INSIGNIA FINANCING I
6 1/2% TRUST CONVERTIBLE PREFERRED SECURITIES
(THE "CONVERTIBLE PREFERRED SECURITIES")
GUARANTEEDBY AND CONVERTIBLE INTO SHARES OF CLASS A COMMON STOCK OF
INSIGNIA FINANCIAL GROUP, INC.
REGISTRATION RIGHTS AGREEMENT
NOVEMBER 1,1996
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇, READ & CO. INC.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
As Initial Purchasers
c/▇ ▇▇▇▇▇▇ Brothers Inc.
Three World Financial Center
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Insignia Financing I, a statutory business trust created under the
laws of the State of Delaware (the "Trust") by Insignia Financial Group, Inc.,
a Delaware corporation ("Insignia"), proposes to issue and sell to ▇▇▇▇▇▇
Brothers Inc., ▇▇▇▇▇▇, Read & Co. Inc., ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., and ▇.▇. ▇▇▇▇▇▇▇
& Sons, Inc. (the "Initial Purchasers"), upon the terms set forth in a
purchase agreement dated October 29, 1996 (the "Purchase Agreement"), among
the Initial Purchasers, Insignia and the Trust, 6 1/2% trust convertible
preferred securities (liquidation amount $50 per convertible preferred
security) (the "Convertible Preferred Securities"). As an inducement to the
Initial Purchasers to enter into the Purchase Agreement and in satisfaction of
a condition to the obligations of the Initial Purchasers thereunder, the Trust
and Insignia agree with you, (i) for the benefit of the Initial Purchasers,
and (ii) for the benefit of the holders from time to time of the Convertible
Preferred Securities, the 6 1/2% Convertible Subordinated Debentures Due
September 30, 2016 (the "Debt Securities"), and the Class A Common Stock, par
value $0.01 per share (the "Class A Common Stock"), of Insignia initially
issuable upon conversion of the Convertible Preferred Securities or the Debt
Securities (collectively, together with the Guarantee of Insignia of the
Convertible Preferred Securities, the "Registrable Securities"), including the
Initial Purchasers (each of the foregoing a "Holder" and together the
"Holders"), as follows:
1. DEFINITIONS.
Capitalized terms used herein without definition shall have their
respective meanings set forth in or pursuant to the Purchase Agreement or the
Offering Memorandum dated October 29, 1996, in respect of the Convertible
Preferred Securities. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:
"Act" or means the Securities Act of 1933, as amended.
"Securities Act"
"Affiliate" of any means any other person which, directly or
specified person indirectly, is in control of, is controlled by, or
is under common control with such specified
person. For purposes of this definition, control
of a person means the power, direct or indirect,
to direct or cause the direction of the
management and policies of such person whether by
contract or otherwise; and the terms
"controlling" and "controlled" have meanings
correlative to the foregoing.
"Commission" means the Securities and Exchange Commission.
"DTC" means The Depository Trust Company.
"Effectiveness has the meaning set forth in Section 2(b) hereof.
Period"
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Managing means the investment banker or investment bankers
Underwriters" and manager or managers that shall administer an
underwritten offering, if any, as set forth in
Section 6 hereof.
"Person" shall mean an individual, partnership,
corporation, trust or unincorporated
organization, or a government or agency or
political subdivision thereof.
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"Prospectus" means the prospectus included in any Shelf
Registration Statement (including, without
limitation, a prospectus that discloses
information previously omitted from a prospectus
filed as part of an effective registration
statement in reliance upon Rule 430A under the
Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the
offering of any portion of the Registrable
Securities.
"Shelf Registration means a "shelf" registration statement of the
Statement" Trust and Insignia pursuant to the provisions of
Section 2 hereof filed with the Commission which
covers some or all of the Registrable Securities,
as applicable, on an appropriate form under Rule
415 under the Act, or any similar rule that may
be adopted by the Commission, amendments and
supplements to such registration statement,
including post-effective amendments, in each case
including the Prospectus contained therein, all
exhibits thereto and all material incorporated by
reference therein.
"Shelf Registration" means a registration effected pursuant to Section
2 hereof.
"Underwriter" means any underwriter of Registrable Securities in
connection with an offering thereof under a Shelf
Registration Statement.
2. SHELF REGISTRATION.
(a) The Trust and Insignia shall, within 90 days following the date
of initial issuance (the "Issue Date") of the Convertible Preferred
Securities, file with the Commission a Shelf Registration Statement relating
to the offer and sale of the Registrable Securities by the Holders from time
to time in accordance with the methods of distribution elected by such Holders
and set forth in such Shelf Registration Statement and, thereafter, shall each
use its all reasonable efforts to cause such Shelf Registration Statement to
be declared effective under the Act as soon as practicable and in no event
later than 180 days after the Issue Date; provided, however, that no Holder
shall be entitled to have the Registrable Securities held by it covered by
such Shelf Registration unless such Holder is in compliance with Section 3(m)
hereof.
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(b) The Trust and Insignia shall each use its all reasonable efforts
(i) to keep the Shelf Registration Statement continuously effective in order
to permit the Prospectus forming part thereof to be usable by Holders for a
period of three years from Issue Date or such shorter period that will
terminate upon the earlier of the following: (A) when all the Convertible
Preferred Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement, exchanged for Debt
Securities or converted into Class A Common Stock (B) when all Debt Securities
issued to Holders in respect of Preferred Securities that had not been sold
pursuant to the Shelf Registration Statement or converted into Class A Common
Stock have been sold pursuant to the Shelf Registration Statement, and (C)
when all shares of Class A Common Stock issued upon conversion of any such
Convertible Preferred Securities or any such Debt Securities that had not been
sold pursuant to the Shelf Registration Statement have been sold pursuant to
the Shelf Registration Statement or (D) when, in the written opinion of
counsel to the Trust and Insignia, all outstanding Registrable Securities held
by persons that are not affiliates of the Trust or Insignia may be resold
without registration under the Act pursuant to Rule 144(k) under the Act or
any successor provision thereto (in any such case, such period being called
the "Effectiveness Period") and (ii) after the effectiveness of the Shelf
Registration Statement, promptly upon the request of any Holder to take any
action reasonably necessary to register the sale of any Registrable Securities
of such Holder and to identify such Holder as a selling securityholder. The
Trust and Insignia shall be deemed not to have used their all reasonable
efforts to keep the Shelf Registration Statement effective during the
requisite period if either the Trust or Insignia voluntarily takes any action
that would result in Holders of Registrable Securities covered thereby not
being able to offer and sell any such Registrable Securities during that
period, unless (i) such action is required by applicable law or the rules of
any national securities exchange or other market on which any of the
Registrable Securities are then listed or quoted, (ii) upon the occurrence of
any event contemplated by paragraph 3(c)(2)(iii) below, and such action is
taken by the Trust or Insignia in good faith and for valid business reasons or
(iii) the continued effectiveness of the Shelf Registration Statement would
require Insignia to disclose a material financing, acquisition or other
corporate transaction, and the Board of Directors shall have determined in
good faith that such disclosure is not in the best interests of Insignia and
its stockholders, and, in the case of clause (i) or (ii) above, the Trust and
Insignia thereafter promptly comply with the requirements of paragraph 3(i)
below.
3. REGISTRATION PROCEDURES.
In connection with any Shelf Registration Statement, the following
provisions shall apply:
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(a) The Trust and Insignia shall furnish to the Initial Purchasers,
prior to the filing thereof with the Commission, a copy of any Shelf
Registration Statement, and each amendment thereof and each amendment or
supplement, if any, to the Prospectus included therein and shall each use its
all reasonable efforts to reflect in each such document, when so filed with
the Commission, such comments as the Initial Purchasers reasonably may
propose.
(b) The Trust and Insignia shall take such action as may be necessary
so that (i) any Shelf Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any amendment or supplement thereto (and
each report or other document incorporated therein by reference in each case)
complies in all material respects with the applicable provisions of the
Securities Act and the Exchange Act and the respective rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto
does not, when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Shelf Registration Statement, and any amendment
or supplement to such Prospectus, does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they were made, not
misleading.
(c) (1) Insignia shall advise the Initial Purchasers and, in the case
of clause (i), the Holders and, if requested by the Initial Purchasers or any
such Holder, confirm such advice in writing: (i) when a Shelf Registration
Statement and any amendment thereto has been filed with the Commission and
when the Shelf Registration Statement or any post-effective amendment thereto
has become effective; and (ii) of any request by the Commission for amendments
or supplements to the Shelf Registration Statement or the Prospectus included
therein or for additional information.
(2) Insignia shall advise the Initial Purchasers and the Holders
and, if requested by the Initial Purchasers or any such Holder, confirm such
advice in writing of: (i) the issuance by the Commission of any stop order
suspending effectiveness of the Shelf Registration Statement or the initiation
of any proceedings for that purpose; (ii) the receipt by the Trust or Insignia
of any notification with respect to the suspension of the qualification of the
securities included therein for sale in any jurisdiction or the initiation of
any proceeding for such purpose; and (iii) the happening of any event that
requires the making of any changes in the Shelf Registration Statement or the
Prospectus so that, as of such date, the Shelf Registration Statement and the
Prospectus do not contain an untrue statement of a material fact and do not
omit to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not
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misleading (which advice shall be accompanied by an instruction to suspend the
use of the Prospectus until the requisite changes have been made).
(d) Insignia shall use its all reasonable efforts to prevent the
issuance, and if issued to obtain the withdrawal, of any order suspending the
effectiveness of any Shelf Registration Statement at the earliest possible
time.
(e) The Trust and Insignia shall furnish to each Holder of
Registrable Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one copy of such Shelf Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing, all
reports, other documents and exhibits (including those incorporated by
reference).
(f) The Trust and Insignia shall, during the Effectiveness Period,
deliver to each Holder of Registrable Securities included within the coverage
of any Shelf Registration Statement, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and each of the Trust and Insignia consents (except
upon and during the continuance of any event described in paragraph
3(c)(2)(iii) above) to the use of the Prospectus or any amendment or
supplement thereto by each of the selling Holders of Registrable Securities in
connection with the offering and sale of the Registrable Securities covered by
the Prospectus or any amendment or supplement thereto during the Shelf
Registration Period.
(g) Prior to any offering of Registrable Securities pursuant to any
Shelf Registration Statement, the Trust and Insignia shall register or qualify
or cooperate with the Holders of Registrable Securities included therein and
their respective counsel in connection with the registration or qualification
of such Registrable Securities for offer and sale under the securities or blue
sky laws of such jurisdictions as any such Holders reasonably request in
writing and do any and all other acts or things necessary or advisable to
enable the offer and sale in such United States jurisdictions of the
Registrable Securities covered by such Shelf Registration Statement; provided,
however, that in no event shall the Trust or Insignia be obligated to (i)
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to so qualify but for
this Section 3(g), (ii) file any general consent to service of process in any
jurisdiction where it is not as of the date hereof then so subject or (iii)
subject itself to taxation in any such jurisdiction if it is not so subject.
(h) Unless any Registrable Securities shall be in book-entry only
form, the Trust and Insignia shall cooperate with the Holders of Registrable
Securities to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to any Shelf
Registration
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Statement free of any restrictive legends and in such permitted denominations
and registered in such names as Holders may request in connection with the
sale of Registrable Securities pursuant to such Shelf Registration Statement.
(i) Upon the occurrence of any event contemplated by paragraph
3(c)(2)(iii) above, the Trust and Insignia shall promptly prepare a
post-effective amendment to any Shelf Registration Statement or an amendment
or supplement to the related Prospectus or file any other required document so
that, as thereafter delivered to purchasers of the Registrable Securities
included therein, the Prospectus will not include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If the Trust or Insignia notifies the Holders of the
occurrence of any event contemplated by paragraph 3(c)(2)(iii) above, the
Holders shall suspend the use of the Prospectus until the requisite changes to
the Prospectus have been made.
(j) Not later than the effective date of any Shelf Registration
Statement hereunder, the Trust and Insignia shall provide a CUSIP number for
the Preferred Securities registered under such Shelf Registration Statement;
in the event of and at the time of any distribution of the Debt Securities to
Holders, Insignia shall provide a CUSIP number for the Debt Securities and
provide the applicable trustee with certificates for such Registrable
Securities, in a form eligible for deposit with DTC.
(k) The Trust and Insignia shall use their best efforts to comply
with all applicable rules and regulations of the Commission and shall make
generally available to their security holders or otherwise provide in
accordance with Section 11(a) of the Securities Act as soon as practicable
after the effective date of the applicable Shelf Registration Statement an
earnings statement satisfying the provisions of Section 11(a) of the
Securities Act.
(l) The Trust and Insignia shall cause the Indenture, the Declaration
and the Preferred Securities Guarantee to be qualified under the Trust
Indenture Act in a timely manner.
(m) The Trust and Insignia may require each Holder of Registrable
Securities to be sold pursuant to any Shelf Registration Statement to furnish
to the Trust and Insignia such information regarding the Holder and the
distribution of such Registrable Securities as the Trust and Insignia may from
time to time reasonably request for inclusion in such Shelf Registration
Statement and Insignia and the Trust may exclude from such registration the
Registrable Securities of any Holder that fails to furnish such information
within a reasonable time after receiving such request.
(n) The Trust and Insignia shall, if requested, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to a Shelf
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Registration Statement, such information as the Managing Underwriters
reasonably agree should be included therein and to which the Trust and
Insignia do not reasonably object and shall make all required filings of such
Prospectus supplement or post-effective amendment as soon as practicable after
they are notified of the matters to be included or incorporated in such
Prospectus supplement or post-effective amendment.
(o) The Trust and Insignia shall enter into such customary agreements
(including underwriting agreements in customary form) to take all other
appropriate actions in order to expedite or facilitate the registration or the
disposition of the Registrable Securities, and in connection therewith, if an
underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures substantially identical to those set
forth in Section 5 (or such other provisions and procedures reasonably
acceptable to the Managing Underwriters, if any) with respect to all parties
to be indemnified pursuant to Section 5.
(p) The Trust and Insignia shall (i) make reasonably available for
inspection by the Holders of Registrable Securities to be registered
thereunder, any Underwriter participating in any disposition pursuant to such
Shelf Registration Statement, and any attorney, accountant or other agent
retained by such Holders or any such Underwriter all relevant financial and
other records, pertinent corporate documents and properties of the Trust and
Insignia and its subsidiaries; (ii) cause Insignia's officers, directors and
employees and the Regular Trustees to make reasonably available for inspection
all relevant information reasonably requested by such Holders or any such
Underwriter, attorney, accountant or agent in connection with any such Shelf
Registration Statement, in each case as is customary for similar due diligence
examinations; provided, however, that any information that is designated in
writing by the Trust and Insignia, in good faith, as confidential at the time
of delivery of such information shall be kept confidential by such Holders or
any such Underwriter, attorney, accountant or agent, unless such disclosure is
made in connection with a court proceeding or required by law, or such
information becomes available to the public generally or through a third party
without an accompanying obligation of confidentiality; and provided further
that the foregoing inspection and information gathering shall, to the greatest
extent possible, be coordinated on behalf of the Holders and the other parties
entitled thereto by one counsel designated by and on behalf of such Holders
and other parties; (iii) make such representations and warranties to the
Holders of Registrable Securities registered thereunder and the Underwriters,
if any, in form, substance and scope as are customarily made by Insignia and
the Trust to Underwriters in primary underwritten offerings and covering
matters including, but not limited to, those set forth in the Purchase
Agreement; (iv) obtain opinions of counsel to the Trust and Insignia (who may
be the general counsel of Insignia) and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to
the Managing Underwriters, if any) in customary form
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addressed to each selling Holder and the Underwriters, if any, covering such
matters as are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such
Holders and the Managing Underwriters (it being agreed that the matters to be
covered by such opinion or a written statement by such counsel delivered in
connection with such opinions shall include, without limitation, as of the
date of the opinion and as of the effective date of the Shelf Registration
Statement or most recent post-effective amendment thereto, as the case may be,
that such counsel has no actual knowledge that such Shelf Registration
Statement and the prospectus included therein, as then amended or
supplemented, including the documents incorporated by reference therein,
included an untrue statement of a material fact or omitted to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; (v) obtain "cold comfort" letters and
updates thereof from the independent public accountants of Insignia (and, if
necessary, any other independent public accountants of any subsidiary of
Insignia or of any business acquired by Insignia for which financial
statements and financial data are, or are required to be, included in the
Shelf Registration Statement), addressed to each such Holder of Registrable
Securities registered thereunder and the Underwriters, if any, in customary
form and covering matters of the type customarily covered in "cold comfort"
letters in connection with primary underwritten offerings; and (vi) deliver
such other customary documents and certificates as may be reasonably requested
by any such Holders and the Managing Underwriters, if any, including those to
evidence compliance with Section 3(i) and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Trust and Insignia. The foregoing actions set forth in clauses (iii), (iv),
(v) and (vi) of this Section 3(p) shall be performed at each closing under any
underwritten offering to the extent required thereunder.
(q) In the event that any broker-dealer registered under the Exchange
Act shall underwrite any Registrable Securities or participate as a member of
an underwriting syndicate or selling group or "assist in the distribution"
(within the meaning of the Rules of Fair Practice and the By-Laws of the
National Association of Securities Dealers, Inc. ("NASD")) thereof, whether as
a Holder of such Registrable Securities or as an underwriter, a placement or
sales agent or a broker or dealer in respect thereof, or otherwise, Insignia
shall assist such broker-dealer in complying with the requirements of such
Rules and By-Laws, including, without limitation, by (A) if such Rules or
By-Laws, including Schedule E thereto, shall so require, engaging at the
expense of the Holders a "qualified independent underwriter" (as defined in
Schedule E) to participate in the preparation of the Shelf Registration
Statement relating to such Registrable Securities and to exercise usual
standards of due diligence in respect thereto, (B) indemnifying any such
qualified independent underwriter to the extent of the indemnification of
Underwriters provided in Section 5 hereof and (C) providing such information
to such broker-dealer as may be reasonably required in order for such
broker-dealer to comply with the requirements of the Rules of Fair Practice of
the NASD.
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(r) The Trust and Insignia shall use their all reasonable efforts to
take all other steps necessary to effect the registration, offering and sale
of the Registrable Securities covered by the Shelf Registration Statement
contemplated hereby.
4. REGISTRATION EXPENSES.
Except as otherwise provided in Section 6, Insignia shall bear all
fees and expenses incurred by it and the Trust in connection with the
performance of its obligations under Sections 2 and 3 hereof and shall bear or
reimburse the Holders for the reasonable fees and disbursements of one firm of
counsel designated by Insignia and reasonably acceptable to the Holders of a
majority of the Registrable Securities covered by the Shelf Registration
Statement to act as counsel therefor in connection therewith.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) In connection with any Shelf Registration Statement, Insignia
shall indemnify and hold harmless the Trust, the Initial Purchasers, each
Holder, each Underwriter who participates in an offering of Registrable
Securities, each of their respective directors, officers, employees, and
trustees, and each Person, if any, who controls the Trust, the Initial
Purchasers and any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act as follows:
(i) from and against any loss, liability, claim, damage and
expense whatsoever, including any amounts paid in settlement of any
investigation, litigation, proceeding or claim, joint or several, as incurred,
arising out of any untrue statement or alleged untrue statement of a material
fact contained in any Shelf Registration Statement (or any amendment thereto)
covering Registrable Securities, including all documents incorporated therein
by reference, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or arising out of any untrue statement or alleged untrue statement
of a material fact contained in any Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, that
Insignia shall not be liable under this clause (i) for any settlement of any
action effected without its written consent, which consent shall not be
unreasonably withheld; and (ii) against any and all expenses (including
reasonable fees and disbursements of counsel chosen by the Holders, such
Holder or any Underwriter (except to the extent otherwise expressly provided
in Section 5(c) hereof)), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
court or governmental agency
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or body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, as such expenses are incurred to the extent that any such expense is
not paid under subparagraph (i) of this Section 5(a); provided further, that
the indemnity provided for in this Section 5(a) shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission (i) made in
reliance upon and in conformity with written information furnished to the
Trust or Insignia by the Initial Purchasers, such Holder or any Underwriter in
writing expressly for use in the Shelf Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto)
or (ii) contained in any preliminary prospectus or the Prospectus if the
Initial Purchasers, such Holder or such Underwriter failed to send or deliver
a copy of the Prospectus (or any amendment or supplement thereto) to the
Person asserting such losses, claims, damages or liabilities on or prior to
the delivery of written confirmation of any sale of securities covered thereby
to such Person in any case where such Prospectus (or any amendment or
supplement thereto) corrected such untrue statement or omission. Any amounts
advanced by Insignia to an indemnified party pursuant to this Section 5 as a
result of such losses shall be returned to Insignia if it shall be finally
determined by such a court in a judgment not subject to appeal or final review
that such indemnified party was not entitled to indemnification by Insignia.
(b) Each Holder, severally and not jointly, shall indemnify and hold
harmless the Trust, Insignia, the Initial Purchasers, each Underwriter who
participates in an offering of Registrable Securities and the other selling
Holders and each of their respective directors, officers (including each
officer of Insignia who signed the Shelf Registration Statement), employees
and trustees and each Person, if any, who controls the Trust, Insignia, the
Initial Purchasers, any Underwriter or any other selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any loss, liability, claim, damage and expense whatsoever
described in the indemnity contained in Section 5(a) hereof, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Shelf Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information furnished to
Insignia by such selling Holder expressly for use in the Shelf Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto); provided that the indemnity provided for in this Section
5(b) shall not apply to any loss, liability, claim, damage or expense to the
extent arising out of an untrue statement or omission or alleged untrue
statement or omission contained in any preliminary prospectus or the
Prospectus if the Initial Purchasers, such Holder or such Underwriter failed
to send or deliver a copy of the Prospectus (or any amendment or supplement
thereto) to the Person asserting such losses, claims, damages or liabilities
on or prior to the delivery of written confirmation of any sale of securities
covered thereby to such Person in any case where such
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Prospectus (or any amendment or supplement thereto) corrected such untrue
statement or omission; provided, however, that no such Holder shall be liable
for any claims hereunder in excess of the amount of net proceeds received by
such Holder from the sale of Registrable Securities pursuant to the Shelf
Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any claim or any action commenced against it in respect
of which indemnity may be sought hereunder, enclosing a copy of all papers
served on such indemnified party, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it
may have other than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of any such action. If
an indemnifying party so elects within a reasonable time after receipt of such
notice, such indemnifying party, jointly with any other indemnifying party,
may assume the defense of such action with counsel chosen by it and reasonably
satisfactory to the indemnified party or parties defendant in such action,
provided that if any such indemnified party reasonably determines that
representation of such indemnifying party and any indemnified party by the
same counsel would present a conflict of interest, then such indemnifying
party or parties shall not be entitled to assume such defense. If an
indemnifying party is not entitled to assume the defense of such action as a
result of the proviso to the preceding sentence, counsel for such indemnifying
party shall be entitled to conduct the defense of such indemnifying party and
counsel for each indemnified party or parties shall be entitled to conduct the
defense of such indemnified party or parties. If an indemnifying party assumes
the defense of an action in accordance with and as permitted by the provisions
of this paragraph, such indemnifying party shall not be liable for any fees
and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel (in
addition to any local counsel) separate from its own counsel for all
indemnified parties 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. No indemnifying party shall (i) without the
prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent
of the indemnifying party or if there shall be a final judgment of the
plaintiff in any such action, the indemnifying party
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agrees to indemnify and hold harmless any indemnified party from and against
any loss or liability by reason of such settlement or judgment.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 5(a) or
(b) is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, Insignia, the Initial
Purchasers and the Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by Insignia, the Initial Purchasers and the
Holders, as incurred; provided that 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 that was not guilty of such
fraudulent misrepresentation. As between Insignia, the Initial Purchasers and
the Holders, such parties shall contribute to such aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement in such proportion as shall be appropriate to reflect the
relative fault of Insignia, on the one hand, and the Initial Purchasers and
the Holders, on the other hand, with respect to the statements or omissions
which resulted in such loss, liability, claim, damage or expense, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative fault of Insignia, on the one hand, and of the Initial Purchasers and
the Holders, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by Insignia, on the one hand, or by or on behalf of the
Initial Purchasers or the Holders, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. Insignia, the Initial Purchasers and the Holders
of the Registrable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were to be determined by pro rata
allocation or by any other method of allocation that does not take into
account the relevant equitable considerations. For purposes of this Section
5(d), each director, officer, employee and trustee of an Initial Purchaser or
Holder, and each Person, if any, who controls an Initial Purchaser or Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, shall have the same rights to contribution as such Initial
Purchaser or Holder, and each director, officer, employee and trustee of
Insignia and the Trust, and each Person, if any, who controls Insignia or the
Trust within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, shall have the same rights to contribution as Insignia or
the Trust. No party shall be liable for contribution with respect to any
action, suit, proceeding or claim settled without its written consent.
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6. UNDERWRITTEN OFFERING.
The Holders of Registrable Securities covered by the Shelf
Registration Statement who desire to do so may sell such Registrable
Securities in an underwritten offering. In any such underwritten offering, the
investment banker or bankers and manager or managers that will administer the
offering will be selected by, and the underwriting arrangements with respect
thereto will be approved by, the Holders of a majority of the Registrable
Securities to be included in such offering; provided however, that (i) such
investment bankers and managers and underwriting arrangements (including
indemnification agreements) must be reasonably satisfactory to Insignia and
the Trust and (ii) Insignia and the Trust shall not be obligated to cooperate
with the Initial Purchasers or Holders in more than one underwritten offering
during the Effectiveness Period. No Holder may participate in the underwritten
offering contemplated hereby unless such Holder (a) agrees to sell such
Holder's Registrable Securities in accordance with any approved underwriting
arrangements, (b) completes and executes all reasonable questionnaires, powers
of attorney, indemnities, underwriting agreements, lock-up letters and other
documents required under the terms of such approved underwriting arrangements
and (c) at least 20% of the outstanding Registrable Securities are included in
such underwritten offering. The Holders participating in the underwritten
offering shall be responsible for any expenses customarily borne by selling
securityholders, including underwriting discounts and commissions and fees and
expenses of counsel to the selling securityholders, and shall reimburse the
Trust and Insignia for the fees and disbursements of their counsel, their
independent public accountants and any printing and other out-of-pocket
expenses reasonably incurred in connection with such underwritten offering.
Notwithstanding the foregoing or the provisions of Section 3(n) hereof, upon
receipt of a request from the Managing Underwriter or a representative of
Holders of a majority of the Registrable Securities outstanding to prepare and
file an amendment or supplement to the Shelf Registration Statement and
Prospectus in connection with an underwritten offering, Insignia may delay the
filing of any such amendment or supplement for up to 90 days if Insignia in
good faith has a valid business reason for such delay.
7. MISCELLANEOUS.
(a) Other Registration Rights.
Insignia may grant registration rights that would permit any Person
that is a third party the right to piggy-back on any Shelf Registration
Statement, provided that if the Managing Underwriter, if any, of such offering
delivers an opinion to the selling Holders that the total amount of securities
which they and the holders of such piggy-back rights intend to include in any
Shelf Registration Statement is so large as to materially adversely affect the
success of such offering
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(including the price at which such securities can be sold), then (except to
the extent otherwise required under the terms of any registration rights
granted by Insignia prior to the date hereof) only the amount, number or kind
of securities to be offered for the account of holders of such piggy-back
rights will be reduced to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount, number or kind
recommended by the Managing Underwriter prior to any reduction in the amount
of Registrable Securities to be included.
(b) Amendments and Waivers.
The provision of this Agreement, including the provisions of this
sentence, may not be amended, qualified, modified or supplemented, and waivers
or consents to departures from the provisions hereof may not be given, unless
the Trust and Insignia have obtained the written consent of the Initial
Purchasers. Any such written consent of the Initial Purchasers shall be
binding upon each Holder and each subsequent Holder.
(c) Notices.
All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such
Holder to Insignia in accordance with the provisions of this Section 7(c);
(2) if to the Initial Purchasers, initially at the address set
forth in the Purchase Agreement; and
(3) if to the Trust or Insignia, initially at its address set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received.
The Initial Purchasers or the Trust and Insignia by notice to the
other may designate additional or different addresses for subsequent notices
or communications.
(d) Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties and the Holders, including,
without the need for an express assignment or any consent by the Trust or
Insignia thereto, subsequent Holders of Registrable Securities. The Trust and
Insignia hereby agree to extend the benefits of this Agreement to any Holder
of Registrable Securities and
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any such Holder may specifically enforce the provisions of this Agreement as
if an original party hereto.
(e) Counterparts.
This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(f) Headings.
The headings herein are inserted for convenience of reference only
and are not intended to be part of, or to affect the meaning or interpretation
of this Agreement.
(g) Governing law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the conflicts of laws
principles thereof.
(h) Severability.
In the event that any one of more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the
parties shall be enforceable to the fullest extent permitted by law.
Please confirm that the foregoing correctly sets forth the agreement
between Insignia, the Trust and you.
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Very truly yours,
INSIGNIA FINANCIAL GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Title: Chief Operating Officer
INSIGNIA FINANCING I
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Title: Regular Trustee
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇, READ & CO., INC.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
By: ▇▇▇▇▇▇ BROTHERS INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Authorized Representative
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