INVESTORS AGREEMENT
THIS INVESTORS AGREEMENT (this "AGREEMENT"), entered into as of the
____ day of ________________, 1997, is made by and among INSIGNIA PROPERTIES
TRUST, a Maryland real estate investment trust ("IPT"), Insignia Financial
Group, Inc., a Delaware corporation ("IFG"), and the undersigned investor in
IPT (the "INVESTOR").
WITNESSETH:
WHEREAS, pursuant to that certain Confidential Memorandum dated May 9,
1997 (the "MEMORANDUM"), IPT offered to certain investors the opportunity to
purchase up to 5,000,000 (the "SHARES") common shares of beneficial interest of
IPT, par value $.01 per share ("COMMON SHARES");
WHEREAS, the Investor has executed a Subscription Agreement (the
"SUBSCRIPTION AGREEMENT") providing, among other things, for the issuance by
IPT and subscription and purchase by the Investor of the number of Shares
specified, and on the terms and conditions set forth, in the Subscription
Agreement;
WHEREAS, the execution of this Agreement is a condition to the
issuance and sale of the Shares by IPT; and
WHEREAS, the parties hereto desire to set forth more fully their
agreements regarding the ownership by the Investor or its Affiliates (as
defined herein) of interests in IPT.
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
5.5(c).
"INDEMNIFYING PARTY" has the meaning set forth in Section
5.5(c).
"INVESTOR" has the meaning set forth in the recitals.
"IPT" has the meaning set forth in the recitals.
"MEMORANDUM" has the meaning set forth in the recitals.
"PARTNERSHIP" means any partnership in which IPT, IFG or
Metropolitan Asset Enhancement, L.P. holds a general partner interest or
limited partner interest, at any time and from time to time.
"PIGGYBACK MAXIMUM NUMBER" has the meaning set forth in
Section 5.2(b).
"PRIORITY RIGHTS HOLDER" means (i) the Investor, (ii) all
other holders of Common Shares who entered into registration rights agreements
with IPT in connection with the offering made pursuant to the Memorandum, and
(iii) IFG and any of its Affiliates pursuant to any registration rights
agreements with IPT in effect as of the date hereof.
"REQUESTING HOLDER" has the meaning set forth in Section
5.2(b).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" has the meaning set forth in the recitals.
"SUBSCRIPTION AGREEMENT" has the meaning set forth in the
recitals.
"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.
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ARTICLE II.
COVENANTS OF INVESTOR
Neither the Investor nor any of its Affiliates, nor any other
person acting on their behalf or in concert with them shall, directly or
indirectly (except through their investments directly in IPT):
(i) acquire, offer to acquire, or agree to acquire,
by purchase, gift or otherwise, any interest in a Partnership,
including without limitation any right to receive allocations or
distributions of the profits and losses of any Partnership or the
right to a share of the assets of any Partnership upon its winding up
and dissolution;
(ii) seek to control, disrupt, influence or
participate in the management, the policies or affairs of any
Partnership, including any Partnership in which the Investor acquired
an ownership interest prior to the date of this Agreement; or
(iii) make, or in any way participate in, any
"solicitation" of "proxies" to vote (as such terms are defined in Rule
14a-1 of the Exchange Act), solicit or communicate with or seek to
advise or influence any person or entity with respect to the voting of
any interest in any Partnership, including any Partnership in which
the Investor acquired an ownership interest prior to the date of this
Agreement.
Notwithstanding the foregoing, nothing herein shall be deemed to
prohibit the Investor from owning any interest in a Partnership, including,
without limitation, any right to receive allocations or distributions of the
profits and losses of any Partnership or the right to a share of the assets of
any Partnership upon its winding up and dissolution provided that such interest
was acquired prior to the date of this Agreement.
ARTICLE III.
TRANSFER COVENANT OF INVESTOR
SECTION 3.1 Restrictions on Transfer.
The Investor hereby agrees that it will not assign, transfer
or convey any Shares held by it unless and until the transferee, assignee or
successor of such Shares agrees in writing to be bound by the provisions of
this Agreement; provided, however, that this Section 3.1 shall not apply to (i)
any sale or exchange of Shares if any securities of IPT are registered pursuant
to Section 12 of the Exchange Act and are listed on a national securities
exchange or quoted on the NASDAQ, (ii) any sale or exchange of Shares pursuant
to any merger or other business combination to which IPT is a party, or (iii)
any transfer of securities received in a transaction described in the
immediately preceding clause (ii), provided such securities (or any other
securities of the same issuer) are registered pursuant to Section 12 of the
Exchange Act and are listed on a national securities exchange or quoted on the
NASDAQ; and further provided that the foregoing proviso shall not in any way
affect any transfer restrictions the Investor may be subject to other than
pursuant to this Section 3.1.
SECTION 3.2 Share Certificate Legend.
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The certificates representing the Shares will bear the
following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL
FOR THE COMPANY) STATING THAT SUCH SALE OR TRANSFER IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SUCH ACT. THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AND
CERTAIN OTHER AGREEMENTS SET FORTH IN AN INVESTORS AGREEMENT
AMONG THE COMPANY, INSIGNIA FINANCIAL GROUP, INC. AND THE
HOLDER HEREOF, A COPY OF WHICH MAY BE OBTAINED BY THE HOLDER
HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
ARTICLE IV.
TERMINATION
This Agreement shall commence on the date hereof and shall
terminate on the earliest to occur of:
(i) the written agreement of the parties hereto to
terminate this Agreement;
(ii) the final dissolution of IPT in accordance with
applicable law; and
(iii) the date on which all the Shares come to be owned by a
single shareholder or a group of shareholders that are Affiliates of
each other.
ARTICLE V.
REGISTRATION RIGHTS
SECTION 5.1 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 the Investor
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 the Investor's written request that IPT effect the registration under the
Securities Act of all, but not less than all, of such Investor's Shares, which
request shall specify (A) that the request is being made pursuant to this
Section 5.1, (B) the Investor's intended method of dispo-
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sition 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 such Investor to be received for such
Shares, IPT will 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 5.1 and IPT furnishes to the Investor 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 the Investor; 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 the Investor. In
addition to the other limitations set forth herein, the Investor shall not be
entitled to request and have effected more than one registration under this
Section 5.1.
(b) Method of Distribution. The Investor requesting a
registration pursuant to Section 5.1(a) shall determine the method of
distribution of the Shares included in such registration.
(c) Registration of Other Securities. Whenever IPT shall
effect a registration pursuant to this Section 5.1 in connection with an
underwritten offering, no securities other than Shares requested by the
Investor to be included shall be included among the securities covered by such
registration unless (i) the managing underwriter of such offering shall have
advised the Investor in writing that the inclusion of such other securities
would not adversely affect the price the Investor will receive for its Shares
in such offering or (ii) the Investor shall have consented in writing to the
inclusion of such other securities.
(d) Registration Statement Form. Registrations under this
Section 5.1 shall be on such appropriate registration form of the Commission
(i) as shall be selected by IPT and as shall be reasonably acceptable to the
Investor, and (ii) as shall permit the disposition of such Shares in accordance
with the method or methods of disposition selected pursuant to Section 5.1(b)
hereof.
(e) Effective Registration Statement. A registration
requested pursuant to this Section 5.1 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 the Investor), (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 the Investor, including, without limitation,
in the context of a proposed firm commitment underwriting, the fact that the
underwriters have advised the Investor 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
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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 the Investor).
(f) Selection of Underwriters. If a requested registration
pursuant to this Section 5.1 involves an underwritten offering, the underwriter
or underwriters thereof shall be selected by IPT and the Investor. The Investor
(together with IPT and other holders, if any, of Common Shares 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 5.1 shall be paid by the Investor 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, the Investor shall pay the underwriting discounts and commissions
applicable to the Shares sold by the Investor.
SECTION 5.2 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 the Investor of its intention to
do so. Upon the written request of the Investor made within 15 days after the
receipt of any such notice (which request shall specify the Shares intended to
be disposed of by the Investor 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 the Investor,
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 the Investor 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 5.4 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 5.2 for the same period as the
delay in registering such other securities.
(b) Priority. If (i) a registration pursuant to this Section
5.2 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 the Investor 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
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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, the
Investor) (based upon the number of Common Shares held by such holders
(including, without limitation, the Investor) immediately prior to the filing
of the registration statement with respect to such 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 5.2 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 5.2 initiated by a Requesting Holder shall be paid by the
holders, including, without limitation, the Investor, 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, the Investor shall pay the
underwriting discounts and commissions applicable to the Shares sold by the
Investor.
(d) Underwritten Offerings. If any Common Shares to be
registered under the Securities Act as contemplated by this Section 5.2 are to
be distributed by or through one or more underwriters, and the Investor has
requested that its Shares be included in such offering as provided in Section
5.2(a), then IPT shall not be obligated to include the Investor's Shares in
such offering unless the Investor accepts the terms of the underwritten
offering agreed on between the Company or the Requesting Holder, as the case
may be, and the underwriters selected by the Company or the Requesting Holder,
as the case may be. Furthermore, if requested by the underwriters, the Investor
agrees to enter into an agreement with such underwriters not to sell any Common
Shares owned by the Investor 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. The Investor 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
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underwriters shall also be made to and for the benefit of such Investor 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 the Investor. The Investor 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 the Investor,
the Investor's Common Shares or other securities of IPT, the Investor's
intended method of distribution and any representations, warranties or
agreements required by law.
SECTION 5.3 Registration Procedures.
If and whenever any Shares of the Investor 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 the Investor; 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 the Investor 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 the Investor 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 the Investor 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 the Investor to consummate the disposition in
such jurisdictions of the Shares owned by the Investor, except that
IPT shall not for any such purpose be required
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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 the Investor to consummate the disposition
of such Shares;
(vi) furnish to the Investor a copy, or, upon request, a
signed counterpart, addressed to the Investor (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 the Investor
(or the underwriters, if any) may reasonably request;
(vii) notify the Investor, 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 the
Investor, prepare and furnish to the Investor 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
9
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 the Investor, upon request of the Investor, 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 the Investor 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;
(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 the Investor's Shares pursuant to this Section 5.3
that the Investor furnish IPT in writing such information regarding the
Investor, the Shares and other securities of IPT held by the Investor, and the
distribution of such Shares as IPT may from time to time reasonably request in
writing. If the Investor 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 the Investor's Shares from the
registration statement if IPT provides the Investor with an opinion of counsel
to the effect that such information must be included in the registration
statement and the Investor thereafter continues to withhold such information.
The exclusion of the Investor's Shares from a registration statement shall not
affect the registration of the other Shares to be included in such registration
statement.
The Investor 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 5.3, the Investor will forthwith discontinue the Investor's
disposition of Shares pursuant to the registration statement relating to such
Shares until the Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by subdivision (vii) of this Section 5.3 and,
if so directed by IPT, will deliver to IPT (at IPT's expense) all copies, other
than permanent file copies then in the Investor's possession, of the prospectus
relating to such Shares current at the time of receipt of such notice.
SECTION 5.4 Preparation; Reasonable Investigation.
In connection with the preparation and filing of each
registration statement under the Securities Act which includes shares of the
Investor pursuant to this Agreement, IPT will give the Investor, its
underwriters, if any, its counsel and its accountants the opportunity to
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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 the Investor, to conduct a
reasonable investigation within the meaning of the Securities Act.
SECTION 5.5 Indemnification.
(a) Indemnification by IPT. In the event any of the
Investor's Shares are included in a registration statement under this Article
V, to the extent permitted by law, IPT will, and hereby does, indemnify and
hold harmless the Investor, each of the directors and officers of the Investor,
each Affiliate of the Investor, each of the directors and officers of such
Affiliate of the Investor, each other person who participates as an underwriter
in the offering or sale of such securities and each other person, if any, who
controls the Investor, 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 the Investor 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 the Investor 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 the Investor or any such director,
officer, underwriter or controlling person and shall survive the transfer of
such Shares by the Investor
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(b) Indemnification by the Investor. IPT may require, as a
condition to including any of the Investor's Shares in any registration
statement filed pursuant to Section 5.3 hereof, that IPT shall have received an
undertaking satisfactory to it from the Investor 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 5.5) 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 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 the Investor 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
the Investor 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 the Investor. In no event shall the liability of the Investor
under this Section 5.5 be greater in amount than the dollar amount of the
proceeds received by the Investor 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 5.5, 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 5.5, 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
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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 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 5.5 (with appropriate
modifications) shall be given by IPT and the Investor 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 5.5 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 5.5 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 5.5, any legal or
other fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
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The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.5 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 5.5, 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 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 5.5, the
Indemnifying Parties shall indemnify each Indemnified Party to the full extent
provided in Section 5.5(a) through Section 5.5(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 5.5(f).
SECTION 5.6 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 the Investor (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 5.6 are (a) to enable
the Investor to comply with the current public information requirement
contained in Paragraph (c) of Rule 144 under the Securities Act should the
Investor 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.
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SECTION 5.7 Investor Information.
IPT may require the Investor, if any of the Investor's Shares
are to be registered pursuant to this Article V, to furnish IPT such
information in writing with respect to the Investor 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.
SECTION 5.8 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 5.9 Transfer of Registration Rights.
The registration rights granted the Investor under this
Article V 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 the
Investor.
ARTICLE VI.
MISCELLANEOUS
SECTION 6.1 Survival.
Without intending to exclude the provisions hereof which by
their nature survive, the provisions of Article II hereof and Section 5.5
hereof shall survive any termination of this Agreement.
SECTION 6.2 Successors and Assigns.
This Agreement shall bind and inure to the benefit of and be
enforceable by IPT, IFG and the Investor. Either IPT or IFG may assign its
rights under this Agreement without the consent of the Investor or its
permitted successors or assigns, and this Agreement (with the exception of
Article V) shall bind and inure to the benefit of and be enforceable by any
successor or assign of IPT or IFG. Except as provided in Section 5.9, the
Investor may not assign its rights under this Agreement without the prior
written consent of all other parties to this Agreement.
SECTION 6.3 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.
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SECTION 6.4 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 6.5 Headings.
The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms hereof.
SECTION 6.6 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 6.7 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, IFG and the
Investor and no delay or failure in exercising any rights hereunder shall
operate as a waiver of the rights of any party hereto.
SECTION 6.8 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.
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SECTION 6.9 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 6.10 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.
SECTION 6.11 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:
--------------------------------------
Xxxxxxx X. Xxxxx
Vice President
INSIGNIA FINANCIAL GROUP, INC.
By:
--------------------------------------
Xxxxxxx X. Xxxxx
Senior Vice President
INVESTOR:
-----------------------------------------
Name of Investor
By:
--------------------------------------
Name:
---------------------------------
Title:
---------------------------------
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