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Exhibit 4.3
FORM OF REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is
entered into as of June 30, 1998, by and between ASSOCIATED ESTATES REALTY
CORPORATION, an Ohio corporation (the "Company"), and each of the persons who
are signatories hereto (each, a "Holder").
WHEREAS, each Holder has entered into a purchase agreement for
the sale of real property by Holder to the Company (the "Purchase Agreement")
and a portion of the consideration paid by the Company for such real property is
a number of common shares, without par value, of the Company specified in the
Purchase Agreement; and
WHEREAS, the Company has agreed to provide the Holders with
certain registration rights with respect to the shares received by those
Holders, subject to the terms and conditions provided herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual
promises and agreements set forth herein, and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"PERMITTED TRANSFEREE" shall mean, in the case of a Holder
that is a group trust or corporation, any Person that is a beneficial owner or
shareholder, respectively, therein and shall include the holders of the Class A
Common Stock of MIG Residential REIT, Inc.
"PERSON" shall mean an individual, partnership, corporation,
trust, or unincorporated organization, or a government or agency or political
subdivision thereof.
"PROSPECTUS" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Shares covered by such Registration
Statement, and by all other amendments and supplements to such prospectus,
including post-effective amendments, and in each case including all material
incorporated by reference therein.
"REGISTRABLE SHARES" shall mean (i) the Shares received in
consideration for real property pursuant to the Purchase Agreements (excluding
(a) Shares for which a Registration Statement relating to the sale thereof shall
have become effective under the Securities Act and which have been disposed of
under such Registration Statement, and (b) Shares sold pursuant to Rule 144
under the Securities Act, and (ii) any securities of the Company that may be
issued or distributed with respect to, in exchange or substitution for, or upon
conversion of such Registrable Shares, or on account of such Registrable Shares
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as a result of any stock dividend, stock split, reverse split or other
distribution, merger, combination, consolidation, recapitalization or
reclassification or otherwise. All references in this Agreement to Rule 144 and
subsections thereof shall refer to corresponding provisions of future law.
Registrable Shares includes Shares held by other holders pursuant to other real
estate purchase agreements by and between such holders and the Company, as
contemplated by that certain Agreement and Plan of Merger, dated November 5,
1997, among the Company, MIG Realty Advisors, Inc. ("MIGRA") and certain
stockholders of MIGRA.
"REGISTRATION EXPENSES" shall mean all expenses incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all SEC, stock exchange or NASD registration and filing fees; (ii) all fees
and expenses incurred in connection with compliance with state securities or
"blue sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualification of any of the Registrable Shares and
the preparation of a Blue Sky Memorandum) and compliance with the rules of the
NASD; (iii) all out-of-pocket expenses of any Persons in preparing or assisting
in preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, certificates and other documents relating to the
performance of and compliance with this Agreement; (iv) all fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Shares on any securities exchange or exchanges; and (v) the fees and
disbursements of counsel for the Company (other than its internal counsel) and
of the independent public accountants of the Company, including the expenses of
any special audit or "cold comfort" letters required by or incident to such
performance and compliance. Registration Expenses shall specifically exclude
underwriting discounts and commissions relating to the sale or disposition of
Registrable Shares by the Holder, the fees and disbursements of counsel
representing the Holder, and transfer taxes, if any, relating to the sale or
disposition of Registrable Shares by the Holder, all of which shall be borne by
the Holder in all cases.
"REGISTRATION STATEMENT" shall mean any registration statement
of the Company and any other entity required to be a registrant with respect to
such registration statement pursuant to the requirements of the Securities Act
which covers any of the Registrable Shares on an appropriate form, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all materials incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SHARES" shall mean common shares, without par value, of the
Company.
2. REGISTRATION.
(a) As soon as reasonably practicable, but no later than
sixty days after the Closing Date (as defined in the Purchase Agreement), the
Company at its sole cost and expense, will prepare and file with the SEC a
Registration Statement on Form S-3 under Rule 415 promulgated under the
Securities Act relating to the Registrable Shares (the "Initial Registration
Statement").
(b) The Company will use all reasonable efforts to have the
Initial Registration Statement declared effective by the SEC as promptly as
practicable (which effective date may or may not occur before the Closing Date
as defined in the Purchase Agreement) and to keep the Registration Statement
continuously effective for a period ending on the date that is one (1) year
following the date the Initial Registration Statement is declared effective by
the SEC or until such earlier date on which the Holders no longer hold any
Registrable Shares covered by the Initial Registration Statement. Holder
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acknowledges and agrees that the Company's exercise of "reasonable efforts"
under this Section 2(b) in connection with keeping the Initial Registration
Statement continuously effective, shall not require the Company to alter or
otherwise revise its disclosure practices nor shall the Company's obligation to
use such "reasonable efforts" require the Company to accelerate any discussions
or take any other actions in an effort to reduce the Black-Out Periods (as
defined in Section 8). However, the Company will not invoke Black-Out Periods in
excess of an aggregate of 180 days. In addition, if, in the aggregate, the
Black-Out Periods exceed 120 days, then the Company's obligation to maintain the
effectiveness of the Initial Registration Statement pursuant to this Section
2(b) will be extended by that number of days in excess of 120.
(c) If, at any time while the Registrable Shares are
outstanding (without any obligation to do so) the Company proposes to file
another Registration Statement under the Securities Act with respect to an
offering of Shares which covers sales of Shares by holders of demand
registration rights granted by the Company, the Company shall give prompt
written notice of such proposed filing to the Holders. The notice referred to in
the preceding sentence shall offer each of the Holders the opportunity to
register such amount of Registrable Shares as they may request (a "PIGGYBACK
REGISTRATION"). Subject to the provisions of Section 3 below, the Company shall
include in such Piggyback Registration and in the registration and qualification
for sale under the blue sky or securities laws of the various states, all
Registrable Shares for which the Company has received a written request for
inclusion therein within ten (10) calendar days after the notice referred to
above has been given by the Company to the Holders. Each Holder shall be
permitted to withdraw all or part of his Registrable Shares from a Piggyback
Registration at any time prior to the effective date of such Piggyback
Registration.
(d) During the period beginning one year after the date of
issuance of the Registrable Shares and ending two years after the date of such
issuance, if the Company proposes to file a Registration Statement under the
Securities Act with respect to an underwritten offering by the Company, for its
own account, of any class of equity security (or any options, warrants or other
securities convertible into, or exchangeable or exercisable for, equity
securities) to be offered for cash (other than in connection with the
registration of securities issuable pursuant to an employee stock option, stock
purchase or similar plan or pursuant to a merger, exchange offer or a
transaction of the type specified in Rule 145(a) under the Securities Act) (a
"Company Registration"), then the Company will give written notice of the
proposed filing to the Holders at least 20 days before the filing date, and the
notice will offer the Holders the opportunity to register such number of
Registrable Shares as each Holder may request. If such offer is accepted by
written notice to the Company within 10 days of the giving of the written notice
provided for in the preceding sentence, the Company will use its best efforts to
cause the managing underwriter or underwriters thereof to permit, the Holders of
Registrable Shares requested to be included in the Company Registration for such
offering to include such Registrable Shares in such offering on the same terms
and conditions as the corresponding securities of the Company included therein.
The number of Registrable Shares to be offered for the account of Holders will
be 20% of the number of Shares to be offered by the Company (for example, if the
Company proposes to offer 100,000 Shares, the number of Registrable Shares to be
offered will be 20,000 for an aggregate offering of 120,000 Shares). If the
Company receives acceptances from Holders to register Registrable Shares in
excess of 20% of the number of Shares to be offered by the Company, then the
amount of securities to be offered for the accounts of Holders of Registrable
Shares shall be reduced PRO RATA to the extent necessary to reduce the total
amount of Registrable Shares to be included in such offering to 20% of the
number of Shares to be offered by the Company. If, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the Registration Statement filed in connection with such
Company Registration, the Company determines for any reason not to proceed with
the proposed Company Registration, the Company may, at its election, give
written notice of such determination to each Holder of Registrable Shares
requested to be included in such registration and thereupon will be relieved of
its obligation to register any Registrable Shares in connection with such
registration.
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The Company will only be obligated to include Registrable
Shares in one Company Registration as determined by the Company in consultation
with the managing underwriters. The Company will have no obligation to include
Registrable Shares in a spot or "rapidly offered common" offering. Upon
completion of a Company Registration in which notice to Holders pursuant to this
Section 2(d) was provided and the Registrable Shares of the applicable Holders
were sold, the Holders will have no further right to include Registrable Shares
in a Company Registration.
All Holders requesting to have Registrable Shares included in
the Company Registration must sell their Registrable Shares to the underwriters
who shall have been selected by the Company on the same terms and conditions as
apply to the Company, with such differences, including any with respect to
indemnification and contribution, as may be customary or appropriate in combined
primary and secondary offerings.
Any Holder who elects to participate in a Company Registration
must agree to enter into a contractual agreement with the managing underwriter
or underwriters of the offering to refrain from sale or distribution of
Registrable Shares (other than those Registrable Shares included in the Company
Registration) during the 90-day period beginning on the effective date of the
Registration Statement filed in connection with the Company Registration.
(e) The Company shall notify each Holder of the
effectiveness of each Registration Statement which covers Registrable Shares and
shall furnish to each Holder the number of copies of the Registration Statement
(including any amendments, supplements and exhibits), the Prospectus contained
therein (including each preliminary prospectus and all related amendments and
supplements) and any documents incorporated by reference in the Registration
Statement or such other documents as each Holder may reasonably request in order
to facilitate his sale of the Registrable Shares in the manner described in the
Registration Statement.
(f) The Company shall prepare and file with the SEC from
time to time such amendments and supplements to the Initial Registration
Statement and Prospectus used in connection therewith (the "Initial Prospectus")
as may be necessary to keep the Initial Registration Statement effective and to
comply with the provisions of the Securities Act with respect to the disposition
of all the Registrable Shares until the earlier of (i) such time as all of the
Registrable Shares have been disposed of in accordance with the intended methods
of disposition by the Holders as set forth in the Initial Registration Statement
or (ii) the date on which the Initial Registration Statement ceases to be
effective in accordance with the terms of this Section 2. The Company shall file
any necessary listing applications or amendments to the existing applications to
cause the Registrable Shares registered under any Registration Statement to be
then listed or quoted on the primary exchange or quotation system on which the
Registrable Shares are then listed or quoted and use its reasonable efforts to
have the Registrable Shares so listed.
(g) The Company shall promptly notify the Holders of, and
confirm in writing, any request by the SEC for amendments or supplements to any
Registration Statement or the Prospectus related thereto or for additional
information. In addition, the Company shall promptly notify the Holders of, and
confirm in writing, the filing of any Registration Statement or any Prospectus,
amendment or supplement related thereto or any post-effective amendment to the
Registration Statement and the effectiveness of any post-effective amendment.
(h) At any time when a Prospectus relating to a
Registration Statement is required to be delivered under the Securities Act, the
Company shall immediately notify the Holders of the happening of any event as a
result of which the Prospectus included in the Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state any
material fact required to
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be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. In such event, the
Company shall promptly prepare and furnish to each Holder a reasonable number of
copies of a supplement to or an amendment of such Prospectus as may be necessary
so that, as thereafter delivered to the purchasers of Registrable Shares, such
Prospectus shall not include 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 are made, not
misleading. The Company will, if necessary, amend the Registration Statement of
which such Prospectus is a part to reflect such amendment or supplement.
(i) The Company shall use its reasonable efforts to comply
with all applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earning statement
covering the period of at least twelve months, beginning with the first fiscal
quarter beginning after the effective date of the Registration Statement, which
earning statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
(j) The Company shall use its reasonable efforts
(including, without limitation, calling for a meeting to obtain, through the use
of reasonable efforts, the approval of the Company's shareholders as required by
the New York Stock Exchange or its rules) to cause any Shares issued to Holders
to be approved for listing on the New York Stock Exchange, subject to official
notice of issuance.
3. STATE SECURITIES LAWS. Subject to the conditions set forth
in this Agreement, the Company shall, in connection with the filing of any
Registration Statement hereunder, file such documents as may be necessary under
the securities or "Blue Sky" laws of such states as a Holder may reasonably
request and otherwise use its reasonable efforts to have the Registrable Shares
registered, qualified or otherwise eligible for sale.
4. EXPENSES. The Company will bear all Registration Expenses
incurred in connection with Registration Statements filed pursuant to Section
2(a). In all cases, the Holders shall be responsible for any brokerage or
underwriting commissions and taxes of any kind (including, without limitation,
transfer taxes) with respect to any disposition, sale or transfer of Registrable
Shares sold by it and for any legal, accounting and other expenses incurred by
it. The Holders shall also bear their pro rata shares of any Registration
Expenses incurred in connection with any Piggyback Registration.
5. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each Holder and its directors, officers, employees,
agents, trustees, and partners and each Person, if any, who controls such Holder
(within the meaning of the Securities Act or Exchange Act) against all losses,
claims, damages, actions, liabilities, costs and expenses (including without
limitation reasonable fees, expenses and disbursements of attorneys and other
professionals), joint or several, arising out of or based upon (a) any violation
or alleged violation by the Company of any rule or regulation promulgated under
the Securities Act or the Exchange Act or any state securities and, in each
case, any rule or regulations promulgated thereunder, applicable to the Company
and relating to action or inaction required of the Company in connection with
any Registration Statement or Prospectus, or (b) upon any untrue or alleged
untrue statement of material fact contained in the Registration Statement or any
Prospectus, (including, in each case, any amendments or supplements thereto) or
(c) any omission or alleged omission to state therein 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; provided that the
Company shall not be liable to a Holder in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon (x) an untrue statement or alleged
untrue statement or omission or alleged omission made in such Registration
Statement, any such preliminary prospectus, final prospectus, summary
prospectus,
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amendment or supplement in reliance upon and in conformity with information
regarding a Holder or his plan of distribution or ownership interests which was
furnished to the Company for use in connection with the Registration Statement
or the Prospectus contained therein by the Holder or the Holder's
representatives or (y) such Holder's failure to send or give a copy of the final
prospectus furnished to it by the Company through no fault of the Company at or
prior to the time such action is required by the Securities Act to the Person
claiming an untrue statement or alleged untrue statement or omission or alleged
omission if such statement or omission was corrected in such final prospectus.
The Company will reimburse such Holder and its directors, officers, employees,
agents, trustees and partners, and any Person who controls such Holder, for any
reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, cost,
expense or action.
6. COVENANTS OF THE HOLDER. Each Holder hereby severally
agrees (a) to cooperate with the Company and to furnish to the Company all such
information concerning its plan of distribution and ownership interests with
respect to its Registrable Shares in connection with the preparation of the
Registration Statement and any filings with any state securities commissions as
the Company may reasonably request, (b) to deliver or cause delivery of the
Prospectus contained in the Registration Statement to any purchaser of the
shares covered by the Registration Statement from the Holder, and (c) to
indemnify the Company, its officers, directors, employees, agents,
representatives and affiliates, and each Person, if any, who controls the
Company within the meaning of the Securities Act, and each other Person, if any,
subject to liability because of his connection with the Company, against all
losses, claims, damages, actions, liabilities, costs and expenses arising out of
or based upon (i) any untrue statement or alleged untrue statement of material
fact contained in either a Registration Statement or the Prospectus contained
therein, or any omission or alleged omission to state therein 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, if and
solely to the extent that such statement or omission occurs from reliance upon
and in conformity with written information regarding such Holder, its plan of
distribution or ownership interests, which was furnished to the Company by such
Holder or the Holder's representatives expressly for use therein or (ii) the
failure by such Holder to deliver or cause to be delivered the Prospectus
contained in the Registration Statement (as amended or supplemented, if
applicable) furnished by the Company to such Holder to any purchaser of the
Registrable Shares covered by the Registration Statement from such Holder
through no fault of the Company. The obligation of a Holder to provide
indemnification under this Section 6 shall be limited to the proceeds (net of
underwriting commissions and discounts) received by such Holder from the sale of
Registrable Shares under the Registration Statement which gives rise to such
obligation.
7. SUSPENSION OF REGISTRATION REQUIREMENT.
(a) The Company shall promptly notify each Holder of, and
confirm in writing, the issuance by the SEC of any stop order suspending the
effectiveness of any Registration Statement or the initiation of any proceedings
for that purpose. The Company shall use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of any such Registration
Statement at the earliest possible moment.
(b) Notwithstanding anything to the contrary set forth in
this Agreement, the Company's obligation under this Agreement to use all
reasonable efforts to cause a Registration Statement and any filings with any
state securities commission to become or remain effective or to amend or
supplement a Registration Statement shall be suspended in the event and during
such period as circumstances exist (including without limitation (i) pending
negotiations relating to, or consummation of, a transaction or the occurrence of
an event that would require additional disclosure of material information by the
Company in the Registration Statement, as to which the Company has a bona fide
business purpose for preserving confidentiality or which renders the Company
unable to comply with the
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Securities Act and the rules and regulations promulgated by the SEC thereunder);
and (ii) in the case of a Company Registration, if, and to the extent that, the
Company is advised by the underwriters that sale of Registrable Shares (except
for those Registrable Shares included in the Company Registration) would have a
material adverse effect on the offering (such circumstances being hereinafter
referred to as a "SUSPENSION EVENT")) that would make it impractical or
inadvisable to cause the Registration Statement or such filings to become
effective or to amend or supplement the Registration Statement, but such
suspension shall continue only for so long as such event or its effect is
continuing. The Company shall notify each Holder of the existence and, in the
case of circumstances referred to in clause (i) of this Section 7(b), nature of
any Suspension Event.
8. BLACK-OUT PERIOD. Following the effectiveness of any
Registration Statement and the filings with any state securities commissions,
each Holder agrees that he will not effect any sales of the Registrable Shares
pursuant to the Registration Statement or any such filings at any time after he
has received notice from the Company to suspend sales as a result of the
occurrence or existence of any Suspension Event with respect to such
Registration Statement or so that the Company may correct or update such
Registration Statement or such filing (a "Black-Out Period"). Each Holder may
recommence effecting sales of the Registrable Shares pursuant to the
Registration Statement or such filings following further notice to such effect
from the Company, which notice shall be given by the Company not later than
three (3) days after the conclusion of any such Suspension Event.
9. RULE 144. For a period of two (2) years following the
Closing Date (as defined in the Purchase Agreement), the Company covenants that
it will file the reports required to be filed by it under the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder (or, if
the Company is not required to file such reports, it will, upon the request of
Holder, make publicly available other information so long as necessary to permit
sales under Rule 144 of the Securities Act ("Rule 144")) and it will take such
further action as Holder may reasonably request, all to the extent required from
time to time to enable Holder to sell the Shares without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
as may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of Holder, the Company will
deliver to Seller a written statement as to whether it has complied with such
requirements.
10. ADDITIONAL SHARES. The Company, at its option, may
register, under any Registration Statement (other than the Initial Registration
Statement) and any filings with any state securities commissions filed pursuant
to this Agreement (other than in connection with the Initial Registration
Statement), any number of unissued Shares of the Company or any Shares of the
Company owned by any other shareholder or shareholders of the Company.
11. REGISTRATION PROCEDURES.
(a) The Company shall provide a transfer agent and
registrar for the Registrable Shares not later than the effective date of such
Registration Statement and thereafter maintain such a transfer agent and
registrar; and otherwise cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Shares to be
sold and not bearing any restrictive legends, other than as provided in the
Company's Articles of Incorporation;
(b) The Company shall provide such information and make
available appropriate management personnel as may reasonably be requested by the
Holders in connection with any "road show" or related selling activity.
(c) The Company shall deliver to each Holder, at least
thirty (30) days prior to the filing of a Registration Statement, a notice which
sets forth the name and number of shares
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proposed to be shown in the Registration Statement with respect to such Holder,
to the extent such Holder is to be listed in the Registration Statement as a
selling stockholder; PROVIDED THAT, if such Holder provides corrected
information for inclusion in the Registration Statement within fifteen (15) days
after the date the notice is delivered, the Company shall instead include such
corrected information with respect to such Holder.
12. CONTRIBUTION. If the indemnification provided for in
Sections 5 and 6 is unavailable to an indemnified party with respect to any
losses, claims, damages, actions, liabilities, costs or expenses referred to
therein or is insufficient to hold the indemnified party harmless as
contemplated therein, then the Company or the Holder, whichever is the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, actions, liabilities, costs or expenses in such
proportion as is appropriate to reflect the relative fault of the Company, on
the one hand, and the Holder, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages, actions,
liabilities, costs or expenses as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Holder, on the other hand, shall be determined by reference to, among other
factors, whether the untrue or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the Company
or by the Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
PROVIDED, HOWEVER, that in no event shall the obligation of the Company or the
Holder, as indemnifying party, to contribute under this Section 10 exceed the
amount that such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under Sections 5 or 6 hereof
had been available under the circumstances.
The Company and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section 10 were determined
by pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately preceding
paragraph.
Notwithstanding the provisions of this Section 12, no
Holder shall be required to contribute any amount in excess of the amount by
which the proceeds (net of underwriting commissions and discounts) to such
Holder from the sale of such Holder's Registrable Shares sold pursuant to the
Registration Statement which give to such obligation to contribute (less the
aggregate amount of any damages which such Holder has otherwise been required to
pay in respect of such loss, claim, damage, liability, cost or expense arising
from the sale of the Registrable Shares) exceeds the amount of any damages that
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any indemnifying party who was not guilty
of such fraudulent misrepresentation.
13. NOTICE; RIGHT TO DEFEND. Promptly after receipt by an
indemnified party under this Agreement of notice of the commencement of any
action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Agreement, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, if the indemnifying party agrees in writing that it will be
responsible for any costs, expenses, judgments, damages and losses incurred by
the indemnified party with respect to such claim, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if the indemnified party reasonably
believes that representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual
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or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying party of any
liability to the indemnified party under this Agreement only if and to the
extent that such failure is prejudicial to its ability to defend such action,
and the omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party other than
under this Agreement.
14. SURVIVAL OF INDEMNITY AND CONTRIBUTION. The
indemnification and contribution provided by this Agreement shall be a
continuing right to indemnification and contribution and shall survive the
registration and sale of any securities by any Person entitled to
indemnification or contribution hereunder and the expiration or termination of
this Agreement.
15. NO OTHER OBLIGATION TO REGISTER. Except as otherwise
expressly provided in this Agreement, the Company shall have no obligation to
any Holder to register the Registrable Shares under the Securities Act.
16. AMENDMENTS AND WAIVERS. The provisions of this Agreement
may not be amended, modified, or supplemented or waived without the prior
written consent of (a) the Company and (b) Holders who, at the time of such
amendment, own a majority of the Registrable Shares then covered by this
Agreement.
17. NOTICES. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by telex or
telecopier, registered or certified mail (return receipt requested), postage
prepaid or courier or overnight delivery service to the respective parties at
the following addresses (or at such other address for any party as shall be
specified by like notice, provided that notices of a change of address shall be
effective only upon receipt thereof):
If to the Company: Associated Estates Realty Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxx X. Xxxxx
Xxxxx & Xxxxxxxxx LLP
3200 National City Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Holder: At the address set forth below that
Holder's signature.
In addition to the manner of notice permitted above,
notices given by the Company pursuant to Sections 2, 7 and 8 hereof may be
effected telephonically and confirmed in writing thereafter in the manner
described above.
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18. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the parties hereto and their respective successors and permitted assigns
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. This Agreement may be assigned by a Holder solely to a
Permitted Transferee and may not be otherwise assigned and any attempted
assignment hereof by a Holder in violation of the foregoing will be void and of
no effect and shall terminate all obligations of the Company hereunder to such
Holder; PROVIDED THAT a Holder may assign his rights hereunder in connection
with any of the following types of dispositions of Registrable Shares:
(a) a disposition by the Holder pursuant to a pledge,
grant of security interest or other encumbrance effected in a bona fide
transaction with an unrelated and unaffiliated pledgee;
(b) a disposition to another Holder; and
(c) at the sole discretion of the Company, a disposition
to a "qualified institutional buyer" (as that term is defined in Rule 144A
promulgated under the Securities Act) or an "accredited investor" (as that term
is defined in Rule 501 of Regulation D under the Securities Act)
PROVIDED, FURTHER, however, that any such assignment shall be effective only if,
the disposition is permitted under applicable federal or state securities laws.
In the event a Holder assigns its rights hereunder, the
Registrable Shares shall remain subject to this Agreement and, as a condition of
the validity of such assignment, the transferee shall be required to execute and
deliver a counterpart of this Agreement (except that a pledgee shall not be
required to execute and deliver a counterpart of this Agreement until it
forecloses upon such Shares). Thereafter, such transferee (including, without
limitation, a Permitted Transferee) shall be deemed to be a Holder for purposes
of this Agreement.
19. AUTHORIZATION; NO CONFLICTS. The execution and delivery of
this Agreement by the Company and the performance by the Company of its
covenants and agreements under this Agreement have been, or at the time of such
performance will have been, duly authorized by all necessary corporate action on
the part of the Company, and all required consents to the transactions
contemplated hereby have been obtained by the Company, or at the time of such
performance will have been received by the Company. The execution, delivery and
performance by the Company of this Agreement, the fulfillment of and compliance
with the respective terms and provisions hereof and thereof, and the
consummation by the Company of the transactions contemplated hereby and thereby,
do not and will not: (a) conflict with, or violate any provisions of, the
Articles of Incorporation or Code of Regulations of the Company; (b) conflict
with, or violate any provision of, any statute, law, ordinance, regulation,
rule, order, writ or injunction having applicability to the Company or any of
its assets; (c) result in a breach or acceleration of the maturity of any loan
or credit agreement to which the Company is a party or by which any of its
assets may be affected; or (d) conflict with, result in any breach of, or
constitute a default under any agreement to which the Company is a party or by
which it or any of its assets are bound; except (in the case of clauses (b), (c)
and (d) above) for such conflicts, violations, breaches or defaults (i) as will
not have a material adverse effect on the business or financial condition of the
Company or the transactions contemplated herein, or (ii) with respect to which
consents or waivers shall be obtained prior to the Company's performance of its
obligations hereunder.
20. SPECIFIC PERFORMANCE. The parties hereto acknowledge that
the obligations undertaken by them hereunder are unique and that there would not
be adequate remedy at law if any party fails to perform any of its obligations
hereunder, and accordingly agree that each party, in addition to any other
remedy to which it may be entitled at law or in equity, shall be entitled to (a)
compel specific performance of the obligations, covenants and agreements of any
other party under the Agreement in
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accordance with the terms and conditions of this Agreement and (b) obtain
preliminary injunctive relief to secure specific performance and to prevent a
breach or contemplated breach of this Agreement in any court of the Unites
States or any State thereof having jurisdiction (each party waives the
requirement of the posting of any bond or security in connection with any
proceedings or any injunction issued in connection with this Section 20).
21. TIME OF THE ESSENCE. Time is of the essence in the
performance of this Agreement.
22. ATTORNEYS' FEES. Should either party employ attorneys to
enforce any of the provisions of this Agreement, the party against whom any
final judgement is entered agrees to pay the prevailing party all reasonable
costs, charges and expenses, including reasonable attorneys' fees, expended or
incurred by the prevailing party in connection therewith.
23. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
24. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio applicable to
contracts made and to be performed wholly within said State.
25. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
26. ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and intended to be the complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to such subject matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
ASSOCIATED ESTATES REALTY CORPORATION
By: ___________________________________
Its: ___________________________________
HOLDERS:
By:_______________________________
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