<PAGE> 1
INSIGNIA PROPERTIES TRUST
1873 SOUTH BELLAIRE STREET, 17TH FLOOR
DENVER, COLORADO 80222
----------------------
Information Statement
Pursuant to Section 14(f) of the
Securities and Exchange Act of 1934, as amended,
and Rule 14f-1 Thereunder
----------------------
INTRODUCTION
This Information Statement is being mailed on or about October 27, 1998 to
the holders of record of outstanding common shares of beneficial interest, par
value $.01 per share ("IPT Common Shares"), of Insignia Properties Trust, a
Maryland real estate investment trust ("IPT"), on October 1, 1998. You are
receiving this Information Statement in connection with the appointment of
persons designated by Apartment Investment and Management Company, a Maryland
corporation ("AIMCO"), to a majority of the trusteeships on the Board of
Trustees of IPT (the "IPT Board").
On October 1, 1998, AIMCO completed the merger of Insignia Financial Group,
Inc., a Delaware corporation ("IFG"), with and into AIMCO, with AIMCO as the
surviving corporation (the "IFG Merger"). Through the IFG Merger, AIMCO acquired
approximately 51% of the outstanding IPT Common Shares, which were formerly
owned by IFG, and AIMCO became the special limited partner of Insignia
Properties, L.P., a Delaware limited partnership ("IPLP"). Substantially all of
IPT's assets are held through IPLP.
Also, effective October 1, 1998, IPT and AIMCO entered into an Agreement
and Plan of Merger (the "Merger Agreement"), pursuant to which IPT is to be
merged into AIMCO (the "Merger"). The Merger Agreement provides that, upon
consummation of the Merger, IPT shareholders will receive (x) $13.25 per IPT
Common Share in cash, (y) $13.28 per IPT Common Share in shares of Class A
Common Stock, par value
<PAGE> 2
$.01 per share, of AIMCO ("AIMCO Common Stock"), or (z) a combination of cash
and shares of AIMCO Common Stock, at AIMCO's option.
IPT entered into the Merger Agreement because the IPT Board (comprised
entirely of trustees not affiliated with AIMCO) (the "Old Board"), at a meeting
attended by all but one trustee, unanimously deemed the Merger advisable and in
the best interests of IPT, and the IPT Board directed the Merger to be
submitted to IPT shareholders and recommended the Merger to IPT shareholders.
IPT agreed that it would cause Ronald Uretta and Ronald J. Consiglio to
resign their trusteeships and would increase the size of the IPT Board to eleven
persons and cause each of the trustee candidates designated by AIMCO (together
with their successors, the "AIMCO-nominated Trustees") to be elected as a
trustee of IPT. IPT also agreed to cause the officer candidates designated by
AIMCO to be appointed to their respective positions (the "New Executive
Officers"). IPT agreed to establish a committee of the IPT Board, consisting
solely of certain AIMCO-nominated Trustees (the "AIMCO Committee"), authorized
and empowered to act to the extent set forth in the bylaws of IPT (the "IPT
Bylaws"), and to recognize that the several trustees serving on the Old Board,
consisting of Andrew L. Farkas, James A. Aston, Warren M. Eckstein, Frank M.
Garrison and Bryan L. Hermann (the "Continuing Trustees"), are authorized and
empowered to act to the extent set forth in the IPT Bylaws. In addition, IPT
established an executive committee of the IPT Board (the "Executive Committee")
consisting solely of four AIMCO-nominated Trustees (Terry Considine, Peter K.
Kompaniez, Patrick J. Foye and Thomas W. Toomey) to act to the extent set forth
in the IPT Bylaws. The AIMCO Committee and the Executive Committee will not be
dissolved prior to the earlier of the effective time of the Merger (the
"Effective Time") or the termination of the Merger Agreement. The powers of the
Continuing Trustees may not be modified prior to the earlier of the Effective
Time or the termination of the Merger Agreement without the consent of a
majority of the Continuing Trustees. All of the changes referred to in this
paragraph have taken place.
If, after the date of the Merger Agreement and prior to the Effective Time,
any IPT shareholder vote is taken for the election of a trustee to any position
on the IPT Board currently occupied by any of the Continuing Trustees or by
their successors duly elected under the Merger Agreement, AIMCO is required to
vote its IPT Common Shares for the reelection of each such Continuing Trustee or
for the election of such Continuing Trustee's successor designated by a majority
of the Continuing Trustees. If, after the date of the Merger Agreement and prior
to the Effective Time, any vacancy on the IPT Board arises with respect to a
trustee position occupied by a Continuing Trustee, AIMCO is required to cause
the AIMCO-nominated Trustees to vote to fill such vacancy by electing a person
nominated by a majority of the Continuing Trustees.
In addition, pursuant to the Merger Agreement and the IPT Bylaws, a
majority of the Continuing Trustees must approve, among other things, the
following actions: (i) removal of a Continuing Trustee; (ii) termination of
IPT's independent auditors or the financial advisor or legal counsel for the
Merger; (iii) all alternative proposals to acquire IPT or its subsidiaries;
(iv) amendment or waiver of any provision of (A) the Merger Agreement, (B) the
Fourth Amended and Restated Agreement of Limited Partnership of IPLP, (C) the
IPT's declaration of trust, as amended, establishing IPT as a real estate
investment trust ("REIT") under Maryland law (the "Declaration of Trust") or
(D) the IPT Bylaws; (v) modification of the powers of the Continuing Trustees;
and (vi) making of loans by IPT or its subsidiaries to AIMCO or its
subsidiaries. The Continuing Trustees' special powers terminate on the earliest
to occur of (I) the Merger, (II) January 1, 2002, or (III) the sooner
termination of the Merger Agreement under certain circumstances.
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The Merger is subject to the approval of the IPT shareholders, regulatory
approvals, and the satisfaction or waiver of various other conditions. AIMCO has
agreed to vote all IPT Common Shares owned by it in favor of the Merger
Agreement and the transactions contemplated thereby, and granted certain
Continuing Trustees an irrevocable proxy (the "Proxy") to vote all IPT Common
Shares held by AIMCO at all meetings of IPT shareholders, and in every written
consent in lieu of such meetings, in favor of approval of the Merger and any
matter that could reasonably be expected to facilitate the Merger; accordingly
shareholder approval of the Merger is assured. Each grantee under the Proxy
explicitly agreed in writing to vote all IPT Common Shares subject to the Proxy
in favor of the Merger. The Proxy shall terminate upon the earlier of (a)
January 1, 2002 and (b) the consummation of the Merger.
If the Merger is not completed, (i) the Continuing Trustees will be
entitled, acting by a majority, to accept sufficient number of the resignations
submitted by the AIMCO-nominated Trustees and to fill vacancies created thereby
with their own nominees, in order that the Continuing Trustees shall thereafter
constitute a majority of the IPT Board and (ii) certain transactions involving
AIMCO and IPT that occurred between the time of the IFG Merger and the
termination of the Merger Agreement, including the acquisition by AIMCO of
certain assets of IPLP and interests in partnerships controlled by IPT, will be
unwound.
In connection with the execution of the Merger Agreement, AIMCO and
certain shareholders of the IPT entered into an agreement, dated October 1,
1998 (the "Shareholder's Agreement"), whereby AIMCO agreed that, following a
termination of the Merger Agreement under certain circumstances, it will vote
its IPT Common Shares as follows: for the first two annual meetings of IPT
shareholders following such a termination, in favor of designees of the
Continuing Trustees, so that such designees constitute a majority of the
trustees of the IPT Board, and thereafter in favor of designees of the
Continuing Trustees so that such designees constitute one less than a majority
of the trustees of the IPT Board. The IPT Shareholder's Agreement remains in
effect as long as AIMCO and/or its affiliates own at least 10% of the
outstanding IPT Common Shares, but terminates upon consummation of the Merger.
You are urged to read this Information Statement carefully in its entirety
as well as the Merger Agreement and the IPT Bylaws which have been filed as
exhibit to IPT's periodic reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). You are not, however, required to take any
action. This Information Statement is required by Section 14(f) of the Exchange
Act, and Rule 14f-1 thereunder. The information in this Information Statement
about AIMCO has been furnished to IPT by AIMCO and IPT assumes no
responsibility for the accuracy or completeness of such information.
TRUSTEES AND NEW EXECUTIVE OFFICERS OF IPT
The following sets forth certain information with respect to the trustees
and New Executive Officers of IPT.
IPT Board
The IPT Board consists of eleven members, six of whom also serve as
officers of AIMCO (including two who are also directors of AIMCO). The trustees
are
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classified, with respect to the terms for which they severally hold office,
into separate classes, if and in the manner prescribed in the Declaration of
Trust. In the event that the IPT Board amends the IPT Bylaws to decrease the
number of trustees, the tenure of office of a trustee shall not be affected by
any decrease in the number of trustees. Trustees need not be shareholders of
IPT.
During the last fiscal year, IPT was a private company and the IPT Board
acted through written consent instead of holding board meetings.
The following table identifies the Continuing Trustees, together with
their respective ages and positions with IPT. Each Continuing Trustee will
serve until his term is completed, unless he is removed or resigns prior to
completing his term. All Continuing Trustees will be removed from office upon
consummation of the Merger.
Continuing Trustees
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Andrew L. Farkas 37 Trustee
James A. Aston 45 Trustee
Frank M. Garrison 42 Trustee
Warren M. Eckstein 37 Trustee
Bryan L. Herrmann 62 Trustee
</TABLE>
The following is a biographical summary of the experience for the past five
years or more of the Continuing Trustees.
Andrew L. Farkas. Mr. Farkas has served as a trustee of IPT since December 1996
and served as the Chairman and the Chief Executive Officer of IPT from January
1997 until October 1, 1998. Mr. Farkas was a Trustee and Chairman, President
and Chief Executive Officer of IFG from its inception in January 1991 to
October 1998. Currently, Mr. Farkas serves as the Chairman and Chief Executive
Officer of Insignia/ESG Holdings Inc. Mr. Farkas has been President of
Metropolitan Asset Group, Ltd., a real estate investment banking firm, since
1983. Mr. Farkas is involved in IPT affairs only to the extent of strategic
planning and capital formation. Mr. Farkas' term as a trustee of IPT will
expire at the annual meeting of the shareholders of IPT held in the year 2000.
James A. Aston. Mr. Aston has served as a trustee since IPT's inception in May
1996. Mr. Aston served as and President of IPT from May 1996 until October 1,
1998. Mr.
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Aston's principal employment had been with IFG for more than the past five
years. Mr. Aston currently serves as the Chief Financial Officer of
Insignia/ESG Holdings Inc. and is a member of the Office of Chairman of
Insignia/ESG Holdings Inc. Mr. Aston's term as a trustee of IPT will expire at
the annual meeting of the shareholders of IPT held in the year 1999.
Frank M. Garrison. Mr. Garrison has served as a trustee of IPT since December
1996. He also served in various other officer capacities with IPT between
December 1996 and October 1998. Mr. Garrison's principal employment was with
IFG for more than the past five years. He currently serves as a member of the
Office of Chairman of Insignia/ESG Holdings Inc. and he serves in various
officer positions with subsidiaries of Insignia/ESG Holdings Inc. Mr.
Garrison's term as a trustee of IPT will expire at the annual meeting of the
shareholders of IPT held in the year 2001.
Warren M. Eckstein. Mr. Eckstein was appointed as a trustee of IPT in
September 1998. Mr. Eckstein has been Managing Director - Investment Banking of
Paine Webber Incorporated since October 1996. Prior to October 1996, Mr.
Eckstein served as Senior Vice President, Investment Banking, of Dillon, Reed &
Co., Inc. Mr. Eckstein's term as a trustee of IPT will expire at the annual
meeting of the shareholders of IPT held in the year 1999.
Bryan L. Herrmann. Mr. Herrmann was appointed as a trustee of IPT in September
1998. Mr. Herrmann is an investment banker by background and currently is
Chairman and Chief Executive Officer of Base Camp 9 Corp., a position he has
held since 1990. Mr. Herrmann is also a member of the board of directors of
Wynn's International, Inc., a public company. Mr. Herrmann's term as a trustee
of IPT will expire at the annual meeting of the shareholders of IPT held in the
year 2001.
The following table identifies the AIMCO-nominated Trustees and the New
Executive Officers, together with their respective ages and positions with IPT.
Each AIMCO-nominated Trustee will serve until his term is completed, unless he
is removed or resigns prior to completing his term. Each New Executive Officer
will serve until his successor is appointed by the IPT Board.
AIMCO-nominated Trustees and New Executive Officers
<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ---- --- ---------
<S> <C> <C>
Terry Considine 51 Trustee, Chairman and Chief Executive
Officer
</TABLE>
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<TABLE>
<S> <C> <C>
Peter K. Kompaniez 53 Trustee, President
Joel F. Bonder 49 Executive Vice President, General
Counsel and Assistant Secretary
Patrick J. Foye 41 Trustee, Executive Vice President
Robert Ty Howard 40 Executive Vice President - Ancillary
Services
Steven D. Ira 47 Trustee, Executive Vice President
Thomas W. Toomey 37 Trustee, Executive Vice President -
Finance and Administration
David L. Williams 52 Executive Vice President - Property
Operations
Harry G. Alcock 34 Trustee, Senior Vice President -
Acquisitions
Troy D. Butts 33 Senior Vice President and Chief
Financial Officer
Jeffrey P. Cohen 30 Senior Vice President and Secretary
</TABLE>
The following is a biographical summary of the experience for the past five
years or more of the AIMCO-nominated Trustees and the New Executive Officers of
IPT.
Terry Considine. Mr. Considine was appointed as a trustee, Chairman of the IPT
Board and Chief Executive Officer of IPT on October 1, 1998. He has served as
Chairman of the Board of Directors and Chief Executive Officer of AIMCO since
July 1994 and was President until July 1997. He is the sole owner of Considine
Investment Co. and prior to July 1994 was owner of approximately 75% of
Property Asset Management, L.L.C., a Limited Liability Company, a Colorado
limited liability company, and its related entities (collectively, "PAM"), one
of AIMCO's predecessors. On October 1, 1996, Mr. Considine was appointed
Co-Chairman and director of Asset Investors Corp. and Commercial Asset
Investors, Inc., two other public REITs, and appointed as a director of
Financial Assets Management, LLC, a REIT manager. Mr. Considine has been
involved as a principal in a variety of real estate activities, including the
acquisition, renovation, development and disposition of properties. Mr.
Considine has also controlled entities engaged in other businesses such as
television broadcasting, gasoline distribution and environmental laboratories.
Mr. Considine received a B.A. from Harvard College, a J.D. from Harvard Law
School and is admitted as a member of the Massachusetts Bar. Mr. Considine's
term as a trustee of IPT will expire at the annual meeting of the shareholders
of IPT held in the year 2001.
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Mr. Considine has had substantial multifamily real estate experience. From 1975
through July 1994, partnerships or other entities in which Mr. Considine had
controlling interests invested in approximately 35 multifamily apartment
properties and commercial real estate properties. Six of these real estate
assets (four of which were multifamily apartment properties and two of which
were office properties) did not generate sufficient cash flow to service their
related indebtedness and were foreclosed upon by their lenders, causing pre-tax
losses of approximately $11.9 million to investors and losses of approximately
$2.7 million to Mr. Considine.
Peter Kompaniez. Mr. Kompaniez was appointed as a trustee and President of IPT
on October 1, 1998. He has been Vice Chairman, President and a director of
AIMCO since July 1994 and was appointed President in July 1997. Since September
1993, Mr. Kompaniez has owned 75% of PDI Realty Enterprises, Inc., a Delaware
corporation ("PDI"), one of AIMCO's predecessors, and serves as its President
and Chief Executive Officer. From 1986 to 1993, he served as President and
Chief Executive Officer of Heron Financial Corporation ("HFC"), a United States
holding company for Heron International, N.V.'s real estate and related assets.
While at HFC, Mr. Kompaniez administered the acquisition, development and
disposition of approximately 8,150 apartment units (including 6,217 units that
have been acquired by AIMCO) and 3.1 million square feet of commercial real
estate. Prior to joining HFC, Mr. Kompaniez was a senior partner with the law
firm of Loeb and Loeb where he had extensive real estate and REIT experience.
Mr. Kompaniez received a B.A. from Yale College and a J.D. from the University
of California (Boalt Hall). Mr. Kompaniez's term as a trustee of IPT will
expire at the annual meeting of the shareholders of IPT held in the year 2001.
The downturn in the real estate markets in the late 1980s and early 1990s
adversely affected the United States real estate operations of Heron
International N.V. and its subsidiaries and affiliates (the "Heron Group").
During this period from 1986 to 1993, Mr. Kompaniez served as President and
Chief Executive Officer of HFC, and as a director or officer of certain other
Heron Group entities. In 1993, HFC, its parent Heron International, and certain
other members of the Heron Group voluntarily entered into restructuring
agreements with separate groups of their United States and international
creditors. The restructuring agreement for the United States members of the
Heron Group generally provided for the joint assumption of certain liabilities
and the pledge of unencumbered assets in support of such liabilities for the
benefit of their United States creditors. As a result of the restructuring, the
operations and assets of the United States members of the Heron Group were
generally separated from those of Heron International and its non-United States
subsidiaries. At the conclusion of the
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restructuring, Mr. Kompaniez commenced the operations of PDI, which was engaged
to act as asset and corporate manager of the continuing United States
operations of HFC and the other United States Heron Group members for the
benefit of the United States creditors. In connection with certain transactions
effected at the time of the initial public offering of AIMCO Common Stock, Mr.
Kompaniez was appointed Vice Chairman of AIMCO and substantially all of the
property management assets of PDI were transferred or assigned to AIMCO.
Joel F. Bonder. Mr. Bonder was appointed as Executive Vice President,
General Counsel and Secretary of IPT on October 1, 1998. He has served as
Executive Vice President and General Counsel of AIMCO since December 1997.
Prior to joining AIMCO, Mr. Bonder served as Senior Vice President and General
Counsel of NHP from April 1994 until December 1997. Mr. Bonder served as Vice
President and Deputy General Counsel of NHP from June 1991 to March 1994 and as
Associate General Counsel of NHP from 1986 to 1991. From 1983 to 1985, Mr.
Bonder was with the Washington, D.C. law firm of Lane & Edson, P.C. From 1979
to 1983, Mr. Bonder practiced with the Chicago law firm of Ross and Hardies.
Mr. Bonder received an A.B. from the University of Rochester and a J.D. from
Washington University School of Law.
Patrick J. Foye. Mr. Foye was appointed as a trustee of IPT on October 1,
1998. He has served as Executive Vice President of AIMCO since May 1998. Prior
to joining AIMCO, Mr. Foye was a partner in the law firm of Skadden, Arps,
Slate, Meagher & Flom LLP from 1989 to 1998 and was managing Partner of the
firm's Brussels, Budapest and Moscow offices from 1992 through 1994. Mr. Foye
is also Deputy Chairman of the Long Island Power authority and serves as a
member of the New York State Privatization Council. He received a B.A. from
Fordham College and a J.D. from Fordham University Law School. Mr. Foye's term
as a trustee of IPT will expire at the annual meeting of the shareholders of
IPT held in the year 2000.
Robert Ty Howard. Mr. Howard was appointed Executive Vice President -
Ancillary Services of IPT on October 1, 1998. He was appointed Executive Vice
President - Ancillary Services of AIMCO in February 1998. Prior to joining
AIMCO, Mr. Howard served as an officer and/or director of four affiliated
companies, Hecco Ventures, Craig Corporation, Reading Company and Decurion
Corporation. Mr. Howard was responsible for financing, mergers and acquisitions
activities, investments in commercial real estate, both nationally and
internationally, cinema development and interest rate risk management. From
1983 to 1988, he was employed by Spieker
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Properties. Mr. Howard received a B.A. from Amherst College, a J.D. from
Harvard Law School and an M.B.A. from Stanford University Graduate School of
Business.
Steven D. Ira. Mr. Ira was appointed as a trustee and Executive Vice President
of IPT on October 1, 1998. He is a Co-Founder of AIMCO and has served as
Executive Vice President of AIMCO since July 1994. From 1987 until July 1994,
he served as President of PAM. Prior to merging his firm with PAM in 1987, Mr.
Ira acquired extensive experience in property management. Between 1977 and
1981, he supervised the property management of over 3,000 apartment and mobile
home units in Colorado, Michigan, Pennsylvania and Florida, and in 1981 he
joined with others to form the property management firm of McDermott, Stein and
Ira. Mr. Ira served for several years on the National Apartment Manager
Accreditation Board and is a former president of both the National Apartment
Association and the Colorado Apartment Association. Mr. Ira is the sixth
individual elected to the Hall of Fame of the National Apartment Association in
its 54-year history. He holds a Certified Apartment Property Supervisor (CAPS)
and a Certified Apartment Manager designation from the National Apartment
Association, a Certified Property Manager (CPM) designation from the National
Institute of Real Estate Management (IREM) and he is a member of the Boards of
Directors of the National Multi-Housing Council, the National Apartment
Association and the Apartment Association of Metro Denver. Mr. Ira received a
B.S. from Metropolitan State College in 1975. Mr. Ira's term as a trustee of
IPT will expire at the annual meeting of the shareholders of IPT held in the
year 2000.
Thomas W. Toomey. Mr. Toomey was appointed as a trustee and Executive Vice
President - Finance and Administration of IPT on October 1, 1998. He has served
as Senior Vice President - Finance and Administration of AIMCO since January
1996 and was promoted to Executive Vice President - Finance and Administration
of AIMCO in March 1997. From 1990 until 1995, Mr. Toomey served in a similar
capacity with Lincoln Property Company ("LPC") as Vice President/Senior
Controller and Director of Administrative Services of Lincoln Property Services
where he was responsible for LPC's computer systems, accounting, tax, treasury
services and benefits administration. From 1984 to 1990, he was an audit
manager with Arthur Andersen & Co. where he served real estate and banking
clients. From 1981 to 1983, Mr. Toomey was on the audit staff of Kenneth
Leventhal & Company. Mr. Toomey received a B.S. in Business
Administration/Finance from Oregon State University and is a Certified Public
Accountant. Mr. Toomey's term as a trustee of IPT will expire at the annual
meeting of the shareholders of IPT held in the year 1999.
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<PAGE> 10
David L. Williams. Mr. Williams was appointed Executive Vice President -
Property Operations of IPT on October 1, 1998. He has been Executive Vice
President - Operations of AIMCO since January 1997. Prior to joining AIMCO, Mr.
Williams was Senior Vice President of Operations at Evans Withycombe
Residential, Inc. from January 1996 to January 1997. Previously, he was
Executive Vice President at Equity Residential Properties Trust from October
1989 to December 1995. He has served on National Multi-Housing Council Boards
and NAREIT committees. Mr. Williams also served as Senior Vice President of
Operations and Acquisitions of US Shelter Corporation from 1983 to 1989. Mr.
Williams has been involved in the property management, development and
acquisition of real estate properties since 1973. Mr. Williams received his B.A.
in education and administration from the University of Washington in 1967.
Harry G. Alcock. Mr. Alcock was appointed as a trustee and Senior Vice
President - Acquisitions of IPT on October 1, 1998. He has served as a Vice
President of AIMCO since July 1996, and was promoted to Senior Vice President -
Acquisitions of AIMCO in October 1997, with responsibility for acquisition and
financing activities since July 1994. From June 1992 until July 1994, Mr.
Alcock served as Senior Financial Analyst for PDI and HFC. From 1988 to 1992,
Mr. Alcock worked for Larwin Development Corp., a Los Angeles based real estate
developer, with responsibility for raising debt and joint venture equity to
fund land acquisitions and development. From 1987 to 1988, Mr. Alcock worked
for Ford Aerospace Corp. He received his B.S. from San Jose State University.
Mr. Alcock's term as a trustee of IPT will expire at the annual meeting of the
shareholders of IPT held in the year 1999.
Troy D. Butts. Mr. Butts was appointed Senior Vice President and Chief Financial
Officer on October 1, 1998. He has served as Senior Vice President and Chief
Financial Officer of AIMCO since November 1997. Prior to joining AIMCO, Mr.
Butts served as a Senior Manager in the audit practice of the Real Estate
Services Group for Arthur Andersen LLP in Dallas, Texas. Mr. Butts was employed
by Arthur Andersen LLP for ten years and his clients were primarily
publicly-held real estate companies, including office and multi-family REITs.
Mr. Butts holds a Bachelor of Business Administration degree in Accounting from
Angelo State University and is a Certified Public Accountant.
Jeffrey P. Cohen. Mr. Cohen has served in various capacities with IPT since
June 1997 and currently serves as a Senior Vice President and Secretary of IPT.
Between April 1997 and October 1998, Mr. Cohen's principal occupation was to
serve as a Senior Vice President - Investment Banking of IFG. Prior to April
1997, Mr. Cohen's
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principal occupation was as an attorney with the law firm of Rogers & Wells,
New York, New York.
There are no material legal proceedings to which any of the trustees, or
any associate of any such trustee, is a party adverse to IPT or any of its
subsidiaries. None of the trustees, or any associate of any such trustee, has
any material interest adverse to IPT or any of its subsidiaries.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act require trustees and executive
officers, and persons who beneficially own more than ten percent of the issued
and outstanding IPT Common Shares to file reports of ownership of IPT's
securities and changes in such ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors and greater than ten percent
beneficial shareholders are required by SEC regulations to furnish IPT with
copies of all Section 16(a) forms they file. Because IPT was a private company
during the fiscal year ended December 31, 1997, Section 16(a) filing
requirements were not applicable to the IPT trustees, executive officers and
greater than ten percent beneficial shareholders during such period.
SECURITY OWNERSHIP OF IPT
The following table sets forth certain information regarding the beneficial
ownership of IPT Common Shares by (i) each person who is known to be a
beneficial owner of more than five percent of the outstanding IPT Common Shares,
(ii) each current and former trustee of IPT, and (iii) the trustees and
executive officers of IPT as a group, in each case as of October 1, 1998. Unless
otherwise indicated in the footnotes, all of such IPT Common Shares are owned
directly, and the indicated person has sole voting and investment power with
respect thereto.
As of October 1, 1998, there were 23,446,538 IPT Common Shares outstanding
and 9,934,475 units of IPLP ("IPLP OP Units") outstanding not held by IPT. All
IPLP CP Units are exchangeable to IPT Common Shares or cash, at IPT's option.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY % OF CLASS
NAME OF OWNER OR IDENTITY OF GROUP OWNED OUTSTANDING
- ---------------------------------- ------------ -----------
<S> <C> <C>
AIMCO(1)(2)............................................ 21,968,031 65.8%
Andrew L. Farkas(3).................................... 982,662 4.2%
James A. Aston(4)(5)................................... 108,000 0.5%
Frank M. Garrison(4)(5)................................ 105,400 0.5%
Ronald Uretta(4)(5).................................... 105,300 0.5%
Warren Eckstein........................................ -- *
Ronald J. Consiglio.................................... 22,360 0.1%
Bryan L. Herrmann...................................... 6,898 *
Terry Considine........................................ -- *
Peter K. Kompaniez..................................... -- *
Patrick J. Foye........................................ -- *
Steven D. Ira.......................................... -- *
Thomas W. Toomey....................................... -- *
Harry G. Alcock........................................ -- *
All trustees and executive officers as a group (17
individuals)(6)...................................... 1,356,865 5.8%
</TABLE>
- -------------------------
* Indicates less than 0.1%.
(1) Assumes that all IPLP OP Units held by AIMCO, including 1,014,995 IPLP OP
Units held through its wholly-owned subsidiary, Insignia Capital
Corporation, are acquired by IPT in exchange for IPT Common Shares.
(2) Includes IPT Common Shares held through subsidiaries of AIMCO.
(3) Includes 130,000 restricted IPT Common Shares owned by such person as well
as 807,202 IPT Common Shares owned by a partnership controlled by such
person.
(4) Includes certain IPT Common Shares owned by such individual's immediate
family.
(5) Includes 86,664 restricted IPT Common Shares owned by such person.
(6) Includes former executive officers, Messrs. Cohen, Jarrard, Falls, and
Vinson, and former IPT trustees, Messrs. Uretta and Consiglio, as well as
the current trustees of IPT and the New Executive Officers.
CERTAIN TRANSACTIONS
In order to avoid adverse tax consequences to AIMCO, the IFG Merger
Agreement required that AIMCO and IFG use their best efforts to cause IPLP to
transfer substantially all of its assets to AIMCO Properties, L.P., a Delaware
limited partnership and the operating partnership of AIMCO ("AIMCO Operating
Partnership"), in exchange for limited partner units in AIMCO OP ("OP Units").
As a result, contemporaneously with the IFG Merger and the execution of the
Merger Agreement, IPLP and AIMCO Operating Partnership entered into an
Assignment and Assumption Agreement, dated as of October 1, 1998 (the "IPLP
Asset Agreement"). Pursuant to the IPLP Asset Agreement, IPLP transferred a
substantial portion of its assets to the AIMCO Operating Partnership in
exchange for OP Units. In addition, AIMCO and IPT formed a joint venture to
acquire from a third party multifamily assets in which IPT's 99% joint venture
was funded through a payment of approximately $15 million by IPLP.
Upon the execution of the Merger Agreement, an aggregate of 65,000
restricted IPT Common Shares granted to five current and former executive
officers of IPT became vested pursuant to retention agreements entered into
with such officer and IPT.
Messrs. Aston, Farkas and Garrison, who are Continuing Trustees, and Mr.
Uretta, a former IPT trustee, own an aggregate 450,000 restricted IPT Common
Shares. These restricted shares will convert into that number of restricted
shares of AIMCO Common Stock equal to $13.28 divided by the AIMCO Exchange
Value (as defined in the Merger Agreement), regardless of whether AIMCO elects
to pay all or a portion of the merger consideration in cash. The terms and
vesting of the restricted stock will not be affected by the Merger.
In the IFG Merger, Messrs. Aston, Farkas, Garrison and Uretta, as IFG
stockholders, became the beneficial owners of approximately 1.2 million shares
of Class E Cumulative Convertible Preferred Stock of AIMCO.
THE IPT BOARD, ITS COMMITTEES AND COMPENSATION
The IPT Board has four committees -- the Executive Committee, the AIMCO
Committee, the Audit Committee and the Compensation Committee.
Executive Committee. The Executive Committee, formed October 1, 1998, is
comprised of Messrs. Considine, Kompaniez, Foye, and Toomey. the Executive
Committee can act with respect to all matters relating to the general management
of the Company except for such matters as are specifically referred to other
committees under the IPT Bylaws.
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AIMCO Committee. The AIMCO Committee, formed October 1, 1998, is comprised of
Messrs. Alcock, Considine, Ira, Kompaniez, Foye, and Toomey. The AIMCO
Committee can act on behalf of the IPT Board with respect to all matters and
all actions required or desired to be taken by the Company related to (i) all
transactions between the Company or its subsidiaries and AIMCO or its
subsidiaries (other than those specifically described in the IPT Bylaws), (ii)
any offer by AIMCO or its affiliates to purchase limited partnership interests
in limited partnerships that are controlled by or affiliated with the Company
or controlled by Winthrop Financial Associates and (iii) any public
announcement or filing with a governmental authority.
Audit Committee. The Audit Committee, formed in September 1998, currently is
comprised of three independent trustees (Messrs. Eckstein, Herrmann and
Aston). The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public accountants
the plans and results of audit engagement, approves professional services
provided by the independent public accountants, reviews the independence of the
independent public accountants, considers the range of audit and non-audit fees
and reviews the adequacy of IPT's internal accounting controls.
Compensation Committee. The Compensation Committee, formed in September 1998,
currently is comprised of three independent trustees (Messrs. Eckstein, Farkas
and Herrmann). The Compensation Committee determines the compensation for
IPT's executive officers and administers IPT's 1997 Share Incentive Plan.
COMPENSATION OF TRUSTEES
Prior to the execution of the Merger Agreement, each trustee of IPT who
was not also an officer of IFG received a board retainer of $12,000 per year,
and each trustee of IPT who was not also an officer of IPT or IFG received
additional compensation in the amount of $2,000 for each regular meeting of the
IPT Board he attended in person and $500 for each regular meeting attended via
telephone. In addition, each trustee who was a member of the Audit Committee or
the Compensation Committee (and who was not an officer of IPT or IFG) received
$1,000 for each committee meeting attended, whether in person or by telephone.
Each trustee could, in lieu of receiving the above described compensation,
direct that such compensation be paid to a charitable organization of his
choice. Mr. Eckstein has previously indicated that it is his intent to do so.
In addition, all trustees of IPT were eligible to receive grants of options to
purchase IPT Shares and
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compensation, direct that such compensation be paid to a charitable organization
of his choice. Mr. Eckstein has previously indicated that it is his intent to do
so. In addition, all trustees of IPT were eligible to receive grants of options
to purchase IPT Common Shares and restricted IPT Common Shares under the terms
of IPT's 1997 Share Incentive Plan. See "-- 1997 Share Incentive Plan" below.
The IPT Bylaws, in effect since the execution of the Merger Agreement,
provide that the trustees shall not receive any stated salary for their
services as trustees but, by resolution of the trustees, may receive a fixed
sum of cash and/or IPT Common Shares (or options to acquire IPT Common Shares)
per year and/or per visit to real property owned or to be acquired by IPT and
for any service or activity they performed or engaged in as trustees. Trustees
may be reimbursed for expenses of attendance, if any, at each annual, regular
or special meeting of the trustees or of any committee thereof; and for their
expenses, if any, in connection with each property visit and any other service
or activity performed or engaged in as trustees.
COMPENSATION OF EXECUTIVE OFFICERS
Because IPT was an externally advised and managed REIT and had no
employees until the termination of the Advisory Agreement in February 1998
(with retroactive effect to January 1, 1998), IPT paid no cash compensation to
its executive officers prior to that time. Upon the termination of the Advisory
Agreement, the twelve employees of IFG who worked almost exclusively on IPT
matters, three of whom are
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executive officers of IPT, became employees of IPT and received cash salaries
from IPT for their service between January 1, 1998 and October 1, 1998. In
addition, in February 1998 these three executive officers were granted an
aggregate of 22,000 restricted IPT Common Shares, which shares will vest ratably
over five years commencing on September 30, 1998 and will be issued only upon
vesting. The 22,000 restricted IPT Common Shares were allocated 10,000 to
Carroll D. Vinson, 10,000 to William H. Jarrard, Jr. and 2,000 to William D.
Falls. See "--1997 Share Incentive Plan" below.
Two former executive officers of IPT own options to purchase an aggregate
of 25,000 IPT Common Shares with an exercise price of $10.00 per share.
Upon consummation of the Merger, these options will be retired by IPT at a price
equal to the difference between the exercise price of such option and $13.25
per share IPT will pay an aggregate of $81,250 to retire such option.
No decision has been made about the compensation the New Executive
Officers will receive for their service since the execution of the Merger
Agreement.
1997 SHARE INCENTIVE PLAN
General
IPT adopted the 1997 Share Incentive Plan in August 1997 for the purpose
of attracting and retaining executive officers, trustees and employees. In
general, all employees (including officers) and trustees of, and consultants
to, IPT are eligible to participate in the 1997 Share Incentive Plan. The 1997
Share Incentive Plan is administered by the Compensation Committee of the IPT
Board.
The 1997 Share Incentive Plan authorizes the granting of awards with
respect to up to 1,200,000 IPT Common Shares. The 1997 Share Incentive Plan
provides for the grant of awards of (i) options to purchase IPT Common Shares
intended to qualify as incentive stock options ("Incentive Share Options")
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), (ii) options to purchase IPT Common Shares not intended to qualify as
incentive stock options under Section 422 of the Code ("Nonqualified Share
Options"), and (iii) "restricted" IPT Common Shares which vest over time or on
the attainment of specified performance goals or other criteria as prescribed
by the Compensation Committee. Awards are documented by written agreements
between the holder of the award and IPT.
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Options
The Compensation Committee will determine the option exercise schedule
(which may not commence prior to six months from the option grant date) and any
vesting requirements in connection with any grant of options under the 1997
Share Incentive Plan. Options may be exercised by paying the purchase price in
cash or surrendering IPT Common Shares already owned by the option holder. An
option may not be exercised for a fractional IPT Common Share and an option
holder will have no rights as a shareholder with respect to the IPT Common
Shares subject to his option unless and until the option is exercised.
The Compensation Committee has the discretion to determine the exercise
price of options granted under the 1997 Share Incentive Plan; however, the
exercise price per share of an Incentive Share Option may not be less than 100%
of the fair market value of an IPT Common Share on the date of grant. In
addition, an Incentive Share Option granted to a holder of more than 10% of the
total combined voting power of all of the shares of beneficial interest of IPT
or any subsidiary must have an exercise price of at least 110% of the fair
market value of an IPT Common Share on the date of grant and by its terms must
not be exercisable after the expiration of five years from the date it is
granted.
At or prior to the exercise of vested Nonqualified Share Options, the
Compensation Committee will have the discretion to permit the option holder, in
lieu of purchasing the entire number of IPT Common Shares subject to purchase
under such options, to relinquish all or part of the unexercised portion of the
option for cash in the amount of the difference between the aggregate value of
the IPT Common Shares subject to the option and the aggregate exercise price of
the option. The option holder may elect to have this amount paid in IPT Common
Shares instead of cash.
If a holder of an option award dies or becomes totally disabled, all
outstanding options covered thereby will become immediately exercisable in full
and will thereafter be exercisable for one year after the date of death or
total disability (but not later than the scheduled expiration of such options).
If a holder of an option award ceases to be an employee or consultant (other
than because of death or total disability) prior to complete exercise thereof,
then the options covered thereby will be exercisable only to the extent
provided in the applicable option agreement. However, if a holder of an option
award ceases to be an employee or consultant as a result of a termination for
"cause," then all options covered thereby will immediately terminate.
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Restricted Shares
Restricted shares granted by the Compensation Committee are awards of IPT
Common Shares which vest in the holder only after termination of a restriction
period. The Compensation Committee may determine the price, if any, to be paid
by the holder for the restricted shares and has discretion to determine whether
IPT Common Shares covered by such awards will be issued at the beginning or end
of a restriction period and whether dividend equivalents will be paid during the
restriction period. The vesting of restricted shares may be dependent upon the
passage of time and/or the fulfillment of employment or other conditions,
including performance goals. Restricted Shares issued at the end of a
restriction period will not constitute issued or outstanding shares for any
purpose unless and until vested. Restricted shares which are issued at the
beginning of a restriction period, however, will constitute issued and
outstanding IPT Common Shares for all purposes. Accordingly, the holder of
restricted shares issued at the beginning of a restriction period will have the
right to vote such IPT Common Shares and to receive and retain all regular cash
distributions or any other similar distributions from IPT. However, such a
holder will not be entitled to delivery of any share certificate or certificates
evidencing the shares until the restriction period expires and the shares vest.
Other than regular cash dividends and any other distributions that the
Compensation Committee may in its discretion designate, IPT will retain custody
of all distributions made or declared with respect to any restricted shares
until vesting thereof, and any such retained distributions will not bear
interest or be segregated in a separate account.
In connection with any award of restricted IPT Common Shares, a provision
may be made for the payment of a cash amount to the holder at any time after
the restricted shares become vested. Any such cash award will be payable in
accordance with any additional restrictions, terms and conditions as prescribed
by the Compensation Committee in the applicable restricted share agreement.
In the event of the death of a holder of restricted shares, the
restriction period applicable to the award will be deemed to have expired and
all such restricted shares will become vested. If a holder of restricted shares
ceases to be an employee or consultant (other than because of death or total
disability) prior to the vesting thereof, then such restricted shares will vest
only to the extent provided in the applicable restricted share agreement.
However, if a holder of unvested restricted shares ceases to be an employee or
consultant as a result of a termination for "cause," then the holder's rights
to all such restricted shares (and any cash awards) will be forfeited
immediately.
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The 510,000 restricted IPT Common Shares granted in connection with the
termination of the Advisory Agreement were issued at the beginning of the
restriction period and, therefore, the holders are entitled to receive and
retain all regular cash distributions paid by IPT in respect thereof. In
addition, the vesting of such restricted IPT Common Shares is, in certain
cases, automatically accelerated upon a change in control of IPT. The 22,000
restricted IPT Common Shares issued to Messrs. Vinson, Jarrard and Falls were
not issued at the beginning of the restriction period, and the vesting of those
shares does not accelerate automatically upon a change of control of IPT.
Miscellaneous
In general, neither options nor restricted shares may be sold, assigned,
pledged or transferred prior to exercise, in the case of options, or vesting,
in the case of restricted shares. However, subject to the prior consent of the
Compensation Committee, Nonqualified Share Options may be transferred by the
holder to one or more "permitted transferees" if there is no consideration for
the transfer and certain other requirements are met. For this purpose, a
"permitted transferee" means any member of the holder's "immediate family," a
trust established for the exclusive benefit of such immediate family members or
a partnership in which immediate family members are the only partners; and
"immediate family" means spouses, children, step-children and grandchildren
including relationships arising from adoption.
The Compensation Committee may, at any time before termination of an
option or lapsing of restrictions on restricted shares, accelerate the time or
times at which options may be exercised or restricted shares may vest. However,
unless otherwise provided in an applicable option or restricted share agreement,
a change of control of IPT will not cause options to become fully exercisable or
cause restricted shares to become fully vested.
The Compensation Committee may make or provide for such adjustments in the
number of IPT Common Shares available for awards under the 1997 Share Incentive
Plan or in the number of shares for which outstanding awards have been granted
as it determines is appropriate in order to prevent dilution or enlargement of
the rights of holders or to otherwise recognize the effects of any share split,
share dividend, combination or reclassification of shares, recapitalization or
reorganization, spin-off, liquidation or similar transaction. In addition, the
exercise price or purchase price applicable to awards may be similarly adjusted
in such events.
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The IPT Bylaws provide that the Continuing Trustees shall be empowered to
direct the grant of up to 10,000 restricted IPT Common Shares under the 1997
Share Incentive Plan, subject to the approval of the Compensation Committee to
the extent required by the 1997 Share Incentive Plan, or to direct the payment
of up to $132,000 cash compensation (any such awards of cash compensation will
reduce pro rata the number of IPT Common Shares that the Continuing Trustees
may grant).
EMPLOYMENT AGREEMENTS
On September 17, 1998, IPT entered into a three-year employment agreement
with Ronald J. Consiglio (the "Consiglio Employment Agreement"), which
provided (i) for base annual compensation in the amount of $276,000 and an
annual bonus of not less than $90,000, (ii) for severance payments in the event
of death, disability, termination by IPT without cause, or voluntary
resignation by Mr. Consiglio occurring within twelve months of his initial
employment, (iii) that Mr. Consiglio must devote his full business time to the
affairs of IPT, provided however, that Mr. Consiglio's work days and work hours
will be substantially similar to the work days and work hours that Mr.
Consiglio devoted to Angeles Mortgage Investment Trust, and (iv) that, subject
to certain exceptions, during the term of his employment Mr. Consiglio is
prohibited from engaging, directly or indirectly, in any activity that competes
with IPT. The Consiglio Employment Agreement also provided that for a period of
one year following the cessation of Mr. Consiglio's employment with IPT, Mr.
Consiglio may not purchase, acquire or participate in the acquisition of (a)
any assets, securities or debt of IPT or any of its affiliates or subsidiaries,
(b) limited partner or general partner interests in any partnership affiliated
with IPT or any of its affiliates or subsidiaries or owning multifamily housing
or commercial properties managed by IPT or any of its affiliates or
subsidiaries, (c) interest in entities owning or controlling, directly or
indirectly, limited or general partner interests in such partnerships or
otherwise acting, directly or indirectly, as general partner of such
partnerships.
On October 1, 1998, IPT terminated the Consiglio Employment Agreement
without cause. Under the terms of the Consiglio Employment Agreement, Mr.
Consiglio is entitled to (1) an amount equal to the aggregate of (A) his base
salary plus (B) the bonus paid to him in the prior calendar year, multiplied by
the number of years remaining in the employment term, and (2) the continuance
of health coverage for himself, his spouse and dependents for the remainder of
the employment term.
In connection with the execution of the Merger Agreement, IPT entered into
consulting agreements with each of Messrs. Aston, Farkas, Garrison and Uretta
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pursuant to which each of these individual agreed to become consultants to IPT
for a fee of $1,000 per month. These consulting agreements terminate on January
31, 2003.
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Dated: October 27, 1998
INSIGNIA PROPERTIES TRUST
By: /s/ PATRICK J. FOYE
---------------------------------
Patrick J. Foye
Executive Vice President
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