Unassociated Document


    Exhibit
      10.41

     

    SECURITIES
      PURCHASE AGREEMENT

     

    SECURITIES
      PURCHASE AGREEMENT
      (the
      "Agreement"),
      dated
      as of April 4, 2007, by and among American Real Estate Partners, L.P., a
      Delaware limited partnership with headquarters located at 767 Fifth Avenue,
      Suite 4700, New York, New York 10153 (the "Company"),
      and
      the investors listed on the Schedule of Buyers attached hereto, as such Schedule
      of Buyers may be amended to add additional investors upon executing any Joinder
      Agreements (as defined herein) pursuant to Section 1(b) hereof (individually,
      a
      "Buyer"
      and
      collectively, the "Buyers").

     

    WHEREAS:

     

    A.    The
      Company and each Buyer is executing and delivering this Agreement in reliance
      upon the exemption from securities registration afforded by Rule 144A and
      Section 4(2) of the Securities Act of 1933, as amended (the "1933
      Act"),
      and
      Rule 506 of Regulation D ("Regulation D")
      as
      promulgated by the United States Securities and Exchange Commission (the
      "SEC")
      under
      the 1933 Act.

     

    B.    The
      Company has authorized the issuance of up to $600,000,000 of Senior Convertible
      Notes due 2013 (the "Notes"),
      which
      shall be issued pursuant to and by the provisions of an Indenture dated as
      of
      the Initial Closing Date (as defined below) between the Company and Wilmington
      Trust Company, as trustee (the "Trustee"),
      in
      substantially the form attached hereto as Exhibit
      A
      (the
      "Indenture").
      The
      Notes will be in the form attached to the Indenture as Exhibit A attached
      thereto and shall be convertible into the depositary units representing limited
      partnership units of the Company (the "Units"
      and as
      issued upon conversion of the Notes, the "Conversion
      Units")
      in
      accordance with the terms thereof and of the Indenture.

     

    C.    Each
      Buyer listed as an Initial Buyer on the Schedule of Buyers attached hereto
      (individually, an "Initial
      Buyer"
      and
      collectively, the "Initial
      Buyers")
      wishes
      to purchase, and the Company wishes to sell, upon the terms and conditions
      stated in this Agreement, at the Initial Closing (as defined below) $100,000,000
      principal amount of Notes (which aggregate amount for both Initial Buyers shall
      be $200,000,000 in the aggregate) (collectively, the "Initial Notes").

     

    D.    Subject
      to the terms and conditions set forth in this Agreement, each Initial Buyer
      shall have the right, from the Initial Closing Date until 5:00 p.m. New York
      City time on April 13, 2007 (the "First
      Option Period"),
      to
      purchase, and require the Company to sell, up to $200,000,000 principal amount
      of Notes (which aggregate amount for both Initial Buyers shall not exceed
      $400,000,000) (collectively, the "Additional
      Notes").
      

     

    E.    Subject
      to the terms and conditions set forth in this Agreement, to the extent an
      Initial Buyer’s portion of the First Option was not exercised in full by such
      Initial Buyer, each Initial Buyer shall have the right from and after the
      expiration of the First Option Period until 5:00 p.m. New York City time on
      April 25, 2007 (the "Second
      Option Period"),
      to
      purchase, and require the Company to sell, up to a principal amount of
      Additional Notes equal to the lesser of (i) $50,000,000 and (ii) the difference
      calculated by subtracting (A) the aggregate principal amount of Additional
      Notes
      purchased by such Initial Buyer at the First Additional Closing from
      (B)

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      



    $200,000,000
      (which aggregate amount, for both Initial Buyers, when combined with the
      principal amount of Additional Notes purchased by both Initial Buyers at the
      First Additional Closing shall not exceed $400,000,000). 

     

    F.    Subject
      to the terms and conditions set forth in this Agreement, after the expiration
      of
      the First Additional Closing Date until 5:00 p.m. New York City time on May
      5,
      2007 (the "Third
      Option Period"),
      the
      Company shall have the right to permit one or more additional parties (each
      of
      which shall become a party to this Agreement as a Buyer by executing a Joinder
      Agreement) to purchase, and require the Company to sell any Additional Notes
      not
      previously purchased hereunder by the Initial Buyers, up to a maximum aggregate
      principal amount of Additional Notes equal to $400,000,000, provided,
      that,
      until the expiration of the Second Option Period, the Company may not sell
      any
      Additional Notes for which the Initial Buyers have an option to purchase
      pursuant to the Second Option.

     

    G.    Contemporaneously
      with the execution and delivery of this Agreement, the parties hereto are
      executing and delivering a Registration Rights Agreement, substantially in
      the
      form attached hereto as Exhibit
      B
      (as
      amended or modified from time to time, the "Registration
      Rights Agreement"),
      pursuant to which the Company has agreed to provide certain registration rights
      with respect to the Conversion Units under the 1933 Act and the rules and
      regulations promulgated thereunder, and applicable state securities
      laws.

     

    H.    The
      Notes
      and the Conversion Units collectively are referred to herein as the
      "Securities".

     

    NOW,
      THEREFORE,
      the
      Company and each Buyer hereby agree as follows:

     

    1.    PURCHASE
      AND SALE OF NOTES.

     

    (a)    Purchase
      of Initial Notes. Subject to the satisfaction (or waiver) of the conditions
      set
      forth in Sections 5(a) and 6(a) below, the Company shall issue and sell to
      each
      Initial Buyer, and each Initial Buyer severally, but not jointly, agrees to
      purchase from the Company on the Initial Closing Date (as defined below)
      $100,000,000 principal amount of Notes (the "Initial
      Closing").

     

    (b)    Purchase
      of Additional Notes. 

     

    (i)    Subject
      to the satisfaction (or waiver) of the conditions set forth in Sections 5(b)
      and
      6(b) below, the Company agrees to sell to each Initial Buyer, and each Initial
      Buyer shall have the right to purchase (the "First
      Option")
      on the
      First Additional Closing Date (as defined below), up to an aggregate of
      $200,000,000 principal amount of Additional Notes (the "First
      Additional Closing").
      To
      exercise the First Option, an Initial Buyer must so notify the Company in
      writing (the "First
      Option Exercise Notice"),
      prior
      to 5:00 p.m. New York City time on April 13, 2007, which First Option Exercise
      Notice shall specify the principal amount of Additional Notes such Initial
      Buyer
      elects to purchase pursuant to the First Option.

     

    (ii)    Subject
      to the satisfaction (or waiver) of the conditions set forth in Sections 5(b)
      and
      6(b) below, the Company agrees to sell to each Initial Buyer, and each Initial
      Buyer shall have the right to purchase (the "Second
      Option")
      on the
      Second

    
      
        
        

      

      
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    Additional
      Closing Date (as defined below), up to a principal amount of Additional Notes
      equal to the lesser of (i) $50,000,000 and (ii) the difference calculated
      by subtracting (A) the aggregate principal amount of Additional Notes purchased
      by such Initial Buyer at the First Additional Closing from (B) $200,000,000
      (the
      "Second
      Additional Closing").
      To
      exercise the Second Option, an Initial Buyer must so notify the Company in
      writing (the "Second
      Option Exercise Notice")
      on or
      before the expiration of the Second Option Period, which Second Option Exercise
      Notice shall specify the principal amount of Additional Notes such Initial
      Buyer
      elects to purchase pursuant to the Second Option.

     

    (iii)    From
      and
      after the expiration of the First Option Period, until the expiration of the
      Third Option Period, to the extent that the Initial Buyers have not elected
      to
      purchase the entire $400,000,000 aggregate principal amount of Additional Notes
      pursuant to the First Option and the Second Option, the Company, directly or
      through a placement agent, shall be entitled to place (the "Third
      Additional Closing,"
      and
      when referred to with the First Additional Closing and the Second Additional
      Closing, each an "Additional
      Closing"
      and
      together, the "Additional
      Closings")
      with
      other investors (such investors, "Other
      Buyers"),
      such
      amount of the Additional Notes not previously purchased by the Initial Buyers
      on
      the same terms and conditions as the Initial Buyers received at the Initial
      Closing, the First Additional Closing and the Second Additional Closing;
provided,
      that
      until the expiration of the Second Option Period, the Company may not sell
      any
      Additional Notes for which the Initial Buyers have an option to purchase
      pursuant to the Second Option. Subject to the satisfaction (or waiver) of the
      conditions set forth in Sections 5(b) and 6(b) below, the Company agrees to
      sell
      to each Other Buyer, and each Other Buyer shall purchase, such amount of
      Additional Notes as such Other Buyer has elected to purchase. At or prior to
      the
      end of the Third Option Period, each Other Buyer shall execute and deliver
      to
      the Company a joinder agreement in the form attached hereto as Exhibit
      C
      indicating the principal amount of Additional Notes to be purchased by such
      Other Buyer, which the Company shall acknowledge and agree to in writing (each,
      a "Joinder
      Agreement").
      

     

    (iv)    Upon
      the
      execution and delivery of a Joinder Agreement by an Other Buyer and the Company,
      (A) the Company shall become obligated to sell to such Other Buyer, and such
      Other Buyer shall become obligated to purchase from the Company, such principal
      amount of Additional Notes specified in the Joinder Agreement on the Third
      Additional Closing Date and (ii) each such Other Buyer shall be deemed to be
      a
      "Buyer" hereunder, entitled to all rights, and subject to all obligations,
      of a
      Buyer. Upon consummation of each Additional Closing, the parties agree that
      the
      Schedule of Buyers shall be amended to reflect additional Buyers and/or the
      Additional Notes purchased at each such Additional Closing. Each Other Buyer
      and
      each Initial Buyer that delivers an Option Exercise Notice is referred to herein
      as an "Additional
      Buyer"
      and,
      collectively, the "Additional
      Buyers."
      As
      used herein "Business
      Day"
      means
      any day other than a Saturday, Sunday or other day on which commercial banks
      in
      The City of New York are authorized or required by law to remain
      closed.

     

    (c)    Closing.
      The Initial Closing and the Additional Closing are each referred to in this
      Agreement as a "Closing."
      Each
      Closing shall occur on the applicable Closing Date (as defined

      
        
          
          

        

        
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    below)
      at
      the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New
      York 10022. Subject to the satisfaction (or waiver by the Initial Buyers and
      the
      Company, as applicable) of the conditions set forth in Sections 5(a) and 6(a)
      below, the date and time of the Initial Closing (the "Initial Closing
      Date")
      shall
      be 10:00 a.m., New York City time, on April 5, 2007 (or such other date as
      is
      mutually agreed to by the Company and each Buyer). Subject to the satisfaction
      (or waiver by the applicable Buyers and the Company, as applicable) of the
      conditions to the First Additional Closing set forth in Section 5(b) and 6(b),
      the date and time of the First Additional Closing (the "First
      Additional Closing Date")
      shall
      be 10:00 a.m., New York City time, on April 16, 2007 (or such other date(s)
      as
      is mutually agreed to by the Company and the applicable Buyers). Subject to
      the
      satisfaction (or waiver by the applicable Buyers and the Company, as applicable)
      of the conditions to the Second Additional Closing set forth in Section 5(b)
      and
      6(b), the date and time of the Second Additional Closing (the "Second
      Additional Closing Date"),
      shall
      be 10:00 a.m., New York City time, on April 26, 2007 (or such other date(s)
      as
      is mutually agreed to by the Company and the applicable Buyers). Subject to
      the
      satisfaction (or waiver by the applicable Buyers and the Company, as applicable)
      of the conditions to the Third Additional Closing set forth in Section 5(b)
      and
      6(b), the date and time of the Third Additional Closing (the "Third
      Additional Closing Date,"
      and
      when referred to with the First Additional Closing Date and the Second
      Additional Closing Date, each, an "Additional
      Closing Date"
      and
      together, the "Additional
      Closing Dates")
      shall
      be 10:00 am New York City time, on May 7, 2007 (or such other date(s) as is
      mutually agreed to by the Company and the applicable Buyers). 

     

    (d)    Purchase
      Price. The purchase price for the Initial Notes to be purchased by each Initial
      Buyer at the Initial Closing (the "Initial
      Notes Purchase
      Price")
      shall
      be $100,000,000. If purchased by an Additional Buyer at an Additional Closing,
      Additional Notes shall be sold at a purchase price of $1.00 for each $1.00
      of
      principal amount of Additional Notes to be purchased by such Additional Buyer
      at
      such Additional Closing Date, plus, in each case, accrued interest on such
      Additional Notes from the preceding interest payment date, or if no interest
      has
      been paid on the Additional Notes, from the Initial Closing Date. 

     

    (e)    Form
      of
      Payment. On each Closing Date, (i) each Buyer shall pay its applicable purchase
      price contemplated pursuant to Section 1(d) above to the Company for the Notes
      to be issued and sold to such Buyer at such Closing, by wire transfer of
      immediately available funds in accordance with the Company's written wire
      instructions, and (ii) the Company shall deliver or caused to be delivered
      to each Buyer the Notes (for the account of such Buyer as such Buyer shall
      instruct) which such Buyer is then purchasing, duly executed on behalf of the
      Company and registered in the name of such Buyer or its designee.

     

    2.    BUYER'S
      REPRESENTATIONS AND WARRANTIES.

     

    Each
      Buyer, severally and not jointly, represents and warrants, as of the date hereof
      and as of the Initial Closing Date with respect to each Initial Buyer, and
      as of
      the date of each Additional Closing Date with respect to each Additional Buyer
      purchasing Additional Notes on such Additional Closing Date, that: 

     

    (a)    No
      Public
      Sale or Distribution. Such Buyer is (i) acquiring the Notes and (ii) upon
      conversion of the Notes, will acquire the Conversion Units issuable upon
      conversion of the Notes, in each case, for its own account and not with a view
      towards, or for resale in connection with, the public sale or distribution
      thereof, except pursuant to sales registered or exempted under the 1933
      Act;


    
      
        
          
          

        

        
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    provided,
      however, that by making the representations herein, such Buyer does not agree
      to
      hold any of the Securities for any minimum or other specific term and reserves
      the right to dispose of the Securities at any time in accordance with or
      pursuant to a registration statement or an exemption under the 1933 Act. Such
      Buyer acknowledges that it is not purchasing the Notes as a result of any
      advertisements, articles, notices or other communications published in any
      newspaper, magazine or similar media or broadcast over radio or television,
      or
      any seminar or meeting whose attendees have been invited by general solicitation
      or general advertising. Such Buyer further acknowledges, to its knowledge,
      that
      it is not purchasing the Notes as a result of any general solicitation or
      general advertising, as such terms are used in Regulation D under the 1933
      Act.
      Such Buyer is acquiring the Securities hereunder in the ordinary course of
      its
      business. Such Buyer does not presently have any agreement or understanding,
      directly or indirectly, with any Person to distribute any of the Securities.
      As
      used in this Agreement, "Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization and a government or any
      department or agency thereof.

     

    (b)    Accredited
      Investor Status. Such Buyer is an "accredited investor" as that term is defined
      in Rule 501(a) of Regulation D and a "qualified institutional buyer" within
      the
      meaning of Rule 144A under the 1933 Act.

     

    (c)    Reliance
      on Exemptions. Such Buyer understands that the Securities are being offered
      and
      sold to it in reliance on specific exemptions from the registration requirements
      of United States federal and state securities laws and that the Company is
      relying in part upon the truth and accuracy of, and such Buyer's compliance
      with, the representations, warranties, agreements, acknowledgments and
      understandings of such Buyer set forth herein in order to determine the
      availability of such exemptions and the eligibility of such Buyer to acquire
      the
      Securities.

     

    (d)    Information.
      Such Buyer and its advisors, if any, have been furnished with all materials
      relating to the business, finances and operations of the Company and materials
      relating to the offer and sale of the Securities which have been requested
      by
      such Buyer. Such Buyer and its advisors, if any, have been afforded the
      opportunity to ask questions of the Company. Neither such inquiries nor any
      other due diligence investigations conducted by such Buyer or its advisors,
      if
      any, or its representatives shall modify, amend or affect such Buyer's right
      to
      rely on the Company's representations and warranties contained herein. Such
      Buyer understands that its investment in the Securities involves a high degree
      of risk. Such Buyer has sought such accounting, legal and tax advice as it
      has
      considered necessary to make an informed investment decision with respect to
      its
      acquisition of the Securities.

     

    (e)    No
      Governmental Review. Such Buyer understands that no United States federal or
      state agency or any other government or governmental agency has passed on or
      made any recommendation or endorsement of the Securities or the fairness or
      suitability of the investment in the Securities nor have such authorities passed
      upon or endorsed the merits of the offering of the Securities.

     

    (f)    Validity;
      Enforcement. This Agreement and the Registration Rights Agreement have been
      duly
      and validly authorized, executed and delivered on behalf of such Buyer and
      shall
      constitute the legal, valid and binding obligations of such Buyer enforceable
      against such Buyer in accordance with their respective terms, except as such
      enforceability may be limited by general principles of equity or to applicable
      bankruptcy, insolvency, reorganization, moratorium, liquidation and

      
        
          
          

        

        
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other
      similar laws relating to, or affecting generally, the enforcement of applicable
      creditors' rights and remedies.

     

    (g)    No
      Conflicts. The execution, delivery and performance by such Buyer of this
      Agreement and the Registration Rights Agreement and the consummation by such
      Buyer of the transactions contemplated hereby and thereby will not (i) result
      in
      a violation of the organizational documents of such Buyer or (ii) conflict
      with,
      or constitute a default (or an event which with notice or lapse of time or
      both
      would become a default) under, or give to others any rights of termination,
      amendment, acceleration or cancellation of, any agreement, indenture or
      instrument to which such Buyer is a party, or (iii) result in a violation of
      any
      law, rule, regulation, order, judgment or decree (including federal and state
      securities laws) applicable to such Buyer, except in the case of clauses (ii)
      and (iii) above, for such conflicts, defaults, rights or violations which would
      not, individually or in the aggregate, reasonably be expected to have a material
      adverse effect on the enforceability of this Agreement or the Registration
      Rights Agreement or ability of such Buyer to perform its obligations hereunder
      or thereunder.

     

    (h)    Residency.
      Such Buyer is a resident of that jurisdiction specified below its address on
      the
      Schedule of Buyers.

     

    (i)    No
      Short
      Positions. No Initial Buyer purchasing Initial Notes, and no Additional Buyer
      purchasing Additional Notes, has any direct or indirect short position in the
      Units or any type of direct or indirect forward contracts, options, puts, swaps,
      "put equivalent positions" (as such term is defined in Rule 16a-1(h) of the
      1934
      Act) or similar arrangements with respect to the Units.

     

    (j)    Manipulation
      of Price. No Initial Buyer purchasing Initial Notes, and no Additional Buyer
      purchasing Additional Notes, has, and to its knowledge no one acting on its
      behalf has, taken, directly or indirectly, any action designed to cause or
      to
      result in the stabilization or manipulation of the price of any security of
      the
      Company in connection with the purchase or any resale of any of the Securities
      by such Buyer.

     

    3.    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    The
      Company represents and warrants to each of the Initial Buyers, as of the date
      hereof and as of the Initial Closing Date, and to each Additional Buyer as
      of
      the date of each Additional Closing Date on which such Additional Buyer is
      purchasing Additional Notes, that:

     

    (a)    Organization
      and Qualification. The Company is duly organized and validly existing and in
      good standing under the laws of the State of Delaware, and has the requisite
      power and authorization to own its properties and to carry on its business
      as
      now being conducted. The Company is duly qualified as a foreign entity to do
      business and is in good standing in every jurisdiction in which its ownership
      of
      property or the nature of the business conducted by it makes such qualification
      necessary, except to the extent that the failure to be so qualified or be in
      good standing would not reasonably be expected to have a Material Adverse
      Effect. As used in this Agreement, "Material
      Adverse Effect"
      means
      any material adverse effect on the business, properties, assets, operations,
      results of operations or condition (financial or otherwise) of the Company
      and
      its subsidiaries, taken as a whole, or on the transactions contemplated hereby
      or in the other Transaction Documents (as defined

      
        
          
          

        

        
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    below)
      or
      by the agreements and instruments to be entered into in connection herewith
      or
      therewith, or on the authority or ability of the Company to perform its
      obligations under the Transaction Documents.

     

    (b)    Authorization;
      Enforcement; Validity. The Company has the requisite power and authority to
      enter into and perform its obligations under this Agreement, the Indenture,
      the
      Notes and the Registration Rights Agreement (collectively, the "Transaction
      Documents")
      and to
      issue the Securities in accordance with the terms hereof and thereof. The
      execution and delivery of the Transaction Documents by the Company and the
      consummation by the Company of the transactions contemplated hereby and thereby,
      including, without limitation, the issuance of the Notes and the reservation
      for
      issuance and the issuance of the Conversion Units issuable
      upon conversion of the Notes have been duly authorized by its general partner
      and (other than the filing with the SEC of one or more Registration Statements
      in accordance with the requirements of the Registration Rights Agreement) no
      further authorization is required by the Company, its general partner or its
      equityholders. This Agreement and the other Transaction Documents of even date
      herewith have been duly executed and delivered by the Company, and constitute
      the legal, valid and binding obligations of the Company, enforceable against
      the
      Company in accordance with their respective terms, except as such enforceability
      may be limited by general principles of equity or applicable bankruptcy,
      insolvency, reorganization, moratorium, liquidation or similar laws relating
      to,
      or affecting generally, the enforcement of applicable creditors' rights and
      remedies. 

     

    (c)    Issuance
      of Securities. As of each Closing, a number of Units shall have been duly
      authorized and reserved for issuance, free of pre-emptive rights, sufficient
      for the purpose of enabling the
      Company
      to satisfy all obligations to issue the Conversion Units upon
      conversion of all of the Notes. Upon conversion in accordance with the
      Indenture, the Conversion Units will be validly issued and free from all
      preemptive or similar rights, taxes, liens and charges with respect to the
      issue
      thereof, with the holders being entitled to all rights accorded to a holder
      of
      Units. Assuming the accuracy of the representations of the Buyers contained
      in
      Section 2 hereof and their compliance with the agreements set forth therein,
      the
      issuance by the Company of the Notes pursuant to this Agreement, and the
      issuance by the Company of the Conversion Units upon conversion of the Notes
      in
      accordance with the terms of the Notes and the Indenture, are exempt from
      registration under the 1933 Act.

     

    (d)    No
      Conflicts. The execution, delivery and performance of the Transaction Documents
      by the Company and the consummation by the Company of the transactions
      contemplated hereby and thereby (including, without limitation, the issuance
      of
      the Notes and reservation for issuance and issuance of the Conversion Units)
      will not (i) result in a violation of the Certificate of Limited Partnership
      or
      the Company's Limited Partnership Agreement (each as defined in Section 3(x))
      or
      any equity securities of the Company or (ii) conflict with, or constitute a
      default (or an event which with notice or lapse of time or both would become
      a
      default) under, or give to others any rights of termination, amendment,
      acceleration or cancellation of, any agreement, indenture or instrument to
      which
      the Company or any of its Subsidiaries is a party, or (iii) result in a
      violation of any law, rule, regulation, order, judgment or decree (including
      federal and state securities laws and regulations and the rules and regulations
      of the New York Stock Exchange (the "Principal
      Market"))
      applicable to the Company or by which any property or asset of the Company
      is
      bound or affected, except, in the case of clauses (ii) and (iii), as would
      not
      reasonably be expected to have a Material Adverse Effect.

      
        
          
          

        

        
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    (e)    Consents.
      The Company is not required to obtain any consent, authorization or order of,
      or
      make any filing or registration with, any court, governmental agency or any
      regulatory or self-regulatory agency or any other Person in order for it to
      execute, deliver or perform any of its obligations under or contemplated by
      the
      Transaction Documents, in each case in accordance with the terms hereof or
      thereof, except for any such consent, authorization, order, filing or
      registration the failure to obtain or make would not reasonably be expected
      to
      have a Material Adverse Effect. All consents, authorizations, orders, filings
      and registrations which the Company is required to obtain pursuant to the
      preceding sentence have been obtained or effected on or prior to each Closing
      Date, and the Company and its Subsidiaries are unaware of any facts or
      circumstances which might prevent the Company from obtaining or effecting any
      of
      the registration, application or filings pursuant to the preceding
      sentence.

     

    (f)    Acknowledgment
      Regarding Buyer's Purchase of Securities. The Company acknowledges that no
      Buyer
      is acting as a financial advisor or fiduciary of the Company or any of its
      subsidiaries (or in any similar capacity) with respect to the Transaction
      Documents and the transactions contemplated hereby and thereby, and any advice
      given by a Buyer or any of its representatives or agents in connection with
      the
      Transaction Documents and the transactions contemplated hereby and thereby
      is
      merely incidental to such Buyer's purchase of the Securities. The Company
      further represents to each Buyer that the Company's decision to enter into
      the
      Transaction Documents has been based solely on the independent evaluation by
      the
      Company and its representatives.

     

    (g)    No
      General Solicitation. Neither the Company nor any Person acting on its behalf,
      has engaged in any form of general solicitation or general advertising (within
      the meaning of Regulation D) in connection with the offer or sale of the
      Securities. 

     

    (h)    No
      Integrated Offering. Neither the Company nor any Person acting on its behalf
      has, directly or indirectly, made any offers or sales of any security or
      solicited any offers to buy any security, under circumstances that would require
      registration of any of the Securities under the 1933 Act or cause this offering
      of the Securities to be integrated with prior offerings by the Company for
      purposes of the 1933 Act or any applicable equityholder approval provisions,
      including, without limitation, under the rules and regulations of any exchange
      or automated quotation system on which any of the securities of the Company
      are
      listed or designated.

     

    (i)    Form
      S-3
      Eligibility. The Company is eligible to register the Conversion Units for resale
      by the Buyers using Form S-3 promulgated under the 1933 Act.

     

    (j)    Rule
      144A. The Notes satisfy the requirements set forth in Rule l44A(d)(3) under
      the
      1933 Act.

     

    (k)    Trust
      Indenture Act. Assuming the accuracy of the representations of the Buyers
      contained in Section 2 hereof and their compliance with the agreements set
      forth
      therein, it is not necessary in connection with the offer, sale and delivery
      of
      the Securities in the manner contemplated by this Agreement to qualify the
      Indenture under the Trust Indenture Act of 1939, as amended (the "TIA").

     

    (l)    Dilutive
      Effect. The Company understands and acknowledges that the number of Conversion
      Units issuable upon conversion of the Notes will increase in certain
      circumstances. The Company further acknowledges that its obligation to issue
      Conversion Units upon


    
      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

    

     

    conversion
      of the Notes in accordance with this Agreement, the Indenture and the Notes,
      absolute and unconditional regardless of the dilutive effect that such issuance
      may have on the ownership interests of other equityholders of the
      Company.

     

    (m)    Application
      of Takeover Protections; Poison Pill. The Company and its general partner have
      taken all necessary action, if any, in order to render inapplicable any control
      share acquisition, business combination, poison pill (including any distribution
      under a rights agreement) or other similar anti-takeover provision under the
      Certificate of Limited Partnership, the Company's Limited Partnership Agreement
      or the laws of the State of Delaware which is or could become applicable to
      any
      Buyer as a result of the transactions contemplated by this Agreement, including,
      without limitation, the Company's issuance of the Securities and any Buyer's
      ownership of the Securities. The Company has not adopted a poison pill or
      similar arrangement relating to accumulations of beneficial ownership of Units
      or a change in control of the Company.

     

    (n)    SEC
      Documents; Financial Statements. During the two (2) years up to and including
      the date hereof, the Company has timely filed all reports, schedules, forms,
      statements and other documents required to be filed by it with the SEC pursuant
      to the reporting requirements of the 1934 Act (all of the foregoing filed during
      the 12 months prior to the applicable Closing Date, including all documents
      incorporated by reference therein being hereinafter referred to as the
      "SEC
      Documents").
      As of
      their respective dates, the SEC Documents complied in all material respects
      with
      the requirements of the 1934 Act and the rules and regulations of the SEC
      promulgated thereunder applicable to the SEC Documents, and none of the SEC
      Documents, at the time they were filed with the SEC, contained any untrue
      statement of a material fact or omitted to state a material fact required to
      be
      stated therein or necessary in order to make the statements therein, in the
      light of the circumstances under which they were made, not misleading. As of
      their respective dates, the financial statements of the Company included in
      the
      SEC Documents complied as to form in all material respects with applicable
      accounting requirements and the published rules and regulations of the SEC
      with
      respect thereto. Such financial statements have been prepared in accordance
      with
      generally accepted accounting principles, consistently applied, during the
      periods involved (except (i) as may be otherwise indicated in such financial
      statements or the notes thereto, or (ii) in the case of unaudited interim
      statements, to the extent they may exclude footnotes or may be condensed or
      summary statements) and fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments).

     

    (o)    Absence
      of Certain Changes. Except as disclosed in the SEC Documents or in Schedule
      3(o), since December 31, 2006, there has been no material adverse change and
      no
      material adverse development in the business, assets, properties, operations,
      condition (financial or otherwise) or results of operations of the Company
      or
      its subsidiaries, taken as a whole. The Company has not has taken any steps
      to
      seek protection pursuant to any bankruptcy law nor does the Company have any
      knowledge or reason to believe that its creditors intend to initiate involuntary
      bankruptcy proceedings or any actual knowledge of any fact which would
      reasonably lead a creditor to do so. The Company and its subsidiaries, on a
      consolidated basis, are not as of the date hereof, and after giving effect
      to
      the transactions contemplated hereby to occur at each Closing, will not be
      Insolvent (as defined below). For purposes of this Section 3(o), "Insolvent"
      means,
      with respect to any Person (i) the present fair saleable value of the such
      Person's assets is less than the amount required to pay such Person's total
      Indebtedness (as defined in Section 3(v)), (ii) such Person is unable to pay
      its
      debts and liabilities, subordinated,


    
      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

    

     

    contingent
      or otherwise, as such debts and liabilities become absolute and matured, (iii)
      such Person intends to incur or believes that it will incur debts that would
      be
      beyond its ability to pay as such debts mature or (iv) such Person has
      unreasonably small capital with which to conduct the business in which it is
      engaged as such business is now conducted and is proposed to be
      conducted.

     

    (p)    Conduct
      of Business; Regulatory Permits. The Company is not in violation of any term
      of
      or in default under its Certificate of Limited Partnership or Limited
      Partnership Agreement. The Company is not in violation of any judgment, decree
      or order or any statute, ordinance, rule or regulation applicable to the
      Company, except for possible violations which would not, individually or in
      the
      aggregate, reasonably be expected to have a Material Adverse Effect. Without
      limiting the generality of the foregoing, the Company is not in violation of
      any
      of the rules, regulations or requirements of the Principal Market except for
      violations which could not, individually or in the aggregate, reasonably be
      expected to have a Material Adverse Effect. Since December 31, 2004 (i) the
      Units has been designated for quotation on the Principal Market, (ii) trading
      in
      the Units has not been suspended by the SEC or the Principal Market and (iii)
      the Company has received no written communication from the SEC or the Principal
      Market regarding the suspension or delisting of the Units from the Principal
      Market.

     

    (q)    Foreign
      Corrupt Practices. Neither the Company, nor any director, officer, agent,
      employee or other Person acting on behalf of the Company, in the course of
      its
      actions for, or on behalf of, the Company, has (i) used any partnership funds
      for any unlawful contribution, gift, entertainment or other unlawful expenses
      relating to political activity; (ii) made any direct or indirect unlawful
      payment to any foreign or domestic government official or employee from
      partnership funds; (iii) violated or is in violation of any provision of the
      U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any
      unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
      payment to any foreign or domestic government official or employee.

     

    (r)    Money
      Laundering. The operations of the Company are and have been conducted at all
      times in compliance with applicable financial record-keeping and reporting
      requirements of the Currency and Foreign Transactions Reporting Act of 1970,
      as
      amended, applicable money laundering statutes and applicable rules and
      regulations thereunder (collectively, the "Money
      Laundering Laws"),
      and
      no action, suit or proceeding by or before any court or governmental agency,
      authority or body or any arbitrator involving the Company with respect to the
      Money Laundering Laws is pending or, to the knowledge of the Company,
      threatened. 

     

    (s)    OFAC.
      Neither the Company nor, to the knowledge of the Company, any director, officer,
      agent or employee of the Company is currently subject to any U.S. sanctions
      administered by the Office of Foreign Assets Control of the U.S. Treasury
      Department ("OFAC");
      and
      the Company will not, directly or indirectly, use the proceeds of the offering,
      or lend, contribute or otherwise make available such proceeds to any subsidiary,
      joint venture partner or other Person, for the purpose of financing the
      activities of any person currently subject to any U.S. sanctions administered
      by
      OFAC.

     

    (t)    Sarbanes-Oxley
      Act. There is and has been no failure on the part of the Company, the Company's
      general partner or any of the Company's directors or officers, in their
      capacities as such, to comply in all material respects with any provision of
      the
      Sarbanes-Oxley Act of


    
      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

    

     

    2002,
      as
      in effect at the applicable time, and the rules and regulations promulgated
      in
      connection therewith (the "Sarbanes-Oxley
      Act"),
      including Section 402 related to loans and Sections 302 and 906 related to
      certifications.

     

    (u)    Internal
      Accounting and Disclosure Controls. The Company maintains a system of internal
      accounting controls sufficient to provide reasonable assurance that (i)
      transactions are executed in accordance with management's general or specific
      authorizations, (ii) transactions are recorded as necessary to permit
      preparation of financial statements in conformity with generally accepted
      accounting principles and to maintain asset and liability accountability, (iii)
      access to assets or incurrence of liabilities is permitted only in accordance
      with management's general or specific authorization and (iv) the recorded
      accountability for assets and liabilities is compared with the existing assets
      and liabilities at reasonable intervals and appropriate action is taken with
      respect to any difference. The Company maintains disclosure controls and
      procedures (as such term is defined in Rule 13a-14 under the 1934 Act) that
      are
      effective in ensuring that information required to be disclosed by the Company
      in the reports that it files or submits under the 1934 Act is recorded,
      processed, summarized and reported, within the time periods specified in the
      rules and forms of the SEC, including, without limitation, controls and
      procedures designed in to ensure that information required to be disclosed
      by
      the Company in the reports that it files or submits under the 1934 Act is
      accumulated and communicated to the Company's management, including its
      principal executive officer or officers and its principal financial officer
      or
      officers, as appropriate, to allow timely decisions regarding required
      disclosure. Except as set forth on Schedule 3(u), during the twelve months
      prior
      to the date hereof, the Company has not received any notice or correspondence
      from its independent accountant relating to any potential material weakness
      in
      any part of the system of internal accounting controls of the
      Company.

     

    (v)    Equity
      Capitalization. As of the date hereof, the authorized equity securities of
      the
      Company consists of (i) 69,358,353 Units, of which as of the date hereof,
      61,856,830 are issued and outstanding, 1,137,200 Units are issued and held
      as
      treasury units, no Units are reserved for issuance pursuant to the Company's
      option and purchase plans and no Units are reserved for issuance pursuant to
      securities (other than the Notes) exercisable or exchangeable for, or
      convertible into, Units and (ii) 12,100,000 preferred units, of which as of
      the
      date hereof, 11,907,073 of which is issued and outstanding or reserved for
      issuance. The Conversion Units shall have those rights, preferences, privileges
      and restrictions governing the Units as set forth in the Limited Partnership
      Agreement. All of such outstanding Units have been validly issued. Except as
      disclosed in Schedule 3(v): (i) none of the Company's equity securities is
      subject to preemptive rights or any other similar rights or any liens or
      encumbrances suffered or permitted by the Company; (ii) there are no outstanding
      options, warrants, scrip, rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities or rights convertible into,
      or
      exercisable or exchangeable for, any equity securities of the Company, or
      contracts, commitments, understandings or arrangements by which the Company
      is
      or may become bound to issue additional equity securities of the Company or
      options, warrants, scrip, rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities or rights convertible into,
      or
      exercisable or exchangeable for, any equity securities of the Company; (iii)
      there are no agreements or arrangements under which the Company is obligated
      to
      register the sale of any of its equity securities under the 1933 Act (except
      pursuant to the Registration Rights Agreement); (iv) there are no outstanding
      equity securities of the Company which contain any redemption or similar
      provisions, and there are no contracts, commitments, understandings or
      arrangements by which the Company is or may become bound to redeem an equity
      security of the Company; (v) there are no equity securities containing
      anti-dilution or similar provisions that will be triggered by the issuance
      of
      the Securities; and (vi) the


    
      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

    

     

    Company
      does not have any stock appreciation rights or "phantom stock" or "phantom
      equity" plans or agreements or any similar plan or agreement.

     

    (w)    Absence
      of Litigation. Except as set forth in Schedule 3(w) and as set forth in the
      "Risk Factors" and "Legal Proceedings" sections of the Company's Annual Report
      on Form 10-K/A for the fiscal year ended December 31, 2006, there is no action,
      suit, proceeding, inquiry or investigation before or by the Principal Market,
      any court, public board, government agency, self-regulatory organization or
      body
      pending or, to the knowledge of the Company, threatened against or affecting
      the
      Company, the Units or any of the Company's officers or directors in their
      capacities as such, whether of a civil or criminal nature of otherwise which
      could reasonably be expected to have a Material Adverse Effect.

     

    (x)    Tax
      Status. The Company (i) has made or filed all foreign, federal and state income
      and all other tax returns, reports and declarations required by any jurisdiction
      to which it is subject except where the failure to so file could not reasonably
      be expected to have a Material Adverse Effect, (ii) has paid all taxes and
      other
      governmental assessments and charges that are material in amount, shown or
      determined to be due on such returns, reports and declarations, except those
      being contested in good faith except where failure to pay such taxes could
      not
      reasonably be expected to have a Material Adverse Effect and (iii) to the extent
      required by GAAP, has set aside on its books provision reasonably adequate
      for
      the payment of all taxes for periods subsequent to the periods to which such
      returns, reports or declarations apply. There are no unpaid taxes in any
      material amount claimed to be due by the taxing authority of any jurisdiction,
      and the officers of the Company have not received written notice of any such
      claim.

     

    (y)    Ranking
      of Notes. Except as set forth on Schedule 3(y), no Indebtedness of the Company
      is expressly senior to the Notes in right of payment, whether with respect
      of
      payment of redemptions, interest, damages or upon liquidation or dissolution
      or
      otherwise.

     

    (z)    Independent
      Accountants. Grant Thornton LLP, who have certified the consolidated financial
      statements of the Company as of December 31, 2006, are independent public
      accountants within the meaning of the 1933 Act.

     

    (aa)    Off
      Balance Sheet Arrangements. There is no transaction, arrangement, or other
      relationship between the Company and an unconsolidated or other off balance
      sheet entity that is required to be disclosed by the Company in its 1934 Act
      filings and is not so disclosed or that otherwise would be reasonably likely
      to
      have a Material Adverse Effect.

     

    (bb)    Investment
      Company. The Company is not and, after giving effect to the offering and sale
      of
      the Securities and the application of the proceeds thereof, will not become
      an
      "investment company" or an "affiliated person" of, or "promoter" or "principal
      underwriter" for an investment company, within the meaning of the Investment
      Company Act of 1940, as amended.

     

    (cc)    Manipulation
      of Price. The Company has not, and to its knowledge no one acting on its behalf
      has, taken, directly or indirectly, any action designed to cause or to result
      in
      the stabilization or manipulation of the price of any security of the Company
      to
      facilitate the sale or resale of any of the Securities.

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

    

     

    (dd)    Transfer
      Taxes. On each applicable Closing Date, all stock transfer or other taxes (other
      than income or similar taxes) which are required to be paid in connection with
      the sale and transfer of the Securities to be sold to each Buyer hereunder
      will
      be, or will have been, fully paid or provided for by the Company, and all laws
      imposing such taxes will be or will have been complied with.

     

    (ee)    Disclosure.
      All disclosure provided to the Buyers regarding the Company and its
      Subsidiaries, their business and the transactions contemplated hereby,
      considered as a whole, including the Schedules to this Agreement, furnished
      by
      or on behalf of the Company is true and correct and does not contain any untrue
      statement of a material fact or omit to state any material fact necessary in
      order to make the statements made therein, in the light of the circumstances
      under which they were made, not misleading. No event or circumstance has
      occurred or information exists with respect to the Company or its business,
      properties, operations or financial conditions, which, under applicable law,
      rule or regulation, requires public disclosure or announcement by the Company
      but which has not been so publicly announced or disclosed. 

     

    (ff)    MLP
      Status. The Company met for the taxable year ended December 31, 2005, and the
      Company expects to meet for the taxable years ending December 31, 2006 and
      December 31, 2007, the gross income requirements of Section 7704(c)(2) of the
      Code, and accordingly the Company does not reasonably expect to be, taxed as
      a
      corporation for U.S. federal income tax purposes or for applicable tax purposes.
      The Company indicated in the Form K-1 for the year ended December 31, 2006,
      that
      its equityholders may be subject to state income taxes in the jurisdictions
      set
      forth on Schedule 3(ff) attached hereto. 

     

    4.    COVENANTS.

     

    (a)    Best
      Efforts. Each party shall use its best efforts timely to satisfy each of the
      conditions to be satisfied by it as provided in Sections 5 and 6 of this
      Agreement.

     

    (b)    Form
      D
      and Blue Sky. The Company agrees to file a Form D with respect to the Securities
      as required under Regulation D. The Company shall, on or before each Closing
      Date, take such action as the Company shall reasonably determine is necessary
      in
      order to obtain an exemption for or to qualify the Securities for sale to the
      Buyers at such Closing pursuant to this Agreement under applicable securities
      or
      "Blue Sky" laws of the states of the United States (or to obtain an exemption
      from such qualification). The Company shall make all filings and reports
      relating to the offer and sale of the Securities required under applicable
      securities or "Blue Sky" laws of the states of the United States following
      the
      applicable Closing Date. 

     

    (c)    Financial
      Information. For so long as any Securities remain outstanding and are
      "restricted securities" within the meaning of Rule 144(a)(3) under the 1933
      Act,
      the Company will, during any period in which it is not subject to Section 13
      or
      15(d) under the 1934 Act, make available to each Buyer and any holder of
      Securities in connection with any sale thereof and any prospective purchaser
      of
      Securities and securities analysts, in each case upon request, the information
      specified in, and meeting the requirements of, Rule 144A(d)(4) under the 1933
      Act (or any successor thereto).

     

    (d)    Fees
      and
      Expenses. 

     

    (i)    The
      Company shall be responsible for the payment of any placement agent's fees
      or
      commissions, financial advisory fees, or broker's commissions

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

       

    

    (other
      than for Persons engaged by any Buyer) relating to or arising out of the
      transactions contemplated hereby. The Company shall pay, and hold each Buyer
      harmless against, any liability, loss or expense (including, without limitation,
      reasonable attorney's fees and out-of-pocket expenses) arising in connection
      with any claim relating to any such payment. In addition to the foregoing (and
      without duplication), the Company agrees to pay Portside Growth &
Opportunity Fund (an Initial Buyer) ("Portside") or
      its
      designee(s) for all reasonable costs and expenses, not to exceed $275,000,
      incurred in connection with the transactions contemplated by the Transaction
      Documents (including all reasonable legal fees and disbursements in connection
      therewith, documentation and implementation of the transactions contemplated
      by
      the Transaction Documents and due diligence in connection therewith), which
      amount may be withheld by Portside from its Initial Notes Purchase Price at
      the
      Initial Closing. Except as otherwise set forth in the Transaction Documents,
      each party to this Agreement shall bear its own expenses in connection with
      the
      sale of the Securities to the Buyers.

     

    (ii)    Whether
      or not the transactions contemplated in this Agreement are consummated or this
      Agreement is terminated, the Company shall pay or cause to be paid all costs
      and
      expenses incident to the performance of its obligations hereunder, including
      without limitation, all fees, costs and expenses (A) incident to the
      preparation, issuance, execution, authentication and delivery of the Securities,
      including any expenses of the Trustee, (B) incurred in connection with the
      registration or qualification and determination of eligibility for investment
      of
      the Securities under the laws of such jurisdictions as the Buyers may reasonably
      designate, (C) in connection with the admission for trading of the Notes on
      any
      securities exchange or inter-dealer quotation system (as well as in connection
      with the admission of the Notes for trading in the Private Offerings, Resales
      and Trading through Automatic Linkages ("PORTAL")
      system
      of the National Association of Securities Dealers, Inc. ("NASD") or
      any
      appropriate market system) and (D) in connection with satisfying its obligations
      under Section 4(b).

     

    (e)    Pledge
      of
      Securities. The Company acknowledges and agrees that the Securities may be
      pledged by a Holder (as defined in the Registration Rights Agreement) in
      connection with a bona fide margin agreement or other loan or financing
      arrangement that is secured by the Securities. The pledge of Securities shall
      not be deemed to be a transfer, sale or assignment of the Securities hereunder,
      and no Buyer effecting a pledge of Securities shall be required to provide
      the
      Company with any notice thereof or otherwise make any delivery to the Company
      pursuant to this Agreement or any other Transaction Document. The Company hereby
      agrees to execute and deliver such documentation as a pledgee of the Securities
      may reasonably request in connection with a pledge of the Securities to such
      pledgee by a Buyer.

     

    (f)    Disclosure
      of Transactions and Other Material Information. On or before 8:30 a.m., New
      York
      Time, on April
      5,
      2007, the Company shall issue a press release (the "Initial
      Press Release")
      and
      file a Current Report on Form 8-K describing the terms of the transactions
      contemplated by the Transaction Documents in the form required by the 1934
      Act
      and attaching the Transaction Documents as exhibits to such filing (including
      all attachments, the "Initial
      8-K Filing").
      On or
      before 8:30 a.m., New York City Time, on the first Business Day following each
      Additional Closing Date, the Company shall issue a press release (each an
      "Additional
      Press Release",
      and
      together with the Initial Press Release the "Press
      Releases")
      and
      file a Current Report on Form 8-K with the SEC describing the


    
      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

    

     

    transactions
      to be consummated pursuant thereto (the "Additional
      8-K Filing,"
      and
      together with the Initial 8-K Filing, the "8-K
      Filings").
      The
      Company shall not, and shall cause its officers, directors, employees and
      agents, not to, provide any Buyer with any material, nonpublic information
      regarding the Company or any of its subsidiaries from and after the filing
      of
      the Initial 8-K Filing with the SEC without the express written consent of
      such
      Buyer. Subject to the foregoing, neither the Company, its Subsidiaries nor
      any
      Buyer shall issue any press releases or any other public statements with respect
      to the transactions contemplated hereby; provided, however, that the Company
      shall be entitled, without the prior approval of any Buyer, to make any press
      release or other public disclosure with respect to such transactions (i) in
      substantial conformity with the 8-K Filings and contemporaneously therewith
      and
      (ii) as is required by applicable law and regulations (provided that in the
      case
      of clause (i) each Buyer shall be consulted by the Company in connection with
      any such press release or other public disclosure prior to its release). Without
      the prior written consent of any applicable Buyer, other than in the 8-K Filings
      and the Press Releases (which shall be subject to the reasonable approval of
      the
      Initial Buyers), neither the Company nor any of its subsidiaries or affiliates
      shall disclose the name of such Buyer in any public filing, public announcement,
      press release or similar public disclosure, unless such disclosure is required
      by law, regulation or the Principal Market.

     

    (g)    Additional
      Notes. For so long as any Notes remain outstanding, the Company will not issue
      any Notes under the Indenture other than as contemplated hereby and
      thereby.

     

    (h)    Reservation
      of Units. The Company shall take all action necessary to at all times have
      authorized, and reserved for the purpose of issuance, free of pre-emptive
      rights, after the Initial Closing Date, a number of
      Units
      sufficient for the purpose of enabling the Company to satisfy all obligations
      to
      issue the Conversion Units upon
      conversion of all of the outstanding Notes.

     

    (i)    Regulation
      M. The Company will not take any action prohibited by Regulation M under the
      1934 Act, in connection with the distribution of the Securities contemplated
      hereby.

     

    (j)    General
      Solicitation. Neither the Company nor any person acting on behalf of the Company
      will solicit any offer to buy or offer or sell the Securities by means of any
      form of general solicitation or general advertising within the meaning of
      Regulation D, including: (i)
      any
      advertisement, article, notice or other communication published in any
      newspaper, magazine or similar medium or broadcast over television or radio;
      and
      (ii)
      any
      seminar or meeting whose attendees have been invited by any general solicitation
      or general advertising.

     

    (k)    Integration.
      Neither the Company nor any person acting on behalf of the Company will sell,
      offer for sale or solicit offers to buy or otherwise negotiate in respect of
      any
      security (as defined in the 1933 Act) which will be integrated with the sale
      of
      the Securities or the Conversion Units in a manner which would require the
      registration under the 1933 Act of the Securities or
      require equityholder approval under the rules and regulations of the
Principal
      Market.

     

    (l)    Lock-Up.

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

       

    

    (i)    For
      purposes of this Section 4(l), the following definitions shall
      apply.

     

    (1)    "Convertible
      Securities"
      means
      any stock or securities (other than Options) convertible into or exercisable
      or
      exchangeable for Units or other equity securities of the Company.

     

    (2)    "Options"
      means
      any rights, warrants or options to subscribe for or purchase Units, other equity
      securities of the Company or Convertible Securities.

     

    (3)    "Unit
      Equivalents"
      means,
      collectively, Options and Convertible Securities.

     

    (4)    From
      the
      date hereof until the date that is ninety (90) days following the Initial
      Closing Date, the Company hereby agrees that, it will not sell, agree to sell,
      or contract to sell, any Units or any Unit Equivalents. The foregoing sentence
      shall not apply to (A) the sale of the Notes as contemplated by this Agreement
      or the issuance of the Conversion Units, (B) in connection with any employee
      benefit plan which has been approved by the Board of Directors of the general
      partner of the Company, pursuant to which the Company's securities may be issued
      to any employee, officer or director for services provided to the Company,
      (C)
      the issuance by the Company of any Units upon the exercise of an option or
      warrant or the conversion of a security outstanding on the date hereof (provided
      that the terms relating to pricing or the number of Units issuable upon exercise
      of such options or warrants are not amended or modified in any manner after
      the
      date hereof) or an option or warrant issued or granted in compliance with this
      paragraph, (D) the sale of Units in a bona fide firm commitment
      underwritten offering with a nationally recognized underwriter if the price
      per
      share in such offering exceeds 115% of the Conversion Price (other than an
      "at-the-market offering" as defined in Rule 415(a)(4) under the 1933 Act and
      "equity lines"); (E) the entry into an agreement to issue and the issuance
      of, Units, other equity securities of the Company or Unit Equivalents in
      exchange for assets or equity securities of another entity to be acquired by
      the
      Company, the
      primary purpose of which is not to raise equity capital
      and (F)
      the issuance of preferred units distributed as dividends on preferred units
      which are currently outstanding. In addition, the Company agrees to obtain
      lock-up agreements with each of its executive officers and directors who own
      equity securities of the Company in substantially the form attached hereto
      as
Exhibit
      G.
      

     

    5.    CONDITIONS
      TO THE COMPANY'S OBLIGATION TO SELL. 

     

    (a)    Initial
      Closing Date. The obligation of the Company hereunder to issue and sell the
      Initial Notes to each Initial Buyer at the Initial Closing is subject to the
      satisfaction, at or before the Initial Closing Date, of each of the following
      conditions, provided that these conditions are for the Company's sole benefit
      and may be waived by the Company at any time in its sole discretion by providing
      each Initial Buyer with prior written notice thereof:

     

    (i)    Such
      Initial Buyer shall have executed each of the Transaction Documents to which
      it
      is a party and delivered the same to the Company.

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

       

    

    (ii)    Such
      Initial Buyer and each other Initial Buyer shall have delivered to the Company
      the Initial Notes Purchase Price (less any amounts withheld pursuant to Section
      4(d)) for the Initial Notes being purchased by such Initial Buyer at the Initial
      Closing by wire transfer of immediately available funds pursuant to the wire
      instructions provided by the Company.

     

    (iii)    The
      representations and warranties of such Initial Buyer shall be true and correct
      in all material respects as of the date when made and as of the Initial Closing
      Date as though made at that time (except for representations and warranties
      that
      speak as of a specific date), and such Initial Buyer shall have performed,
      satisfied and complied in all material respects with the covenants, agreements
      and conditions required by this Agreement to be performed, satisfied or complied
      with by such Initial Buyer at or prior to the Initial Closing Date.

     

    (b)    Additional
      Closing Dates. The obligation of the Company hereunder to issue and sell
      Additional Notes to each of the applicable Additional Buyers at each Additional
      Closing is subject to the satisfaction, at or before the applicable Additional
      Closing Date, of each of the following conditions, provided that these
      conditions are for the Company's sole benefit and may be waived by the Company
      at any time in its sole discretion by providing each Additional Buyer with
      prior
      written notice thereof:

     

    (i)    Such
      Additional Buyer and each other applicable Additional Buyer shall have delivered
      to the Company the purchase price contemplated pursuant to Section 1(d) for
      the
      Additional Notes being purchased by such Additional Buyer at such Additional
      Closing by wire transfer of immediately available funds pursuant to the wire
      instructions provided by the Company.

     

    (ii)    The
      representations and warranties of such Additional Buyer shall be true and
      correct in all material respects as of the date when made and as of such
      Additional Closing Date as though made at that time (except for representations
      and warranties that speak as of a specific date), and such Additional Buyer
      shall have performed, satisfied and complied in all material respects with
      the
      covenants, agreements and conditions required by this Agreement to be performed,
      satisfied or complied with by such Additional Buyer at or prior to such
      Additional Closing Date.

     

    6.    CONDITIONS
      TO EACH BUYER'S OBLIGATION TO PURCHASE.

     

    (a)    Initial
      Closing Date. The obligation of each Initial Buyer hereunder to purchase the
      Initial Notes at
      the
      Initial Closing is subject to the satisfaction, at or before the Initial Closing
      Date, of each of the following conditions, provided that these conditions are
      for each Initial Buyer's sole benefit and may be waived by such Initial Buyer
      at
      any time in its sole discretion by providing the Company with prior written
      notice thereof: 

     

    (i)    The
      Company shall have executed and delivered to such Initial Buyer (i) each of
      the Transaction Documents and (ii) the Initial Notes (for the

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    account
      of such Initial Buyer as such Initial Buyer shall instruct) being purchased
      by
      such Initial Buyer at the Initial Closing pursuant to this
      Agreement.

     

    (ii)    Such
      Initial Buyer shall have received the opinion of Proskauer Rose LLP, the
      Company's outside counsel, dated as of the Initial Closing Date, in
      substantially the form of Exhibit
      D
      attached
      hereto.

     

    (iii)    The
      Company shall have delivered to such Initial Buyer a certificate evidencing
      the
      formation and good standing of the Company issued by the Secretary of State
      of
      Delaware, as of a date within ten (10) days of the Initial Closing
      Date.

     

    (iv)    The
      Company shall have delivered to such Initial Buyer a certificate evidencing
      the
      Company's qualification as a foreign entity and good standing issued by the
      Secretary of State (or comparable office) of each jurisdiction in which the
      Company conducts business and is required to so qualify, as of a date within
      ten
      (10) days of the Initial Closing Date. 

     

    (v)    The
      Company shall have delivered to such Initial Buyer a certified copy of the
      Certificate of Limited Partnership as certified by the Secretary of State of
      the
      State of Delaware within ten (10) days of the Initial Closing Date.

     

    (vi)    The
      Company shall have delivered to such Initial Buyer a certificate, executed
      by
      the Secretary of the general partner of the Company and dated as of the Initial
      Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted
      by the Company's general partner in a form reasonably acceptable to such Initial
      Buyer, (ii) the Certificate of Limited Partnership and (iii) the Limited
      Partnership Agreement, each as in effect at the Initial Closing, in the form
      attached hereto as Exhibit E.

     

    (vii)    The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except for those representations and warranties that are
      qualified by materiality or Material Adverse Effect, which shall be true and
      correct in all respects) as of the date when made and as of the Initial Closing
      Date as though made at that time (except for representations and warranties
      that
      speak as of a specific date, which shall be true and correct as of such
      specified date) and the Company shall have performed, satisfied and complied
      in
      all material respects with the covenants, agreements and conditions required
      by
      the Transaction Documents to be performed, satisfied or complied with by the
      Company at or prior to the Initial Closing Date. Such Initial Buyer shall have
      received a certificate, executed by the President of the general partner of
      the
      Company, dated as of the Initial Closing Date, to the foregoing effect in the
      form attached hereto as Exhibit
      F.

     

    (viii)    The
      Company shall have delivered to such Initial Buyer a letter from the Company's
      transfer agent certifying the number of Units outstanding as of a date within
      five (5) days of the Initial Closing Date.

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

       

    

    (ix)    The
      Units
      (i) shall be designated for quotation or listed on the Principal Market and
      (ii)
      shall not have been suspended, as of the Initial Closing Date, by the SEC or
      the
      Principal Market from trading on the Principal Market nor shall suspension
      by
      the SEC or the Principal Market have been threatened, as of the Initial Closing
      Date, either (1)
      in
      writing by the SEC or the Principal Market or (2)
      by
      falling below the minimum listing maintenance requirements of the Principal
      Market. 

     

    (x)    The
      Company shall have obtained all governmental, regulatory or third party consents
      and approvals, if any, necessary for the sale of the Securities.

     

    (xi)    The
      Notes
      shall have been approved for trading on PORTAL, subject only to notice of
      issuance at or prior to the time of purchase.

     

    (xii)    The
      Company shall have delivered to such Initial Buyer lock-up agreements with
      each
      of the Company's executive officers and directors who own equity in the Company
      in substantially the form attached hereto as Exhibit
      G.

     

    (b)    Additional
      Closing Dates. The obligation of each Additional Buyer hereunder to purchase
      the
      Additional Notes at each Additional Closing is subject to the satisfaction,
      at
      or before the applicable Additional Closing Date, of each of the following
      conditions, provided that these conditions are for each applicable Additional
      Buyer's sole benefit and may be waived by such Additional Buyer at any time
      in
      its sole discretion by providing the Company with prior written notice
      thereof:

     

    (i)    The
      Company shall have executed and delivered to such Additional Buyer the
      Additional Notes (for the account of such Additional Buyer as such Additional
      Buyer shall instruct), which are being purchased by such Additional Buyer at
      such Additional Closing pursuant to this Agreement.

     

    (ii)    Such
      Additional Buyer shall have received the opinion of Proskauer Rose LLP, the
      Company's outside counsel, dated as of such Additional Closing Date, in
      substantially the form of Exhibit
      D
      attached
      hereto.

     

    (iii)    The
      Company shall have delivered to such Additional Buyer a certificate evidencing
      the formation and good standing of the Company issued by the Secretary of State
      of Delaware, as of a date within ten (10) days of such Additional Closing
      Date.

     

    (iv)    The
      Company shall have delivered to such Additional Buyer a certificate evidencing
      the Company's qualification as a foreign entity and good standing issued by
      the
      Secretary of State (or comparable office) of each jurisdiction in which the
      Company conducts business and is required to so qualify, as of a date within
      ten
      (10) days of such Additional Closing Date.

     

    (v)    The
      Company shall have delivered to such Additional Buyer a certified copy of the
      Certificate of Limited Partnership as certified by the Secretary of State of
      the
      State of Delaware within ten (10) days of such Additional Closing
      Date.

      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

        

      



    (vi)    The
      Company shall have delivered to such Additional Buyer a certificate, executed
      by
      the Secretary of the general partner of the Company and dated as of such
      Additional Closing Date, as to (i) the resolutions consistent with Section
      3(b)
      as adopted by the Company's general partner in a form reasonably acceptable
      to
      such Additional Buyer, (ii) the Certificate of Limited Partnership and (iii)
      the
      Limited Partnership Agreement, each as in effect at such Additional Closing,
      in
      the form attached hereto as Exhibit
      E.

     

    (vii)    The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except for those representations and warranties that are
      qualified by materiality or Material Adverse Effect, which shall be true and
      correct in all respects) as of the date when made and as of such Additional
      Closing Date as though made at that time (except for representations and
      warranties that speak as of a specific date) and the Company shall have
      performed, satisfied and complied in all material respects with the covenants,
      agreements and conditions required by the Transaction Documents to be performed,
      satisfied or complied with by the Company at or prior to such Additional Closing
      Date. Such Additional Buyer shall have received a certificate, executed by
      the
      President of the general partner of the Company, dated as of such Additional
      Closing Date, to the foregoing effect in the form attached hereto as
Exhibit
      F.

     

    (viii)    The
      Company shall have delivered to such Additional Buyer a letter from the
      Company's transfer agent certifying the number of Units outstanding as of a
      date
      within five days of such Additional Closing Date.

     

    (ix)    The
      Units
      (I) shall be designated for quotation or listed on the Principal Market and
      (II)
      shall not have been suspended, as of such Additional Closing Date, by the SEC
      or
      the Principal Market from trading on the Principal Market nor shall suspension
      by the SEC or the Principal Market have been threatened, as of such Additional
      Closing Date, either (A) in writing by the SEC or the Principal Market or (B)
      by
      falling below the minimum maintenance requirements of the Principal
      Market.

     

    (x)    The
      Company shall have obtained all governmental, regulatory or third party consents
      and approvals, if any, necessary for the sale of the Securities.

     

    (xi)    No
      Event
      of Default (as defined in the Notes) shall have occurred and be
      continuing.

     

    (xii)    The
      Notes
      to be issued at such Additional Closing shall have been approved for trading
      on
      PORTAL, subject only to notice of issuance at or prior to the time of purchase.
      

     

    7.    TERMINATION.

     

    In
      the
      event that the Initial Closing shall not have occurred with respect to an
      Initial Buyer on or before five (5) Business Days from the date hereof due
      to
      the Company's or such Initial Buyer's failure to satisfy the conditions set
      forth in Sections 5 and 6 above (and the nonbreaching party's failure to waive
      such unsatisfied condition(s)), the nonbreaching party shall have the option
      to
      terminate this Agreement with respect to such breaching party at the close
      of
      business on such date without liability of any party to any other party;
provided,
      however,
      that
      if

      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

      



    this
      Agreement is terminated pursuant to this Section 8, (a) the Company shall remain
      obligated to reimburse the non-breaching Initial Buyers for the expenses
      described in Section 4(d) above, and (b) such termination shall not relieve
      any
      party from any liability it may have resulting from such party's breach of
      this
      Agreement prior to such termination.

     

    8.    MISCELLANEOUS.

     

    (a)    Governing
      Law; Jurisdiction; Jury Trial. All questions concerning the construction,
      validity, enforcement and interpretation of this Agreement shall be governed
      by
      the internal laws of the State of New York, without giving effect to any choice
      of law or conflict of law provision or rule (whether of the State of New York
      or
      any other jurisdictions) that would cause the application of the laws of any
      jurisdictions other than the State of New York. Each party hereby irrevocably
      submits to the exclusive jurisdiction of the state and federal courts sitting
      in
      The City of New York, Borough of Manhattan, for the adjudication of any dispute
      hereunder or in connection herewith or with any transaction contemplated hereby,
      and hereby irrevocably waives, and agrees not to assert in any suit, action
      or
      proceeding, any claim that it is not personally subject to the jurisdiction
      of
      any such court, that such suit, action or proceeding is brought in an
      inconvenient forum or that the venue of such suit, action or proceeding is
      improper. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof to such party at the address for such notices to it
      under
      this Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
      HEREBY. 

     

    (b)    Counterparts.
      This Agreement may be executed in two or more identical counterparts, all of
      which shall be considered one and the same agreement and shall become effective
      when counterparts have been signed by each party and delivered to the other
      party; provided that a facsimile signature shall be considered due execution
      and
      shall be binding upon the signatory thereto with the same force and effect
      as if
      the signature were an original, not a facsimile signature.

     

    (c)    Headings.
      The headings of this Agreement are for convenience of reference and shall not
      form part of, or affect the interpretation of, this Agreement.

     

    (d)    Severability.
      If any provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

     

    (e)    Entire
      Agreement; Amendments. This Agreement and the other Transaction Documents
      supersede all other prior oral or written agreements between the Buyers, the
      Company, their affiliates and Persons acting on their behalf with respect to
      the
      matters contemplated hereby, and this Agreement, the other Transaction Documents
      and the instruments referenced herein and therein contain the entire
      understanding of the parties with respect to the matters covered herein and
      therein and, except as specifically set forth herein or therein, neither the
      Company nor any Buyer makes any representation,

      
        
          
          

        

        
          -21-

          
            

          

        

        
          
          

        

      

    

     

    warranty,
      covenant or undertaking with respect to such matters. No provision of this
      Agreement may be amended other than by an instrument in writing signed by the
      Company and the holders of at least a majority of the aggregate principal amount
      of the Notes issued and issuable hereunder, and any amendment to this Agreement
      made in conformity with the provisions of this Section 9(e) shall be binding
      on
      all Buyers and holders of Notes, as applicable. No provision hereof may be
      waived other than by an instrument in writing signed by the party against whom
      enforcement is sought. No such amendment shall be effective to the extent that
      it applies to less than all of the holders of the applicable Securities then
      outstanding. No consideration shall be offered or paid to any Person to amend
      or
      consent to a waiver or modification of any provision of any of the Transaction
      Documents unless the same consideration also is offered to all of the parties
      to
      the Transaction Documents or holders of Notes, as the case may be. The Company
      has not, directly or indirectly, made any agreements with any Buyers relating
      to
      the terms or conditions of the transactions contemplated by the Transaction
      Documents except as set forth in the Transaction Documents. 

     

    (f)    Notices.
      Any notices, consents, waivers or other communications required or permitted
      to
      be given under the terms of this Agreement must be in writing and will be deemed
      to have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party
      and a duplicate copy is sent by electronic mail in PDF format); or (iii) one
      Business Day after deposit with an overnight courier service, in each case
      properly addressed to the party to receive the same. The addresses and facsimile
      numbers for such communications shall be:

     

    If
      to the
      Company:

     

    American
      Real Estate Partners, L.P.

    767
      Fifth
      Avenue

    New
      York,
      New York 10153

    Telephone: 
      (914)
      614-7077

    Facsimile:
      (646)
      365-2833

    Email: 
      fbuebel@arep.com

    Attention:
      Felicia
      Buebel

     

    Copy
      to:

    


    Proskauer
      Rose LLP

    1585
      Broadway

    New
      York,
      New York 10036-8299

    Telephone:
      (212)
      969-3580

    Facsimile:
      (212)
      969-2900

    Email: 
      iblumenstein@proskauer.com

    Attention:
      Ian
      B.
      Blumenstein

    


    If
      to a
      Buyer, to its address and facsimile number set forth on the Schedule of Buyers,
      with copies to such Buyer's representatives as set forth on the Schedule of
      Buyers, 


    
      
        
          
          

        

        
          -22-

          
            

          

        

        
          
          

        

      

    

    
       

      with
        a
        copy (for informational purposes only) to:

       

    

    Schulte
      Roth & Zabel LLP

    919
      Third
      Avenue

    New
      York,
      New York 10022

    Telephone:
      (212)
      756-2000

    Facsimile:
      (212)
      593-5955

    Email:
      eleazer.klein@srz.com

    Attention:
      Eleazer
      N. Klein, Esq.

    


    or
      to
      such other address and/or facsimile number and/or to the attention of such
      other
      Person as the recipient party has specified by written notice given to each
      other party five (5) days prior to the effectiveness of such change. Written
      confirmation of receipt (A) given by the recipient of such notice, consent,
      waiver or other communication, (B) mechanically or electronically generated
      by
      the sender's facsimile machine containing the time, date, recipient facsimile
      number and an image of the first page of such transmission or (C) provided
      by an
      overnight courier service shall be rebuttable evidence of personal service,
      receipt by facsimile or receipt from an overnight courier service in accordance
      with clause (i), (ii) or (iii) above, respectively.

     

    (g)    Successors
      and Assigns. This Agreement shall be binding upon and inure to the benefit
      of
      the parties and their respective successors and assigns, including any
      purchasers of the Notes. The Company shall not assign this Agreement or any
      rights or obligations hereunder without the prior written consent of the holders
      of at least a majority of the aggregate principal amount of the Notes issued
      and
      issuable hereunder. A Buyer may assign some or all of its rights hereunder
      without the consent of the Company (other than any portion of the First Option
      and Second Option to purchase Additional Notes, which may only be assigned
      to
      the investment advisor, or funds managed by the investment advisor or parent
      of
      the investment advisor, of each Initial Buyer), in which event such assignee
      shall be deemed to be a Buyer hereunder with respect to such assigned rights.
      

     

    (h)    No
      Third
      Party Beneficiaries. This Agreement is intended for the benefit of the parties
      hereto and their respective permitted successors and assigns, and is not for
      the
      benefit of, nor may any provision hereof be enforced by, any other
      Person.

     

    (i)    Survival.
      Unless this Agreement is terminated under Section 8, the representations and
      warranties of the Company and the Buyers contained in Sections 2 and 3 and
      the
      agreements and covenants set forth in Sections 4 and 9 shall survive the each
      Closing and delivery and exercise of the Securities, as applicable. Each Buyer
      shall be responsible only for its own representations, warranties, agreements
      and covenants hereunder.

     

    (j)    Further
      Assurances. Each party shall do and perform, or cause to be done and performed,
      all such further acts and things, and shall execute and deliver all such other
      agreements, certificates, instruments and documents, as any other party may
      reasonably request in order to carry out the intent and accomplish the purposes
      of this Agreement and the consummation of the transactions contemplated
      hereby.

     

    (k)    Indemnification.
      ii) In
      consideration of each Buyer's execution and delivery of the Transaction
      Documents and acquiring the Securities thereunder and in addition to all of
      the
      Company's other obligations under the Transaction Documents, the Company shall
      defend, protect,


    
      
        
          
          

        

        
          -23-

          
            

          

        

        
          
          

        

      

    

     

    indemnify
      and hold harmless each Buyer and each other holder of the Securities and all
      of
      their stockholders, partners, members, officers, directors, employees and direct
      or indirect investors (to the extent the Buyer has transferred Securities to
      such investors) and any of the foregoing Persons' agents or other
      representatives (including, without limitation, those retained in connection
      with the transactions contemplated by this Agreement) (collectively, the
      "Indemnitees"),
      as
      incurred, from and against any and all actions, causes of action, suits, claims,
      losses, costs, penalties, fees, liabilities and damages, and expenses in
      connection therewith (irrespective of whether any such Indemnitee is a party
      to
      the action for which indemnification hereunder is sought), and including
      reasonable attorneys' fees and disbursements (the "Indemnified
      Liabilities"),
      incurred by any Indemnitee as a result of, or arising out of, or relating to
      (a)
      any misrepresentation or breach of any representation or warranty made by the
      Company in the Transaction Documents, (b) any breach of any covenant, agreement
      or obligation of the Company contained in the Transaction Documents or (c)
      any
      cause of action, suit or claim brought or made against such Indemnitee by a
      third party (including for these purposes a derivative action brought on behalf
      of the Company) and arising out of or resulting from the execution, delivery,
      performance or enforcement of the Transaction Documents or any other
      certificate, instrument or document contemplated hereby or thereby. To the
      extent that the foregoing undertaking by the Company may be unenforceable for
      any reason, the Company shall make the maximum contribution to the payment
      and
      satisfaction of each of the Indemnified Liabilities which is permissible under
      applicable law. 

     

    (ii)    Promptly
      after receipt by an Indemnitee under this Section 9(k) of notice of the
      commencement of any action or proceeding (including any governmental action
      or
      proceeding) involving an Indemnified Liability, such Indemnitee shall, if a
      claim for indemnification in respect thereof is to be made against any
      indemnifying party under this Section 9(k), deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, to assume control of the defense thereof with counsel reasonably
      satisfactory to such indemnified party; provided, however, that an Indemnitee
      shall have the right to retain its own counsel with the fees and expenses of
      not
      more than one counsel for all Indemnitees to be paid by the indemnifying party,
      if, in the reasonable opinion of counsel to the Indemnitee, the representation
      by such counsel of the Indemnitee and the indemnifying party would be
      inappropriate due to actual or potential differing interests between such
      Indemnitee and any other party represented by such counsel in such proceeding.
      Legal counsel referred to in the immediately preceding sentence shall be
      selected by the Buyers holding at least a majority of the aggregate principal
      amount of the Notes issued and issuable hereunder. The Indemnitee shall
      cooperate fully with the indemnifying party in connection with any negotiation
      or defense of any such action or Indemnified Liabilities by the indemnifying
      party and shall furnish to the indemnifying party all information reasonably
      available to the Indemnitee that relates to such action or Indemnified
      Liabilities. The indemnifying party shall keep the Indemnitee fully apprised
      at
      all times as to the status of the defense or any settlement negotiations with
      respect thereto. No indemnifying party shall be liable for any settlement of
      any
      action, claim or proceeding effected without its prior written consent,
      provided, however, that the indemnifying party shall not unreasonably withhold,
      delay or condition its consent. No indemnifying party shall, without the prior
      written consent of the Indemnitee, which consent shall not be unreasonably
      withheld conditioned or delayed, consent to entry of any judgment or enter
      into
      any settlement or other

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

    compromise
      which does not include as an unconditional term thereof the giving by the
      claimant or plaintiff to such Indemnitee of a release from all liability in
      respect to such Indemnified Liabilities or litigation. Following indemnification
      as provided for hereunder, the indemnifying party shall be subrogated to all
      rights of the Indemnitee with respect to all third parties, firms or
      corporations relating to the matter for which indemnification has been made.
      The
      failure to deliver written notice to the indemnifying party within a reasonable
      time of the commencement of any such action shall not relieve such indemnifying
      party of any liability to the Indemnitee under this Section 9(k), except to
      the
      extent that the indemnifying party is prejudiced in its ability to defend such
      action.

     

    (iii)    The
      indemnification required by this Section 9(k) shall be made by periodic payments
      of the amount thereof during the course of the investigation or defense, as
      and
      when bills are received or Indemnified Liabilities are incurred.

     

    (iv)    The
      indemnity agreements contained herein shall be in addition to (x) any cause
      of
      action or similar right of the Indemnitee against the indemnifying party or
      others, and (y) any liabilities the indemnifying party may be subject to
      pursuant to the law.

     

    (v)    Notwithstanding
      the foregoing, in no event shall the Company be liable to any Indemnitee for
      any
      consequential, special, punitive or other indirect damages.

     

    (l)    No
      Strict
      Construction. The language used in this Agreement will be deemed to be the
      language chosen by the parties to express their mutual intent, and no rules
      of
      strict construction will be applied against any party.

     

    (m)    Independent
      Nature of Buyers' Obligations and Rights. The obligations of each Buyer under
      any Transaction Document are several and not joint with the obligations of
      any
      other Buyer, and no Buyer shall be responsible in any way for the performance
      of
      the obligations of any other Buyer under any Transaction Document. Nothing
      contained herein or in any other Transaction Document, and no action taken
      by
      any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers
      as a partnership, an association, a joint venture or any other kind of entity,
      or create a presumption that the Buyers are in any way acting in concert or
      as a
      group with respect to such obligations or the transactions contemplated by
      the
      Transaction Documents and the Company acknowledges that the Buyers are not
      acting in concert or as a group, and the Company will not assert any such claim,
      with respect to such obligations or the transactions contemplated by the
      Transaction Documents. Each Buyer confirms that it has independently
      participated in the negotiation of the transaction contemplated hereby with the
      advice of its own counsel and advisors. Except to the extent otherwise
      specifically set forth in the Transaction Documents, each Buyer shall be
      entitled to independently protect and enforce its rights, including, without
      limitation, the rights arising out of this Agreement or out of any other
      Transaction Documents, and it shall not be necessary for any other Buyer to
      be
      joined as an additional party in any proceeding for such purpose.

     

    [Signature
      Page Follows]

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Securities Purchase Agreement to be duly executed as of the date first written
      above.

     

    
      	
              COMPANY:

            
	 
	
              AMERICAN
                REAL ESTATE PARTNERS, L.P.

               

              By:
                American Property Investors, Inc.,

              its
                general partner

               

              By: 
                ______________________________

              Name:

              Title:

            
	
            


    

    


    


     

     

     

     

    [Signature
      Page to Securities Purchase Agreement]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Securities Purchase Agreement to be duly executed as of the date first written
      above.

     

    
      	
              BUYERS:

            
	   
	
              PORTSIDE
                GROWTH AND OPPORTUNITY FUND 

               

              By: 
                ______________________________

              Name:

              Title:

            
	
            


    

    


     

     

    
 

     

    [Signature
      Page to Securities Purchase Agreement]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Securities Purchase Agreement to be duly executed as of the date first written
      above.

     

    
      	
              BUYERS:

            
	 
	
              HIGHBRIDGE
                INTERNATIONAL LLC

               

              By:
                HIGHBRIDGE CAPITAL MANAGEMENT, LLC

               

              By: 
                ______________________________

              Name:
                Adam J. Chill

              Title:
                Managing Director

            
	 


    

    


     

    


     

     

    [Signature
      Page to Securities Purchase Agreement]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      OF BUYERS

     

    
      	
              (1)

            	 	
              (2)

            	 	
              (3)

            	 	
              (4)

            	 	
              (5)

            	 	
              (5)

            
	
              Buyer

            	 	
              Address
                and

              Facsimile
                Number

            	 	
              Aggregate
                Principal Amount of

              Initial
                Notes

            	 	
              Purchase

              Price

            	 	
              Aggregate
                Principal Amount of Additional Notes

            	 	
              Legal
                Representative's 

              Address
                and Facsimile Number

            
	
              Initial
                Buyers

            	 	 	 	 	 	 	 	 	 	 
	
              Portside
                Growth and Opportunity Fund

            	 	
              c/o
                Ramius Capital Group, LLC 

              666
                Third Avenue, 26th Floor

              New
                York, New York 10017

              Attention: 
                Jeffrey Smith

              Owen
                Littman

              Facsimile:    (212)
                845-7999

              Telephone: 
                (212) 845-7955

              Email: 
                jsmith@ramius.com

              olittman@ramius.com

              Residence: 
                Cayman
                Islands

            	 	
              $100,000,000

            	 	
              $100,000,000

            	 	 	 	
              Schulte
                Roth & Zabel LLP

              919
                Third Avenue

              New
                York, New York 10022

              Attention:
                Eleazer Klein, Esq.

              Facsimile:
                (212) 593-5955

              Telephone:
                (212) 756-2376

            
	 	 	 	 	 	 	 	 	 	 	 
	
              Highbridge
                International LLC

            	 	
              c/o
                Highbridge Capital

              Management,
                LLC 

              9
                West 57th
                Street, 27th
                Floor

              New
                York, New York 10019

              Attention: 
                Ari J. Storch

              Adam
                J. Chill

              Facsimile:   
                (212) 751-0755

              Telephone:
                (212) 287-4720

              Email: 
                ari.storch@hcmny.com

              adam.chill@hcmny.com

              Residence: 
                Cayman Islands

            	 	
              $100,000,000

            	 	
              $100,000,000

            	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	
              Other
                Buyers

            	 	 	 	 	 	 	 	 	 	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBITS

     

    
      	ExhibitA	
              Indenture

            


    

    
      	ExhibitB	
              Registration
                Rights Agreement

            


    

    
      	ExhibitC	
              Form
                of Joinder Agreement

            


    

    
      	ExhibitD	
              Form
                of Outside Company Counsel Opinion

            


    

    
      	ExhibitE	
              Form
                of Secretary's Certificate

            


    

    
      	ExhibitF	
              Form
                of Officer's Certificate

            


    

    
      	ExhibitG	
              Form
                of Lock-Up Agreement

            


    

     

    SCHEDULES

     

    
      	Schedule3(o)	
              Absence
                of Certain Changes

            


    

    
      	Schedule3(u)	
              Internal
                Accounting and Disclosure Controls

            


    

    
      	Schedule3(v)	
              Capitalization

            


    

    
      	Schedule3(w)	
              Litigation

            


    

    
      	Schedule3(y)	
              Ranking

            


    

    
      	Schedule3(ff)	
              MLP
                Status