REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), entered into as
of the 1st day of January, 1997, is made by and among INSIGNIA PROPERTIES
TRUST, a Maryland real estate investment trust ("IPT"), and Insignia Financial
Group, Inc., a Delaware corporation ("IFG").
WITNESSETH:
WHEREAS, in connection with the formation of IPT, IFG and its
Affiliates (as defined herein) contributed certain interests in limited
partnerships which principally own multi-family residential properties and, to
a lesser extent commercial properties, to IPT in exchange for among other
things, common shares of beneficial interest of IPT, par value $.01 per share
("COMMON SHARES");
WHEREAS, in connection with the above-described transactions IPT
agreed to grant IFG certain registration rights with respect to the Shares (as
defined herein) owned by IFG;
WHEREAS, IPT and IFG desire to set forth more fully their agreements
regarding such registration rights relating to the Shares owned by IFG.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, the receipt and sufficiency of which
are acknowledged, the parties hereto, each intending to be legally bound
hereby, agree as follows:
ARTICLE I.
DEFINITIONS
As used herein, the following terms shall have the respective
meanings set forth below:
"AFFILIATE" of any person means any person that directly or
indirectly controls, or is under common control with, or is controlled by, such
person. As used in this definition, "CONTROL" (including with its correlative
meanings, "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a person (whether through ownership
of securities or partnership or other ownership interests, by contract or
otherwise).
"AGREEMENT" has the meaning set forth in the recitals.
"BOARD OF TRUSTEES" means the Board of Trustees of IPT, as
constituted from time to time in accordance with IPT's Declaration of Trust and
IPT's Bylaws.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON SHARES" has the meaning set forth in the recitals.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"IFG" has the meaning set forth in the recitals.
"INDEMNIFIED PARTY" has the meaning set forth in Section
2.5(c).
"INDEMNIFYING PARTY" has the meaning set forth in Section
2.5(c).
"IPT" has the meaning set forth in the recitals.
"PIGGYBACK MAXIMUM NUMBER" has the meaning set forth in
Section 2.2(b).
"PRIORITY RIGHTS HOLDER" (i) IFG and any of its Affiliates
(including Metropolitan Asset Enhancement, L.P.) pursuant to any registration
rights agreements with IPT, and (ii) all holders of Common Shares who enter
into registration rights agreements with IPT in connection with the offering of
Common Shares made pursuant to that certain Confidential Memorandum dated May
9, 1997.
"REQUESTING HOLDER" has the meaning set forth in Section
2.2(b).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means any Common Shares owned by IFG on or after
the date hereof.
"TRUSTEE" means a member of the Board of Trustees.
The foregoing definitions shall be equally applicable to both
the singular and plural forms of the defined terms. The words "herein,"
"hereof" and words of similar import as used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision in this
Agreement.
ARTICLE II.
REGISTRATION RIGHTS
SECTION 2.1 Registration on Request.
(a) Request. Provided that (i) IPT has not at any time prior
to the fifth anniversary of this Agreement had any Common Shares registered
under the Exchange Act and listed on a national securities exchange or quoted
on the NASDAQ and (ii) at the time of the request specified below IFG holds not
less than 50,000 Shares, then, subject to the limitations provided herein, at
any time subsequent to the fifth anniversary of the date hereof, upon IFG's
written request that IPT effect the registration under the Securities Act of at
least 50,000 of IFG's Shares, which request shall specify (A) that the request
is being made pursuant to this Section 2.1, (B) IFG's intended method of
disposition of such Shares, (C) whether or not such requested registration is
to be an underwritten offering, and (D) the price range (net of underwriting
discounts and commissions) acceptable to IFG to be received for such Shares,
IPT will
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use reasonable efforts to effect the registration under the Securities Act of
such Shares. If IPT is required to effect a registration pursuant to this
Section 2.1 and IPT furnishes to IFG a certificate signed by the President of
IPT stating that in the good faith judgment of the Board of Trustees of IPT it
would not be in the best interests of IPT and its shareholders for such
registration statement to be filed on or before the date such filing would
otherwise be required hereunder and it is therefore necessary to defer the
filing of such registration statement, then IPT shall have the right to defer
such filing for a period of not more than 120 days after receipt of the request
for such registration from IFG; provided that during such time IPT may not file
a registration statement for securities to be issued and sold for its own
account or that of anyone other than IFG.
(b) Method of Distribution. IFG shall determine the method
of distribution of the Shares included in such registration pursuant to Section
2.1(a).
(c) Registration of Other Securities. Whenever IPT shall
effect a registration pursuant to this Section 2.1 in connection with an
underwritten offering, no securities other than Shares requested by IFG to be
included shall be included among the securities covered by such registration
unless (i) the managing underwriter of such offering shall have advised IFG in
writing that the inclusion of such other securities would not adversely affect
the price IFG will receive for its Shares in such offering or (ii) IFG shall
have consented in writing to the inclusion of such other securities.
(d) Registration Statement Form. Registrations under this
Section 2.1 shall be on such appropriate registration form of the Commission
(i) as shall be selected by IPT and as shall be reasonably acceptable to IFG,
and (ii) as shall permit the disposition of such Shares in accordance with the
method or methods of disposition selected pursuant to Section 2.1(b) hereof.
(e) Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been
effected (i) unless a registration statement with respect thereto has become
effective (unless a substantial cause of the failure of such registration
statement to become effective shall be attributable to IFG), (ii) if after a
registration statement with respect thereto has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason, resulting in a failure to consummate the offering of Shares offered
thereby, (iii) if after a registration statement with respect thereto has
become effective, the offering of Shares offered thereby is not consummated due
to factors beyond the control of IFG, including, without limitation, in the
context of a proposed firm commitment underwriting, the fact that the
underwriters have advised IFG that its Shares cannot be sold at a net price
equal to or above the net price anticipated at the time of filing of the
preliminary prospectus, or (iv) if the conditions to closing specified in the
underwriting agreement entered into in connection with such registration are
not satisfied (unless a substantial cause of such conditions to closing not
being satisfied shall be attributable to IFG).
(f) Selection of Underwriters. If a requested registration
pursuant to this Section 2.1 involves an underwritten offering, the underwriter
or underwriters thereof shall be selected by IPT and IFG. IFG (together with
IPT and other holders, if any, of Common Shares
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participating therein) shall enter into an underwriting agreement in customary
form with the representative of such underwriter(s).
(g) Expenses. All expenses of any registration requested
under this Section 2.1 shall be paid by IFG and the other holders of Common
Shares, if any, participating in such registration, pro rata among such holders
based on the ratio the number of Common Shares included by each selling holder
bears to the number of all Common Shares included in the registration. In all
cases, IFG shall pay the underwriting discounts and commissions applicable to
the Shares sold by IFG.
SECTION 2.2 Right to Include Shares.
(a) Inclusion. If IPT at any time proposes to register any of
its Common Shares under the Securities Act (other than by a registration on
Form X-0, X-0 or any successor similar forms or any other form not available
for registering the Shares for sale to the public), whether or not for sale for
its own account, it will each such time, at least 30 days prior to filing the
registration statement, give written notice to IFG of its intention to do so.
Upon the written request of IFG made within 15 days after the receipt of any
such notice (which request shall specify the Shares intended to be disposed of
by IFG and the intended method of disposition thereof), IPT will use reasonable
efforts to effect the registration under the Securities Act of all Shares which
IPT has been so requested to register by IFG, to the extent requisite to permit
the disposition of the Shares to be so registered, provided, however, that if,
at any time after giving written notice of its intention to register any Common
Shares and prior to the effective date of the registration statement filed in
connection with such registration, IPT shall determine for any reason not to
register or to delay registration of such Common Shares, IPT may, at its
election, give written notice of such determination to IFG and, thereupon, (i)
in the case of a determination not to register, shall be relieved of its
obligation to register any Shares in connection with such registration (but not
from its obligation to pay expenses in accordance with Section 2.4 hereof) and
(ii) in the case of a determination to delay registering, shall be permitted to
delay registering any Shares being registered pursuant to this Section 2.2 for
the same period as the delay in registering such other securities.
(b) Priority. If (i) a registration pursuant to this Section
2.2 involves an underwritten offering whereby the Common Shares so being
registered, whether or not for sale for the account of IPT, are to be
distributed (on a firm commitment basis) by or through one or more underwriters
of recognized standing, whether or not IFG has requested that its Shares be
included in such underwritten offering, and (ii) the managing underwriter of
such underwritten offering shall inform IPT in writing of its belief that the
number of Common Shares requested to be included in such registration exceeds
the maximum number (the "PIGGYBACK MAXIMUM NUMBER") which can be sold in (or
during the time of) such offering within a price range reasonably acceptable to
IPT, IPT shall be entitled to reduce the aggregate number of Common Shares
included in the registration to an aggregate number equal to the Piggyback
Maximum Number, with participation in the offering being allocated (A) if IPT
initiated the registration of Common Shares for its own account, (1) first, for
the account of IPT, and (2) second, pro rata among all Priority Rights Holders
(including, without limitation, IFG) (based upon the number of Common Shares
held by such holders (including, without limitation, IFG) immediately prior to
the filing of the registration statement with respect to such
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registration), and (B) if the registration was initiated by a Priority Rights
Holder (the "REQUESTING HOLDER"), (1) first, for the account of the Requesting
Holder, (2) second, for the account of IPT, and (3) third, pro rata among all
Priority Rights Holders, other than the Requesting Holder, requesting
registration of Common Shares pursuant to any registration rights agreements
with IPT (based on the number of Common Shares held by such holders immediately
prior to the filing of the registration statement with respect to such
registration).
(c) Expenses. All expenses incurred in connection with each
registration pursuant to Section 2.2 initiated by IPT (excluding in each case
underwriting discounts and commissions applicable to Common Shares), including,
without limitation, in each case, all registration, filing and National
Association of Securities Dealer fees; all fees and expenses of complying with
securities or blue sky laws; all word processing, duplicating and printing
expenses, messenger, delivery and shipping expenses; fees and disbursements of
the accountants and counsel for IPT including the expenses of any special
audits or "cold comfort" letters or opinions required by or incident to such
registrations; such premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Common Shares; and any
fees and disbursements of underwriters customarily paid by issuers or sellers
of securities, but excluding underwriting discounts and commissions, if any,
shall be borne by IPT. All expenses incurred in connection with a registration
pursuant to Section 2.2 initiated by a Requesting Holder shall be paid by the
holders, including, without limitation, IFG, participating in such
registration, pro rata among such holders based on the ratio the number of
Common Shares included by each selling holder bears to the number of all Common
Shares included in the registration. In all cases, IFG shall pay the
underwriting discounts and commissions applicable to the Shares sold by IFG.
(d) Underwritten Offerings. If any Common Shares to be
registered under the Securities Act as contemplated by this Section 2.2 are to
be distributed by or through one or more underwriters, and IFG has requested
that its Shares be included in such offering as provided in Section 2.2(a),
then IPT shall not be obligated to include IFG's Shares in such offering unless
IFG accepts the terms of the underwritten offering agreed on between IPT or the
Requesting Holder, as the case may be, and the underwriters selected by IPT or
the Requesting Holder, as the case may be. Furthermore, if requested by the
underwriters, IFG agrees to enter into an agreement with such underwriters not
to sell any Common Shares owned by IFG for a period of time (not to exceed 180
days) after the effectiveness of a registration statement equal to the period
of time which the sellers of Common Shares in such registration have agreed not
to sell the Common Shares owned by them after the effectiveness of such
registration statement. IFG shall be party to the underwriting agreement
between IPT or the Requesting Holder, as the case may be, and such underwriters
and may, at its option, require that any or all of the representations and
warranties by, and the other agreements on the part of, IPT to and for the
benefit of such underwriters shall also be made to and for the benefit of IFG
and that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of IFG. IFG shall not be required to make any representations or
warranties to or agreements with IPT or the underwriters other than
representations, warranties or agreements regarding IFG, IFG's Common Shares or
other securities of IPT, IFG's intended method of distribution and any
representations, warranties or agreements required by law.
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SECTION 2.3 Registration Procedures.
If and whenever any Shares of IFG are proposed to be
registered under the Securities Act as contemplated in this Agreement, IPT
will, subject to the limitations set forth in this Agreement, as expeditiously
as possible:
(i) prepare and (as soon thereafter as possible or in any
event no later than 60 days after the end of the period within which
requests for registration may be given to IPT or such longer period as
IPT shall in good faith require to produce the financial statements
required in connection with such registration) file with the
Commission the requisite registration statement to effect such
registration and thereafter use reasonable efforts to cause such
registration statement to become effective, provided that IPT may
discontinue or delay any registration of any Common Shares in its sole
discretion;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Shares covered
by such registration statement until such time as all of such Shares
have been disposed of in accordance with the intended methods of
disposition by IFG; provided, however, that IPT shall not in any event
be required to keep the registration statement effective for a period
of more than nine months after such registration statement becomes
effective;
(iii) furnish to IFG such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies
of the prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, and such
other documents, as IFG may reasonably request;
(iv) use its best efforts to register or qualify all Shares
covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as IFG thereof shall reasonably
request, to keep such registration or qualification in effect for so
long as such registration statement remains in effect (provided,
however, that IPT shall not in any event be required to keep such
registration or qualification in effect for a period of more than nine
months after such registration or qualification becomes effective) and
take any other action which may be reasonably necessary or advisable
to enable IFG to consummate the disposition in such jurisdictions of
the Shares owned by IFG, except that IPT shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the
requirements of this subdivision (iv) be obligated to be so qualified
or to consent to general service of process in any such jurisdiction;
(v) use its best efforts to cause all Shares covered by such
registration statement to be registered with or approved by such other
United States federal or state governmental agencies or authorities as
may be necessary to enable IFG to consummate the disposition of such
Shares;
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(vi) furnish to IFG a copy, or, upon request, a signed
counterpart, addressed to IFG (and the underwriters, if any) of
(x) an opinion of counsel for IPT, dated the
effective date of such registration statement (or, if such
registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement),
and
(y) a "comfort" letter addressed to the
underwriters, dated the effective date of such registration
statement (or, if such registration includes an underwritten
public offering, dated the date of the closing under the
underwriting agreement), signed by the independent public
accountants who have audited IPT's financial statements
included in such registration statement, covering
substantially the same matters with respect to such
registration statement (and the prospectus included therein)
and, in the case of the accountants' letter, with respect to
events subsequent to the date of such financial statements,
as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities and, in the case
of the accountants' letter, such other financial matters,
and, in the case of the legal opinion such other legal matters, as IFG (or the
underwriters, if any) may reasonably request;
(vii) notify IFG, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances under which they were made, and at the request of IFG,
prepare and furnish to IFG 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 such 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 not misleading in the light
of the circumstances under which they were made;
(viii) otherwise use reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months
beginning with the first full calendar month after the effective date
of such registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act, and will
furnish to IFG, upon request of IFG, at least five days prior to the
filing thereof, a copy of any amendment or supplement to such
registration statement or prospectus and shall not file any amendment
or supplement thereof to which IFG shall have delivered to IPT an
opinion of counsel that such amendment or supplement does not comply
in all material respects with the requirements of the Securities Act
or of the rules or regulations thereunder;
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(ix) provide and cause to be maintained a transfer agent for
all Shares covered by such registration statement from and after a
date not later than the effective date of such registration statement;
(x) use its best efforts to list all Shares covered by such
registration statement on any securities exchange on which any of the
Shares is then listed; and
(xi) refrain from making any sale or distribution of its
equity securities, except pursuant to any employee stock option plan
and any preexisting agreement for the sale of such securities, for at
least ninety (90) days after the closing of the public offering
pursuant to such registration.
It shall be a condition precedent to the obligations of IPT to take any action
with respect to registering IFG's Shares pursuant to this Section 2.3 that IFG
furnish IPT in writing such information regarding IFG, the Shares and other
securities of IPT held by IFG, and the distribution of such Shares as IPT may
from time to time reasonably request in writing. If IFG refuses to provide IPT
with any of such information on the grounds that it is not necessary to include
such information in the registration statement, IPT may exclude IFG's Shares
from the registration statement if IPT provides IFG with an opinion of counsel
to the effect that such information must be included in the registration
statement and IFG thereafter continues to withhold such information. The
exclusion of IFG's Shares from a registration statement shall not affect the
registration of the other Shares to be included in such registration statement.
IFG agrees that upon receipt of any notice from IPT of the
happening of any event of the kind described in subdivision (vii) of this
Section 2.3, IFG will forthwith discontinue its disposition of Shares pursuant
to the registration statement relating to such Shares until IFG's receipt of
the copies of the supplemented or amended prospectus contemplated by
subdivision (vii) of this Section 2.3 and, if so directed by IPT, will deliver
to IPT (at IPT's expense) all copies, other than permanent file copies then in
IFG's possession, of the prospectus relating to such Shares current at the time
of receipt of such notice.
SECTION 2.4 Preparation; Reasonable Investigation.
In connection with the preparation and filing of each
registration statement under the Securities Act which includes shares of IFG
pursuant to this Agreement, IPT will give IFG, its underwriters, if any, its
counsel and its accountants the opportunity to participate in the preparation
of such registration statement, each prospectus included therein or filed with
the Commission, and each amendment thereof or supplement thereto, and will give
each of them such access to its books and records and such opportunities to
discuss the business of IPT with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of IFG, to conduct a reasonable investigation within the meaning
of the Securities Act.
SECTION 2.5 Indemnification.
(a) Indemnification by IPT. In the event any of IFG's
Shares are included in registration statement under this Article II, to the
extent permitted by law, IPT will, and
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hereby does, indemnify and hold harmless IFG, each of the directors and
officers of IFG, each Affiliate of IFG, each of the directors and officers of
such Affiliate of IFG, each other person who participates as an underwriter in
the offering or sale of such securities and each other person, if any, who
controls IFG, such Affiliate or any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages, costs, expenses or
liabilities, joint or several, to which IFG or any such director or officer or
underwriter or controlling person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, any
offering circular or other similar document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
IPT will reimburse IFG and each such director, officer, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, cost, expense, liability, action or proceeding; provided that IPT shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) arises out of or is
based upon 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, offering circular, amendment
or supplement in reliance upon and in conformity with written information
furnished to IPT by any seller expressly for use in the preparation thereof,
and provided further that IPT shall not be liable to any person who
participates as an underwriter in the offering or sale of Shares or any other
person, if any, who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such loss, claim,
damage, cost, expense, liability (or action or proceeding in respect thereof)
arises out of such person's failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, to the person
asserting an untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the sale of Shares
to such person if such statement or omission was corrected in such final
prospectus. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of IFG or any such director, officer,
underwriter or controlling person and shall survive the transfer of such Shares
by IFG.
(b) Indemnification by IFG. IPT may require, as a condition
to including any of IFG's Shares in any registration statement filed pursuant
to Section 2.3 hereof, that IPT shall have received an undertaking satisfactory
to it from IFG and/or its Affiliates, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subdivision (a) of this
Section 2.5) each underwriter, each person who controls such underwriter within
the meaning of the Securities Act, IPT, each Trustee of IPT, each officer of
IPT, each Affiliate of IPT, each director of each Affiliate of IPT, each
trustee of each Affiliate of IPT, each officer of each Affiliate of IPT and
each other person, if any, who controls IPT within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus, summary prospectus or offering circular contained
therein, or any amendment or supplement thereto, if
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such statement or alleged statement or omission or alleged omission was made in
reliance upon and in strict conformity with written information furnished to
IPT by IFG and/or its Affiliates expressly for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, offering circular, amendment or supplement; provided that IFG
and/or its Affiliates shall not be liable to any person who participates as an
underwriter in the offering or sale of Shares or any other person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, cost, expense or
liability (or action or proceeding in respect thereof) arises out of such
person's failure to send or give a copy of the final prospectus, as the same
may be then supplemented or amended, to the person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Shares to such person if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any underwriter, IPT or any such director, trustee, officer or
controlling person and shall survive the transfer of such Shares by IFG. In no
event shall the liability of IFG under this Section 2.5 be greater in amount
than the dollar amount of the proceeds received by IFG upon the sale of the
Common Shares giving rise to such indemnification obligation.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party (the "INDEMNIFIED PARTY") of notice of the commencement of
any action or proceeding involving a claim referred to in the preceding
subdivisions of this Section 2.5, such Indemnified Party will, if a claim in
respect thereof is to be made against an indemnifying party (the "INDEMNIFYING
PARTY"), give written notice to the Indemnifying Party of the commencement of
such action; provided that the failure of any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its obligations
under the preceding subdivisions of this Section 2.5, except to the extent that
the Indemnifying Party is actually prejudiced by such failure to give notice.
In case any such action is brought against an Indemnified Party, unless in such
Indemnified Party's reasonable judgment a conflict of interest between such
Indemnified Party and such Indemnifying Parties may exist in respect of such
claim, the Indemnifying Party shall be entitled to participate in and to assume
the defense thereof, jointly with any other Indemnifying Party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory
to such Indemnified Party, and after notice from the Indemnifying Party to such
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party shall not be liable to such Indemnified Party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No Indemnifying
Party shall, without the consent of the Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. If any such Indemnified Party shall have been advised by counsel
chosen by it that there may be one or more legal defenses available to such
Indemnified Party that are different from or additional to those available to
the Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense of such action on behalf of such Indemnified Party and will
reimburse such Indemnified Party and any person controlling such Indemnified
Party for the reasonable fees and expenses of any counsel retained by the
Indemnified Party, it being understood that the Indemnifying Party shall not,
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of
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more than one separate firm of attorneys for such Indemnified Party or
controlling person and, in the case of indemnification by IPT, all other
parties entitled to indemnification pursuant to agreements with IPT or its
Affiliates, which firm shall be designated in writing by the Indemnified Party
(and, in the case of indemnification by IPT, by holders of a majority of Common
Shares pursuant to which such indemnification obligation arose under this
Agreement and other agreements between other parties and IPT or its Affiliates)
to the Indemnifying Party.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this Section 2.5 (with appropriate
modifications) shall be given by IPT and IFG and its Affiliates with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of any governmental authority other than the
Securities Act.
(e) Indemnification Payments. The indemnification required by
this Section 2.5 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
(f) Contribution. If the indemnification provided for in this
Section 2.5 from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then 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 loss, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and Indemnified Parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Parties shall be determined by reference to,
among other things, whether any action in question, including any untrue
statement of material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Parties, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in this Section 2.5, any legal or
other fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2.5 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 2.5, no
underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Common Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such underwriter has otherwise been required to pay by reason on
such untrue or alleged untrue statement or omission or alleged omission, and no
selling holder shall be required to contribute any amount in excess of the
amount by which the total price at which the Common Shares of such selling
holder were offered to the public exceeds the amount of any damages which such
selling holder has otherwise
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been required to pay by reason of such untrue statement or omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 2.5, the
Indemnifying Parties shall indemnify each Indemnified Party to the full extent
provided in Section 2.5(a) through Section 2.5(e) hereof without regard to the
relative fault of said Indemnifying Party or Indemnified Party or any other
equitable consideration provided for in this Section 2.5(f).
SECTION 2.6 Reporting Requirements Under Exchange Act.
When IPT is first legally required to do so, IPT shall
register its Common Shares under Section 12 of the Exchange Act and shall keep
effective such registration and shall timely file such information, documents
and reports as the Commission may require or prescribe under Section 13 of the
Exchange Act. From and after the effective date of the first registration
statement filed by IPT under the Securities Act, IPT shall (whether or not it
shall then be required to do so) timely file such information, documents and
reports which a corporation, partnership or other entity subject to Section 13
or 15(d) (whichever is applicable) of the Exchange Act is required to file.
Immediately upon becoming subject to the reporting
requirements of either Section 13 or 15(d) of the Exchange Act, IPT shall
forthwith upon request furnish to IFG (i) a written statement by IPT that it
has complied with such reporting requirements, (ii) a copy of the most recent
annual or quarterly report of IPT, and (iii) such other reports and documents
filed by IPT with the Commission as such Investor may reasonably request in
availing itself of an exemption for the sale of Shares without registration
under the Securities Act. IPT acknowledges and agrees that the purposes of the
requirements contained in this Section 2.6 are (a) to enable IFG to comply with
the current public information requirement contained in Paragraph (c) of Rule
144 under the Securities Act should IFG ever wish to dispose of any of the
Shares acquired by it without registration under the Securities Act in reliance
upon Rule 144 (or any other similar exemptive provision) and (b) to qualify IPT
for the use of registration statements on Form S-3. In addition, IPT shall take
such other measures and file such other information, documents and reports, as
shall hereafter be required by the Commission as a condition to the
availability of Rule 144 under the Securities Act (or any similar exemptive
provision hereafter in effect) and the use of Form S-3. IPT also covenants to
use its best efforts, to the extent that it is reasonably within its power to
do so, to qualify for the use of Form S-3.
SECTION 2.7 Information Concerning IFG.
IPT may require IFG, if any of IFG's Shares are to be
registered pursuant to this Article V, to furnish IPT such information in
writing with respect to IFG and the distribution of such Shares (and any other
securities of IPT) as IPT may from time to time reasonably request in writing
and as shall be required by law or by the Commission in connection therewith.
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SECTION 2.8 Forms.
All references in this Agreement to particular forms of
registration statements are intended to include, and shall be deemed to
include, references to all successor forms which are intended to replace, or to
apply to similar transactions as, the forms herein referenced.
SECTION 2.9 Transfer of Registration Rights.
The registration rights granted IFG under this Agreement may
not be transferred without the prior written consent of IPT; provided that such
registration rights may be transferred, in whole or in part, without such prior
written consent upon written notice to IPT in connection with a permitted
transfer of Shares to a partner in or an Affiliate of IFG.
ARTICLE III.
MISCELLANEOUS
SECTION 3.1 Survival.
Without intending to exclude the provisions hereof which by
their nature survive, the provisions of Section 2.5 hereof shall survive any
termination of this Agreement.
SECTION 3.2 Successors and Assigns.
This Agreement shall bind and inure to the benefit of and be
enforceable by IPT and IFG. IPT may assign its rights under this Agreement
without the consent of IFG or its permitted successors or assigns. Except as
provided in Section 2.9 hereof, IFG may not assign its rights under this
Agreement without the prior written consent of IPT.
SECTION 3.3 Counterparts.
This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
SECTION 3.4 Severability.
In case any one or more of the provisions contained in this
Agreement or in any instrument contemplated hereby, or any application thereof,
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
therein, and any other application thereof, shall not in any way be affected or
impaired thereby.
SECTION 3.5 Headings.
The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms hereof.
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SECTION 3.6 Amendment and Waiver.
This Agreement may be amended only by agreement in writing
signed by all of the parties. No waiver of any provision or consent to any
exception to the terms of this Agreement shall be effective unless in writing
and signed by the party to be bound and then only to the extent, specific
purpose and instance so provided.
SECTION 3.7 Remedies.
Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement. In the event a party hereto
brings an action under this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals. No course of dealing between IPT and IFG and no
delay or failure in exercising any rights hereunder shall operate as a waiver
of the rights of any party hereto.
SECTION 3.8 GOVERNING LAW.
THE CORPORATE LAW OF THE STATE OF MARYLAND WILL GOVERN ALL
QUESTIONS CONCERNING THE RELATIVE RIGHTS OF IPT AND ITS SHAREHOLDERS. ALL OTHER
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS
AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS,
OF THE STATE OF NEW YORK.
SECTION 3.9 Jurisdiction.
Each of the parties hereto hereby irrevocably submits to the
non-exclusive jurisdiction of any New York State or United States federal court
sitting in the City of New York over any suit, action or proceeding arising out
of or relating to this Agreement or the transactions contemplated hereby and
irrevocably waives, to the fullest extent they may exclusively do so, any
objection which they may now or hereafter have to the laying of venue of any
such proceeding.
SECTION 3.10 Further Acts.
Each of the parties hereto agrees to perform such other and
further acts and to execute such other further documents as may be reasonably
required to effect the transactions contemplated hereby.
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SECTION 3.11 Termination.
This Agreement shall commence on the date hereof and shall
terminate on the earlier to occur of (i) the written agreement of the parties
hereto to terminate this Agreement and (ii) the final dissolution of IPT in
accordance with applicable law.
SECTION 3.12 Relationship with Declaration of Trust and Bylaws.
In the event of any conflict between this Agreement, IPT's
Declaration of Trust, as amended and Bylaws, as amended, the provisions of this
Agreement shall prevail to the extent permitted by applicable law, and the
parties shall take all action necessary or desirable to effect any amendments
to such documents necessary to avoid any such conflict.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date hereof.
INSIGNIA PROPERTIES TRUST
By:
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Xxxxx X. Aston
President
INSIGNIA FINANCIAL GROUP, INC.
By:
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Xxxxx X. Xxxxxxxx
Executive Managing Director
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