SUBSCRIPTION GUARANTY
THIS SUBSCRIPTION GUARANTY AGREEMENT (the "Agreement"), is
made and entered into as of this ______ day of August, 1997, by and between
American Real Estate Partners, L.P., a Delaware limited partnership ("AREP"),
and High Coast Limited Partnership, a Delaware limited partnership ("High
Coast").
RECITALS:
WHEREAS, AREP is distributing at no cost to holders of record
as of the close of business on August 8, 1997 (the "Record Date"), one
transferable subscription right (each a "Right") for each five depositary units
representing limited partner interests in AREP (the "Depositary Units") held by
such holder. Each Right entitles the holder thereof (each a "Rights Holder") to
purchase (the "Basic Subscription Right") four Depositary Units and one 5%
cumulative pay-in-kind redeemable preferred unit representing a limited partner
interest in AREP (each a "Preferred Unit"); and
WHEREAS, the Rights also entitle each holder thereof who has
exercised any portion of his Basic Subscription Rights to purchase additional
Depositary Units and Preferred Units (the "Over-Subscription Privilege") that
are not purchased through the exercise of all Basic Subscription Rights (the
Depositary Units and the Preferred Units issued upon exercise of the Basic
Subscription Rights and/or the Over-Subscription Privilege, if any, are referred
to herein as the "Securities"). The Securities available pursuant to the
Over-Subscription Privilege will be allocated pro rata (according to the
aggregate number of Basic Subscription Rights exercised so that the aggregate
amount of Depositary Units and Preferred Units issued to exercising Rights
Holders who subscribe pursuant to the Over-Subscription Privilege will generally
be in proportion to the aggregate amount of Depositary Units and Preferred Units
purchased through the exercise of Basic Subscription Rights) among those Rights
Holders who exercise the Over-Subscription Privilege. Other terms and conditions
of the issuance of Rights and the subscription for Securities (the "Offering")
are more particularly set forth in the definitive prospectus dated as of August
__, 1997 (the "Prospectus"), delivered to the holders of Depositary Units
simultaneously with the distribution of the Rights; and
WHEREAS, the Rights, once issued, will be freely transferable
until the close of business on the last business day prior to the expiration
date of the Rights (the "Expiration Date"); and
WHEREAS, the Rights will be listed on the New York Stock
Exchange, Inc. (the "Exchange") under the symbol "ACP.RT;" and
WHEREAS, High Coast, the general partner of which is American
Property Investors, Inc. ("API"), a Delaware corporation wholly owned by Xxxx X.
Icahn ("Icahn") and which is the general partner of AREP (in such capacity, the
"General Partner") together with its affiliates, owns 13,895,712 Depositary
Units (54.1%) and 1,920,945 Preferred Units (88.2%) as of the Record Date; and
WHEREAS, High Coast agrees herein to serve as a stand by
purchaser, guaranteeing to purchase all Depositary Units and Preferred Units
available through the Offering but which have not been subscribed for and
purchased by other Rights Holders either through the exercise of their Basic
Subscription Rights or the Over-Subscription Privilege (the "Unsubscribed
Units"), thereby assuring AREP of receiving gross proceeds from the Offering of
an amount equal to approximately $300 million.
NOW THEREFORE, for and in consideration of the premises, and
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Representations and Warranties. (a) AREP represents and
warrants to High Coast as follows: (The definitions of certain terms, used in
this Section 1 are defined in paragraphs (i) and (xix) of this Section 1(a)).
(i) AREP meets the requirements for use of Form S-3
under the Securities Act of 1933 (the "1933 Act") and has filed with the
Securities and Exchange Commission (the "Commission"), a registration statement
(File number 333-31561) on such Form S-3, (together with any pre-effective or
post-effective amendments thereto, including post-effective amendments filed
pursuant to Rule 462, the "Registration Statement"). As filed, the Registration
Statement and amendments thereto and the prospectus included therein (together
with any amendments and supplements thereto, the "Prospectus"), shall contain
all information required by, and comply in all material respects with the
requirements of, the 1933 Act with respect to the Rights, the Securities, the
Offering thereof and the purchase of the Unsubscribed Units. The Prospectus and
any related letters from AREP to record or beneficial owners of Depositary Units
or Rights, related letters from AREP to securities dealers, commercial banks,
trust companies and other nominees and other offering materials, in each case
disseminated by AREP or by any of its agents with AREP's prior consent,
including, without limitation, the Form of Subscription Certificates, the Form
of Notice of Guaranteed Delivery, Guarantee, and any other information in
writing that AREP may approve or authorize for use in connection with the
Offering, are collectively referred to hereinafter as the "Offering Materials."
(ii) On the Effective Date (as hereinafter defined),
the Registration Statement did or will, and when the Prospectus is first filed
(if required) in accordance with Rule 424(b) and on the Closing Date (as
hereinafter defined), the Prospectus will, comply
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in all material respects with the applicable requirements of the 1933 Act and
the respective rules thereunder; on the Effective Date, the Registration
Statement did not or will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and on the Effective Date,
the Prospectus, if not required to be filed pursuant to Rule 424(b), and the
Offering Materials did not or will not, and on the date of any filing pursuant
to Rule 424(b) and on the Closing Date, the Prospectus and the Offering
Materials will not, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
however, that AREP makes no representations or warranties as to the information
contained in or omitted from the Registration Statement or the Prospectus in
reliance upon and in conformity with information furnished in writing to AREP by
or on behalf of High Coast specifically for inclusion in the Registration
Statement or the Prospectus.
(iii) AREP and its subsidiary, American Real Estate
Holding Limited Partnership (the "Subsidiary"), are limited partnerships duly
formed, validly existing and in good standing under the laws of the State of
Delaware with full power, authority and legal right to own, lease and operate
their respective properties and conduct their respective businesses as now
conducted and currently proposed to be conducted by each of them in the
Registration Statement and the Prospectus; and AREP and its Subsidiary are each
duly qualified to transact business as a foreign limited partnership and are in
good standing in each other jurisdiction in which they own or lease property of
a nature, or transact business of a type, that would make such qualification
necessary, except to the extent that the failure to so qualify or be in good
standing would not have a material adverse effect on AREP and its Subsidiary,
considered as one enterprise.
(iv) AREP and its Subsidiary have all requisite power and
authority to execute, deliver and perform their obligations under this
Agreement; and this Agreement has been duly authorized, executed and delivered
by AREP and, assuming due execution and delivery of this Agreement by High
Coast, constitutes a legal, valid and binding obligation of AREP, enforceable
against AREP in accordance with its terms except (A) as enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and (B) as rights to indemnity
and contribution hereunder may be limited by Federal or state securities laws
and/or public policy.
(v) The consolidated financial statements and the related
notes of AREP incorporated by reference in the Registration Statement and the
Prospectus present fairly in accordance with
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generally accepted accounting principles ("GAAP") the consolidated financial
position of AREP as of the dates indicated therein and the consolidated results
of operations and cash flows of AREP for the periods specified therein. Such
financial statements have been prepared in conformity with GAAP applied on a
consistent basis throughout the periods involved, except as otherwise noted
therein and subject, in the case of interim financial statements, to normal
year-end audit adjustments. The financial statement schedules incorporated by
reference in the Registration Statement and the Prospectus present fairly in
accordance with GAAP the information required to be stated therein.
(vi) All of the Unsubscribed Units will have been duly
authorized, validly issued and duly recorded in the books and on the records of
AREP at the time of issuance; no holder of the Unsubscribed Units will be
subject to personal liability by reason of being such a holder; and none of the
Unsubscribed Units will be issued in violation of the preemptive rights of any
Depositary Unit or Preferred Unit holder.
(vii) The Preferred Units, issued and delivered upon a
distribution, if any, equal to 5% of the liquidation preference on any of the
Unsubscribed Units, will be duly authorized and validly issued and duly recorded
in the books and records of AREP; no holder of any of the Unsubscribed Units as
of the date of issuance will be subject to personal liability by reason of being
such a holder; and none of such Unsubscribed Units outstanding as of the date
thereof, will be issued in violation of the preemptive rights of any holder of
Preferred Units.
(viii) The Depositary Units, when issued and delivered
upon conversion, if any, of any of the Unsubscribed Units, will be duly
authorized and validly issued and duly recorded in the books and records of
AREP; no holder of any of the Depositary Units resulting from the conversion of
any of the Unsubscribed Units as of the date of issuance will be subject to
personal liability by reason of being such a holder; and none of such Depositary
Units outstanding as of the date thereof, will be issued in violation of the
preemptive rights of any holder of Depositary Units.
(ix) AREP has taken or will take all valid and necessary
actions to register and insure the qualification of the Unsubscribed Units under
state securities laws.
(x) AREP has taken all valid action to duly reserve for
listing on the Exchange such number of its authorized and unissued Unsubscribed
Units, if accepted for listing, as are deliverable by AREP pursuant to this
Agreement, against receipt of and payment therefor in accordance with the
provisions set forth herein.
(xi) All securities registered by the Registration
Statement conform in all material respects to the descriptions
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thereof contained or incorporated by reference in the Registration
Statement and the Prospectus.
(xii) Prior to or at the Effective Date, AREP and the
Registrar and Transfer Company, the subscription agent ("Subscription Agent")
will have entered into a subscription agent agreement (the "Subscription Agent
Agreement"). When executed by AREP, the Subscription Agent Agreement will have
been duly authorized, executed and delivered by AREP and, assuming due
authorization, execution and delivery by the Subscription Agent, will constitute
a valid and binding obligation of AREP enforceable against AREP in accordance
with its terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally and except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).
(xiii) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as otherwise
stated or described therein, there has not been (a) any material adverse change
in the condition (financial or otherwise), results of operations, earnings or
business affairs of AREP, whether or not arising in the ordinary course of
business, or (b) any distribution of any kind declared, paid or made by AREP on
its Depositary Units or Preferred Units, other than regular periodic
distributions, if any, and other than the Rights.
(xiv) Neither AREP nor its Subsidiary is in violation of
its certificate of limited partnership or in default under any contract,
indenture, mortgage, loan agreement or other agreement or instrument to which it
is a party or by which any of their respective properties may be subject or by
which it may be bound, except for such defaults that in the aggregate would not
have a material adverse effect on the condition (financial or otherwise) of AREP
or its Subsidiary considered as one enterprise. The execution and delivery of,
and performance under, this Agreement, the exercise of and payment of the
subscription price in connection with such exercise of, the Rights and the
participation in the Offering do not and will not result in any violation of the
certificate of limited partnership of AREP or its Subsidiary or the agreement of
limited partnership of AREP and its Subsidiary, and do not and will not conflict
with, or result in a breach of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of AREP or its Subsidiary under (a) any
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which AREP or its Subsidiary is a party or by which any of their
respective properties may be subject or by which it is or may be bound, or (b)
any existing applicable law, rule, regulation, judgment, order or decree of any
government, government instrumentality or court, domestic or foreign, having
jurisdiction over AREP or its Subsidiary or any of their respective properties
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(except, in the case of (a) and (b) above, where such conflicts, breaches or
defaults or liens, charges or encumbrances in the aggregate would not have a
material adverse effect on the condition (financial or otherwise) of AREP or its
Subsidiary considered as one enterprise).
(xv) No authorization, approval, consent or license of
any government, governmental instrumentality or court, domestic or foreign
(other than under the 1933 Act, the Securities Exchange Act of 1934, as amended
(the "1934 Act") and the securities or blue sky laws of the various states), is
required for the offer and sale by AREP of the Securities or the consummation of
the Offering as set forth in the Registration Statement and the Prospectus or
the consummation by AREP of the transactions contemplated by this Agreement.
(xvi) Except as disclosed in the Prospectus, there is no
action, suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending against or affecting
AREP or its Subsidiary that is required to be disclosed in the Registration
Statement and the Prospectus.
(xvii) AREP has not taken and will not take, directly or
indirectly, any action designed to, or that might be reasonably expected to,
cause or result in stabilization or manipulation of the price of the Rights, the
Depositary Units or the Preferred Units; provided, however, that AREP makes no
representation as to any action taken by High Coast or its affiliates (other
than AREP), except in such affiliates' capacities as officers or agents of AREP,
acting in those capacities.
(xviii) The proceeds of the Offering will be applied as
set forth in the Prospectus.
(xix) The terms which follow, when used in this
Agreement, shall have the meanings indicated. The term "the Effective Date"
shall mean each date that the Registration Statement and any post-effective
amendment or amendments thereto are declared effective by the Securities and
Exchange Commission. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto. "Registration
Statement" shall mean the registration statement referred to in paragraph (i)
above, including exhibits and financial statements, as amended at the Execution
Time (or, if not declared effective at the Execution Time, in the form in which
it shall be declared effective) and, in the event any post-effective amendment
thereto is declared effective prior to the Closing Date, shall also mean such
registration statement as so amended. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as provided by
Rule 430A and any post-effective amendment filed pursuant to Rule 462. "Rule
424," "Rule 430A" and "Rule 462" refer to such rules under the 1933 Act. "Rule
430A Information" means information with respect to the Securities, the
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Unsubscribed Units and the Offering permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A. Any
reference herein to the Registration Statement or the Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 which were filed under the 1934 Act on or before the
Effective Date of the Registration Statement or the issue date of any such
Prospectus, as the case may be; and any reference herein to the terms "amend",
"amendment" or "supplement" with respect to the Registration Statement, any such
Prospectus shall be deemed to refer to and include the filing of any document
under the 1934 Act after the issue date of any such Prospectus, as the case may
be, deemed to be incorporated therein by reference.
(b) High Coast represents and warrants to AREP as follows:
(i) High Coast is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of Delaware
with full power, authority and legal right to own, lease and operate its
properties and conduct its business as now conducted; High Coast is duly
qualified to transact business as a foreign limited partnership and is in good
standing in each other jurisdiction in which it owns or leases property of a
nature, or transact business of a type, that would make such qualification
necessary, except to the extent that the failure to so qualify or be in good
standing would not have a material adverse effect on High Coast.
(ii) High Coast has all requisite power and authority
to execute, deliver and perform its obligations under this Agreement; and this
Agreement has been duly authorized, executed and delivered by High Coast, and,
assuming due execution and delivery of this Agreement by AREP, constitutes a
legal, valid and binding obligation of High Coast, enforceable against High
Coast in accordance with its terms except (A) as enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and (B) as rights to indemnity
and contribution hereunder may be limited by Federal or state securities laws
and/or public policy.
(iii) High Coast is not in violation of its certificate
of limited partnership or in default under any contract, indenture, mortgage,
loan agreement or other agreement or instrument to which it is a party or any of
its properties may be subject or by which it may be bound, except for such
defaults that in the aggregate would not have a material adverse effect on the
condition (financial or otherwise) of High Coast. The execution and delivery of,
and performance under, this Agreement, the exercise of and payment of the
subscription price in connection with such exercise of, the Rights and the
participation in the
7
Offering do not and will not result in any violation of the certificate of
limited partnership of High Coast or the agreement of limited partnership of
High Coast, and do not and will not conflict with, or result in a breach of any
of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of High Coast under (a) any indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which High Coast is a party or any of
its respective properties may be subject or by which it is or may be bound, or
(b) any existing applicable law, rule, regulation, judgment, order or decree of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over High Coast or any of its respective properties (except, in the
case of (a) and (b) above, where such conflicts, breaches or defaults or liens,
charges or encumbrances in the aggregate would not have a material adverse
effect on the condition (financial or otherwise) of High Coast).
(iv) The partnership interests of High Coast are owned
beneficially by the General Partner, ACF Industries, Incorporated, a New Jersey
corporation ("ACF"), and Tortoise Corp., a New York corporation, each of which
is controlled by Icahn; and
(v) High Coast owns beneficially 13,895,712 Depositary
Units and 1,920,945 Preferred Units.
(vi) Immediately prior to the Expiration Date, High
Coast will receive a cash contribution from ACF or an affiliate thereof of such
dollar amount, if any, as is necessary for High Coast to comply with its
obligations to AREP pursuant this Agreement.
(vii) To the extent that the Registration Statement or
Prospectus contains any information regarding High Coast, on the Effective Date,
those portions of the Registration Statement or the Prospectus, furnished in
writing to AREP by or on behalf of High Coast specifically for inclusion
therein, did not or will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading.
(viii) The execution, delivery and consummation of this
Agreement, and the participation by High Coast in the Offering as described in
the Registration Statement and the Prospectus do not and will not result in any
violation of High Coast's agreement of limited partnership and do not and will
not conflict with, or result in a breach of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of High Coast or its
affiliates under (A) any indenture, mortgage, lien agreement, or other agreement
or instrument to which High Coast or its affiliates is a party or any of their
respective properties may be subject, or by which each of them or any of them
may be bound or (B) any existing applicable law, rule, regulation,
8
judgment, order or decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over High Coast or its
affiliates or any of its respective properties (except, in the case of (A) and
(B) above, where such conflicts, breaches or defaults or liens, charges or
encumbrances in the aggregate would not have a material adverse effect on the
condition (financial or otherwise) of High Coast).
(ix) No authorization, approval, consent or license of
any government, governmental instrumentality or court, domestic or foreign
(other than under the 1933 Act and the securities or blue sky laws of the
various states), is required for the receipt or sale of Unsubscribed Units by
High Coast or its affiliates, in connection with the execution, delivery and
consummation of this Agreement, and the participation by High Coast in the
Offering as described in the Registration Statement and the Prospectus.
(x) Except as disclosed in the Prospectus, there is no
action, suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending against or affecting
High Coast.
(xi) High Coast has not taken and will not take,
directly or indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the price of
the Rights, the Depositary Units or the Preferred Units; provided, however, that
High Coast makes no representation as to any action taken by AREP or its
Subsidiary.
2. Agreement of Parties Concerning Purchase, Sale, Delivery
--------------------------------------------------------
and Compensation.
-----------------
On the basis of, and in reliance upon, the representations and
warranties contained herein and subject to the terms and conditions set forth
herein, the parties agree as follows:
(a) AREP agrees to issue and sell to High Coast and High Coast
agrees to (i) subscribe for and purchase 11,116,568 Depositary Units and
2,779,142 Preferred Units through the exercise of its Basic Subscription Rights
and (ii) to purchase Depositary Units and Preferred Units which are not
otherwise acquired by Rights Holders pursuant hereto, thereby assuring AREP will
receive gross proceeds from the Offering of an amount equal to approximately
$300 million.
(b) Delivery of and payment for the Securities purchased by
High Coast mentioned in Section 2(a)(i) above shall be made in accordance with
the terms set forth in the Registration Statement. Delivery of and payment for
the Unsubscribed Units purchased by High Coast mentioned in Section 2(a)(ii)
above shall be on the third (3rd) business day after written notice is given by
AREP or the Subscription Agent to High Coast of the number and
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aggregate purchase price of the Unsubscribed Units High Coast is obligated
hereunder to purchase (the "Closing Date"). Payment shall be made to AREP by
certified or official bank check or similar next day funds payable to the order
of AREP, against delivery to High Coast of those certificates for those
Unsubscribed Units High Coast is obligated hereunder to purchase. The
certificates for such Unsubscribed Units shall be in such denominations as may
be requested by High Coast and registered in the name of High Coast, unless
otherwise designated by High Coast in writing two days before the date of the
Closing Date.
(c) AREP will enter into and perform under an agreement
between High Coast and AREP whereby High Coast is granted registration rights
with respect to all Depositary Units and Preferred Units owned by High Coast
(the "Registration Rights Agreement"), a copy of which is attached hereto as
Exhibit A.
(d) AREP will pay all expenses incident to the performance of
its obligations under this Agreement, including (i) the printing and filing, and
delivery to High Coast of copies, of the Registration Statement as originally
filed and of each amendment thereto, and of the Prospectus; (ii) the printing
(or otherwise reproducing) of this Agreement; (iii) the preparation, issuance
and delivery of the Subscription Certificates to the unit holders of AREP; (iv)
the preparation, issuance and delivery of the certificates for the Securities
and Unsubscribed Units to High Coast; (v) the reasonable fees and disbursements
of AREP's counsel and accountants; (vi) the qualification of the Rights and the
Securities under state securities laws in accordance with the provisions of
Section 1(a)(ix) hereof, including filing fees and the fees and disbursements of
counsel in connection therewith and in connection with the preparation of a
survey of the state securities laws (the "Blue Sky Survey"); (vii) the printing
(or otherwise reproducing) and delivery to High Coast of copies of the Blue Sky
Survey; and (viii) the fees and expenses incurred in connection with the listing
of the Rights and the Securities issued in connection with the Offering, on the
Exchange.
(e) If this Agreement is terminated by High Coast in
accordance with the provisions of Section 4 or Section 6 hereof, AREP shall
reimburse High Coast for all of its reasonable out-of-pocket expenses, including
the reasonable fees and disbursements of High Coast's counsel up to a maximum of
$25,000.
3. Covenants.
---------
(a) AREP covenants to and agrees with High Coast that:
(i) AREP will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, including any post-effective amendment, to become effective
as soon as practicable. Prior to the termination of the Offering, AREP will not
file any amendment of the
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Registration Statement or supplement to the Prospectus without High Coast's
prior consent, which consent shall not be unreasonably withheld or delayed.
Subject to the foregoing sentence, if the Registration Statement has become or
becomes effective pursuant to Rule 430A, or filing of the Prospectus is
otherwise required under Rule 424(b), AREP will cause the Prospectus, properly
completed, to be filed with the Commission pursuant to the applicable paragraph
of Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to High Coast of such timely filing. AREP will promptly advise High
Coast (A) when the Registration Statement, if not effective at the Execution
Time, and any amendment thereto, shall have become effective, (B) when the
Prospectus, shall have been filed (if required) with the Commission pursuant to
Rule 424(b), (C) when, prior to termination of the Offering, any amendment to
the Registration Statement shall have been filed or become effective, (D) of any
request by the Commission for any amendment of the Registration Statement or
supplement to the Prospectus or for any additional information, (E) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose and (F) of the receipt by AREP of any notification with respect to
the suspension of the qualification of the Securities or the Unsubscribed Units
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose. AREP will use its best efforts to prevent the issuance of any
such stop order or suspension and, if issued, to obtain as soon as possible the
withdrawal thereof.
(ii) If, at any time when the Prospectus relating to the
Securities is required to be delivered under the 1933 Act, any event occurs as a
result of which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances under which they
were made not misleading, or if it shall be necessary to amend the Registration
Statement or supplement the Prospectus to comply with the 1933 Act or the rules
thereunder (including to comply with Item 512(c) of the Regulation S-K under the
1933 Act), AREP promptly will prepare and file with the Commission, subject to
the second sentence of paragraph (a)(i) of this Section 3, an amendment or
supplement which will correct such statement or omission or effect such
compliance.
(iii) As soon as practicable, AREP will make generally
available to its unit holders, including High Coast, an earning statement or
statements of AREP which will satisfy the provisions of Section 11(a) of the
1933 Act and Rule 158 promulgated thereunder.
(iv) AREP will furnish to High Coast and its counsel,
without charge, a signed copy of the Registration Statement (including all
amendments and exhibits thereto).
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(v) AREP will promptly advise High Coast if any of the
representations and warranties contained in Section 1(a) hereof becomes
inaccurate in any material respect subsequent to the date hereof.
(vi) AREP will commence mailing, or cause the
Subscription Agent to mail, the Subscription Certificates to holders of the
Depositary Units as of the Record Date not later than seven business days
following the Record Date and shall complete such mailing expeditiously, and
will offer the Securities for subscription in accordance with the terms and
under the conditions set forth in the Prospectus. The Expiration Date shall be
not later than 5:00 PM, New York City time, on September 11, 1997. AREP will
advise High Coast daily, during the period when the Rights are exercisable, of
the number and class of Securities subscribed for, and prior to 12:00 Noon, New
York City time, on the business day following the Expiration Date, will advise
High Coast of the number of Securities for which Rights Holders subscribed.
(b) High Coast covenants to and agrees with AREP that:
(i) High Coast will promptly advise AREP if any of the
representations and warranties contained in Section 1(b) hereof becomes
inaccurate in any material respect subsequent to the date hereof.
(ii) High Coast will deliver to AREP consolidated
financial statements and the related notes of ACF, which present fairly in
accordance with generally accepted accounting principles ("GAAP") the
consolidated financial position of ACF for the last two years.
4. Conditions to Obligations of High Coast.
---------------------------------------
The obligation of High Coast to comply with the provisions of
this Agreement shall be subject to the accuracy of the representations and
warranties on the part of AREP contained herein as of the Execution Time and the
Closing Date, to the accuracy of the statements made by AREP in any certificates
pursuant to the provisions hereof, to the performance by AREP of its obligations
hereunder and the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution time, unless High Coast agrees in writing to a later
time, the Registration Statement will become effective not later than 12:00
Noon, New York City time on the day on which trading in the Rights begins on the
Exchange; if filing of the Prospectus is required pursuant to Rule 424(b), the
Prospectus, will be filed in the manner and within the time period required by
Rule 424(b); and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or threatened.
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(b) AREP shall furnish Xxxxxx Xxxxxx Butowsky Xxxxxxx Shalov &
Xxxx, counsel to High Coast, such documents as are required to enable Xxxxxx
Xxxxxx Butowsky Xxxxxxx Xxxxxx & Xxxx to render a legal opinion on matters
including, without limitation, the issuance and sale of the Rights and the
Securities, the Unsubscribed Units, the Registration Statement, Prospectus and
other related matters as High Coast may reasonably request.
(c) AREP shall have furnished to High Coast certificates of
AREP dated as of the Execution Time and the Closing Date and signed by any two
officers of the General Partner to the effect that:
(i) the representations and warranties of AREP
in this Agreement are true and correct in all material respects at and
as of the Execution Time or on and as of the Closing Date, as the case
may be, with the same effect as if made at the Execution Time or on the
Closing Date, as the case may be, and AREP shall have complied with all
the covenants and agreements and satisfied all conditions, as
applicable;
(ii) there has been no issuance of a stop
order suspending the effectiveness of the Registration Statement and no
proceedings for that purpose have been instituted or, to the best of
AREP's knowledge, no such order is threatened;
(iii) since the date of the most recent
financial statements included in the Prospectus, there has been no
material adverse change in the condition (financial or otherwise), of
AREP or its Subsidiary, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated by
AREP in the Prospectus.
5. Indemnification and Contribution.
(a) AREP agrees to indemnify and hold harmless the general
partner, officers, other limited partners, employees and agents of High Coast
and each person who controls High Coast within the meaning of either the 1933
Act or the 1934 Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the 1933
Act, the 1934 Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement as originally filed or in any amendment thereof, or in
any of the Offering Materials, or in any amendment thereof or supplement
thereto, or arise out of or are based upon 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; provided, however, that AREP will not be
liable in any such case to the extent that any such loss, claim, damage or
liability (A) arises
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out of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to AREP by or on behalf of High Coast
specifically for inclusion therein or (B) is found in a final judgment by a
court of competent jurisdiction to have resulted from the bad faith or
negligence of such indemnified party or any party related to an indemnified
party. This indemnity agreement will be in addition to any liability which AREP
may otherwise have.
(b) High Coast agrees to indemnify and hold harmless AREP,
each of its directors, each of its officers who signs the Registration
Statement, and each person who controls AREP within the meaning of the 1933 Act
or the 1934 Act, to the same extent as the foregoing indemnity from AREP to High
Coast, but only with reference to (i) written information relating to High Coast
furnished to AREP by or on behalf of High Coast specifically for inclusion in
the documents referred to in the foregoing indemnity, or (ii) securities law
violations. This indemnity agreement will be in addition to any liability which
High Coast may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 5, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above, unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or
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additional to those available to the indemnifying party (it being understood,
however, that in connection with such action the indemnifying party shall not be
liable for the expenses of more than one separate counsel (in addition to local
counsel) in any one action or separate but substantially similar actions in the
same jurisdiction arising out of the same general allegations or circumstances,
representing the indemnified parties who are parties to such action), (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action), unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 5 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, AREP and High Coast agree to contribute to the
aggregate losses, claims, damages and liabilities, including legal or other
expenses reasonably incurred in connection with investigating or defending same
(collectively "Losses") to which AREP, on the one hand, and High Coast, on the
other hand, may be subject in such proportion as is appropriate to reflect the
relative benefits received by AREP, on the one hand, and High Coast, on the
other hand, from the Offering. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, AREP, on the one hand, and
High Coast, on the other hand, shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of AREP, on the one hand, and of High Coast, on the other hand, in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by AREP
shall be deemed to be equal to the total net proceeds from the Offering (before
deducting expenses), as set forth on the cover page of the Prospectus (assuming
that all such Rights are exercised), and benefits received by High Coast shall
be deemed to be equal to the total compensation paid to High Coast hereunder.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by AREP or High Coast.
AREP and High Coast agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of
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Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 5, each person who controls High Coast within the meaning of either the
1933 Act or the 1934 Act and each director, officer, partner, employee and agent
of High Coast shall have the same rights to contribution as High Coast, and each
person who controls AREP within the meaning of either the 1933 Act or the 1934
Act, each officer of AREP who shall have signed the Registration Statement and
each officer of AREP shall have the same rights to contribution as AREP, subject
in each case to the applicable terms and conditions of this paragraph (d).
6. Termination. This Agreement shall be subject to termination
in the absolute discretion of High Coast, by notice given to AREP prior to
delivery of and payment for the Securities and Unsubscribed Units, if prior to
such time (i) trading in AREP's Depositary Units or Preferred Units shall have
been suspended by the Commission or the Exchange or trading in securities
generally on the Exchange shall have been suspended or limited or minimum prices
shall have been established on the Exchange, (ii) AREP shall terminate the
Offering or the Offering shall not take place, (iii) a banking moratorium shall
have been declared either by Federal or New York State authorities, (iv) there
shall have occurred a decline in either the Dow Xxxxx Industrial Average or the
Standard & Poor's Index of 400 Industrial Companies by an amount in excess of
20% measured from the close of business on the last trading day preceding the
date hereof to the close of business on the Expiration Date, or (v) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency, or war or other calamity or crisis the
effect of which on the financial markets is such as to make it, in the sole
judgment of High Coast, impracticable or inadvisable to proceed with the
Offering or delivery of the Securities and/or the Unsubscribed Units or the
fulfillment of High Coast's obligations, as contemplated by this Agreement.
7. Representations and Indemnities to Survive. The
respective representations, warranties, agreements, covenants, indemnities and
other statements of AREP or its officers, and of High Coast or its affiliates as
set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any of the
officers, directors or controlling persons of High Coast or AREP. The
representations, warranties, agreements, covenants, indemnities and other
statements will survive delivery of and payment for the Securities. The
provisions of the subsection (e) of Section 2 and Section 5 hereof shall survive
the termination or cancellation of this Agreement.
8. Notices. All communications hereunder will be in
writing and effective only on receipt, and, if sent to High Coast
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will be mailed, delivered or telegraphed and confirmed to it at 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxx X. Icahn; or, if sent
to AREP, will be mailed, delivered or telegraphed and confirmed to it at 000
Xxxxx Xxxxxxx, Xxxxx Xxxxx, XX 00000, attn. Xxxx X. Xxxxxxxxxx.
9. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons of AREP and High Coast, and no
other person will have any right or obligation hereunder.
10. Applicable Law. This Agreement will be governed by and
construed in accordance with the substantive laws of the State of New York.
11. Business Day. For purposes of this Agreement, "business
day" means any day on which the Exchange is open for trading.
12. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
13. Agreement Supersedes. This Agreement shall supersede all
provisions of any prior agreements, whether written or oral, of the parties to
this Agreement that relate to the transactions contemplated by this Agreement.
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IN WITNESS WHEREOF, and intending to be legally bound thereby,
each of AREP and High Coast has signed or caused to be signed its name by its
proper officers thereunto duly authorized, all as of the day and year first
above written.
AMERICAN REAL ESTATE PARTNERS, L.P.
By: American Property Investors, Inc.
By:
-----------------------------
Name:
Title:
HIGH COAST LIMITED PARTNERSHIP
By: American Property Investors, Inc.
By:
-----------------------------
Name:
Title:
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