EXHIBIT 10-1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made
and entered into as of September 27TH 1999 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;
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(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.
(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")
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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.
(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
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(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 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.
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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 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-
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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 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
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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 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
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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
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
9
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 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
000 Xxxx Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President
12
With a copy to:
Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Xx., Esq. and
Xxxxxx Xxxxxxxxx, Esq.
If to the Holders:
c/o Reckson Associates
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: General Counsel
Telecopy: (000) 000-0000
With copies to:
Xxxxx & Wood LLP
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: J. Xxxxxx Xxxxxxx, Esq.
Telecopy: (000) 000-0000
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
000 X. Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
By: /S/ XXXXXXX X. BUTTE
--------------------------------
Name: Xxxxxxx X. Butte
Title: Vice President
HOLDER:
By: /S/ XXXXXXX XXXXXXX
--------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Executive VP
