable to the Investor or by which any property or asset of the Investor is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not materially
impair the Investor's ability to perform its obligations under this Agreement).

3.3   Ownership Limitations.

        The Investor has received a copy of the Company's Charter and
understands the restrictions on transfer and ownership of the Company's capital
stock included therein related to the qualification by the Company as a real
estate investment trust for federal income tax purposes pursuant to Sections 856
through 860 of the Code.

3.4   Title to Shares.

        The Investor holds of record and owns beneficially 1,904,762 Class O
Preferred Shares. As of the Closing, the Investor will hold the Class O
Preferred Shares free and clear of all liens, encumbrances, claims, security
interests or restrictions (other than any restrictions under applicable
securities laws) and there will be no outstanding subscriptions, options,
warrants, rights, contracts, understandings or agreements to purchase or
otherwise acquire the Class O Preferred Shares, except for this Agreement.

3.5   No Commission.

        The Investor has not paid any commission or other renumeration to any
person for soliciting the exchange of the Class W Preferred Shares for the
Class O Preferred Shares.

8

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IV.    CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT CLOSING.

        The Investor's obligations to effect the Closing under this Agreement
are subject to the satisfaction or waiver by the Investor on or before the
Closing of each of the following conditions:

4.1   Class W Preferred Articles Supplementary.

        The Class W Preferred Articles Supplementary shall have been filed with
and accepted for recording by the SDAT.

4.2   Representations and Warranties.

        The representations and warranties of the Company contained in
Article II shall be true on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date.

4.3   Performance.

        The Company shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by it on or before the Closing.

4.4   No Material Adverse Change.

        After the date of this Agreement and through the Closing Date, there
shall not have occurred any change or event that has had a Material Adverse
Effect.

4.5   Opinion of Company Counsel.

        The Investor shall have received (i) from Skadden, Arps, Slate,
Meagher & Flom LLP, counsel for the Company, opinions substantially in the form
attached hereto as Exhibits B-1 and B-2 and (ii) from Piper Rudnick LLP, counsel
for the Company, an opinion in the form attached hereto as Exhibit C.

4.6   Limited Waiver of Ownership Limitations.

        Subject to Section 6.9 hereof, the Board of Directors (or a duly
authorized committee thereof) shall have duly adopted a resolution in the form
of Exhibit D hereto, thereby waiving the application of the Ownership Limit (as
used in Section 3.4.1 (A) of Article IV of the Charter and Section 10.1 (A) of
Article Third of the Class W Preferred Articles Supplementary) to the Investor
and its affiliates to the extent provided in such resolution.

4.7   Amendment to Operating Partnership Agreement.

        The limited partnership agreement of the Operating Partnership shall
have been amended to authorize the general partner of the Operating Partnership
to cause the Operating Partnership, without the approval of any other partners
of the Operating Partnership, to issue preferred partnership interests with
economic attributes substantially identical to those of the Class W Preferred
Shares, and the general partner of the Operating Partnership shall have caused
such preferred partnership interests to have been issued to the Company or a
direct or indirect wholly owned subsidiary thereof.

4.8   Officer's Certificate.

        The Company shall have delivered to the Investor on the Closing Date a
certificate or certificates, signed by an authorized officer of the Company to
the effect that the facts required to exist by

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Sections 4.1, 4.2, 4.3, 4.4, 4.6, 4.7 and, to the knowledge of the Company,
Section 4.10 exist on such Closing Date.

4.9   Proceedings.

        All proceedings to be taken in connection with the transactions
contemplated by this Agreement and all documents incidental thereto, shall be
reasonably satisfactory in form and substance to the Investor; and the Investor
shall have received copies of all documents which the Investor may reasonably
request in connection with said transactions and copies of the records of all
proceedings of the Company in connection therewith in form and substance
reasonably satisfactory to the Investor.

4.10 No Injunction.

        There shall not be in effect any order, decree or injunction of a court
or agency of competent jurisdiction which enjoins or prohibits consummation of
the transactions contemplated hereby and there shall be no actual or, to the
knowledge of any party hereto, threatened action, suit, arbitration, inquiry,
proceedings or investigation by or before any governmental authority, court or
agency of competent jurisdiction, which would reasonably be expected to
materially impair the ability of the Company or the Investor to consummate the
transactions contemplated hereby or of the Company to issue the Class W
Preferred Shares.

V.     CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.

        The obligations of the Company to effect the Closing under this
Agreement are subject to the fulfillment on or before the Closing of each of the
following conditions:

5.1   Representations and Warranties.

        The representations and warranties of the Investor contained in
Article III shall be true on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date.

5.2   Performance.

        The Investor shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by it on or before the Closing.

5.3   Amendment to Operating Partnership Agreement.

        The limited partnership agreement of the Operating Partnership shall
have been amended to authorize the general partner of the Operating Partnership
to cause the Operating Partnership, without the approval of any other partners
of the Operating Partnership, to issue preferred partnership interests with
economic attributes substantially identical to those of the Class W Preferred
Shares, and the general partner of the Operating Partnership shall have caused
such preferred partnership interests to have been issued to the Company.

5.4   No Injunction.

        There shall not be in effect any order, decree or injunction of a court
or agency of competent jurisdiction which enjoins or prohibits consummation of
the transactions contemplated hereby and there shall be no actual or, to the
knowledge of any party hereto, threatened action, suit, arbitration, inquiry,
proceedings or investigation by or before any governmental authority, court or
agency of competent jurisdiction, which would reasonably be expected to
materially impair the ability of the Company or the

10

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Investor to consummate the transactions contemplated hereby or of the Company to
issue the Class W Preferred Shares.

5.5   Release by Investor.

        The Investor shall have delivered to the Company a release substantially
in the form of Exhibit E that releases the Company from liability for its
failure to comply with Section 6.10 of the Class O Cumulative Convertible
Preferred Share Purchase Agreement, dated as of September 13, 2000, by and among
the Company, the Operating Partnership and the Investor (the "Class O Purchase
Agreement").

VI.   COVENANTS.

6.1   Filing of Exchange Act Reports.

        After the date of this Agreement, the Company will timely file all
documents required to be filed with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, and so long as any of the Class W
Preferred Shares or the Common Shares remain issued and outstanding, shall
provide to the Investor copies of all such documents, including, without
limitation, all financial statements of the Company required to be filed with
the Commission, except to the extent that such documents are available through
the Commission's EDGAR system.

6.2   Consultation and Related Rights.

        Until the earlier of (i) three years following the Closing Date or
(ii) the date on which the Investor ceases to hold any Class W Preferred Shares,
the Investor shall have the right to directly participate (within the meaning of
29 CFR 2510.3-101(d)(3)(ii)) in the management of the Company through and by the
following rights and powers:

        (a)   The right to be consulted on the appointment and dismissal of
(i) the chief operating officer and the chief financial officer, or any person
or persons fulfilling similar duties, and the auditors and accountants for the
Company and (ii) the General Partner, the chief operating officer and the chief
financial officer, or any person or persons fulfilling similar duties, and the
auditors and accountants for the Operating Partnership.

        (b)   The right to inspect the books and records of the Company and the
Operating Partnership; provided, that all costs and expenses of such inspection
shall be borne by the Investor; and provided, further, that the Investor shall
keep such information confidential, except that the Investor may disclose such
information to its employees and advisors as necessary in the management and
operation of the Investor's business and investment in the Company and that,
upon reasonable prior notice to the Company, the Investor may disclose such
information as required by law.

        (c)   The right to be consulted concerning the development of the
Company's and the Operating Partnership's annual strategic plan that
incorporates a specific business strategy, an operating agenda, investment and
disposition objectives, and capitalization and funding strategies.

        (d)   The right to be consulted concerning Major Transactions. "Major
Transactions" means (i) any acquisition or disposition of any assets in any
single transaction or any series of related transactions where the aggregate
purchase price paid or received by the Company or the Operating Partnership
exceeds $100,000,000 but not including asset transfers between or among the
Company and any of its subsidiaries respecting which the Company has direct or
indirect majority ownership or management control (including any such
subsidiaries who are not consolidated with the Company for financial reporting
purposes) or between or among such subsidiaries, (ii) a determination by the
Company's Board of Directors to terminate the Company's status as a real estate
investment trust pursuant to Sections 856 through 860 of the Code, (iii) any
Change of

11

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Control (as defined in Section 6.4) initiated by the Company and in the response
to any Change of Control not initiated by the Company and (iv) a determination
by the Operating Partnership's General Partner to terminate the Operating
Partnership's status as a limited partnership.

        From time to time, the Investor may notify the Company that it desires
to exercise a right or rights specified in paragraphs (a) through (d) above.
Upon receipt of such notice and for 90 days thereafter, the Company shall notify
the Investor of any of the foregoing proposed actions for its consideration that
relate to the rights so exercised by the Investor, together with information
which sets forth in reasonable detail the background and reasons for such
action, reasonably in advance (but in no event less than five business days) of
the date any action would be required to be taken by or on behalf of the Company
to permit the Investor to review the information and to provide its views to the
Company. If the Investor exercises its right to be consulted concerning the
development and preparation of the Company's annual operating budget and
strategic plan, the Company shall present to the Investor a reasonably detailed
operating budget and strategic plan for the upcoming calendar year of the
Company. Notwithstanding the foregoing, the Company (i) shall not have any
obligation to comply with any advice offered by the Investor in any consultation
pursuant to this Section 6.2 (and the provisions of this Section 6.2 shall not
be construed to create any approval rights over any matters) and (ii) will not
be required to disclose material information to the Investor if, in the
reasonable judgment of the Company, such disclosure would (a) require any public
disclosure thereof or (b) jeopardize any proposed transaction.

6.3   Maintenance of REIT Status.

        (a)   So long as any of the Class W Preferred Shares or the Common
Shares remain issued and outstanding, the Company shall use its reasonable best
efforts to continue to be taxed as a real estate investment trust pursuant to
Sections 856 through 860 of the Code.

        (b)   If the Company shall fail to continue to be taxed as a real estate
investment trust pursuant to Sections 856 through 860 of the Code (a
"REIT-Repurchase Event"), the Investor shall have the right to require the
Company, to the extent the Company shall have funds legally available therefor,
to repurchase any or all of the Class W Preferred Shares held by the Investor at
a repurchase price payable in cash in an amount equal to 105% of the liquidation
preference thereof, plus accrued and unpaid dividends whether or not declared,
if any (the "REIT-Repurchase Payment"), to the date of repurchase or the date
payment is made available (the "REIT-Repurchase Date"), pursuant to the offer
described in subsection (c) below (the "REIT-Repurchase Offer").

        (c)   Within 15 days following the Company becoming aware that a
REIT-Repurchase Event has occurred, the Company shall mail by recognized
overnight courier a notice to the Investor stating (i) that a REIT-Repurchase
Event has occurred and that the Investor has the right to require the Company to
repurchase any or all Class W Preferred Shares then held by the Investor in
cash, (ii) the date of repurchase (which shall be a business day, no earlier
than 30 days and no later than 60 days from the date such notice is mailed, or
such later date as may be necessary to comply with applicable law), (iii) the
repurchase price and (iv) the instructions determined by the Company, consistent
with this subsection, that the Investor must follow in order to have its Class W
Preferred Shares repurchased.

        (d)   On the REIT-Repurchase Date, the Company will, to the extent
lawful, accept for payment Class W Preferred Shares or portions thereof
delivered to the Company pursuant to the REIT-Repurchase Offer and promptly mail
by recognized overnight courier or by wire transfer of immediately available
funds to the Investor, as directed by the Investor, in an amount equal to the
REIT-Repurchase Payment in respect of all Class W Preferred Shares or portions
thereof so delivered.

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        (e)   Notwithstanding anything else herein, to the extent they are
applicable to any REIT-Repurchase Offer, the Company will comply with any
federal and state securities laws, rules and regulations and all time periods
and requirements shall be adjusted accordingly.

6.4   Change of Control.

        (a)   If a Change of Control occurs, the Company shall, in its sole
discretion, make an election to effect one of the following: (i) to the extent
the Company shall have funds legally available therefor, the Company may offer
to repurchase all of the Investor's Class W Preferred Shares at a repurchase
price payable in cash in an amount equal to 102% of the liquidation preference
thereof, plus accrued and unpaid dividends whether or not declared, if any (the
"Repurchase Payment"), to the date of repurchase or the date payment is made
available (the "Repurchase Date"), pursuant to the offer described in
subsection (b) below (the "Repurchase Offer"), or (ii) the Company shall
increase the Base Rate (as defined in the Class W Preferred Articles
Supplementary) as contemplated by the definition of "Base Rate" contained in the
Class W Preferred Articles Supplementary (a "Dividend Increase").

        (b)   Within 15 days following the Company becoming aware that a Change
of Control has occurred, if the Company elects to make a Repurchase Offer, the
Company shall mail by recognized overnight courier a notice to the Investor
stating (i) that a Change of Control has occurred and that the Investor has the
right to require the Company to repurchase any or all Class W Preferred Shares
then held by the Investor in cash, (ii) the date of repurchase (which shall be a
business day, no earlier than 30 days and no later than 60 days from the date
such notice is mailed, or such later date as may be necessary to comply with the
requirements of the Exchange Act), (iii) the repurchase price for the repurchase
and (iv) the instructions determined by the Company, consistent with this
subsection, that the Investor must follow in order to have its Class W Preferred
Shares repurchased. If the Company elects to make a Repurchase Offer, then on
the Repurchase Date, the Company will, to the extent lawful, accept for payment
Class W Preferred Shares or portions thereof delivered to the Company pursuant
to the Repurchase Offer and promptly mail by recognized overnight courier or by
wire transfer of immediately available funds to the Investor, as directed by the
Investor, payment in an amount equal to the Repurchase Payment in respect of all
Class W Preferred Shares or portions thereof so delivered. To the extent that
the Company cannot lawfully accept for payment any Class W Preferred Shares or
portions thereof delivered to the Company pursuant to the Repurchase Offer, the
Company shall effect a Dividend Increase with respect to such Class W Preferred
Shares with the date of the notice mailed pursuant to this Section 6.4(b) being
the date of the notice for purposes of calculating the Base Rate pursuant to the
Class W Preferred Articles Supplementary.

        (c)   Within 15 days following the Company becoming aware that a Change
of Control has occurred, if the Company elects to make a Dividend Increase, the
Company shall mail by recognized overnight courier a notice to the Investor
stating that a Change of Control has occurred and that the Company has elected
to increase the Base Rate as contemplated by the definition of "Base Rate"
contained in the Class W Preferred Articles Supplementary.

        (d)   Notwithstanding anything else herein, to the extent they are
applicable to any Repurchase Offer, the Company will comply with any federal and
state securities laws, rules and regulations and all time periods and
requirements shall be adjusted accordingly.

        (e)   "Change of Control" means each occurrence of any of the following:
(i) the acquisition, directly or indirectly, by any individual or entity or
group (as such term is used in Section 13(d)(3) of the Exchange Act) (other than
the Investor or any of its affiliates) of beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act, except that such individual or entity shall
be deemed to have beneficial ownership of all shares that any such individual or
entity has the right to acquire, whether such right is exercisable immediately
or only after passage of time) of more than 25% of the Company's outstanding
capital stock with voting power, under ordinary circumstances, to elect
directors

13

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of the Company; (ii) other than with respect to the election, resignation or
replacement of any director designated, appointed or elected by the holders of
the Class W Preferred Stock (each a "Preferred Director"), during any period of
two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a vote of 662/3% of
the directors of the Company (excluding Preferred Directors) (the "Incumbent
Board") then still in office who were either directors at the beginning of such
period, or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors the
Company then in office; (iii) the Company or one of its Subsidiaries is not the
general partner of the Operating Partnership; or (iv) (A) the Company
consolidating with or merging into another entity or conveying, transferring or
leasing all or substantially all of its assets (including, but not limited to,
real property investments) to any individual or entity, or (B) any corporation
consolidating with or merging into the Company, which in either event (A) or (B)
is pursuant to a transaction in which the outstanding voting capital stock of
the Company is reclassified or changed into or exchanged for cash, securities or
other property; provided, however, that the events described in clause (iv)
shall not be deemed to be a Change of Control (a) if the sole purpose of such
event is that the Company is seeking to change its domicile or to change its
form of organization from a corporation to a statutory business trust or (b) if
(x) the holders of the exchanged securities of the Company immediately after
such transaction beneficially own at least a majority of the securities of the
merged or consolidated entity normally entitled to vote in elections of
directors, (y) the chairman and the president of the Company immediately prior
to the execution of the transaction agreement are the chairman and the president
of the merged or consolidated company, and (z) the individuals who were members
of the Incumbent Board immediately prior to the execution of the transaction
agreement constitute at least a majority of the members of the board of
directors of the merged or consolidated company.

6.5   Fixed Charge Coverage; Limitation on Issuance of Additional Preferred
Shares and Indebtedness.

        (a)   So long as the Investor owns Class W Preferred Shares with an
aggregate liquidation preference of at least $25 million, without the written
consent of the Investor, none of the Company, the Operating Partnership or any
other subsidiary of the Company may issue any preferred securities of such
entity or incur any additional indebtedness for borrowed money if the Company's
ratio of aggregate EBITDA to aggregate Fixed Charges (calculated in a manner
substantially similar to the calculation set forth on Exhibit F hereto) for the
four fiscal quarters immediately preceding such issuance was less than 1.2 to 1.

        (b)   Within 45 days after the end of each quarter, the Company shall
provide to Investor a certificate of the Company's chief financial officer, in
substantially the form of Exhibit G hereto, certifying that the Company has
complied with the covenant contained in Section 6.5(a) of this Agreement as of
the last issuance of preferred securities or the incurrence of any additional
indebtedness for borrowed money to occur during the quarter and which also
provides a calculation in sufficient detail to support such conclusion.

        (c)   "EBITDA" for any period means the consolidated net income of the
Company (before extraordinary income or gains) as reported in the Company's
financial statements filed with the Securities and Exchange Commission
(A) increased by the sum of the Company's share of the following (without
duplication):

          (i)  all income and state franchise taxes paid or accrued according to
Generally Accepted Accounting Principals ("GAAP") for such period (other than
income taxes attributable to extraordinary, unusual or non-recurring gains or
losses except to the extent that such gains were not included in EBITDA),

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         (ii)  all interest expense paid or accrued in accordance with GAAP for
such period (including financing fees and amortization of deferred financing
fees and amortization of original issue discount),

        (iii)  depreciation and depletion reflected in such reported net income,

        (iv)  amortization reflected in such reported net income including,
without limitation, amortization of capitalized debt issuance costs (only to the
extent that such amounts have not been previously included in the amount of
EBITDA pursuant to clause (ii) above), goodwill, other intangibles and
management fees, and

         (v)  any other non-cash charges or discretionary prepayment penalties,
to the extent deducted from consolidated net income (including, but not limited
to, income allocated to minority interests); and

(B) decreased by an amount equal to $350 per year multiplied by the average
number of the Company's ownership-adjusted share of apartment units during such
period.

        (d)   "Consolidated Fixed Charges" for any period means the sum of the
Company's share of the following:

          (i)  all interest expense paid or accrued in accordance with GAAP for
such period (excluding financing fees and amortization of deferred financing
fees and amortization of original issue discount),

         (ii)  preferred stock dividend requirements for such period, whether or
not declared or paid, and

        (iii)  regularly scheduled amortization of principal during such period
(other than any balloon payments at maturity).

6.6   No Public Disclosure.

        Neither party to this Agreement, nor any affiliate of such party, will
make any public disclosure concerning the transactions contemplated by this
Agreement unless each of the parties hereto has been provided with a reasonable
time to review such disclosure. Each party agrees that the Company may disclose
the transactions contemplated by this Agreement in filings with the Commission
and the New York Stock Exchange; provided that the Investor shall have been
provided a reasonable time to review, and consult with the Company regarding,
the disclosure.

6.7   Participation Rights.

        (a)   (i) Subject to Section 6.9, if, during the 90 days immediately
following the Closing Date, the Company grants, issues, sells, or agrees to
grant issue or sell any preferred stock or preferred units of the Operating
Partnership or any debt that is convertible into, or exchangeable for, equity
securities of the Company or the Operating Partnership other than securities
issued in exchange for the Class N Preferred Stock (the "Participation
Securities"), for a consideration consisting solely of cash in a
non-underwritten offering, then the Investor shall be entitled to purchase, upon
the same terms and conditions as the other investors, an amount of Participation
Securities equal to the lesser of (i) $100 million or (ii) the amount of the
Participation Securities that are being purchased by the single largest investor
(including its affiliates).

        (ii)   In connection with any issuance of Participation Securities, the
Company shall either, (x) at least 10 business days prior to any such proposed
issuance or sale of Participation Securities, mail by recognized overnight
courier a notice to the Investor stating (i) that a proposed sale will occur and
that the Investor has the right to participate pursuant to the provisions in
subsection

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(a) above, (ii) the date of the proposed closing of the sale, (iii) the amount
of Participation Securities that the Investor has the right to purchase, and
(iv) the instructions determined by the Company, consistent with this
Section 6.7, that the Investor must follow in order to purchase the
Participation Securities on the same terms and conditions as the other
investors, including the anticipated closing date for such issuance, or
(y) within 2 business days after an issuance or sale of Participation
Securities, mail by recognized overnight courier a notice to the Investor
stating (i) that a sale has occurred and that the Investor has the right to
purchase securities equivalent to the Participation Securities ("Equivalent
Securities") pursuant to the provisions in subsection (a) above, (ii) the date
of the closing of the sale, (iii) the amount of Equivalent Securities that the
Investor has the right to purchase, and (iv) the instructions determined by the
Company, consistent with this Section 6.7, that the Investor must follow in
order to purchase the Equivalent Securities on the same terms and conditions as
the other investors.

        (iii)  Within 5 business days after receiving the notice contemplated by
clause (x) of subsection (a)(ii) above, the Investor must send a notice to the
Company stating the amount of Participation Securities it elects to purchase. If
the Investor fails to so notify the Company within such 5 business day period,
the Investor shall have waived its right to purchase such Participation
Securities under this Section 6.7.

        (iv)  Within 10 business days after receiving the notice contemplated by
clause (y) of subsection (a)(ii) above, the Investor must send a notice to the
Company stating the amount of Equivalent Securities it elects to purchase. If
the Investor fails to so notify the Company within such 10 business day period,
the Investor shall have waived its right to purchase such Equivalent Securities
under this Section 6.7.

        (b)   (i) Subject to Section 6.9, if, during the 90 days immediately
following the Closing Date, the Company intends to issue and sell any preferred
stock or preferred units of the Operating Partnership or any debt that is
convertible into, or exchangeable for, equity securities of the Company or the
Operating Partnership (the "Underwritten Securities"), for a consideration
consisting solely of cash in an underwritten offering, then the Investor shall
be entitled to purchase Underwritten Securities in accordance with this
subsection (b), upon the same terms and conditions as the other investors in the
underwritten offering.

        (ii)   In connection with any issuance of Underwritten Securities, the
Company and the underwriters of the underwritten offering shall notify the
Investor of the Company's intent to issue Underwritten Securities prior to
approaching any other potential investor. If the Investor desires to purchase
Underwritten Securities in the underwritten offering, the Investor shall respond
to the Company and the underwriters of the underwritten offering with an order
for Underwritten Securities on or prior to the deadline set by the underwriters
for responses by potential investors. If the Underwritten Securities are priced
at a price equal to or less than the price in the Investor's order or if the
Underwritten Securities have a dividend yield or interest rate equal to or
greater than the dividend yield or interest rate set forth in the Investor's
order, the Company shall direct the underwriters of the underwritten offering to
allocate an amount of Underwritten Securities to the Investor equal to the
lesser of (A) the amount of the Investor's order, (B) $50.0 million or (C) the
total amount of Underwritten Securities that are being issued in the
underwritten offering.

6.8   Favorable Treatment.

        If, during the 60 days immediately following the date hereof, there is
any change to any of the material terms of the Articles Supplementary relating
to the Class N Preferred Stock or if any securities issued in exchange for the
Class N Preferred Stock have material terms different from those contained in
the Class N Preferred Stock on the date hereof, and such difference results in
improved material terms for the holder of those securities (which may include,
without limitation, a lower

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conversion, exchange, exercise or strike price per share, as the case may be,
longer period of no-call protection, better financial or other covenants,
greater dividend rate, greater liquidation preference, greater redemption
payments, greater conversion rate, priority ranking or a greater change of
control price), then the Company shall immediately notify the Investor in
writing of such difference. The Investor shall have 10 business days following
receipt of such notice to notify the Company that the Investor elects to
(i) exchange all, but not a portion, of the Class W Preferred Shares owned by
the Investor and its affiliates for, at the Investor's option, either (A) shares
of Class N Preferred Stock or the securities issued in exchange for the shares
of Class N Preferred Stock or (B) a new class of securities with terms
equivalent to those of the Class W Preferred Shares and incorporating such
improved terms, in either case with a value equal to the aggregate liquidation
preference of the Class W Preferred Shares exchanged, plus accumulated and
unpaid dividends thereon to the date of the exchange, and/or (ii) amend this
Agreement so that the Investor's rights and obligations hereunder include such
improved terms. Within 10 business days after receipt of notice from the
Investor of such election, the Company shall effect such exchange and/or
amendment. The Company hereby covenants to take all such actions as are
reasonably necessary to effect such exchange and amendment in accordance
herewith.

6.9   Ownership Restriction.

        None of the Investor nor any of its controlled affiliates will, and the
Investor will use commercially reasonable efforts to cause Security Capital
Research & Management Incorporated ("SCR&M") and its controlled affiliates not
to, either individually or in the aggregate, directly own (excluding beneficial
ownership pursuant to outstanding conversion or similar rights) more than 9.8%
of the Common Stock at any time outstanding. As used in this Section 6.9,
"controlled affiliate" means any person that is controlled by the Investor or
SCR&M, as applicable, and "control" means the ownership of a majority of the
voting securities of such person, the ability to elect a majority of the
directors of such person or the ability to control such person through
contractual means.

6.10 Listing of Common Shares.

        The Company covenants and agrees that it shall cause the Common Shares
deliverable upon conversion of the Class W Preferred Shares to be listed on each
securities exchange or quoted on each interdealer quotation system, if any, on
which similar securities issued by the Company are then listed or quoted, no
later than the date of such conversion.

6.11 Operating Partnership Securities.

        The Company shall cause the Operating Partnership to issue preferred
partnership interests with economic attributes substantially identical to those
of the Class W Preferred Shares to the Company or a direct or indirect wholly
owned subsidiary thereof and the Company shall cause the Operating Partnership
to keep such partnership interests outstanding for so long as the Class W
Preferred Shares are outstanding.

6.12 Additional Class W Preferred Shares.

        The Company covenants and agrees that it shall not issue any additional
Class W Preferred Shares to any party other than the Investor without the
Investor's prior written consent.

6.13 Parity Stock.

        So long as the Investor owns at least a majority of the then outstanding
Class W Preferred Shares, if the Company proposes to take any action pursuant to
the last paragraph of Section 3 of Article Third of the Series W Preferred
Articles Supplementary, the opinion required to be delivered

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thereunder shall be delivered by a nationally recognized REIT tax counsel
reasonably acceptable to the Investor.

VII. MISCELLANEOUS

7.1   Survival of Warranties and Covenants.

        The warranties and representations of the Company and the Investor
contained in or made pursuant to Articles II and III of this Agreement shall
survive the Closing through and until the expiration of the statute of
limitations applicable to each such warranty or representation. The covenants
contained in or made pursuant to Article VI of this Agreement shall survive the
Closing indefinitely, except for any provisions which expire by their terms. All
other representations and warranties contained in or made in this Agreement
shall survive the Closing for a period of three years. The representations and
warranties contained in this Agreement shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the Investor
or the Company.

7.2   Successors and Assigns.

        Except as otherwise provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto. Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement. Without limiting the
foregoing, no rights set forth in or under this Agreement may be transferred to
any purchaser of Class W Preferred Shares or exercised by or on behalf of any
person other than the Investor; provided, however, that the Investor's rights
hereunder, other than those contained in Section 6.2, may be assigned to (i) an
institutional investor to whom Investor transfers the Class W Preferred Shares,
provided that the assignment of such rights shall be subject to the consent of
the Company, which consent shall not be unreasonably withheld and (ii) Citigroup
Global Markets Holdings Incorporated or another institutional lender pursuant to
a bona fide pledge or upon foreclosure of any loan for which the Class W
Preferred Shares have been provided as collateral.

7.3   Acknowledgment.

        The Investor acknowledges that it has had the opportunity to exercise
its rights under Section 6.3 of the Class O Purchase Agreement to its
satisfaction.

7.4   Governing Law.

        This Agreement shall be governed by and construed in accordance with the
laws of the State of Illinois, without giving effect to the conflict of law
provisions thereof.

7.5   Counterparts.

        This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

7.6   Titles and Subtitles.

        The title and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.

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7.7   Notices.

        Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given
(a) upon personal delivery to the party to be notified, (b) on the fifth
business day after deposit with the United States Post Office, by registered or
certified mail, postage prepaid, (c) on the next business day after dispatch via
nationally recognized overnight courier or (d) upon confirmation of transmission
by facsimile, all addressed to the party to be notified at the address indicated
for such party below, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties. Notices should be
provided in accordance with this Section at the following addresses:

        If to the Investor, to:

Security Capital Preferred Growth Incorporated
11 South LaSalle Street
Chicago, Illinois 60603
Attention: David E. Rosenbaum
Facsimile (312) 345-5888

        with a copy to:

Mayer, Brown Rowe & Maw LLP
190 South LaSalle
Chicago, IL 60603
Facsimile: (312) 701-7711
Attention: Edward J. Schneidman, Esq.

        If to the Company, to:

Apartment Investment and Management Company
4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado 80237
Facsimile: (303) 753-9538
Attn: Terry Considine, Paul McAuliffe and Miles Cortez

        with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Facsimile: (213) 687-5600
Attn: Jonathan Friedman, Esq.

7.8   Finder's Fees.

        Each party represents that it neither is nor will be obligated for any
finders' fee or commission in connection with this transaction. The Investor
agrees to indemnify and hold harmless the Company from any liability for any
commission or compensation in the nature of a finders' fee (and the costs and
expenses of defending against such liability or asserted liability) for which
the Investor or any of its officers, employees or representatives is
responsible. The Company agrees to indemnify and hold harmless the Investor from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.

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7.9   Expenses.

        Each party shall pay all costs and expenses that it incurs with respect
to the negotiation, execution, delivery and performance of this Agreement. If
any action at law or in equity is necessary to enforce or interpret the terms of
this Agreement or the Class W Preferred Articles Supplementary, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.

7.10 Amendments and Waivers.

        Any term of this Agreement may be amended, and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Investor. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.

7.11 Severability.

        If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement and
the balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.

7.12 Entire Agreement.

        This Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof and no party shall be liable or bound to
any other party in any manner by any warranties, representations or covenants
except as specifically set forth herein.

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        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

    SECURITY CAPITAL PREFERRED
GROWTH INCORPORATED
 
 
By:
 
/s/  DAVID ROSENBAUM      

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    Name:   David Rosenbaum     Its:   Senior Vice President
 
 
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
 
 
By:
 
/s/  PAUL J. MCAULIFFE      

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    Name:   Paul J. McAuliffe     Its:   Executive Vice President and Chief
Financial Officer
 
 
AIMCO PROPERTIES, L.P.
 
 
By:
 
AIMCO-GP, Inc., its General Partner
 
 
By:
 
/s/  PAUL J. MCAULIFFE      

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    Name:   Paul J. McAuliffe     Its:   Executive Vice President and Chief
Financial Officer

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