Document:

EX-10.1

 

Exhibit 10.1

DISTRIBUTION REINVESTMENT PLAN

     American Real Estate Partners, L.P. (the “Partnership”), a Delaware limited partnership,
governed under the Agreement of Limited Partnership of the Partnership, dated as of April 29, 1987
(the “Partnership Agreement”), by and among American property Investors, Inc., a Delaware
corporation, as general partner (the “General Partner”), Julia DeSantis, as organizational limited
partner, and the limited partners of the Partnership (the “Limited Partners”), has adopted a
Distribution Reinvestment Plan (the “Plan”), the terms and conditions of which follow. Any term
used herein which is defined in the Partnership Agreement shall have the same meaning herein as
therein, unless otherwise defined or unless the context otherwise indicates.

     1. The effective date of the Plan shall be January 1, 1988.

     2. As agent for participants (the “Participants”) in the Plan, Registrar and Transfer Company
(the “Agent”) will receive all distributions paid after the effective date of the Plan in respect
of Units and Depositary Units held by each Participant and in respect of any Depositary Units
acquired under the Plan. The Agent will apply such funds, after deducting applicable service
charges specified in Paragraph 8 below, as follows:

     Commencing with the distribution for the first full calendar quarter after the effective date
of the Plan, all distributions in respect of the Depositary Units and Units of the Participants
will be paid over to the Agent, which will purchase additional Depositary Units, to the extent
available at a price deemed reasonable by the Agent, for the Participants’ accounts from securities
broker-dealers to whom it will pay commissions.

     Purchases hereunder may be made on any securities exchange on which such Depositary Units are
traded, in the over-the-counter market, or in negotiated transactions, and shall be made at prices
competitive with prevailing market prices and on such other terms as the Agent may determine.

     3. Limited Partners may become Participants in the Plan at any time commencing with the
effective date of the Plan by completing the appropriate authorization form available from the
Agent or the General Partner. Only Limited Partners may become Participants in the Plan, not
Non-Consenting Investors or Subsequent Transferees.

     4. In making purchases for the Participants’ accounts, the Agent may commingle the funds of
any Participant with those of other Participants. The price at which Depositary Units shall be
deemed to have been acquired for a Participant’s account shall be the market price (including such
Participant’s allocable portion of the aggregate brokerage commissions and all costs of purchasing
except the service charge specified in Paragraph 8 below) of all Depositary Units purchased for the
Participants in the Plan with the proceeds of a single distribution. Such distributions shall be
invested by the Agent promptly following the payment date with respect thereto, and in no event
later than 30 days from such receipt. However, under certain circumstances, observance of the
rules and regulations of the Securities and Exchange Commission may require temporary suspension of
such purchases or may require that purchases be spread over a period of more than 30 days, in which
event such purchases will be made or resumed as or when permitted by such rules and regulations.
The Agent may rely and act upon an opinion of counsel in this respect, and in such event will not
be accountable for such inability

 

 

to make all purchases prior to the end of such 30-day period. To the extent the Agent is
unable to make purchases in accordance with the terms of this paragraph, distributions received by
the Agent on behalf of the Participants will be distributed by the Agent to the Participants. The
Agent will hold the Depositary Units of all Participants together in the name of its nominee.

     Neither the Partnership nor the Agent shall have any responsibility or liability as to the
value of the Depositary Units or any change in the value of the Depositary Units acquired for the
Participant’s account.

     5. Pending investment, funds shall be held in a non-interest bearing account maintained by the
Agent in a bank having capital and surplus of not less than $100,000,000. The bank account shall
be specifically designated as being for the benefit of the Reinvestment Plan and disbursements
shall be permitted from such account only for purchases of Depositary Units or to make
distributions to Participants if required pursuant to the terms of Paragraph 4 hereof.

     6. The Agent will distribute to Participants proxy solicitation material received by it from
the Partnership which is attributable to Depositary Units held in the Plan. The Agent will vote
any Depositary Units that it holds for the account of a Participant in accordance with the
Participant’s written instructions. If a Participant gives a proxy to person(s) representing the
General Partner covering Depositary Units registered in the Participant’s name, such proxy will be
deemed to be an instruction to the Agent to vote the full Depositary Units in the Participant’s
account in like manner. If a Participant does not direct the Agent as to how the Depositary Units
should be voted and does not give a proxy to person(s) representing the General Partner covering
these Depositary Units, the Agent will not vote said Depositary Units.

     7. The Agent will mail to each Participant a statement of account describing the distributions
received, the number of Depositary Units purchased, the purchase price per Depositary Unit, and the
total Depositary Units accumulated under the Plan as soon as practicable after all distributions
paid on any payment date with respect thereto have been invested (and also as soon as practicable
after the sale of Depositary Units described in Paragraph 11). Fractional Depositary Units will be
credited to a Participant’s account computed to three decimal places. No Depositary Receipts
representing Depositary Units will be issued for Depositary Units credited to an account until the
account is terminated.

     8. The charge to each Participant, payable to the Agent, for the services of the Agent shall
be five percent (5%) of the amount invested but not less than $.75 or more than $2.50 per
investment transaction for each Participant’s account, plus a proportionate share of the cost of
acquiring the Depositary Units for all Participants.

     9. No Partcipant shall have any right to draw checks or drafts against his account or to give
instructions to the Partnership or the Agent except as expressly provided here.

     10. It is understood that reinvestment of distributions does not relieve a Participant of any
income tax which may be payable on such distributions.

     11. A Participant may terminate an account at any time by written notice to the Agent. To be
effective for any distribution, such notice must be received on or before the record date for such
payment. The Agent may terminate a Participant’s individual participation in the Plan, and the
Partnership or the Agent may terminate the Plan itself at any time by written notice mailed to a
Participant, or to all Participants, as the case may be, at the address or addresses shown on their
account or such more recent address as a Participant may furnish to the Agent in

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writing. Upon termination of the Plan, or upon termination of an individual Participant’s
involvement in the plan, the Agent will send to each Participant a Depositary Receipt evidencing
the whole Depositary Units of the Participant standing in such Participant’s account and, as soon
as practicable, will pay in cash the value of any fractional Depositary Units standing to the
credit of a Participant’s account based upon the market price of Depositary Units, determined as
set forth below. A Participant who terminates his participation in the Plan may either request
that the Agent send Depositary Receipts for the Depositary Units in the account or may request that
the Agent sell all or part of such Depositary Units and deliver the net proceeds, after deduction
of any applicable brokerage commission or other applicable costs of sale, to the Participant. In
the absence of a specific request, the Agent will proceed by the delivery of Depositary Receipts
representing the Depositary Units, in accordance with the foregoing. Such sales may, but need not,
be made by purchase of Depositary Units for the account of the other Participants. Any such
transactions shall be deemed to have been made based upon the price determined as follows, on the
day following the date on which individual termination notice is received by the Agent: The last
sales price on that day regular way, or if no sale takes place on such day, the average of the
closing bid and asked prices the regular way (a) as officially quoted by the principal stock
exchange on which the Depositary Units are listed, or (b) if the Depositary Units are not listed on
any stock exchange, then as quoted on the principal United States market as determined by the
Agent, or (c) if, in the reasonable judgment of the Agent, there exists no principal United States
market for the Depositary Units, or no quote is available on any such market, then the average
price in privately negotiated transactions known to the Agent. If none of the above are available
on such date, then the price shall be determined on the next succeeding day on which any of the
above are available. A service charge of $2.50 will be charged by the Agent to the Participant in
connection with each termination of a Participant’s individual participation in the Plan.

     If the Agent does not receive instructions from the Participant, if a Participant disposes of
all Depositary Units registered on the books of the Partnership in his name, it may, in its
discretion, terminate the Participant’s further participation in the Plan by distributing
Depositary Receipts representing the Depositary Units in a Participant’s account, in accordance
with the foregoing, or continue to reinvest the distributions paid in respect of the Depositary
Units in the account until otherwise notified in writing.

     12. Neither the Partnership nor the Agent shall be liable for any act done in good faith, or
for any good faith omission to act, including, without limitation, any claims of liability (a)
arising out of failure to terminate a Participant’s account upon such Participant’s death prior to
receipt of notice in writing of such death, and (b) with respect to the time and the prices at
which Depositary Units are purchased or sold for a Participant’s account.

     13. Each Participant agrees to notify the Agent promptly in writing of any change of address.
Notices to the Participant may be given by letter addressed to the Participant in his last address
of record with the Agent.

     14. These terms and conditions may be amended or supplemented by an agreement between the
Agent and the Partnership at any time, including but not limited to an amendment to substitute a
new Agent to act as agent for the Participants by mailing an appropriate notification to each
Participant at his last address of record. Such amendment or supplement shall be deemed
conclusively accepted by each Participant except those Participants from whom the Agent receives
written notice of termination prior to the effective date thereof.

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     15. This Plan and a Participant’s election to participate in the Plan shall be governed by the
laws of the State of Delaware. The Partnership may terminate the Plan by giving notice at least 10
days prior to the effective date thereof to each Participant at his last address of record. In
such case, termination shall be made by distributing the whole Depositary Units held by the Agent
under the Plan to each Participant and making cash payments in respect of any fractional Depositary
Units held for the account of each Participant, based upon the actual sales price of such
Depositary Units less any applicable brokerage commissions or other applicable costs of sale.

4EXHIBIT 10.2

 

EXHIBIT 10.2

AMERICAN REAL ESTATE PARTNERS, L.P.

REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT is made as of the ___day of ___, 1995 by and
between AMERICAN REAL ESTATE PARTNERS, L.P., a Delaware limited partnership (the “Partnership”),
and X LP, a Delaware limited Partnership (“X LP”).

     In consideration of the mutual promises contained herein, the parties hereto, intending to be
legally bound, do hereby agree as follows:

1. Registration Rights.

     The Partnership covenants and agrees as follows:

     1.1. Definitions.

     (a) The terms “register,” “registered,” and “registration” refer to a registration
effected by preparing and filing a registration statement or similar document in compliance
with the Securities Act of 1933, as amended (the “1933 Act”), and the declaration or
ordering of effectiveness of such registration statement or document;

     (b) The term “Registration Rights” means rights to cause the registration of
Registrable Securities.

     (c) The term “Registrable Securities” means those depositary units representing limited
partnership interests in the Partnership (the “Depositary Units”) and 5% cumulative
pay-in-kind redeemable convertible preferred units representing limited partner interests in
the Partnership (the “Preferred Units”), which Holder now owns or hereinafter acquires.
Registrable Securities will cease to be such when (x) a registration statement covering such
Registrable Securities has been declared effective and they have been disposed of pursuant
to such effective registration statement; (y) they are sold, transferred or distributed to
the public pursuant to Rule 144 (or any similar provision then in force under the 1933 Act);
or (z) they are not required to be sold pursuant a registration statement.

     (d) The number of “Registrable Securities then outstanding” shall be determined by
adding the number of Depositary Units or Preferred Units outstanding which are, and the
number of Depositary Units issuable pursuant to then exercisable or convertible securities
which upon issuance would be, Registrable Securities;

     (e) The term “Holder” means X LP and its Affiliates.

 

 

     (f) The terms “Form S-3”, “Form S-4” and “Form S-8” mean such respective forms under
the 1933 Act as in effect on the date hereof or any successor registration forms to Form
S-3, Form S-4 and Form S-8, respectively, under the 1933 Act subsequently adopted by the
Securities and Exchange Commission (“Commission”).

     (g) “Affiliate” shall mean, with respect to any Person, any other Person which directly
or indirectly controls, or is controlled by, or is under common control with, such Person.
The term “control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the term “controlled” shall
have a meaning correlative to the foregoing.

1.2. Request for Registration.

     (a) If the Partnership shall receive at any time a written request from Holder that the
Partnership effect the registration under the 1933 Act, then the Partnership agrees to,
within five days of the receipt thereof, subject to the limitations of this Section 1.2, use
its best efforts to effect such a registration as soon as practicable and in any event to
file within 90 days of the receipt of such request a registration statement under the 1933
Act covering all the Registrable Securities which Holder shall in writing request (given
within 20 days of receipt of the notice given by the Partnership pursuant to this Section
1.2(a)) to be included in such registration and to use its best efforts to have such
registration statement become effective.

     (b) If Holder submits a registration request hereunder and intends to distribute the
Registrable Securities covered by a registration statement filed pursuant to that request by
means of an underwriting, it shall so advise the Partnership as a part of its request made
pursuant to this Section 1.2. In such event, the right of Holder to include its Registrable
Securities in such registration shall be conditioned upon its participation in such
underwriting and the inclusion of its Registrable Securities in the underwriting to the
extent provided herein. Holder shall (together with the Partnership as provided in
subsection 1.4(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by Holder and reasonably
satisfactory to the Partnership.

     (c) Notwithstanding the foregoing, (i) the Partnership may, but shall not be obligated
to, effect the filing of a registration statement pursuant to this Section 1.2 during the 90
days following the effective date of a registration statement pertaining to an underwritten
public offering of securities for the account of the Partnership, provided the Partnership
is at all times during such period diligently pursuing such registration, and (ii) if the
Partnership shall furnish to Holder requesting a registration statement pursuant to this
Section 1.2 a certificate signed by the General Partner stating that in the good faith
judgment of the General Partner on behalf of the Partnership, it would not be in the best
interests of the Partnership and its limited partners generally for such registration
statement to be filed, the Partnership shall have the right to defer such filing for a
period of not more than 210 days after receipt of the request of Holder; provided,
however, that the Partnership may not utilize the right set forth in this subsection
(d) (ii) more than once

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     in any twelve-month period.

     1.3. Partnership Registration. If (but without any obligation to do so) the
Partnership proposes to register (including for this purpose a registration effected by the
Partnership for unitholders other than Holder, in their capacity as such) any of its Depositary
Units or other securities under the 1933 Act in connection with the public offering of such
securities solely for cash (other than a registration on Form S-8 relating solely to the sale of
securities to participants in the Partnership Nonqualified Unit Plan, or a registration on Form S-4
or any successor form), the Partnership shall, at such time, promptly give Holder written notice of
such registration. Upon the written request of Holder given within 20 days after mailing of such
notice by the Partnership, the Partnership shall, subject to the provisions of Section 1.8, use its
best efforts to cause a registration statement covering all of the Registrable Securities that
Holder has requested to be registered to become effective under the 1933 Act. Notwithstanding the
foregoing, the Partnership shall be under no obligation to complete any offering of its securities
it proposes to make and shall incur no liability to Holder for its failure to do so.

     1.4. Obligations of the Partnership. Whenever required under this Section 1 to use
its best efforts to effect the registration of any Registrable securities, the Partnership shall,
as expeditiously as possible:

     (a) Prepare and file with the Commission a registration statement with respect to such
Registrable Securities and use its best efforts to cause such registration statement to
become effective, and, upon the request of Holder, keep such registration statement
effective for up to the lesser of 180 days or until Holder has informed the Partnership in
writing that the distribution of its securities has been completed.

     (b) Prepare and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection with such registration
statement, and use its best efforts to cause each such amendment to become effective, as may
be necessary to comply with the provisions of the 1933 Act with respect to the disposition
of all securities covered by such registration statement.

     (c) Furnish to Holder such reasonable number of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the 1933 Act, and such other
documents as it may reasonably request in order to facilitate the disposition of Registrable
Securities owned by it.

     (d) Use its best efforts to register or qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by Holder, provided that the Partnership shall not be required
in connection therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdiction.

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     (e) In the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with the managing
underwriter of such offering. If Holder participates in such underwriting, it shall also
enter into and perform its obligations under such an agreement, including furnishing any
opinion of counsel or entering into a lock-up agreement reasonably requested by the managing
underwriter.

     (f) Notify Holder, whose Registrable Securities are covered by such registration
statement, at any time when a prospectus relating thereto covered by such registration
statement is required to be delivered under the 1933 Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing and promptly file such amendments and supplements which
may be required pursuant to subparagraph (b) of this Section 1.4 on account of such event
and use its best efforts to cause each such amendment and supplement to become effective;
provided, however, once Holder is notified by the Partnership that there is
an inaccuracy in the Partnership’s registration statement or prospectus, Holder will
thereafter immediately discontinue the distribution of such registration statement or
prospectus and the disposition of Registrable Securities pursuant to such registration
statement or prospectus until such time as Holder has received a copy or copies of an
amended or supplemental registration statement or prospectus, and is so directed by the
Partnership in its notice to Holder. Holder shall deliver to the Partnership (at the
Partnership’s expense) all [inaccurate] copies, other than permanent file copies, then in
its possession of the registration statement or prospectus covering such Registrable
Securities.

     (g) Use its best efforts to furnish, at the request of Holder requesting registration
of Registrable Securities pursuant to this Section 1, on the date that such Registrable
Securities are delivered to the underwriters for sale in connection with a registration
pursuant to this Section 1, if such securities are being sold through underwriters, or, if
such securities are not being sold through underwriters on the date that the registration
statement with respect to such securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Partnership for the purposes of such registration, in
form and substance as is customarily given by Partnership counsel to the underwriters in an
underwritten public offering, addressed to the underwriters, if any, and to Holder if Holder
requested registration of Registrable Securities and (ii) a letter dated such date, from the
independent certified public accountant of the Partnership, in form and substance as is
customarily given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters, if any, and to Holder if Holder
requested registration of Registrable Securities.

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     1.5. Furnish Information. It shall be a condition precedent to the obligations of the
Partnership to take any action pursuant to this Section 1 that Holder shall furnish to the
Partnership such information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be required to effect the registration
of its Registrable Securities. Holder hereby agrees to notify the Partnership as promptly as
practicable of any inaccuracy or change in or addition to the information previously furnished by
Holder to the Partnership, which results in any registration statement or prospectus containing an
untrue statement of a material fact regarding Holder or the distribution of such Registrable
Securities or omitting to state any material fact regarding Holder or the distribution of such
Registrable Securities required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.

     1.6. Expenses of Demand Registration. All expenses other than underwriting discounts
and commissions relating to Registrable Securities incurred in connection with two (2) requests for
registration, filings or qualifications pursuant to Section 1.2 and the registrations, filings or
qualifications pursuant to Section 1.11, including, without limitation, all registration, filing
and qualification fees, printing and accounting fees, fees and disbursements of counsel for the
Partnership, and the reasonable fees and disbursements of counsel selected by Holder shall be borne
by the Partnership.

     1.7. Expenses of Partnership Registration. The Partnership shall bear and pay all
expenses incurred in connection with any registration, filing or qualification of Registrable
Securities with respect to the registrations pursuant to Section 1.3 for Holder (which right may be
assigned by Holder as provided in Section 1.12), including, without limitation, all registration,
filing and qualification fees, printing and accounting fees, underwriting discounts and commissions
relating to Registrable Securities fees and disbursements of counsel for the Partnership and the
reasonable fees and disbursements of counsel selected by Holder.

     1.8. Underwriting Requirements. In connection with any offering involving an
underwriting of securities being issued by the Partnership or in connection with any demand
registration made by Holder, the Partnership shall not be required under Section 1.3 to include any
of Holder’s securities in such underwriting unless it accepts the terms of the underwriting as
agreed upon between the Partnership and the underwriters selected by it, and then only in such
quantity, if any, as will not, in the opinion of the underwriters, have a material adverse effect
on the price of the securities being offered by the Partnership or Holder. If the managing
underwriter for the offering shall advise the Partnership or Holder in writing that the total
amount of securities, including Registrable Securities, to be included in such offering exceeds the
amount of securities that can be successfully offered, then the Partnership shall be required to
include in the offering only that number of such securities, including Registrable Securities,
which the managing underwriter believes will not have a material adverse effect on the price of the
securities being offered by the Partnership or Holder. If the foregoing provision requires the
exclusion of securities from any offering described in this Section, then such exclusion of all
securities which unitholders other than Holder seek to include in the offering shall be effected
prior to the exclusion of securities which Holder seeks to register.

     1.9. Indemnification. In the event any Registrable Securities are included in a
registration statement under this Section 1:

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     (a) To the extent permitted by law, the Partnership will indemnify and hold harmless
Holder, the officers, directors, partners, agents and employees thereof, any underwriter (as
defined in the 1933 Act) therefor and each person, if any, who controls Holder or the
underwriter within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as
amended (the “1934 Act”) against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the 1933 Act, the 1934 Act or other federal
or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements, omissions or
violations (a “Violation”): (i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (iii) any violation or
alleged violation by the Partnership of the 1933 Act, the 1934 Act, any state securities law
or any rule or regulation promulgated under the 1933 Act, the 1934 Act or any state
securities law. The Partnership will reimburse Holder, officer, director, partner, agent,
employee, underwriter or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss, claim, damage,
liability, or action. The indemnity agreement contained in this subsection 1.9(a) shall not
apply to amounts paid in settlement of any loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Partnership (which consent shall not be
unreasonably withheld), nor shall the Partnership be liable to Holder in any such case for
any such loss, claim, damage, liability, or action (i) to the extent that it arises out of
or is based upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by or on behalf
of Holder, underwriter or controlling person or (ii) in the case of a sale directly by
Holder, including a sale of such Registrable Securities through any underwriter retained by
Holder to engage in a distribution solely on behalf of Holder, such untrue statement or
alleged untrue statement or omission or alleged omission was contained in a preliminary
prospectus and corrected in a final or amended prospectus, and Holder failed to deliver a
copy of the final or amended prospectus at or prior to the confirmation of the sale of the
Registrable Securities to the person asserting any such loss, claim, damage or liability in
any case where such delivery is required by the 1933 Act.

     (b) To the extent permitted by law, Holder will indemnify and hold harmless the
Partnership, each of its partners and officers who have signed the registration statement,
each person, if any, who controls the Partnership within the meaning of the 1933 Act, each
agent and any underwriter for the Partnership, and any other person selling securities in
such registration statement or any of its directors, officers, partners, agents or employees
or any person who controls such person or underwriter, against any losses, claims, damages,
or liabilities (joint or several) to which the Partnership or any such director, officer,
controlling person, agent, or underwriter or controlling person, or other person or
director, officer or controlling person may become subject, under the 1933 Act, the 1934 Act
or other federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon

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and in conformity with written information furnished by or on behalf of Holder
expressly for use in connection with such registration; and Holder will reimburse any legal
or other expenses reasonably incurred by the Partnership or any such director, officer,
controlling person, agent or underwriter or controlling person, or other person selling
securities in such registration or any of its officers, directors, partners, agents,
employees, or controlling persons in connection with investigating or defending any such
loss, claim, damage, liability, or action; provided, however, that the
liability of Holder hereunder shall be limited to the amount of proceeds received by Holder
in the offering giving rise to the Violation; and provided further that the
indemnity agreement contained in this subsection 1.9(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of Holder, which consent shall not be unreasonable withheld
nor, in the case of a sale directly by the Partnership of its securities (including a sale
of such securities through any underwriter retained by the Partnership to engage in a
distribution solely on behalf of the Partnership), shall Holder be liable to the Partnership
in any case in which such untrue statement or alleged untrue statement or omission or
alleged omission was contained in a preliminary prospectus and corrected in a final or
amended prospectus, and the Partnership failed to deliver a copy of the final or amended
prospectus at or prior to the confirmation of the sale of the securities to the person
asserting any such loss, claim, damage or liability in any case where such delivery is
required by the 1933 Act.

     (c) Promptly after receipt by an indemnified party under this Section 1.9 of notice of
the commencement of any action (including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party under this
Section 1.9, 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, jointly with any other indemnifying party similarly noticed,
to assume and control the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that, if representation of such indemnified party by
counsel retained by the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party represented in such
proceeding, then (i) if such indemnified party is Holder or any Affiliate of Holder, Holder
and any Affiliate of Holder shall have the right to retain one counsel to represent Holder
and any Affiliates of Holder, with fees and expenses to be paid by the indemnifying party
and (ii) all other indemnified parties shall have the right to select one counsel to
represent such indemnified parties, with fees and expenses to be paid by the indemnifying
party. The failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the indemnified party
under this Section 1.9 to the extent of such prejudice, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability that it may
have to any indemnified party otherwise than under this Section 1.9.

     (d) The obligations of the Partnership and Holder under this section 1.9 shall survive
the completion of any offering of Registrable Securities in a registration statement whether
under this Section 1 or otherwise.

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     1.10. Reports Under Securities Exchange Act of 1934. With a view to making available
to Holder the benefits of Rule 144 promulgated under the 1933 Act and any other rule or regulation
of the Commission that may at any time permit Holder to sell securities of the Partnership to the
public without registration, and with a view to making it possible for Holder to register the
Registrable Securities pursuant to a registration on Form S-3, the Partnership agrees to:

     (a) make and keep public information available, as those terms are understood and
defined in Rule 144, at all times;

     (b) take such action, including the voluntary registration of its securities under
Section 12 of the 1934 Act, as is necessary to enable Holder to utilize Form S-3 for the
sale of its Registrable Securities, such action to be taken as soon as practicable (but not
later than 90 days) after the end of the fiscal year in which the first registration
statement filed by the Partnership for the offering of its securities to the general public
is declared effective;

     (c) file with the Commission in a timely manner all reports and other documents
required of the Partnership under the 1933 Act and the 1934 Act; and

     (d) furnish to Holder so long as it owns any Registrable Securities, forthwith upon
request (i) a written statement by the Partnership that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the Partnership and
such other reports and documents so filed by the Partnership, and (iii) such other
information as may be reasonably requested in availing Holder of any rule or regulation of
the Commission which permits the selling of any such securities without registration or
pursuant to such form.

2. Miscellaneous.

     2.1. Parties in Interest. All covenants, agreements, representations, warranties and
undertakings in this Agreement made by and on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties hereto whether so
expressed or not.

     2.2. Amendments and Waivers. Except as set forth in this Agreement, changes in or
additions to this Agreement may be made or compliance with any term, covenant, agreement, condition
or provision set forth herein may be omitted or waived (either generally or in a particular
instance and either retroactively or prospectively), upon the written consent of the Partnership
and Holder.

     2.3. Governing Law. This Agreement shall be deemed a contract made under the laws of
the State of New York and, together with the rights of obligations of the parties hereunder, shall
be construed under and governed by the laws of the State of New York.

     2.4. Notices. All notices, requests, demands and other communications provided for

8

 

hereunder shall be in writing (including telegraphic communication) and mailed, telecopied,
telegraphed or delivered:

     If to Holder:

	 	 	 
	 

	 	American Property Investors, Inc.
	

	 	90 South Bedford Road
	

	 	Mt. Kisco, New York 10549

     If to the Partnership to:

	 	 	 
	 

	 	American Property Investors, Inc.
	

	 	90 South Bedford Road
	

	 	Mt. Kisco, New York 10549

     If to either party, with a copy to:

	 	 	 
	 

	 	Marc Weitzen, Esq.
	

	 	Gordon Altman Butowsky Weitzen
	

	 	Shalov & Wein
	

	 	114 W. 47th Street
	

	 	New York, New York 10036

or at such other address as shall be designated by any party in a written notice to the other
parties complying as to delivery with the terms of this Section 2.4.

     All such notices, requests, demands and other communications shall, when mailed (registered
mail, return receipt requested, postage prepaid), personally delivered, or telegraphed, be
effective four days after deposit in the mails, when personally delivered, or when delivered to the
telegraph Partnership, respectively, addressed as aforesaid, unless otherwise provided herein and,
when telecopied, shall be effective upon actual receipt.

     2.5. Counterparts. This Agreement may be executed in counterparts, all of which
together shall constitute one and the same instrument.

     2.6. Effect of Headings. The section and paragraph headings herein are for
convenience only and shall not affect the construction hereof.

     2.7. Entire Agreement. This Agreement constitutes the entire agreement among the
Partnership and Holder with respect to the subject matter hereof. There are no representations,
warranties, covenants or undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Agreement supersedes all prior agreements between the parties
with respect to the Registrable Securities described herein and the subject matter hereof.

     2.8. Severability. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision.

     IN WITNESS WHEREOF, this Agreement has been executed as of the date first above

9

 

written, by the parties hereto.

	 	 	 	 	 
	 
	 	AMERICAN REAL ESTATE PARTNERS, L.P.
	

	 	By:
	 	American Property Investors, Inc.,
	

	 	 	 	General Partner
	 
	 	 	 	 
	

	 	 	 	

	

	 	 	 	Name:
	

	 	 	 	Title:
	 
	 	 	 	 
	 
	 	X LIMITED PARTNERSHIP
	

	 	By:
	 	American Property Investors, Inc.,
	

	 	 	 	General Partner
	 
	 	 	 	 
	

	 	 	 	

	

	 	 	 	Name:
	

	 	 	 	Title:

10

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