EXHIBIT 10-2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of September 27TH by and between American Real Estate Investment
Corporation, a Maryland corporation (the "COMPANY"), and the holders of
securities listed on SCHEDULE A attached hereto (including their respective
successors, assigns and transferees herein referred to individually as a
"HOLDER" and collectively as the "HOLDERS").
WHEREAS, pursuant to the Contribution and Exchange Agreement (the
"CONTRIBUTION AGREEMENT") made as of August 6, 1999 by and among each of those
Persons set forth in Exhibit A attached thereto, American Real Estate
Investment, L.P. (the "PARTNERSHIP") and the Company, each Holder is receiving
on the date hereof at the Stage I Closing (as defined in the Contribution
Agreement), and will receive from time to time at a Stage II Closing (as defined
in the Contribution Agreement) and/or the Stage III Closing (as defined in the
Contribution Agreement) (each Stage I Closing, Stage II Closing and Stage III
Closing is individually referred to herein as a "CLOSING" and are collectively
referred to herein as the "CLOSINGS") pursuant to the Contribution Agreement,
such number of (i) shares of common stock, par value $.001 per share (the
"COMMON STOCK"), of the Company (ii) shares of Series B Convertible Preferred
Stock, par value $.001 per share (the "SERIES B PREFERRED STOCK"), of the
Company, which are convertible into shares of Common Stock and (iii) Series C
Convertible Preferred Units of limited partnership interest (the "SERIES C
PREFERRED UNITS") of the Partnership, which may be convertible into shares of
Common Stock or shares of Preferred Stock, each as set forth opposite such
Holder's name on SCHEDULE A attached hereto as amended from time to time to
reflect the additional issuance of Common Stock, Series B Preferred Stock or
Series C Preferred Units at a Closing (the Common Stock, Series B Preferred
Stock and Series C Preferred Units issued at a Closing are collectively referred
to as the "ISSUED SECURITIES;" and the Common Stock issued at a Closing and the
shares of Common Stock issued upon conversion of the Series B Preferred Stock
and Series C Preferred Units are collectively referred to as the "REGISTRABLE
SECURITIES;" PROVIDED, HOWEVER, that any such securities shall cease to be
Registrable Securities when (i) a Registration Statement (as defined below)
covering such securities has been declared effective and such Registrable
Securities have been disposed of by the Holder thereof pursuant to such
effective Registration Statement or any other effective Registration Statement,
(ii) such securities are transferred by the Holder thereof to any person other
than a Holder pursuant to Rule 144 (or any successor rule or similar provision
then in effect, but not Rule 144A) under the Securities Act (as defined below),
including a sale pursuant to the provisions of Rule 144(k), (iii) such
securities shall have ceased to be outstanding or (iv) such securities are
eligible for sale pursuant to Rule 144 under the Securities Act and could be
sold in one transaction in accordance with the volume limitations contained in
Rule 144(e)(1)(i) under the Securities Act).
WHEREAS, in connection therewith, the Company has agreed to grant
to Holders the Registration Rights (as defined in Section 1 hereof);
NOW, THEREFORE, the parties hereto, in consideration of the
foregoing, the mutual covenants and agreements hereinafter set forth, and other
good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, hereby agree as follows:
SECTION 1. REGISTRATION RIGHTS
Each Holder shall be entitled to offer for sale from time to time
pursuant to a shelf, demand or piggyback Registration Statement the Registrable
Securities, subject to the terms and conditions set forth herein (the
"REGISTRATION RIGHTS").
1.1 DEMAND REGISTRATION.
(a) REGISTRATION REQUESTS. At any time after the second anniversary
of the Stage I Closing Date (such second anniversary being referred to herein as
the "REGISTRATION RIGHTS DATE"), upon the written request of the Holders of at
least $1 million of Registrable Securities (adjusted proportionately to reflect
any stock dividend, subdivision, split or reverse stock split or the like
effected with respect to the Common Stock) (the "REQUESTING HOLDERS"), the
Company must effect the registration under the Securities Act of 1933, as
amended and the rules and regulations promulgated thereunder (the "SECURITIES
ACT") of all or part of such Holders' Registrable Securities and specifying the
number of Registrable Securities to be registered and the intended method of
disposition thereof, the Company will promptly, and in no event more than ten
(10) Business Days after receipt of such request, give written notice (a "NOTICE
OF DEMAND REGISTRATION") of such request to all other holders of Registrable
Securities, and thereupon will use its best efforts to effect the registration
under the Securities Act (a "DEMAND REGISTRATION") of:
(i) the Registrable Securities which the Company has been so
requested to register by such Requesting Holder or Holders, and
(ii) all other Registrable Securities the holders of which have
made written requests to the Company for registration thereof within
twenty (20) days after the giving of the Notice of Demand Registration
(which requests shall specify the intended method of disposition
thereof),
all to the extent requisite to permit the disposition (in
accordance with the intended methods thereof) of the Registrable
Securities so to be registered. The Company may include in such
registration other securities for sale for its own account or for the
account of any other Person; PROVIDED that, if such Demand
Registration is in connection with an underwritten offering, the
Company or such securityholders, as applicable, agree in writing to
sell their securities on the same terms and conditions as apply to the
Registrable Securities being sold. If any securityholders of the
Company (other than the holders of Registrable Securities in such
capacity) register securities of the Company in a Demand Registration
in accordance with this Section, such holders shall pay the fees and
expenses of their counsel and their PRO RATA share, on the basis of
the respective amounts of the securities included in such registration
on behalf of each such holder, of the Registration Expenses if the
Registration Expenses for such registration are not paid by the
Company for any reason.
(b) LIMITATIONS ON DEMAND REGISTRATIONS. Notwithstanding anything
herein to the contrary, the Company shall not be required to honor a request for
a Demand Registration if:
(i) the Company has previously effected three (3) Demand
Registrations pursuant to SECTION 1.1(a);
(ii) such request is received from any Requesting Holder with
respect to Registrable Securities that may immediately be sold under
Rule 144 during any ninety (90) day period;
(iii) such request is received by the Company less than thirty
(30) days following the effective date of any previous Registration
Statement (other than a Registration Statement on Form S-4 or S-8 or
any successor or similar form that may be adopted by the Securities
and Exchange Commission (the "COMMISSION") or Form S-3 with respect to
a dividend reinvestment plan), regardless of whether any holder of
Registrable Securities exercised its rights under this Agreement with
respect to such registration.
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(iv) there is a Shelf Registration Statement in effect with the
Commission with respect to such Registrable Securities, or the Company
is pursuing in good faith a declaration of effectiveness of a Shelf
Registration Statement on file with the Commission.
(c) REGISTRATION STATEMENT FORM. Demand Registrations shall be on
such appropriate registration form promulgated by the Commission as shall be
selected by the Company, and shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods specified in the
Notice of Demand Registration for such registration (any registration statement
of the Company that covers Registrable Securities pursuant to this Agreement and
all amendments and supplements to such registration statement, including any
post-effective amendments, is hereinafter referred to as a "REGISTRATION
STATEMENT").
(d) PRIORITY IN CUTBACKS. If the managing underwriter advises the
Company and the Holders in writing that, in its opinion, the number of
securities requested to be included in such registration (including securities
of the Company which are not Registrable Securities) exceed the number which can
be sold in such offering, the Company will include in any such registration to
the extent of the number which the managing underwriter advises the Company can
be sold in such offering (i) first, Registrable Securities requested to be
included in such registration by the Requesting Holders, pro rata on the basis
of the number of Registrable Securities requested to be included by such
holders, if all of such Registrable Securities cannot be included, (ii) second,
other Registrable Securities requested to be included in such registration by
the other Holders, pro rata on the basis of the number of Registrable Securities
requested to be included by such holders, if all of such Registrable Securities
cannot be included, and (iii) third, other securities of the Company proposed to
be included in such registration, allocated among the holders thereof in
accordance with the priorities then existing among the Company and the holders
of such other securities; and any securities so excluded shall be withdrawn from
and shall not be included in such Demand Registration.
(e) PREEMPTION OF DEMAND REGISTRATION. Notwithstanding anything to
the contrary contained herein, at any time within thirty (30) days after
receiving a written request for a Demand Registration, the Company may elect to
effect an underwritten primary registration in lieu of the Demand Registration
if the Company's Board of Directors believes that such primary registration
would be in the best interests of the Company or if the managing underwriter for
the Demand Registration advises the Company in writing that in its opinion, in
order to sell the Registrable Securities to be sold, the Company should include
its own securities. If the Company so elects to effect a primary registration,
the Company shall give prompt written notice to all holders of Registrable
Securities of its intention to effect such a registration and shall afford the
holders of the Registrable Securities rights contained in Section 1.3 with
respect to Piggyback Registrations. In the event that the Company so elects to
effect a primary registration after receiving a request for a Demand
Registration, the requests for a Demand Registration shall be deemed to have
been withdrawn and such primary registration shall not be deemed to be a Demand
Registration.
1.2 SHELF REGISTRATIONS. The Company will cause to be filed with
the Commission on or before the Registration Rights Date a shelf Registration
Statement and related prospectus, including any preliminary prospectus and
documents incorporated by reference (the "SHELF REGISTRATION STATEMENT") that
complies as to form in all material respects with applicable Commission rules
providing for the sale by each of the Holders of such Holder's Registrable
Securities whether or not issued or issuable on such date, and agrees (subject
to Section 1.7 hereof) to use its commercially reasonable best efforts to cause
such Shelf Registration Statement to be declared effective by the Commission as
soon as practicable thereafter.
1.3 PIGGYBACK REGISTRATIONS.
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(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. Notwithstanding any
limitation contained in SECTION 1.1, if the Company at any time after the
Registration Rights Date proposes to file a Registration Statement under the
Securities Act (other than a registration in respect of a dividend reinvestment
or similar plan for stockholders of the Company or on Form S-4 or Form S-8
promulgated by the Commission, or any successor or similar forms thereto)
registering shares of its Common Stock, whether for sale for the account of the
Company or for the account of any holder of securities of the Company (other
than Registrable Securities) (a "PIGGYBACK REGISTRATION"), it will each such
time give written notice (a "NOTICE OF PIGGYBACK REGISTRATION") at least fifteen
(15) days prior to the anticipated filing date, to all Holders of Registrable
Securities, of its intention to do so and of such Holders' rights under this
SECTION 1.3, which Notice of Piggyback Registration shall include a description
of the intended method of disposition of such securities. Upon the written
request of any such Holder made within ten (10) days after receipt of a Notice
of Piggyback Registration (which request shall specify the Registrable
Securities intended to be disposed of by such Holder and the intended method of
disposition thereof), the Company will use its commercially reasonable best
efforts to include in the Registration Statement relating to such Piggyback
Registration all Registrable Securities which the Company has been so requested
to register. Notwithstanding the foregoing, if, at any time after giving a
Notice of Piggyback Registration and prior to the effective date of the
Registration Statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Holder of Registrable Securities and, thereupon, (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith) without prejudice, however, to the rights of any Requesting Holder
entitled to do so to request that such registration be effected as a Demand
Registration under SECTION 1.1(a), and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other
securities. No registration effected under this SECTION 1.3 shall relieve the
Company of its obligations to effect a Demand Registration under SECTION 1.1.
(b) PRIORITY IN CUTBACKS. If the managing underwriter advises the
Company and the Holders in writing that, in its opinion, the number of
securities requested to be included in such registration (including securities
of the Company which are not Registrable Securities) exceed the number which can
be sold in such offering, the Company will include in such registration to the
extent of the amount of the securities which the managing underwriter advises
the Company can be sold in such offering:
(i) if such registration as initially proposed by the Company was
solely a primary registration of its securities, (x) FIRST, the
securities proposed by the Company to be sold for its own account, (y)
SECOND, any Registrable Securities requested to be included in such
registration by Requesting Holders, PRO RATA on the basis of the
number of Registrable Securities requested to be included by such
Holders, and (z) THIRD, any other securities of the Company proposed
to be included in such registration, allocated among the holders
thereof in accordance with the priorities then existing among the
Company and such holders; and
(ii) if such registration as initially proposed by the Company
was in whole or in part requested by holders of securities of the
Company, other than holders of Registrable Securities in their
capacities as such, pursuant to demand registration rights, (x) FIRST,
such securities held by the holders initiating such registration and,
if applicable, any securities proposed by the Company to be sold for
its own account, allocated in accordance with the priorities then
existing among the Company and such holders, (y) SECOND, any
Registrable Securities requested to be included in such registration
by Requesting Holders, pro rata on the basis of the number of
Registrable Securities requested to be included by such holders, and
(z) THIRD, any other securities
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of the Company proposed to be included in such registration, allocated
among the holders thereof in accordance with the priorities then
existing among the Company and the holders of such other securities;
and any securities so excluded shall be withdrawn from and shall not be included
in such Piggyback Registration.
1.4 REGISTRATION PROCEDURE.
(a) Each Holder agrees to provide in a timely manner information
regarding the proposed distribution by such Holder of the Registrable Securities
and such other information reasonably requested by the Company in connection
with the preparation of and for inclusion in the Registration Statement.
(b) If and whenever the Company is required to use its commercially
reasonable best efforts to effect the registration of any Registrable Securities
under the Securities Act pursuant to SECTION 1.1, 1.2 OR 1.3, the Company will
use its commercially reasonable best efforts to effect the registration and sale
of such Registrable Securities in accordance with the intended methods of
disposition thereof specified by the Requesting Holders. Without limiting the
foregoing, the Company in each such case will, as expeditiously as possible use
its commercially reasonable best efforts to keep the Registration Statement
effective (subject to Section 1.7 hereof) and free of material misstatements or
omissions (including the preparation and filing of any amendments and
supplements necessary for that purpose) until the earlier of:
(i) the first date on which all Holders have consummated the sale
of all of such Holders' Registrable Securities registered under the
Registration Statement;
(ii) the date on which all of the Registrable Securities
registered under the Registration Statement are eligible for sale
pursuant to Rule 144(k) (or any successor provision) or in a single
transaction pursuant to Rule 144(e) (or any successor provision) under
the Securities Act of 1933, as amended (the "SECURITIES ACT"); or
(iii) (A) with respect to a Shelf Registration Statement, the
later of (x) two (2) years after such Shelf Registration Statement
becomes effective and (y) if Issued Securities are issued at the Stage
III Closing, three (3) years after the Stage III Closing; and (B) with
respect to a Demand Registration or Piggyback Registration, one
hundred and eighty (180) days after such Registration Statement
becomes effective.
(c) The Company agrees to provide to each Holder a reasonable
number of copies of the final Registration Statement and the related prospectus
(including any preliminary prospectus) and any amendments or supplements
thereto. The Company further agrees that it will use commercially reasonable
best efforts to obtain the withdrawal of any order suspending the effectiveness
of any Registration Statement at the earliest possible moment.
1.5 OFFERS AND SALES. All offers and sales by each Holder under
any Registration Statement referred to in SECTION 1.1, 1.2 OR 1.3, if any,
shall be completed within the period during which such Registration Statement
is required to remain effective pursuant to SECTION 1.4(b), and, upon
expiration of such period, no Holder will offer or sell any Registrable
Securities under such Registration Statement. If directed by the Company,
each Holder will return all undistributed copies of any prospectus in its
possession upon the expiration of such period. Each Holder shall promptly,
but in any event no later than two (2) business days after a sale by such
Holder of Registrable Securities, notify the Company of
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any sale or other transfer by such Holder of Registrable Securities and include
in such notice the number of Registrable securities sold or transferred by
Holder.
1.6 SUSPENSION OF OFFERING.
(a) If the Company determines in its good faith judgment that the
filing of the Registration Statement under SECTION 1.1, 1.2 OR 1.3 hereof or the
use of any prospectus would materially impede, delay or interfere with any
pending material financing, acquisition or corporate reorganization or other
material corporate development involving the Company or any of its subsidiaries,
or require the disclosure of important information which the Company has a
material business purpose for preserving as confidential or the disclosure of
which would materially impede the Company's ability to consummate a significant
transaction, upon written notice of such determination by the Company, the
rights of each Holder to offer, sell or distribute any Registrable Securities
pursuant to a Registration Statement or to require the Company to take action
with respect to the registration or sale of any Registrable Securities pursuant
to a Registration Statement (including any action contemplated by SECTION 1.4
hereof) will be suspended until the date upon which the Company notifies the
Holders in writing that suspension of such rights for the grounds set forth in
this SECTION 1.7(a) is no longer necessary, but, in any event, no such period
shall extend for longer than 60 days; PROVIDED the Company may deliver only two
such notices in any twelve month period.
(b) In the case of the registration of any underwritten public
offering proposed by the Company (other than any registration by the Company on
Form S-8, or a successor or substantially similar form, of (A) an employee stock
option, stock purchase or compensation plan or of securities issued or issuable
pursuant to any such plan or (B) a dividend reinvestment plan), each Holder
agrees, if requested in writing by the managing underwriter or underwriters
administering such offering, not to effect any underwritten offering for the
resale of Registrable Securities (or any option or right to acquire Registrable
Securities), other than pursuant to a Piggyback Registration, during the period
commencing on the 7th day prior to the expected effective date of the
Registration Statement covering such underwritten public offering or the date on
which the proposed offering is expected to commence (which date shall be stated
in such notice) and ending on the date specified by such managing underwriter in
such written request to such Holder, which date shall not be later than 45 days
after such expected date of effectiveness or the commencement of the offering,
as the case may be.
1.7 Expenses. Except as otherwise set forth in this SECTION 1.7,
the Company shall pay all expenses incident to the performance by it of its
registration obligations under this Section 1, including (i) all stock exchange,
Commission and state securities registration, listing and filing fees, (ii) all
expenses incurred in connection with the preparation, printing and distributing
of the Registration Statement and prospectus (including all expenses incurred in
connection with the delivery to any Holder of such number of copies of any
prospectus as such Holder may reasonably request), and (iii) fees and
disbursements of counsel for the Company and of the independent public
accountants of the Company (collectively the "REGISTRATION EXPENSES"). Each
Holder shall be responsible for the payment of any underwriting fees, brokerage
and sales commissions, fees and disbursements of such Holder's counsel, and any
transfer taxes relating to the sale or disposition of the Registrable Securities
by such Holder (collectively, the "HOLDER EXPENSES"); PROVIDED, HOWEVER, that
the Company shall be responsible, one-time only, for the reasonable fees and
disbursements, up to a maximum of $5,000, of a single legal counsel to the
Holders in connection with the filing by the Company of a Registration Statement
contemplated hereunder. Notwithstanding anything to the contrary contained
herein, if the Company has previously effected two (2) Demand Registrations
pursuant to Section 1.1(a), the Company shall not pay any Registration Expenses
or Holder Expenses in connection with any additional Demand Registration other
than with respect to securities included in such Registration Statement for sale
for its own account, and the Holders and other securityholders of the Company
who include securities in the Registration
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Statement shall be responsible for their respective Holder Expenses and their
PRO RATA share, on the basis of the respective amounts of the securities
included in such Registration Statement on behalf of each such holder, of the
Registration Expenses.
1.8 QUALIFICATION. The Company agrees to use its commercially
reasonable best efforts to register or qualify the Registrable Securities by the
time the Registration Statement is declared effective by the Commission under
all applicable state securities or "BLUE SKY" laws of such jurisdictions as any
Holder shall reasonably request in writing, to keep each such registration or
qualification effective during the period the Registration Statement is required
to be kept effective, and to do any and all other acts and things which may be
reasonably necessary or advisable to enable each Holder to consummate the
disposition in each such jurisdiction of the Registrable Securities owned by
such Holder; PROVIDED, HOWEVER, that the Company shall not be required to (x)
qualify generally to do business in any jurisdiction or to register as a broker
or dealer in such jurisdiction where it would not otherwise be required to
qualify but for this Section 1.9, (y) subject itself to taxation in any such
jurisdiction, or (z) submit to the general service of process in any such
jurisdiction.
1.9 NOTICES TO HOLDERS. Subject to Section 1.4(a) hereof, during
the period that the Company is required to keep the Registration Statement
effective, the Company will advise the Holders within a reasonable time (i)
when the prospectus or any prospectus supplement or post-effective amendment
thereto has been filed, and when the same has become effective, (ii) of any
request by the Commission for any amendments to, or issuance by the
Commission of any stop order with respect to the Registration Statement or
any prospectus or amendment thereto, or (iii) that an amendment or supplement
to the most recent Prospectus or prospectus supplement, as the case may be,
is necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
1.10 LISTING. The Company agrees to use its reasonable efforts to
cause all Registrable Securities to be listed on the principal securities
exchange on which the Common Stock is listed.
1.11 COOPERATION OF COMPANY IN REGISTRATION OF SECURITIES. Whenever
required under SECTION 1 to effect the registration of any Registrable
Securities, the Company shall, as promptly as practicable:
(a) Prior to filing a registration statement or prospectus or any
amendments or supplements thereto, the Company shall furnish to one firm of
counsel for the Holders, copies of all such documents in the form substantially
as proposed to be filed with the SEC and shall in good faith consider
incorporating in each such document such changes as such counsel to the Holders
reasonably and in a timely manner may suggest.
(b) Make available for inspection by any Holder, any underwriter
participating in such offering and the representatives of such Holder and any
such underwriter (but not ore than one firm of counsel to the Holders), all
financial and other information as shall be reasonably requested by them at the
Company's offices, during business hours and upon reasonable advance notice, and
provide any Holder, any underwriter participating in such offering and the
representatives of such Holder and underwriter the reasonable opportunity to
discuss the business affairs of the Company with is principal executives and
independent public accountants who have certified the audited financial
statements included in such Registration Statement, in each case all as
necessary to enable them to exercise their due diligence responsibility under
the Securities Act; PROVIDED, HOWEVER, that information that the Company
determines to be confidential and which the Company advises such person in
writing, is confidential shall not be disclosed unless such person signs a
confidentiality agreement reasonably satisfactory to the Company or the related
Holder of Registrable Securities agrees to be responsible for such Person's
breach
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of confidentiality on terms reasonably satisfactory to the Company; PROVIDED,
FURTHER, that the Company shall not be required to incur any material
out-of-pocket expense pursuant to this SECTION 1.11(b).
(c) If Registrable Securities are included in an underwritten
public offering and the underwriter is reasonably acceptable to the Company, the
Company shall (i) enter into an underwriting or similar agreement with the
underwriter or underwriters and the Holder in such form as is customary for an
underwritten public offering and (ii) furnish the Holder and such underwriter or
underwriters with a "comfort letter" from the independent public accountants of
the Company and legal opinions of counsel to the Company, each in such form as
is customary for underwritten public offerings and covering matters of the type
customarily covered by opinions or comfort letters, as the case may be. Delivery
of such opinion or comfort letter shall be subject to the recipient furnishing
such written representations or acknowledgements as are reasonably requested by
such independent public accountants or legal counsel to the Company.
SECTION 2. INDEMNIFICATION
2.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each Holder and each person, if any, who controls
any Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
as follows:
(a) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which the Registrable
Securities were registered under the Securities Act, 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 or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto), including all documents
incorporated therein by reference, 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;
(b) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of the
Company, which consent shall not be unreasonably withheld; and
(c) against any and all expense whatsoever, as incurred (including
reasonable fees and disbursements of counsel), reasonably incurred in
investigating, preparing or defending against any litigation, or investigation
or proceeding by any governmental agency or body, commenced or threatened, in
each case whether or not a party, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under subparagraph (a) or (b)
above;
PROVIDED, HOWEVER, that the indemnity provided pursuant to this
Section 2.1 does not apply to any Holder with respect to any loss,
liability, claim, damage or expense to the extent arising out of (i)
any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder
expressly for use in the Registration Statement (or any amendment
thereto) or the related
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prospectus (or any amendment or supplement thereto), or (ii) such
Holder's failure to deliver an amended or supplemental Prospectus
(provided such Holder was notified in writing pursuant to Section 1.9,
or otherwise, of the need for an amended or supplemental Prospectus)
if such loss, liability, claim, damage or expense would not have
arisen had such delivery occurred.
2.2 INDEMNIFICATION BY HOLDER. Each Holder (on a several and not
joint basis) agrees to indemnify and hold harmless the Company, and each of
its directors and officers (including each director and officer of the
Company who signed a Registration Statement), and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, as follows:
(a) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which the Registrable
Securities were registered under the Securities Act, 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 or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto), including all documents
incorporated therein by reference, 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;
(b) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of Holder,
which consent shall not be unreasonably withheld; and
(c) against any and all expense whatsoever, as incurred (including
reasonable fees and disbursements of counsel), reasonably incurred in
investigating, preparing or defending against any litigation, or investigation
or proceeding by any governmental agency or body, commenced or threatened, in
each case whether or not a party, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under subparagraph (a) or (b)
above;
PROVIDED, HOWEVER, that the indemnity provided pursuant to this Section 2.2
shall only apply with respect to any loss, liability, claim, damage or
expense to the extent arising out of (i) any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of such Holder expressly for use in the Registration Statement (or
any amendment thereto) or the related prospectus (or any amendment or
supplement thereto), or (ii) such Holder's failure to deliver an amended or
supplemental prospectus (provided such Holder was notified in writing
pursuant to Section 1.9, or otherwise, of the need for an amended or
supplemental Prospectus) if such loss, liability, claim, damage or expense
would not have arisen had such delivery occurred. Notwithstanding the
provisions of this Section 2.2, no Holder shall be required to indemnify
the Company, its officers, directors or control persons with respect to any
amount in excess of the amount of the total proceeds to such Holder from
sales of the Registrable Securities of such Holder under the Registration
Statement (after deducting the amounts already paid to the Company by such
Holder or any person, if any, who controls such Holder pursuant to this
Section 2.2), and no
9
Holder shall be liable under this Section 2.2 for any statements or
omissions of any other Holder or the failure by such other Holder to
deliver an amended or supplemental prospectus.
2.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. The indemnified
party shall give reasonably prompt notice to the indemnifying party of any
action or proceeding commenced against it in respect of which indemnity may
be sought hereunder, but failure to so notify the indemnifying party (i)
shall not relieve it from any liability which it may have under the indemnity
agreement provided in Section 2.1 or 2.2 above, unless and to the extent it
did not otherwise learn of such action and the lack of notice by the
indemnified party results in the forfeiture by the indemnifying party of
substantial rights or defenses, and (ii) shall not, in any event, relieve the
indemnifying party from any obligations to the indemnified party other than
the indemnification obligation provided under Section 2.1 or 2.2 above. If
the indemnifying party so elects within a reasonable time after receipt of
such notice, the indemnifying party may assume the defense of such action or
proceeding at such indemnifying party's own expense with counsel chosen by
the indemnifying party and approved by the indemnified party, which approval
shall not be unreasonably withheld; PROVIDED, HOWEVER, that the indemnifying
party will not settle any such action or proceeding without the written
consent of the indemnified party unless, as a condition to such settlement,
the indemnifying party secures the unconditional release of the indemnified
party; and PROVIDED FURTHER, that if the indemnified party reasonably
determines that a conflict of interest exists where it is advisable for the
indemnified party to be represented by separate counsel or that, upon advice
of counsel, there may be legal defenses available to it which are different
from or in addition to those available to the indemnifying party, then the
indemnifying party shall not be entitled to assume such defense and the
indemnified party shall be entitled to separate counsel at the indemnifying
party's expense. If the indemnifying party is not entitled to assume the
defense of such action or proceeding as a result of the proviso to the
preceding sentence, the indemnifying party's counsel shall be entitled to
conduct the indemnifying party's defense and counsel for the indemnified
party shall be entitled to conduct the defense of the indemnified party, it
being understood that both such counsel will cooperate with each other to
conduct the defense of such action or proceeding as efficiently as possible.
If the indemnifying party (i) is not so entitled to assume the defense of
such action, (ii) does not assume such defense, after having received the
notice referred to in the first sentence of this paragraph, or (iii) fails to
employ counsel that is reasonably satisfactory to the indemnified party,
after having received the notice referred to in the first sentence of this
paragraph, the indemnifying party will pay the reasonable fees and expenses
of counsel for the indemnified party. In such event, however, the
indemnifying party will not be liable for any settlement effected without the
written consent of the indemnifying party, which consent shall not be
unreasonably withheld. If an indemnifying party is entitled to assume, and
assumes, the defense of such action or proceeding in accordance with this
paragraph, the indemnifying party shall not be liable for any fees and
expenses of counsel for the indemnified party incurred thereafter in
connection with such action or proceeding.
10
2.4 CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
this Section 2 is for any reason held to be unenforceable by the indemnified
party although applicable in accordance with its terms, the Company and the
applicable Holder shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by the Company and such Holder, (i) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and
such Holder on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative fault
of but also the relative benefits to the Company on the one hand and such Holder
on the other hand, from the purchase and sale of the Registrable Securities, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits to the indemnifying party and
indemnified party shall be determined by reference to, among other things, the
total proceeds received by the indemnifying party and indemnified party in
connection with the offering to which such losses, claims, damages, liabilities
or expenses relate. The relative fault of the indemnifying party and indemnified
party shall be determined by reference to, among other things, whether the
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, the indemnifying party or the
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The obligations
of each Holder under this Section 2.4 are several and not joint.
The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 2.4 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 2.4, no Holder shall be required
to contribute any amount in excess of the amount of the total proceeds to that
Holder from sales of the Registrable Securities of such Holder under the
Registration Statement.
Notwithstanding the foregoing, 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. For purposes of this Section 2.4, each person, if
any, who controls any Holder within the meaning of Section 15 of the Securities
Act shall have the same rights to contribution as such Holder, and each director
of the Company, each officer of the Company who signed a Registration Statement
and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act shall have the same rights to contribution as the
Company.
SECTION 3. RULE 144 COMPLIANCE
The Company covenants that it will file the reports required to be
filed by the Company under the Securities Act and the Exchange Act so as to
enable each Holder to sell Registrable Securities, pursuant to Rule 144 under
the Securities Act. In connection with any sale, transfer or other disposition
by any Holder of any Registrable Securities pursuant to Rule 144 under the
Securities Act, the Company shall cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any Securities Act legend, and enable
certificates for such Registrable Securities to be for such number of shares and
registered in such names as such Holder may reasonably request at least five (5)
business days prior to any sale of Registrable Securities hereunder.
11
SECTION 4. MISCELLANEOUS
4.1 INTEGRATION; AMENDMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the matters set
forth herein and supersedes and renders of no force and effect all prior oral
or written agreements, commitments and understandings among the parties with
respect to the matters set forth herein. Except as otherwise expressly
provided in this Agreement, no amendment, modification or discharge of this
Agreement shall be valid or binding unless set forth in writing and duly
executed by the Company and the applicable Holder.
4.2 WAIVERS. No waiver by a party hereto shall be effective unless
made in a written instrument duly executed by the party against whom such waiver
is sought to be enforced, and only to the extent set forth in such instrument.
Neither the waiver by any of the parties hereto of a breach or a default under
any of the provisions of this Agreement, nor the failure of any of the parties,
on one or more occasions, to enforce any of the provisions of this Agreement or
to exercise any right or privilege hereunder shall thereafter be construed as a
waiver of any subsequent breach or default of a similar nature, or as a waiver
of any such provisions, rights or privileges hereunder.
4.3 ASSIGNMENT. This Agreement shall inure to the benefit of and be
binding on the successors, assigns and transferees of each of the parties,
including, without limitation and without the need for an express assignment,
subsequent Holders. If any successor, assignee or transferee of any Holder shall
acquire Registrable Securities, in any manner, whether by operation of law or
otherwise, such successor, assignee or transferee shall be deemed a Holder and
be entitled to the rights of a Holder hereunder, and such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding Registrable Securities such Person shall be conclusively deemed to have
agreed to be bound by all of the terms and provisions hereof.
4.4 NOTICES. All notices, payments, demands or other
communications given hereunder (a) shall be deemed to have been duly given and
received (i) upon personal delivery, (ii) if by telecopy, upon receipt, (iii) in
the case of notices sent within, and for delivery within, the United States, as
of the date shown on the return receipt after mailing by registered or certified
mail, return receipt requested, postage prepaid, or (iv) the second succeeding
business day after deposit with Federal Express or other equivalent air courier
delivery service, unless the notice is held or retained by the customs service,
in which case the date shall be the fifth succeeding business day after such
deposit and (b) must be in writing and delivered personally, by a recognized
courier service, by a recognized overnight delivery service, by telecopy or by
registered or certified mail, postage prepaid, at the following addresses (or to
the attention of such other person or such other address as any party may
provide to the other parties by notice in accordance with this Section 4.4):
If to the Company:
American Real Estate Investment Corporation
Plymouth Meeting Executive Campus
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
12
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Esq. and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Esq.
If to the Holders:
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating Partnership
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇, Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
4.5 SPECIFIC PERFORMANCE. The parties hereto acknowledge that
the obligations undertaken by them hereunder are unique and that there would
be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that each party, in addition to
any other remedy to which it may be entitled at law or in equity, shall be
entitled to (i) compel specific performance of the obligations, covenants and
agreements of any other party under this Agreement in accordance with the
terms and conditions of this Agreement and (ii) obtain preliminary injunctive
relief to secure specific performance and to prevent a breach or contemplated
breach of this Agreement in any court of the United States or any State
thereof having jurisdiction.
4.6 GOVERNING LAW. This Agreement, the rights and obligations of
the parties hereto, and any claims or disputes relating thereto, shall be
governed by and construed in accordance with the laws of the State of New
York, without giving effect to the choice of law rules thereof. The parties
agree that all disputes between any of them arising out of, connected with,
related to, or incidental to the relationship established between them in
connection with this Agreement, and whether arising in law or in equity or
otherwise, shall be resolved by the federal or state courts located in New
York, New York. Nothing herein shall affect the right of any party to serve
process in any other manner permitted by law or to commence legal proceedings
or otherwise proceed against the other in any other jurisdiction. In
addition, each of the parties hereto consents to submit to the personal
jurisdiction of any federal or state court located in the state of New York
in the event that any dispute arises out of this Agreement. The parties, for
themselves and their respective affiliates, hereby irrevocably waive all
right to a trial by jury in any action, proceeding or counterclaim (whether
based on contract, tort or otherwise) arising out of or relating to the
actions of the parties or their respective affiliates pursuant to this
Agreement in the negotiation, administration, performance or enforcement
thereof.
4.7 HEADINGS . Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any
13
purpose, and shall not in any way define or affect the meaning, construction or
scope of any of the provisions hereof.
4.8 PRONOUNS. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person or entity may require.
4.9 EXECUTION IN COUNTERPARTS. To facilitate execution, this
Agreement may be executed in as many counterparts as may be required. It
shall not be necessary that the signature of or on behalf of each party
appears on each counterpart, but it shall be sufficient that the signature of
or on behalf of each party appears on one or more of the counterparts. All
counterparts shall collectively constitute a single agreement. It shall not
be necessary in any proof of this Agreement to produce or account for more
than a number of counterparts containing the respective signatures of or on
behalf of all of the parties hereto.
4.10 SEVERABILITY. If fulfillment of any provision of this
Agreement, at the time such fulfillment shall be due, shall transcend the
limit of validity prescribed by law, then the obligation to be fulfilled
shall be reduced to the limit of such validity; and if any clause or
provision contained in this Agreement operates or would operate to invalidate
this Agreement, in whole or in part, then such clause or provision only shall
be held ineffective, as though not herein contained, and the remainder of
this Agreement shall remain operative and in full force and effect.
14
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf as of the date first hereinabove set
forth.
COMPANY:
Address: AMERICAN REAL ESTATE INVESTMENT
Plymouth Meeting Executive Campus CORPORATION
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. Butte
---------------------
Name: ▇▇▇▇▇▇▇ ▇. Butte
Title: Vice President
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed on its behalf as of the date first hereinabove set forth.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇
THE ▇▇▇▇ ▇▇▇▇▇▇ TRUST
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Trustee
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇ TRUST
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Trustee
THE ▇▇▇▇▇ ▇▇▇▇▇▇ TRUST
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: General partner
▇▇▇▇▇▇ ▇▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: General partner