Exhibit 10.5
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of December
23, 1998, by and between American Real Estate Investment Corporation, a Maryland
corporation (the "Company"), and AEW Targeted Securities Fund, L.P. (the
"Purchaser").
This Agreement is made pursuant to a certain Securities Purchase
Agreement (the "Securities Purchase Agreement") dated as of the date hereof by
and between the Company and the Purchaser, pursuant to which the Purchaser shall
purchase 800,000 shares of Series A Convertible Preferred Stock, par value $.001
per share, of the Company (the "Preferred Stock"), which are convertible into
shares of Common Stock, par value $.001 per share, of the Company (the
"Securities"). In order to induce the purchasers to enter into the Securities
Purchase Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement. The execution of this Agreement is a condition to
the closing of the transactions contemplated by the Securities Purchase
Agreement.
In consideration of the foregoing, the parties hereby agree as follows:
SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"ADVICE" has the meaning set forth in Section 3.
"AFFILIATE" means, with respect to any specified Person, any other
Person who, directly or indirectly, controls, is controlled by, or is under
common control with such specified Person.
"BUSINESS DAY" means any day other than a Saturday or Sunday or a day
on which commercial banking institutions in New York, New York are authorized by
law to be closed. Any reference to "days" (unless Business Days are specified)
shall mean calendar days.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock, par value $.001 per share, of
the Company.
"COMPANY" has the meaning set forth in the preamble and shall include
the Company's successors by merger, acquisition, reorganization or otherwise.
"CONTROLLING PERSONS" has the meaning set forth in Section 6(a).
"DAMAGES" has the meaning set forth in Section 6(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute, and the rules and regulations of
the Commission promulgated thereunder.
"HOLDER" means (i) each Person (other than the Company and its
Affiliates) who is a signatory to this Agreement as listed on Schedule 1 hereto
and (ii) each Person (other than the Company and its Affiliates) to whom a
Holder transfers Securities if such Person acquires such Securities as
Registrable Securities.
"INSPECTORS" has the meaning set forth in Section 4(k).
"NASD" has the meaning set forth in Section 4(m).
"NASDAQ" has the meaning set forth in Section 4(m).
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
unincorporated organization or government or other agency or political
subdivision thereof.
"PROSPECTUS" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
Registration Statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other amendments and
supplements to the prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such prospectus.
"QUALIFYING OFFERING" means the sale of Common Stock in an underwritten
public offering (in which no person acquires more than 10% of the Common Stock
to be sold) at a price of at least $16.50 per share which results in net
proceeds to the Company of at least $150 million.
"RECORDS" has the meaning set forth in Section 4(k).
"REGISTRABLE SECURITIES" means the Securities; PROVIDED, HOWEVER, that
any Securities shall cease to be Registrable Securities when (i) a Registration
Statement 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,
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
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transaction in accordance with the volume limitations contained in Rule
144(e)(1)(i) under the Securities Act.
"REGISTRATION EXPENSES" has the meaning set forth in Section 5.
"REGISTRATION STATEMENT" means any registration statement of the
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement and all amendments and supplements to any such registration
statement, including post-effective amendments, in each case including the
Prospectus, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
"REQUIRED FILING DATE" has the meaning set forth in Section 2(a).
"SECURITIES" has the meaning set forth in the introduction.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, or any successor statute, and the rules and regulations of the
Commission promulgated thereunder.
"SECURITIES PURCHASE AGREEMENT" has the meaning set forth in the
introduction.
"SHELF REGISTRATION STATEMENT" has the meaning set forth in Section
2(a).
"SUSPENSION NOTICE" has the meaning set forth in Section 4.
"SUSPENSION PERIOD" has the meaning set forth in Section 4.
"TARGET EFFECTIVE DATE" means the date 30 days after the earlier of (i)
a Required Filing Date or (ii) the date on which the Shelf Registration
Statement is actually filed with the Commission.
"TARGET EFFECTIVE PERIOD" means the period of time between the date of
this Agreement and the later of (A) (i) the date which is 24 months following
the date hereof, (ii) the first date on which all Holders have consummated the
sale of all of such Holders' Registrable Securities registered under the Shelf
Registration Statement, or (iii) the date on which all of the Registrable
Securities 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, whichever of (i), (ii) or (iii) is earlier,
or (B) the date which is three months after the date on which all Holders cease
to be an Affiliate of the Company.
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SECTION 2. SHELF REGISTRATION.
(a) FILING; EFFECTIVENESS. As soon as practicable but not
later than the sixtieth (60th) day following the closing of the transactions
contemplated by the Securities Purchase Agreement (the "REQUIRED FILING DATE"),
the Company shall prepare and file with the Commission a "shelf" registration
statement (the "SHELF REGISTRATION STATEMENT") on the appropriate form for an
offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act (or any successor rule or similar provision then in effect)
covering all of the Registrable Securities. The Company shall use its
commercially reasonable efforts to have the Shelf Registration Statement
declared effective on or before the Target Effective Date and to keep such Shelf
Registration Statement continuously effective for the Target Effective Period.
Any Holder of Registrable Securities shall be permitted to withdraw all or any
part of the Registrable Securities from a Shelf Registration Statement at any
time prior to the effective date of such Shelf Registration Statement, but the
Company shall be under no further obligation to register such Securities.
(b) SUPPLEMENTS; AMENDMENTS. The Company agrees, if necessary,
to supplement or amend the Shelf Registration Statement, as required by the
rules, regulations or instructions applicable to the registration form used by
the Company for such Shelf Registration Statement or by the Securities Act or as
otherwise required by this Agreement.
(c) EFFECTIVE REGISTRATION. A registration will not be deemed
to have been effected as a Shelf Registration Statement unless the Shelf
Registration Statement with respect thereto has been declared effective by the
Commission and the Company has complied in all material respects with its
obligations under this Agreement with respect thereto; PROVIDED, HOWEVER, that
if after the Shelf Registration Statement has been declared effective, the
offering of Registrable Securities pursuant to such Shelf Registration Statement
is interfered with by any stop order, injunction or other order or requirement
of the Commission or any other governmental agency or court, such Shelf
Registration Statement will be deemed not to have be effective during the period
of such interference until the offering of Registrable Securities pursuant to
such Shelf Registration Statement may legally resume. If a registration
requested pursuant to this Section 2 is deemed not to have been effected, then
the Company shall continue to be obligated to effect a registration pursuant to
this Section 2.
SECTION 3. REGISTRATION PROCEDURES.
In connection with the obligations of the Company to effect or cause
the registration of any Registrable Securities pursuant to the terms and
conditions of this Agreement, the Company shall use its commercially reasonable
efforts to effect the registration and sale of such Registrable Securities in
accordance with the intended method of distribution thereof as quickly as
practicable (provided, however, that the Holders shall not be entitled to effect
such distribution through any underwriter until the earlier to occur of (i) the
consummation by the Company of a Qualifying Offering or (ii) 3 1/2 years from
the date hereof), and in connection therewith:
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(a) The Company shall prepare and file with the Commission a
Registration Statement on the appropriate form under the Securities Act, which
Registration Statement shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the Commission to be filed therewith, and use its commercially
reasonable efforts to cause such Registration Statement to become effective and
remain effective in accordance with the provisions of this Agreement; PROVIDED,
HOWEVER, that, prior to filing a Registration Statement or Prospectus or any
amendments or supplements thereto, the Company shall furnish to the Holders of
the Registrable Securities covered by such Registration Statement, Holders'
Counsel and the managing underwriters, if any, draft copies of all such
documents proposed to be filed, and shall, prior to filing such documents,
review any comments which are submitted by any Holder or its counsel within five
(5) days after delivery of such documents to such Holder by the Company;
PROVIDED, FURTHER, that, except to the extent such comments relate to specific
disclosure regarding such Holder or its proposed method of disposition of the
Securities, the Company shall not be required to incorporate any such comments
into the documents.
(b) The Company shall (i) prepare and file with the Commission
such amendments to such Registration Statement as may be necessary to keep such
Registration Statement effective during the Target Effective Period; (ii) cause
the Prospectus to be amended or supplemented as required and to be filed as
required by Rule 424 or any similar rule that may be adopted under the
Securities Act; (iii) respond as promptly as practicable to any comments
received from the SEC with respect to the Shelf Registration Statement or any
amendment thereto; and (iv) comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the Holder covered thereby.
(c) The Company shall promptly furnish to any Holder and the
managing underwriters, if any, without charge, such number of conformed copies
of such Registration Statement and any post-effective amendment thereto and such
number of copies of the Prospectus (including each preliminary Prospectus) and
any amendments or supplements thereto, any documents incorporated by reference
therein and such other documents as any such Holder or underwriter may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities being sold by such Holder.
(d) The Company, if necessary, shall, on or prior to the date
on which a Registration Statement is declared effective, (i) use its best
efforts to register or qualify the Registrable Securities covered by such
Registration Statement under the securities or "blue sky" laws of each of the 50
states of the United States or obtain appropriate exemptions therefrom; (ii) do
any and all other acts and things which may be reasonably necessary or advisable
to enable the Holders of Registrable Securities included in such Registration
Statement to consummate the disposition of such Registrable Securities in
accordance with their intended method of distribution thereof; (iii) use its
commercially reasonable efforts to keep each such state securities or "blue sky"
registration or qualification (or exemption therefrom) effective during the
period in which the Company is required to keep the Registration Statement
effective;
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and (iv) do any and all other acts or things which may be reasonably necessary
or advisable to enable the Holders of Registrable Securities included in such
Registration Statement to complete the disposition in such jurisdictions of such
Registrable Securities in accordance with their intended method of distribution
thereof; PROVIDED, HOWEVER, that the Company shall not be required (A) to
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 so
qualify but for this Section 4(d), (B) to submit to the general service of
process in any such jurisdiction where it is not otherwise subject to general
service of process or (C) subject itself to taxation in any such jurisdiction
where it is not otherwise subject to taxation.
(e) The Company shall promptly notify each Holder and Holders'
counsel, and (if requested by any such Person) confirm such notice in writing,
(i) when a Registration Statement or a Prospectus or any post-effective
amendment or any Prospectus supplement has been filed and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the Commission or any state securities
authority for amendments and supplements to a Registration Statement and
Prospectus or for additional information after the Registration Statement has
become effective, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or the initiation or
threatening of any proceedings for that purpose, (iv) of the issuance by any
state securities commission or other regulatory authority of any order
suspending the registration or qualification or exemption from registration or
qualification of any of the Registrable Securities under state securities or
"blue sky" laws or the initiation of any proceedings for that purpose, (v) if,
between the effective date of a Registration Statement and the closing of any
sale of Registrable Securities covered thereby, the representations and
warranties of the Company contained in any underwriting agreement, if any,
relating to the offering of such Registrable Securities cease to be true and
correct in all material respects, and (vi) of the happening of any event which
requires the making of any changes in such Registration Statement or Prospectus
so that such Registration Statement or Prospectus will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and, as promptly as
practicable thereafter, prepare and file an amendment to such Registration
Statement with the Commission and furnish to the Holders, Holders' counsel and
any underwriter a supplement or amendment to such Prospectus so that, as
thereafter deliverable to the purchasers of such Registrable Securities, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(f) The Company shall make generally available to its security
holders an earnings statement satisfying the provisions of Section 11(a) of the
Securities Act as soon as practicable after the effective date of a Registration
Statement, which requirement will be deemed to be satisfied if the Company
timely files complete and accurate information on Forms 10-Q, 10-K and 8-K under
the Exchange Act and otherwise complies with Rule 158 under the Securities Act.
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(g) The Company shall use its commercially reasonable efforts
to prevent the issuance of any order suspending the effectiveness of a
Registration Statement, and, if any such order suspending the effectiveness of a
Registration Statement is issued, shall use its commercially reasonable efforts
to obtain the withdrawal of such order at the earliest possible moment.
(h) The Company shall, if reasonably requested by Holders'
counsel or any Holder, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as such Holder or Holders' counsel
requests to be included therein, including, without limitation, with respect to
the Registrable Securities being sold by such Holder to any underwriter or
underwriters, the purchase price being paid therefor by such underwriter or
underwriters and any other terms of an underwritten offering of the Registrable
Securities to be sold in such offering, and the Company shall promptly make all
required filings of such Prospectus supplement or post-effective amendment.
(i) The Company shall cooperate with the Holders to facilitate
the timely preparation and delivery of certificates (which shall not bear any
restrictive legends unless required under applicable law) representing
Registrable Securities sold under a Registration Statement to the purchasers
thereof, and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any, or
such Holders may request and keep available and make available to the Company's
transfer agent prior to the effectiveness of such Registration Statement a
supply of such certificates.
(j) The Company shall enter into such customary agreements
(including, if applicable, an underwriting agreement in customary form) and take
such other actions as the Holders or the underwriters retained by the Holders
participating in an underwritten public offering, if any, may reasonably request
in order to expedite or facilitate the disposition of Registrable Securities;
provided, however, that such underwriters are reasonably acceptable to the
Company. (The Holders may, at their option, require that any or all of the
representations, warranties and covenants of the Company to or for the benefit
of any underwriters also be made to and for the benefit of the Holders.)
(k) The Company shall promptly make available to each Holder,
any underwriter participating in any disposition of Registrable Securities
pursuant to a Registration Statement, and any attorney, accountant or other
agent or representative retained by any such Holder or underwriter
(collectively, the "INSPECTORS"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "RECORDS"),
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply such Records as are reasonably requested by any such Inspector in
connection with such Registration Statement.
(l) The Company shall furnish to each Holder of Registrable
Securities included in such offering and to each underwriter, if any, if
requested by such Holder or underwriter, a signed counterpart, addressed to such
Holder or underwriter, of (i) an opinion or opinions of counsel to the Company,
and (ii) a comfort letter or comfort letters from the
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Company's independent public accountants, each in customary form and covering
matters of the type customarily covered by opinions or comfort letters, as the
case may be.
(m) The Company shall use its commercially reasonable efforts
to cause the Registrable Securities included in a Registration Statement (if the
Company and the Registrable Securities so qualify) (i) to be listed on each
national securities exchange, if any, on which similar securities issued by the
Company are then listed, or (ii) if similar securities of the Company are not
then listed, to be authorized for quotation or listing, as applicable, on the
National Association of Securities Dealers, Inc.'s ("NASD") Nasdaq Stock Market
("NASDAQ").
(n) The Company shall cooperate with each Holder and each
underwriter participating in the disposition of Registrable Securities and their
respective counsel in connection with any filings required to be made with the
NASD.
(o) The Company shall, during the period when the Prospectus
is required to be delivered under the Securities Act, file in a timely fashion
all documents required to be filed with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act.
(p) The Company shall maintain a transfer agent and registrar
for all Registrable Securities covered by a Registration Statement not later
than the effective date of such Registration Statement.
(q) If the Registrable Securities are of a class of securities
that is listed on a national securities exchange, the Company shall file copies
of any Prospectus with such exchange to satisfy the requirements of Rule 153
under the Securities Act so that the Holders shall benefit from the prospectus
delivery procedures described therein.
In the case of a Shelf Registration Statement, each Holder, upon
receipt of any notice (a "SUSPENSION NOTICE") of the happening of any event of
the kind described in Section 3(e)(vi), shall forthwith discontinue disposition
of the Registrable Securities pursuant to the Shelf Registration Statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(e) or until
such Holder is advised in writing (the "ADVICE") by the Company that the use of
the Prospectus may be resumed, and such Holder has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus, and, if so directed by the Company, such Holder will, and will
request the managing underwriter or underwriters, if any, to deliver to the
Company all copies, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice. In the event that the Company shall give any
Suspension Notice, the Company shall use its commercially reasonable efforts and
take such actions as are reasonably necessary to render the Advice and deliver
copies of the supplemental or amended Prospectus as promptly as reasonably
practicable.
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If any Registration Statement refers to any Holder by name or otherwise
as the holder of any securities of the Company, then such Holder shall have the
right to require the deletion of the reference to such Holder in the event that
such reference to such Holder by name or otherwise is not required by the
Securities Act or any similar federal or state securities or "blue sky" statute
and the rules and regulations thereunder then in force.
SECTION 4. SUSPENSION OF OFFERING.
(a) If the Company determines in its good faith judgment that
the filing of the Shelf Registration Statement under Section 2(a) 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 the
Shelf Registration Statement or to require to sell or distribute any Registrable
Securities pursuant to the Shelf Registration Statement or to require the
Company to take action with respect to the registration or sale of any
Registrable Securities pursuant to the Shelf Registration Statement (including
any action contemplated by Section 2 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 4 is no longer necessary, but,
in any event, no such period shall extend for longer than 45 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 (i) an employee stock
option, stock purchase or compensation plan or of securities issued or issuable
pursuant to any plan or (ii) 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) 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.
SECTION 5. REGISTRATION EXPENSES. Any and all expenses incident to the
Company's performance of or compliance with this Agreement, including without
limitation, all Commission and securities exchange, Nasdaq or NASD registration,
listing and filing fees, all fees and expenses incurred in connection with
compliance with state securities or "blue sky" laws (including reasonable fees
and disbursements of counsel for any underwriters or Holder in connection with
the state securities or "blue sky" qualifications of the Registrable
Securities),
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printing expenses, messenger and delivery expenses, internal expenses
(including, without limitation, all salaries and expenses of the Company's
officers and employees performing legal or accounting duties), all expenses for
word processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting agreements
and other documents relating to the performance of and compliance with this
Agreement, the fees and expenses incurred in connection with the listing of the
Registrable Securities, the fees and disbursements of counsel for the Company
and of the independent certified public accountants of the Company (including
the expenses of any comfort letters or costs associated with the delivery by
independent certified public accountants of a comfort letter or comfort letter
requested pursuant to Section 4(l)), Securities Act liability insurance (if the
Company elects to obtain such insurance), the reasonable fees and expenses of
any special experts or other Persons retained by the Company in connection with
any registration, and the reasonable fees and disbursements up to a maximum of
$5,000 of the Holders' legal counsel (other than in connection with any
underwritten offering) (all such expenses being herein called "REGISTRATION
EXPENSES"), will be borne by the Company whether or not the Shelf Registration
Statement to which such expenses relate becomes effective. The Company shall not
be required to pay underwriters' discounts, commissions or expenses of stock
transfer taxes relating to the Registrable Securities.
SECTION 6. INDEMNIFICATION AND CONTRIBUTION.
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(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless, to the full extent permitted by law, each Holder,
its partners, officers, directors, trustees, stockholders, employees, agents and
investment advisers, and each Person who controls such Holder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
together with the partners, officers, directors, trustees, stockholders,
employees, agents and investment advisors of such controlling Person
(collectively, the "CONTROLLING PERSONS"), from and against all losses, claims,
damages, liabilities and expenses (including, without limitation, any legal or
other fees and expenses reasonably incurred by any Holder or any such
Controlling Person in connection with defending or investigating any action or
claim in respect thereof) (collectively, the "DAMAGES") to which such Holder,
its partners, officers, directors, trustees, stockholders, employees, agents and
investment advisers, and any such Controlling Person, may become subject under
the Securities Act or otherwise, insofar as such Damages (or proceedings in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of material fact contained in any Registration Statement (or any
amendment thereto) pursuant to which Registrable Securities were registered
under the Securities Act, including all documents incorporated therein by
reference, or are caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or are caused by any
omission or alleged omission to state therein a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the Company shall not be liable
for Damages to any Holder under this Section 6(a) to the extent that any such
Damages (i) arise out of or are based upon any such untrue statement or omission
which is based upon information relating to such Holder furnished in writing to
the Company by or on behalf of such Holder expressly for use in any such
Registration Statement (or any amendment thereto) or Prospectus (or amendment or
supplement thereto); or (ii) were caused by the fact that such Holder sold
Securities to a Person as to whom it shall be established that there was not
sent or given, or deemed sent or given pursuant to Rule 153 under the Securities
Act, at the time of or prior to the written confirmation of such sale, a copy of
the Prospectus as then amended or supplemented if, and only if, (a) the Company
has previously furnished copies of such amended or supplemented Prospectus to
such Holder or the Company has notified such Holder for the need for an amended
or supplemental Prospectus and (b) such Damages were caused by any untrue
statement or omission or alleged untrue statement or omission contained in the
Prospectus so delivered which was or was to be corrected in such amended or
supplemented Prospectus. In connection with an underwritten offering, the
Company will indemnify the underwriters thereof, their officers and directors
and each Person who controls such underwriters (within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of the Holders of
Registrable Securities except with respect to information provided by the
underwriter specifically for inclusion therein.
(b) INDEMNIFICATION BY THE HOLDERS. Each Holder agrees,
severally and not jointly, to indemnify and hold harmless the Company, its
directors and officers and each Person,
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if any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against all Damages to
the same extent as the foregoing indemnity from the Company to such Holder set
forth in Section 5(a), but only to the extent such Damages arise out of or are
based upon any untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) or Prospectus (or any amendment or
supplement thereto) or are caused by any omission to state therein a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, which untrue statement or omission
is based upon information relating to such Holder furnished in writing to the
Company by or on behalf of such Holder expressly for use in any such
Registration Statement (or any amendment thereto) or any such Prospectus (or any
amendment or supplement thereto); PROVIDED, HOWEVER, that such Holder shall not
be obligated to provide such indemnity to the extent that such Damages result
from the failure of the Company to amend or take action to correct or supplement
any such Registration Statement or Prospectus in a timely fashion on the basis
of corrected or supplemental information furnished in writing to the Company by
such Holder expressly for such purpose. In no event shall the liability of any
Holder of Registrable Securities hereunder be greater in amount than the amount
of the proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) INDEMNIFICATION PROCEDURES. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to either paragraph
(a) or (b) above, such Person (the "indemnified party") shall promptly notify
the Person against whom such indemnity may be sought (the "indemnifying party")
in writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceedings and shall pay the fees and disbursements of such
counsel relating to such proceeding. The failure of an indemnified party to
notify the indemnifying party with respect to a particular proceeding shall not
relieve the indemnifying party from any obligation or liability (i) which it may
have pursuant to this Agreement if the indemnifying party is not substantially
prejudiced by such failure to so notify it or (ii) which it may have otherwise
than pursuant to this Agreement. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, or (ii) the indemnifying party fails within a
reasonable time to assume the defense of such proceeding or fails to employ
counsel reasonably satisfactory to such indemnified party, or (iii) (A) the
named parties to any such proceeding (including any impleaded parties) include
both such indemnified party or an Affiliate of such indemnified party and any
indemnifying party or an Affiliate of such indemnifying party, (B) there may be
one or more defenses available to such indemnified party or any Affiliate of
such indemnified party that are different from or additional to those available
to any indemnifying party or any Affiliate of any indemnifying party and (C)
such indemnified party shall have been advised by such counsel that there may
exist a conflict of interest between or among such indemnified party or any
Affiliate of such indemnified party and such indemnifying party or any Affiliate
of such
12
indemnifying party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel of its
choice at the reasonable expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense thereof and such counsel
shall be at the expense of the indemnifying party, it being understood, however,
that unless there exists a conflict among indemnified parties, the indemnifying
parties shall not, in connection with any one such proceeding or separate but
substantially similar or related proceedings in the same jurisdiction, arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such indemnified
parties. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but, if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify each indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of each indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which such
indemnified party is a party, and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on all claims that are the subject
matter of such proceeding with no payment by such indemnified party of
consideration in connection with such settlement.
(d) CONTRIBUTION. If the indemnification from the indemnifying
party provided for in this Section 6 is found, pursuant to a final judicial
determination not subject to appeal, to be unavailable to an indemnified party
hereunder or insufficient in respect of any Damages incurred by such indemnified
party, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the Damages paid or payable by such indemnified party
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified parties in connection with the actions or
omissions that resulted in such Damages, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
parties shall be determined by reference to, among other things, whether any
action or omission in question, including any untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact,
has been made by, or relates to information supplied by, such indemnifying party
or indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the Damages referred to above shall be
deemed to include, subject to the limitations set forth in Section 6(c), any
legal or other expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6(d), no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public
13
(less any underwriting discounts or commissions) exceeds the amount of any
damages which such underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and no
selling Holder shall be required to contribute any amount in excess of the
amount by which the total net proceeds received by such selling Holder with
respect to Registrable Securities sold by such selling Holder exceeds the amount
of any damages which such selling Holder has otherwise been required to pay by
reason of such untrue statement or alleged untrue statement or omission or
alleged omission. Each Holder's obligation to contribute pursuant to this
Section 6(d) is several and not joint and shall be determined by reference to
the proportion that the proceeds of the offering received by such Holder bears
to the total proceeds of the offering received by all the Holders. 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. The remedies provided for in
this Section 6 are not exclusive and shall not limit any rights or remedies that
may otherwise be available to any indemnified party at law or in equity.
Notwithstanding the foregoing, if indemnification is available under
paragraph (a) or (b) of this Section 6, the indemnifying parties shall indemnify
each indemnified party to the full extent provided in such paragraphs without
regard to the relative fault of said indemnifying party or indemnified party or
any other equitable consideration provided for in this Section 6(d).
SECTION 7. RULE 144. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange
Act, and the rules and regulations adopted by the Commission thereunder (or, if
the Company is not required to file such reports, it will, upon the request of
any Holder, make publicly available other information so long as necessary to
permit sales of the Registrable Securities under Rule 144 under the Securities
Act), and it will take such further action as any Holder may request, all to the
extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any successor rule or similar
provision or regulation hereafter adopted by the Commission. Upon the request of
any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
SECTION 8. RULE 144A. The Company covenants that it will file all
reports required to be filed by it under the Securities Act and the Exchange
Act, and the rules and regulations adopted by the Commission thereunder (or if
the Company is not required to file such reports, it will, upon the request of
any Holder, make available other information so long as necessary to permit
sales of the Registrable Securities pursuant to Rule 144A under the Securities
Act), and it will take such further action as any Holder may request, all to the
extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144A, as such rule may be amended from
time to time, or (b) any successor rule or similar provision or regulation
hereafter adopted by the Commission.
14
SECTION 9. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company has not entered
into nor will the Company on or after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's other issued and outstanding securities under any such agreements.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in interest of the outstanding Registrable Securities
affected by such amendment, modification, supplement, waiver or consent;
PROVIDED, HOWEVER, that, no amendment, modification, supplement, waiver or
consent to any departure from the provisions of Section 4 hereof (other than any
immaterial amendment, modification, supplement, waiver or consent) shall be
effective as against any Holder of Registrable Securities unless consented to in
writing by such Holder.
(c) NOTICES. Except as otherwise provided in this Agreement,
notices and other communications under this Agreement shall be in writing and
shall be sent by facsimile, delivered or mailed by registered or certified mail,
return receipt requested, or by a nationally recognized overnight courier,
postage prepaid, addressed, (a) if to the Holder, at the facsimile number or
address set forth on the signature page hereto or such other facsimile number or
address as the Holder shall have furnished to the Company in writing, or (b) if
to the Company, at its facsimile number or address set forth on the signature
page hereto, or at such other address the Company shall have furnished to the
Holder and each such other holder in writing. This Agreement and all documents
entered into on the date hereof in conjunction with the transactions
contemplated by the Securities Purchase Agreement and any such other documents
delivered in connection herewith or therewith embody the entire agreement and
understanding between the Holder and the Company and supersedes all prior
agreements and understandings relating to the subject matter hereof.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; by confirmed
receipt of transmission, if telecopied; and on the next Business Day if timely
delivered to a courier guaranteeing overnight delivery.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon 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 transferee of any Holder shall
acquire Registrable Securities in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the terms
of this Agreement, and by taking and holding such Registrable Securities such
person shall be conclusively deemed
15
to have agreed to be bound by and to perform all of the terms and provisions of
this Agreement and such person shall be entitled to receive the benefits hereof.
(e) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland without regard to
principles or rules of conflicts of law.
(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Holders shall be enforceable to the fullest extent permitted by law.
(i) ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and is intended to be the
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(j) FURTHER ASSURANCES. Each party shall cooperate and take
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
(k) REMEDIES. In the event of a breach or a threatened breach
by any party to this Agreement of its obligations under this Agreement, any
party injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that remedies at law
for violations hereof, including monetary damages, are inadequate and that the
right to object in any action for specific performance or injunctive relief
hereunder on the basis that a remedy at law would be adequate is waived.
[Remainder of Page Intentionally Left Blank]
16
DOCSC\693711.4
17
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
AMERICAN REAL ESTATE INVESTMENT
CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX
-----------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice-President
Notice Information:
000 Xxxx Xxxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxxx Xxxxxxx, XX 00000
Telecopier 000-000-0000
with a copy to:
Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxx, Xx.
Xxxxxx X. Xxxxxxxxx
Telecopier: (000) 000-0000
AEW TARGETED SECURITIES FUND, L.P.
By: AEW TSF, L.L.C., its General Partner
By: AEW TSF, INC., its Managing-Member
By: /s/ XXXXXX X. XXXXXXX
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
18
Notice Information:
c/o AEW Capital Management, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
J. Xxxxx Xxxxxxx, Esq.
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attn: Xxxxx Xxxxxx Xxxxxx, P.C.
Telecopier: (000) 000-0000
19
