-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FqQzxnveu/5z1G8WswR6ONxDueR6v9kXie5Ke5lCfcjcbnF+Ck9rGqmcukmKiKF9 DULdmz44ABfdphNVBacuMg== 0000897204-97-000306.txt : 19971223 0000897204-97-000306.hdr.sgml : 19971223 ACCESSION NUMBER: 0000897204-97-000306 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19971222 SROS: AMEX GROUP MEMBERS: DAVID H. LESSER GROUP MEMBERS: HUDSON BAY PARTNERS II LP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN REAL ESTATE INVESTMENT CORP CENTRAL INDEX KEY: 0000906113 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 841246585 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-51613 FILM NUMBER: 97742283 BUSINESS ADDRESS: STREET 1: 1670 BROADWAY STREET 2: SUITE 3350 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3038694700 MAIL ADDRESS: STREET 1: 1670 BRAODWAY STREET 2: SUITE 3350 CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: AMERICANA REAL ESTATE INVESTMENT CORP DATE OF NAME CHANGE: 19931007 FORMER COMPANY: FORMER CONFORMED NAME: AMERICANA REAL ESTATE INVESTMENT TRUST DATE OF NAME CHANGE: 19930524 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HUDSON BAY PARTNERS II LP CENTRAL INDEX KEY: 0001051724 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 237 PARK AVENUE STREET 2: SUITE 900 CITY: NEW YORK STATE: NY ZIP: 10017 MAIL ADDRESS: STREET 1: 237 PARK AVENUE STREET 2: SUITE 900 CITY: NEW YORK STATE: NY ZIP: 10017 SC 13D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------- SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 ------------------------- AMERICAN REAL ESTATE INVESTMENT CORPORATION (Name of Issuer) COMMON STOCK (Title of Class of Securities) 029166105 (Cusip Number) ------------------------- MR. DAVID H. LESSER HUDSON BAY PARTNERS II, L.P. 237 PARK AVENUE SUITE 900 NEW YORK, NEW YORK 10017 (212) 692-3622 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) ------------------------- COPY TO: ROBERT E. KING, JR., ESQ. ROGERS & WELLS 200 PARK AVENUE NEW YORK, NEW YORK 10166 212-878-8000 ------------------------- DECEMBER 12, 1997 (Date of event which requires filing of this statement) - ------------------------------------------------------------------------------- Check box if the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4). Check box if a fee is being paid with the statement. - ------------------------------------------------------------------------------- CUSIP No. 029166105 13D Page 2 of 8 Pages
1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON Hudson Bay Partners II, L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) (B) 3. SEC USE ONLY 4. SOURCES OF FUNDS WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware 7. SOLE VOTING POWER NUMBER OF 1,754,545* UNITS 8. SHARED VOTING POWER BENEFICIALLY 1,754,545* OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING 1,754,545* PERSON WITH 10. SHARED DISPOSITIVE POWER 1,754,545* 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,754,545 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 33.23% 14. TYPE OF REPORTING PERSON PN
* Mr. Lesser is President, sole director and sole shareholder of Hudson Bay Partners, Inc., the general partner of Hudson Bay Partners II, L.P., and, as a result of such affiliation, may be deemed to have shared voting and dispositive power over the 1,754,545 shares of Common Stock owned by Hudson Bay Partners II, L.P.; however, Mr. Lesser expressly disclaims beneficial ownership of any Common Stock not directly owned by him. CUSIP No. 029166105 13D Page 3 of 8 Pages
1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON David H. Lesser 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) (B) 3. SEC USE ONLY 4. SOURCES OF FUNDS PF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) 6. CITIZENSHIP OR PLACE OF ORGANIZATION United States 7. SOLE VOTING POWER NUMBER OF 9,827 UNITS 8. SHARED VOTING POWER BENEFICIALLY 1,754,545* OWNED BY EACH 9. SOLE DISPOSITIVE POWER REPORTING 9,827 PERSON WITH 10. SHARED DISPOSITIVE POWER 1,754,545* 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,764,372* 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 33.41% 14. TYPE OF REPORTING PERSON IN
* Mr. Lesser is President, sole director and sole shareholder of Hudson Bay Partners, Inc., the general partner of Hudson Bay Partners II, L.P., and, as a result of such affiliation, may be deemed to have shared voting and dispositive power over the 1,754,545 shares of Common Stock owned by Hudson Bay Partners II, L.P.; however, Mr. Lesser expressly disclaims beneficial ownership of any Common Stock not directly owned by him. SCHEDULE 13D FILED PURSUANT TO RULE 13d-1 OF THE GENERAL RULES AND REGULATIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED ITEM 1. SECURITY AND ISSUER. This Statement on Schedule 13D (this "Statement") relates to shares of the common stock, par value $0.001 per share (the "Common Stock") of American Real Estate Investment Corporation, a Maryland corporation (the "Issuer"). The Issuer's principal executive offices are located at Plymouth Meeting Executive Campus, 620 W. Germantown Pike, Suite 200, Plymouth Meeting, Pennsylvania 19462. ITEM 2. IDENTITY AND BACKGROUND. (a)-(c) The entity filing this statement is Hudson Bay Partners II, L.P., a Delaware limited partnership ("Hudson Bay") of which Hudson Bay Partners, Inc., a New York corporation, is the sole general partner (the "General Partner"). David H. Lesser is the sole director and executive officer of the General Partner. The principal executive offices of Hudson Bay and the General Partner and the principal business address of Mr. Lesser are located at 237 Park Avenue, Suite 900, New York, New York 10017. Hudson Bay's principal business is investments in real estate related securities. The General Partner's principal business is acting as general partner of Hudson Bay and Hudson Bay Partners, L.P., a Delaware limited partnership. Mr. Lesser's current principal occupation is to serve as President of the General Partner. (d)-(e) During the last five years, neither Hudson Bay, the General Partner, nor Mr. Lesser (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining further violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Hudson Bay used funds from its working capital for the purchases described in Items 4 and 5 below. ITEM 4. PURPOSE OF THE TRANSACTION. On August 20, 1997, the Issuer and American Real Estate Investment, L.P. (the "Operating Partnership") entered into agreements with Hudson Bay and other investors (collectively with Hudson Bay, the "Investor Group") providing for a series of transactions (the "Transactions") involving the contribution by the Investor Group of cash, real estate properties and other assets to the Issuer and to the Operating Partnership in exchange for shares of Common Stock and units of limited partnership interest of the Operating Partnership ("OP Units"). The Transactions involved, among other things, (i) the cash investment in the Issuer by Hudson Bay and certain other investors, the contribution by McBride Hudson Bay, L.P. and various entities affiliated with it of interests in certain entities owning real property, cash and acquisition agreements, the contribution by Jeffrey E. Kelter of a 95% non-voting equity interest in Penn Square Properties, Inc., a Pennsylvania corporation ("Penn Square"), the contribution by Penn Square of contracts relating to the acquisition of certain real estate properties and the merger of Fair Lawn Industrial Park, Inc., a New York corporation, with and into the Issuer with the Issuer as the surviving corporation (the "Merger"), in each case in exchange for either Common Stock, OP Units or warrants for the purchase of Common Stock or OP Units, or a combination of the foregoing; (ii) the election of five persons to the Issuer's board of directors (the "Board") to fill five vacancies that existed upon the consummation of the Transactions by reason of the resignations of three of the Issuer's previous directors and the expansion of the Board by two persons; (iii) the adoption, as a consequence of the Merger, of Amended and Restated Articles of Incorporation and Amended and Restated Bylaws of the Issuer; (iv) the disposition of the multi-family residential properties or interests therein owned by the Operating Partnership; (v) the amendment of the Agreement of Limited Partnership of the Operating Partnership; (vi) in consideration of the Transactions described in clause (i) above, the issuance to members of the Investor Group of an aggregate of 4,136,033 shares of Common Stock and an aggregate of 3,362,503 OP Units, and the issuance of warrants to purchase 300,000 shares of Common Stock and 375,000 OP Units; and (vii) the assumption by the Issuer of approximately $56.8 million in certain indebtedness as part of the Transactions described in clause (i) above. The Issuer's stockholders approved the Transactions at a special meeting held on December 11, 1997, and the Transactions were consummated on December 12, 1997. Upon consummation of the Transactions, the Issuer issued to Hudson Bay 1,454,545 shares of Common Stock and a warrant (the "Warrant") to purchase 300,000 shares of Common Stock, in exchange for Hudson Bay's investment of $16 million in the Issuer. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a)-(b) Hudson Bay is the record and beneficial owner of 1,454,545 shares of Common Stock of the Issuer and has sole voting and dispositive power with respect to such shares. Hudson Bay also owns a Warrant to purchase 300,000 shares of Common Stock of the Issuer. The Warrant is exercisable by Hudson Bay at any time before 5:00 p.m. New York City time on December 12, 2004. Upon exercise of the Warrant, Hudson Bay would have sole voting and dispositive power for any shares of Common Stock issued pursuant to such exercise. Accordingly, pursuant to the Warrant, Hudson Bay owns beneficially 300,000 shares of the Common Stock of the Issuer, and therefore owns beneficially an aggregate of 1,754,545 shares of Common Stock, representing approximately 33.23% of the outstanding Common Stock of the Issuer. The General Partner owns no shares of Common Stock, except indirectly as general partner of Hudson Bay. Mr. Lesser is the record and beneficial owner of 9,827 shares of Common Stock, constituting approximately 0.19% of the outstanding Common Stock of the Issuer, and has sole voting and dispositive power with respect to such shares. As a result of his affiliation with the General Partner, Mr. Lesser may be deemed to beneficially own the 1,454,545 shares of Common Stock owned by Hudson Bay and the 300,000 shares of Common Stock issuable upon exercise of the Warrant. Mr Lesser expressly disclaims beneficial ownership of any shares of Common Stock not directly owned by him. Mr. Lesser may also be deemed to share with Hudson Bay voting and dispositive power over the 1,454,545 shares of Common Stock owned by Hudson Bay and the 300,000 shares of Common Stock to be received upon exercise of the Warrant. (c) On December 10, 1997, Mr. Lesser acquired 144 shares of Common Stock through the Issuer's dividend reinvestment program. On December 12, 1997, Hudson Bay acquired 1,454,545 shares of Common Stock and the Warrant in the Transactions described in Item 4 above. (d)-(e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The Issuer, Hudson Bay and certain other holders of Common Stock of the Issuer (collectively, the "Holders") entered into a Registration Rights Agreement, dated December 12, 1997 (the "Registration Rights Agreement"), pursuant to which the Issuer granted the Holders certain registration rights with respect to the shares of Common Stock held by them. A copy of the Registration Rights Agreement is attached herein as Exhibit 7.2. Other than the Registration Rights Agreement, no contracts, arrangements, understandings or relationships (legal or otherwise) between Hudson Bay, the General Partner or Mr. Lesser and any other person exists with respect to any securities of the Issuer, including but not limited to transfer or voting of any such securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 7.1 Agreement of Joint Filing between Hudson Bay Partners II, L.P., and David H. Lesser, dated December 19, 1997. Exhibit 7.2 Registration Rights Agreement, dated December 12, 1997. SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: December 19, 1997 HUDSON BAY PARTNERS II, L.P. By: Hudson Bay Partners, Inc., General Partner By: /S/ DAVID H. LESSER --------------------------------------- David H. Lesser President By: /S/ DAVID H. LESSER --------------------------------------------- David H. Lesser, individually EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ----------- ----------- 7.1 Agreement of Joint Filing between Hudson Bay Partners II, L.P. and David H. Lesser, dated December 19, 1997. 7.2 Registration Rights Agreement, dated December 12, 1997.
EXHIBIT 7.1 AGREEMENT OF JOINT FILING ------------------------- Hudson Bay Partners II, L.P. and David H. Lesser hereby agree that the Statement on Schedule 13D to which this agreement is attached as an exhibit, as well as all future amendments to such Statement, shall be filed jointly on behalf of each of them. This agreement is intended to satisfy the requirements of Rule 13d-1(f)(1)(iii) under the Securities Exchange Act of 1934, as amended. Dated: December 19, 1997 HUDSON BAY PARTNERS II, L.P. By: Hudson Bay Partners, Inc., General Partner By: /S/ DAVID H. LESSER ------------------------------ Name: David H. Lesser Title: President By: /S/ DAVID H. LESSER -------------------------------- David H. Lesser, individually EX-7.2 2 EXHIBIT 7.2 REGISTRATION RIGHTS AGREEMENT dated as of December 12, 1997, between AMERICAN REAL ESTATE INVESTMENT CORPORATION, a Maryland corporation (the "Company"), and the persons listed on the signature pages hereto (each an "Initial Holder" and collectively, the "Initial Holders"). WHEREAS, in connection with the Master Investment Agreement, dated as of August 20, 1997 (the "Master Agreement"), among the Company and the parties listed on the signature pages thereto, each Initial Holder will receive shares of Common Stock (as defined below); and WHEREAS, in order to induce the Initial Holders to enter into the First Amendment to the Master Agreement dated December [12], 1997, the Company has agreed to provide each Initial Holder with the registration rights set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: Section 1. DEFINITIONS. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Master Agreement. For purposes of this Agreement, the following terms shall have the following meanings: "Closing Date" has the meaning given to it in the Master Agreement. "Common Stock" means the common stock, par value $.001, of the Company. "Counsel to the Holders" means the single law firm from time to time representing the Holders, as appointed by the Holders of a majority in number of the Registrable Securities, which law firm shall be reasonably acceptable to the Company. "Effective Period" means, with respect to any Holder, a period commencing on the date of this Agreement and ending on the earlier of (i) the first date as of which all Registrable Securities cease to be Registrable Securities and (ii) the date on which such Holder may sell Registrable Securities in accordance with Rule 145(d)(3) under the Securities Act. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Holder" means a person who owns Registrable Securities and is either (i) named on the signature pages hereof as an Initial Holder, or (ii) a person who has agreed to be bound by the terms of this Agreement as if such person were a Holder and is (A) a person to whom a Holder has transferred Registrable Securities pursuant to an applicable exemption from registration under the Securities Act, the executor of the estate of such Holder or any of such Holder's heirs, devisees, legatees or assigns, or (C) upon the disability of any Holder, any guardian or conservator of such Holder. "NASD" means the National Association of Securities Dealers, Inc. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Prospectus" means the prospectus included in any Shelf Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by any Shelf Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus. "Registrable Securities" means the shares of Common Stock to be issued on the Closing Date in connection with the Master Agreement and the transactions described therein, unless (i) they have been effectively registered under Section 5 of the Securities Act and disposed of pursuant to an effective Shelf Registration Statement, (ii) such securities can be freely sold and transferred without restriction under Rule 144(k) or Rule 145 or any other similar restrictions under the Securities Act, (iii) such securities have been transferred pursuant to Rule 144 under the Securities Act or any successor rule such that, after any such transfer referred to in this clause (iii), such securities may be freely transferred without restriction under the Securities Act or (iv) such securities have ceased to be outstanding. "Registration Expenses" means any and all reasonable expenses incident to performance of or compliance with this Agreement, including, without limitation, (i) all SEC, NASD and securities exchange registration and filing fees, (ii) all fees and expenses of complying with state securities or blue sky laws, (iii) all printing, messenger and delivery expenses, (iv) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or automated quotation system pursuant to Section 3(h), (v) the fees and disbursements of counsel for the Company and of its independent public accountants, (vi) the reasonable fees and expenses of any special experts retained by the Company in connection with the requested registration and (vii) the reasonable fees and expenses of Counsel to the Holders. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Shelf Registration" means a "shelf" registration statement on an appropriate form pursuant to Rule 415 under the Securities Act (or any successor rule that may be adopted by the SEC). 2 "Shelf Registration Statement" means any Shelf Registration of the Company referred to in Section 2, including any Prospectus, amendments and supplements to any such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in any such registration statement. Section 2. SHELF REGISTRATION UNDER THE SECURITIES ACT. Within 22 months following the Closing Date, the Company shall cause to be filed a Shelf Registration Statement providing for the sale by the Holders of all of the Registrable Securities in accordance with the terms hereof and will use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective by the SEC as soon as reasonably practicable, but in any event no later than the second anniversary of the Closing Date. The Company agrees to use its reasonable best efforts to keep the Shelf Registration Statement continuously effective under the Securities Act until such time as there are no Registrable Securities outstanding and further agrees to supplement or amend the Shelf Registration Statement, if and as required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or by any other rules and regulations thereunder for Shelf Registration. Section 3. REGISTRATION PROCEDURES. In connection with the obligations of the Company with respect to the Shelf Registration Statement pursuant to Section 2 hereof, the Company shall: (a) prepare and file with the SEC a Shelf Registration Statement with respect to the Registrable Securities on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate, and which form shall be available for the sale of the Registrable Securities in accordance with the intended methods of distribution thereof (including distributions under Rule 415 under the Securities Act), and use commercially reasonable efforts to cause such Shelf Registration Statement to become and remain effective; (b) prepare and file with the SEC amendments and post-effective amendments to such Shelf Registration Statement and such amendments and supplements to the Prospectus used in connection therewith as may be necessary to maintain the effectiveness of such registration or as may be required by the rules, regulations or instructions applicable to the registration form utilized by the Company or by the Securities Act or rules and regulations thereunder necessary to keep such Shelf Registration Statement continuously effective as provided in Section 2, and cause the Prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to otherwise comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Shelf Registration Statement until such time as all Registrable Securities covered by such Shelf Registration Statement have ceased to be Registrable Securities; (c) furnish to each Holder of such Registrable Securities such number of copies of such Shelf Registration Statement and of each amendment and post-effective amendment thereto (in each case including all exhibits), any Prospectus (including each preliminary prospectus) or Prospectus supplement and such other documents as such Holder may 3 reasonably request in order to facilitate the disposition of the Registrable Securities by such Holder (the Company hereby consenting to the use (subject to the limitations set forth in the last paragraph of this Section 3) of the Prospectus (including each preliminary prospectus) or any amendment or supplement thereto in connection with such disposition); (d) use commercially reasonable efforts to register or qualify such Registrable Securities covered by such Shelf Registration Statement under such other securities or blue sky laws of such jurisdictions in the United States as each Holder shall reasonably request, and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder, except that the Company shall not for any such purpose be required to (i) qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this Section 3(d), it would not be obligated to be so qualified, (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction; (e) notify each Holder of any such Registrable Securities covered by such Shelf Registration Statement, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the Company's becoming aware that the Prospectus included in such Shelf 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 light of the circumstances then existing, and prepare and furnish to such Holder a reasonable number of copies of an amendment to such Shelf Registration Statement or related Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (f) notify each Holder of Registrable Securities covered by such Shelf Registration Statement at any time, (1) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Shelf Registration Statement or any post-effective amendment, when the same has become effective; (2) of any request by the SEC for amendments or supplements to the Shelf Registration Statement or the Prospectus or for additional information; (3) of the issuance by the SEC of any stop order of which the Company or its counsel is aware or should be aware suspending the effectiveness of the Shelf Registration Statement or any order preventing the use of a related Prospectus, or the initiation or any threats of any proceedings for such purposes; and 4 (4) of the receipt by the Company of any written notification of the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or any threats of any proceeding for that purpose; (g) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC, and make available to the Holders an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act, provided that the Company shall be deemed to have complied with this paragraph if it has complied with Rule 158 under the Securities Act; (h) use commercially reasonable efforts to cause all such Registrable Securities to be listed on any securities exchange or automated quotation system on which the Common Stock is then listed, if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange or automated quotation system, and to provide a transfer agent and registrar for such Registrable Securities covered by such Shelf Registration Statement no later than the effective date of such Shelf Registration Statement; (i) cooperate with the Holders of Registrable Securities covered by such Shelf Registration Statement to facilitate, to the extent commercially reasonable under the circumstances, the timely preparation and delivery of certificates (not bearing any restrictive legends) representing the securities to be sold under such Shelf Registration Statement, and enable such securities to be in such denominations and registered in such names as such Holders may request; (j) provide any Holder of Registrable Securities included in such Shelf Registration Statement and any attorney, accountant or other agent retained by any such Holder (collectively, the "Inspectors") with reasonable access to appropriate officers of the Company and the Company's subsidiaries to ask questions and to obtain information reasonably requested by any such Inspector and make available for inspection all financial and other records and other information, pertinent corporate documents and properties of any of the Company and its subsidiaries and affiliates (collectively, the "Records"), as shall be reasonably necessary to enable them to exercise their due diligence responsibility; provided, however, that the Records that the Company determines, in good faith, to be confidential and which it notifies the Inspectors in writing are confidential shall not be disclosed to any Inspector unless such Inspector signs a confidentiality agreement reasonably satisfactory to the Company but in any event permitting disclosure by an Inspector if (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission of a material fact in such Shelf Registration Statement or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction; provided further, however, that any decision regarding the disclosure of information pursuant to subclause (i) shall be made only after consultation with counsel for the applicable Inspectors. Each Holder of Registrable Securities agrees that it will, promptly after learning that disclosure of such Records is sought in a court having jurisdiction, give notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of such Records; and 5 (k) in the event of the issuance of any stop order of which the Company or its counsel is aware or should be aware suspending the effectiveness of the Shelf Registration Statement or of any order suspending or preventing the use of any related Prospectus or suspending the qualification of any Registrable Securities included in the Shelf Registration Statement for sale in any jurisdiction, the Company will use commercially reasonable efforts promptly to obtain its withdrawal. The Company may require each Holder of Registrable Securities as to which any registration is being effected to furnish the Company with such information regarding such Holder and pertinent to the disclosure requirements relating to the registration and the distribution of such securities as the Company may from time to time reasonably request in writing. Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(e), such Holder will forthwith discontinue disposition of Registrable Securities pursuant to the Prospectus or Shelf Registration Statement covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(e), and, if so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. Section 4. REGISTRATION EXPENSES. The Company will pay all Registration Expenses in connection with all registrations of Registrable Securities pursuant to Section 2 upon the written request of any of the Holders, and each Holder shall pay (x) any fees or disbursements of counsel to such Holder (other than Counsel to the Holders, if any) and (y) all commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities pursuant to the Shelf Registration Statement. Section 5. REPORTS UNDER THE EXCHANGE ACT. The Company agrees to: (a) file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act; and (b) furnish to any Holder, during the Effective Period, upon request (A) a written statement by the Company that it has complied with the current public information and reporting requirements of Rule 144 under the Securities Act and the Exchange Act and (B) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company. Section 6. RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES. Each Holder agrees with the Company that: (a) If the Board of Directors of the Company determines in its good faith judgment that the filing of the Shelf Registration Statement under Section 2 hereof or the use of any Prospectus would materially impede, delay or interfere with any pending material financing, acquisition 6 or corporate reorganization or other material corporate development involving the Company or any of its subsidiaries, or require the disclosure of important information which the Company has a bona fide business purpose for preserving as confidential or the disclosure of which would impede the Company's ability to consummate a significant transaction, upon written notice of such determination by the Company, the rights of the Holders to offer, sell or distribute any Registrable Securities pursuant to the Shelf Registration Statement or to require the Company to take action with respect to the registration or sale of any Registrable Securities pursuant to the Shelf Registration Statement (including any action contemplated by Section 3 hereof) will be suspended until the date upon which the Company notifies the Holders in writing that suspension of such rights for the grounds set forth in this Section 6(a) is no longer necessary, but no such period shall extend for longer than 90 days. (b) In the case of the registration of any underwritten equity offering proposed by the Company (other than any registration by the Company of (i) an employee stock option, stock purchase or compensation plan or of securities issued or issuable pursuant to any such plan or (ii) a dividend reinvestment plan), each Holder agrees, if requested in writing by the managing underwriter or underwriters administering such offering, not to effect any offer, sale or distribution of Registrable Securities (or any option or right to acquire Registrable Securities) during the period commencing on the 7th day prior to the expected effective date (which date shall be stated in such notice) of the registration statement covering such underwritten primary equity offering and ending on the date specified by such managing underwriter in such written request to such Holder, which date shall not be later than 90 days after such expected date of effectiveness. (c) In the event that any Holder uses a Prospectus in connection with the offering and sale of Registrable Securities covered by such Prospectus, such Holder will use only the latest version of such Prospectus provided to it by the Company. Section 7. INDEMNIFICATION; CONTRIBUTION. (a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and hold harmless each Holder of Registrable Securities, its officers, directors, agents, trustees, stockholders and each Person who controls such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), against all losses, claims, damages, liabilities and expenses (including reasonable attorneys' fees, disbursements and expenses) incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation arising out of or based upon (i) any violation by the Company (or its officers, directors or controlling persons) of any Federal or state law, rule or regulation applicable to the Company and relating to any action required or inaction by the Company (or such other person) in connection with any Shelf Registration Statement, (ii) any untrue or alleged untrue statement of material fact contained in the Shelf Registration Statement, any Prospectus or preliminary Prospectus, or any amendment or supplement to any of the foregoing or (iii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or a preliminary Prospectus, in light of the circumstances then existing) not misleading, except in each case insofar as the same arise out of or are based upon any such untrue statement or omission made in reliance on and in conformity 7 with information with respect to such indemnified party furnished in writing to the Company by such indemnified party or its counsel expressly for use therein. Notwithstanding the foregoing provisions of this Section 7(a), the Company will not be liable to any Holder of Registrable Securities (or any officer, director, agent, trustee, stockholder or controlling person thereof) or any other Person, if any, who controls such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), under the indemnity agreement in this Section 7(a) for any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense that arises out of such Holder's or other Person's failure to send or deliver a copy of the final Prospectus to the Person asserting an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of the Registrable Securities to such Person if such statement or omission was corrected in such final Prospectus and the Company has previously furnished copies thereof to such Holder or other Person in accordance with this Agreement. (b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. In connection with the Shelf Registration Statement, each Holder will furnish to the Company in writing such information, including the name, address and the amount of Registrable Securities held by such Holder, as the Company reasonably requests for use in such Shelf Registration Statement or the related preliminary or final Prospectus and agrees to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 7(a)) the Company, all other Holders and any of their respective affiliates, directors, officers, agents, trustees, stockholders and controlling Persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), against any losses, claims, damages, liabilities and expenses resulting from (i) any violation by such Holder (or its officers, directors, agents, trustees, stockholders or controlling persons) of any Federal or state law, rule or regulation relating to action required of or inaction by such Holder (or other Person) in connection with its offer and sale of Registrable Securities and (ii) any untrue or alleged untrue statement of a material fact contained in, or any omission or alleged omission of a material fact required to be stated in, such Shelf Registration Statement or preliminary or final Prospectus or any amendment or supplement to any of them or necessary to make the statements therein (in the case of a Prospectus, in the light of the circumstances then existing) not misleading, but only to the extent that any such untrue statement or omission is made in reliance on and in conformity with information with respect to such Holder furnished in writing to the Company by such Holder or its counsel specifically for inclusion therein. (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to indemnification hereunder agrees to give prompt written notice to the indemnifying party after the receipt by such indemnified party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which such indemnified party may claim indemnification or contribution pursuant to this Agreement (provided that failure to give such notification shall not affect the obligations of the indemnifying party pursuant to this Section 7 except to the extent the indemnifying party shall have been actually prejudiced as a result of such failure). In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying 8 party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under these indemnification provisions for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation, unless in the reasonable judgment of any indemnified party a conflict of interest is likely to exist, based on the written opinion of counsel, between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the reasonable fees and expenses of such additional counsel or counsels. No indemnifying party, in defense of any such action, suit, proceeding or investigation, shall, except with the written consent of each indemnified party, consent to the entry of any judgment or entry into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such action, suit, proceeding or investigation to the extent the same is covered by the indemnity obligation set forth in this Section 7. No indemnified party shall consent to entry of any judgment or enter into any settlement without the written consent of each indemnifying party. (d) CONTRIBUTION. If the indemnification from the indemnifying party provided for in this Section 7 is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified party in connection with the actions which resulted in such losses, claims, damages, liabilities and expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 7(c), any legal and other fees and expenses reasonably incurred by such indemnified party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 7(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Each Holder's obligation to contribute is several in the proportion that the proceeds of the offering received by such Holder bears to the total proceeds of the offering, and not joint. 9 If indemnification is available under this Section 7, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 7(a) or (b), as the case may be, without regard to the relative fault of said indemnifying parties or indemnified party or any other equitable consideration provided for in this Section 7(d). (e) In no event shall any Holder of Registrable Securities be liable or required to pay any amount under this Section 7 or otherwise in respect of any untrue or alleged untrue statement or omission or alleged omission for amounts in excess of the amount by which the total price at which the Registrable Securities of such Holder were offered to the public exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue statement or omission. (f) The provisions of this Section 7 shall be in addition to any liability which any indemnifying party may have to any indemnified party and shall survive the termination of this Agreement. Section 8. MISCELLANEOUS. (a) REMEDIES. Each Holder of Registrable Securities in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. (b) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of at least a majority in number of the Registrable Securities then outstanding, and, in any case, of each Holder whose rights would be materially adversely affected by such amendment, modification, supplement, waiver or consent, as the case may be. (c) NOTICES. Any notice required to be given hereunder shall be sufficient if in writing, and sent by facsimile transmission or by courier service (with proof of service), hand delivery or certified or registered mail (return receipt requested and first-class postage prepaid), addressed as follows: (i) if to a Holder of Registrable Securities, at the address of such Holder below such Holder's name on the signature pages hereof or, if not a party hereto on the date hereof, such other address as such Holder may designate to the Company in writing; and 10 (ii) if to the Company to: American Real Estate Investment Corporation Plymouth Meeting Executive Campus 620 W. Germantown Pike Plymouth Meeting, PA 19462 Phone: (610) 834-7950 Facsimile: (610) 834-9560 or to such other address as any party shall specify by written notice so given, and such notice shall be deemed to have been delivered as of the date so telecommunicated, personally delivered or mailed. (d) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this Agreement shall inure to the benefit of and be binding upon the successors, assigns, heirs, executors, and administrators of the parties hereto; provided, however, that (i) any Holder shall have agreed in writing to become a Holder under this Agreement and to be bound by the terms and conditions hereof and (ii) subject to clause (i), this Agreement and the provisions of this Agreement that are for the benefit of the Holders shall not be assignable by any Holder to any Person that is not so permitted to be a Holder, and any such purported assignment shall be null and void. (e) COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. (f) DESCRIPTIVE HEADINGS. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (g) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. (h) SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby and that all remaining provisions contained herein shall not be in any way impaired thereby. (i) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final expression and a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter hereof. There are no restrictions, promises, warranties or undertakings with respect to the subject matter hereof, other than those set forth or referred to herein and therein. This Agreement supersedes all 11 prior agreements and understandings between the parties with respect to such subject matter. 12 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. AMERICAN REAL ESTATE INVESTMENT CORPORATION By:/S/ EVAN ZUCKER _______________________________________________ Evan Zucker President HUDSON BAY PARTNERS II, L.P. By: Hudson Bay Partners, Inc., its General Partner By:/S/ DAVID LESSER ______________________________________________ David Lesser President 237 Park Avenue, Suite 900 New York, NY 10017 FRANCIS V. MCBRIDE REVOCABLE TRUST, UID 4/22/96 By:/S/ ANTOINETTE R. McBRIDE _______________________________________________ Antoinette R. McBride Trustee 12512 Marsh Creek Drive Ponte Vedra, FL 32082 /S/ JOAN H. McBRIDE _________________________________________________ JOAN H. MCBRIDE 440 Weymouth Drive Wyckoff, NJ 07481 13 /S/ MARY V. DEKORTE _______________________________________________ MARY V. DEKORTE 736 Tegawitha Way Franklin Lakes, NJ 07417 /S/ TIMOTHY B. McBRIDE _______________________________________________ TIMOTHY B. MCBRIDE 4939 Quebec Street, N.W. Washington, D.C. 20016 /S/ KATHRYN M. KRUCKEL _______________________________________________ KATHRYN M. KRUCKEL 950 Franklin Lakes Road Franklin Lakes, NJ 07417 /S/ MOIRA McBRIDE MURPHY _______________________________________________ MOIRA MCBRIDE MURPHY 328 Longbow Drive Franklin Lakes, NJ 07417 /S/ J. NEVINS McBRIDE, JR. _______________________________________________ J. NEVINS MCBRIDE, JR. 1635 El Paso Real La Jolla, CA 92037 /S/ W. PETER McBRIDE _______________________________________________ W. PETER MCBRIDE 710 Franklin Lakes Road Franklin Lakes, NJ 07417 /S/ DAVID F. McBRIDE _______________________________________________ DAVID F. MCBRIDE 1000 Scioto Drive Franklin Lakes, NJ 07417 14 /S/ TERENCE A. McBRIDE _______________________________________________ TERENCE A. MCBRIDE 954 Colonial Road Franklin Lakes, NJ 07417 /S/ SHEILA JAMES _______________________________________________ SHEILA JAMES 260 Upper Gulph Road Radnor, PA 19087 /S/ MICHAEL X. McBRIDE _______________________________________________ MICHAEL X. MCBRIDE 18 North Murray Avenue Ridgewood, NJ 07450 /S/ MARK J. McBRIDE _______________________________________________ MARK J. MCBRIDE 2 Wyndhurst Drive Madison, NJ 07923 URBAN HOLDINGS, L.L.C. By:/S/ DAVID F. McBRIDE ____________________________________________ Name: Title: c/o McBride Enterprises, Inc. 808 High Mountain Road Franklin Lakes, NJ 07417 15 MARGARET MARY MCBRIDE REVOCABLE TRUST A, UID 3/10/88 By:/S/ TIMOTHY B. McBRIDE ____________________________________________ Timothy B. McBride Trustee 4939 Quebec Street, N.W. Washington, D.C. 20016 JOHN NEVINS MCBRIDE ARTICLE THIRD, TESTAMENTARY TRUST "B", UWD 3/26/93 By:/S/ DAVID F. McBRIDE ____________________________________________ David F. McBride Trustee 1000 Scioto Drive Franklin Lakes, NJ 07417 /S/ MARY K. McBRIDE _______________________________________________ MARY K. MCBRIDE 349 Algonquin Road Franklin Lakes, NJ 07417 /S/ JOSEPH A. McBRIDE _______________________________________________ JOSEPH A. MCBRIDE 999 Cherokee Lane Franklin Lakes, NJ 07417 16 /S/ ROBERT BRANSON _______________________________________________ ROBERT BRANSON 5013 Scarsdale Road Bethesda, MD 20816 THE BRANSON FAMILY LLC By:/S/ ROBERT BRANSON ____________________________________________ Robert Branson Managing Member 5013 Scarsdale Road Bethesda, MD 20816 CRA REAL ESTATE SECURITIES, L.P. By: CRA Real Estate Securities, Inc., its general partner By:/S/ T. RITSON FERGUSON ____________________________________________ T. Ritson Ferguson President 259 Radnor-Chester Road, Suite 205 Radnor, PA 19087 17 -----END PRIVACY-ENHANCED MESSAGE-----