Delaware Limited Partnership Agreement

Exhibit 10.1.1


AGREEMENT OF LIMITED PARTNERSHIP


OF


AMERICAN REAL ESTATE INVESTMENT, L. P.


AGREEMENT OF LIMITED PARTNERSHIP


OF


AMERICAN REAL ESTATE INVESTMENT, L. P.


THIS AGREEMENT OF LIMITED PARTNERSHIP is made and entered into as of the 10th day of November by and among the undersigned parties.


W I T N E S S E T H:


WHEREAS, the parties hereto desire to organize a limited partnership under the Revised Uniform Limited Partnership Act of the State of Delaware;


NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, hereby agree as follows:


ARTICLE I


Definitions; Etc.


1.1 Definitions. Except as otherwise herein expressly provided, the following terms and phrases shall have the meanings set forth below:


"Accountants" shall mean the firm or firms of independent certified public accountants selected by the General Partner on behalf of the Partnership to audit the books and records of the Partnership and to prepare statements and reports in connection therewith.


"Acquisition Cost" shall have the meaning set forth in Section 4.7(b) hereof.


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"Act" shall mean the Revised Uniform Limited Partnership Act as enacted in the State of Delaware, and as the same may hereafter be amended from time to time.


"Additional Interests" shall have the meaning set forth in Section 9.3 hereof.


"Additional Partner" shall have the meaning set forth in Section 9.3 hereof.


"Adjustment Date" shall have the meaning set forth in Section 4.3(b) hereof.


"Administrative Expenses" shall mean (i) all administrative and operating costs and expenses incurred by the Partnership, including, without limitation, organizational expenses, (ii) those administrative costs and expenses of the General Partner, including salaries paid to officers of the General Partner, and accounting and legal expenses undertaken by the General Partner on behalf or for the benefit of the Partnership, and (iii) to the extent not included in clause (ii) above, REIT Expenses.


"Affiliate" shall mean, with respect to any Partner (or as to any other person the affiliates of whom are relevant for purposes of any of the provisions of this Agreement), (i) any member of the Immediate Family of such Partner; (ii) any trustee or beneficiary of a Partner; (iii) any legal representative, successor, or assignee of any Person referred to in the preceding clauses (i) and (ii); (iv) any trustee or trust for the benefit of any Person referred to in the preceding clauses (i) through (iii);


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or (v) any Entity which directly or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, any Person referred to in the preceding clauses (i) through (iv).


"Affiliate Financing" means financing or refinancing obtained from a Partner or an Affiliate of a Partner by the Partnership.


"Agreement" shall mean this Agreement of Limited Partnership, as originally executed and as amended, modified, supplemented or restated from time to time, as the context requires.


"Bankruptcy" shall mean, with respect to any Partner, (i) the commencement by such Partner of any proceeding seeking relief under any provision or chapter of the federal Bankruptcy Code or any other federal or state law relating to insolvency, bankruptcy or reorganization, (ii) an adjudication that such Partner is insolvent or bankrupt; (iii) the entry of an order for relief under the federal Bankruptcy Code with respect to such Partner, (iv) the filing of any such petition or the commencement of any such case or proceeding against such Partner, unless such petition and the case or proceeding initiated thereby are dismissed within ninety (90) days from the date of such filing, (v) the filing of an answer by such Partner admitting the allegations of any such petition, (vi) the appointment of a trustee, receiver or custodian for all or substantially all of the assets of such Partner unless such appointment is vacated or dismissed


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within ninety (90) days from the date of such appointment but not less than five (5) days before the proposed sale of any assets of such Partner, (vii) the insolvency of such Partner or the execution by such Partner of a general assignment for the benefit of creditors, (viii) the failure of such Partner to pay its debts as they mature, (ix) the levy, attachment, execution or other seizure of substantially all of the assets of such Partner where such seizure is not discharged within thirty (30) days thereafter, or (x) the admission by such Partner in writing of its inability to pay its debts as they mature or that it is generally not paying its debts as they become due.


"Beneficially Own" shall mean the ownership of Shares by a Person who would be treated as an owner of such Shares either directly or constructively through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code.


"Capital Contribution" shall mean, with respect to


any Partner, the amount of money and the initial Gross Asset Value of any property other than money contributed to the Partnership with respect to the Partnership Interest held by such Partner (net of liabilities to which such property is subject).


"Certificate" shall mean the Certificate of Limited Partnership establishing the Partnership, as filed with the office of the Delaware Secretary of State, as it may be amended from time to time in accordance with the terms of this Agreement and the Act.


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"Closing Price" on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the American Stock Exchange or, if the Shares are not listed or admitted to trading on the American Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Shares are listed or admitted to trading or, if the Shares are not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers,Inc. Automated Quotations System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Shares as such person is selected from time to time by the Board of Directors of the General Partner.


"Code" shall mean the Internal Revenue Code of 1986, as amended.


"Completion of the Offering" shall mean the closing of the sale of Shares in the Offering.


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"Computation Date" shall have the meaning set forth in Section 11.5 hereof.


"Consent of the Limited Partners" means the written consent of a Majority-In-Interest of the Limited Partners, which consent shall be obtained prior to the taking of any action for which it is required by this Agreement and may be given or withheld by a Majority-In-Interest of the Limited Partners, unless otherwise expressly provided herein, in their sole and absolute discretion.


"Contributed Funds" shall have the meaning set forth in Section 4.3(b) hereof.


"Contributed Property" shall have the meaning set forth in Section 4.7(b) hereof.


"Contributed Limited Partner Assets" shall mean all right, title and interest of the Limited Partners in and to the partnership interests, together with assignments of such rights and other agreements as may relate to such interests, as more particularly described in the Contribution Agreement.


"Contribution Agreement" shall mean and refer to the agreement described in Section 4.2 hereof.


"Contribution Date" shall have the meaning set forth in Section 9.3(a) hereof.


"Control" shall mean the ability, whether by the direct or indirect ownership of shares or other equity interests, by contract or otherwise, to elect a majority of the directors of a corporation, to select the managing partner of a partnership, or


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otherwise to select, or have the power to remove and then select, a majority of those persons exercising governing authority over an Entity. In the case of a limited partnership, the sole general partner, all of the general partners to the extent each has equal management control and authority, or the managing general partner or managing general partners thereof shall be deemed to have control of such partnership and, in the case of a trust, any trustee thereof or any Person having the right to select any such trustee shall be deemed to have control of such trust.


"Conversion Exercise Notice" shall have the meaning set forth in Section 11.2 hereof.


"Conversion Right" shall have the meaning set forth in Section 11.1 hereof.


"Current Per Share Market Price" on any date shall mean the average of the Closing Price for the thirty (30) consecutive Trading Days ending on such date.


"Deemed Partnership Interest Value" as of any date, shall mean with respect to a Partner, the Deemed Value of the Partnership (as of the day preceding such date) multiplied by such Partner's Percentage Interest.


"Deemed Value of the Partnership" as of any date, shall mean and be equal to the quotient of (i) the Share Value as of the Trading Day immediately preceding such date divided by (ii) the Percentage Interest of the General Partner on the Trading Day immediately preceding such date.


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"Depreciation" shall mean for each Partnership Fiscal Year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable under the Code with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.


"Entity" shall mean any general partnership, limited partnership, corporation, joint venture, trust, business trust, cooperative or association.


"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time (or any corresponding provisions of succeeding laws).


"Exercise Notice" shall have the meaning set forth in Section 11.2 hereof.


"Exercising Partners" shall have the meaning set forth in Section 11.2 hereof.


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"GAAP" shall mean generally accepted accounting principles consistently applied.


"General Partner" shall mean American Real Estate Investment Corporation, a Delaware corporation, its duly admitted successors and assigns and any other Person who is a general partner of the Partnership at the time of reference thereto.


"General Partner Capital Contribution" shall have the meaning set forth in Section 4.1 hereof.


"General Partner's Preference Amount" for a Partnership Fiscal Year shall mean an amount equal to the product of (a) .8 and (b) the number of Shares outstanding as of the end of such Partnership Fiscal Year.


"Gross Asset Value" shall have the meaning set forth in Section 4.7(b) hereof.


"Gross Income" means the income of the Partnership determined pursuant to Section 61 of the Code before deduction of items of expense or deduction.


"Hart Scott Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.


"Immediate Family" shall mean, with respect to any Person, such Person's spouse, parents, parents-in-law, descendants by blood or adoption, nephews, nieces, brothers, sisters, brothers-in-law, sisters-in-law and children-in-law.


"Incentive Option" means an option to purchase Shares granted under the Stock Incentive Plan.


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"Incentive Option Agreement" means the form or forms of Incentive Option Agreement to be used under the Stock Incentive Plan.


"Initial Offering Price Per Share" means the price at which the Shares were sold to the public in the Offering.


"Lien" shall mean any liens, security interests, mortgages, deeds of trust, charges, claims, encumbrances, restrictions, pledges, options, rights of first offer or first refusal and any other rights or interests of others of any kind or nature, actual or contingent, or other similar encumbrances of any nature whatsoever.


"Limited Partner Allocation Catch-Up Amount" shall mean the amount determined for X pursuant to the following formula:


X = A (B + X) - C


Where A = the aggregate Percentage Interests of the Limited Partners as of the end of the Fiscal Year;


B = the sum of (a) the aggregate amount of Profits allocated to all of the Partners pursuant to clauses (1), (4) and (5) of Section 6.1(b) for all prior Partnership Fiscal Years and (b) the amount of Profits allocated to the General Partner for the current Partnership Fiscal Year pursuant to clause (1) of Section 6.1(b); and


C = the aggregate amount of Profits allocated to the Limited Partners pursuant to clauses (4) and (5) of Section 6.1(b) for all prior Partnership Fiscal Years.


"Limited Partner Distribution Catch-Up Amount" shall mean the amount determined for X pursuant to the following formula:


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X = A (B + X) - C


Where A = the aggregate Percentage Interests of the Limited Partners as of the end of the Fiscal Year;


B = the sum of (a) the aggregate amount distributed to all of the Partners pursuant to Section 6.2(b) for all prior Partnership Fiscal Years and (b) the amount distributed to the General Partner for the current Partnership Fiscal Year pursuant to clause (1) of Section 6.2(b); and


C = the aggregate amount distributed to the Limited Partners pursuant to clauses (2) and (3) of Section 6.2(b) for all prior Partnership Fiscal Years.


"Limited Partners" shall mean those Persons listed under the heading "Limited Partners" on the signature page hereto who have executed (in person or pursuant to power of attorney) this Agreement in their respective capacities as limited partners of the Partnership, their permitted successors or assigns as a limited partner hereof, or any Person who, at the time of reference thereto, is a limited partner of the Partnership.


"Liquidating Trustee" shall mean such individual or Entity as is selected as the Liquidating Trustee hereunder by the General Partner, which individual or Entity may include the General Partner or an Affiliate of the General Partner, provided such Liquidating Trustee agrees in writing to be bound by the terms of this Agreement. The Liquidating Trustee shall be empowered to give and receive notices, reports and payments in connection with the dissolution, liquidation and/or winding-up of the Partnership and shall hold and exercise such other rights and powers as are necessary or required to permit all parties to deal with the Liquidating Trustee in connection with the dissolution,


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liquidation and/or winding-up of the Partnership.


"Losses" shall have the meaning set forth in Section 6.1 hereof.


"Major Decisions" shall have the meaning set forth in Section 7.3 hereof.


"Majority-In-Interest of the Limited Partners" shall mean Limited Partner(s) who hold in the aggregate more than fifty percent (50%) of the Percentage Interests then allocable to and held by the Limited Partners, as a class.


"Minimum Gain" shall have the meaning set forth in Section 6.l(d)(l) hereof.


"Minimum Gain Chargeback" shall have the meaning


set forth in Section 6.1(d)(1) hereof.


"Net Financing Proceeds" shall mean the cash proceeds received by the Partnership in connection with any borrowing by or on behalf of the Partnership (whether or not secured), after deduction of all costs and expenses incurred by the Partnership in connection with such borrowing, and after deduction of that portion of such proceeds used to repay any other indebtedness of the Partnership, or any interest or premium thereon.


"Net Operating Cash Flow" shall mean, with respect to any fiscal period of the Partnership, the excess, if any, of "Receipts" over "Expenditures". For purposes hereof, the term "Receipts" means the sum of all cash receipts of the Partnership from all sources for such period, including Net Sale Proceeds and Net Financing Proceeds but excluding Capital Contributions, and


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any amounts held as reserves as of the last day of such period which the General Partner reasonably deems to be in excess of necessary reserves as determined below. The term "Expenditures" means the sum of (a) all cash expenses of the Partnership for such period, (b) the amount of all payments of principal and interest on account of any indebtedness of the Partnership, or amounts due on such indebtedness during such period, and (c) such additional cash reserves as of the last day of such period as the General Partner deems necessary for any capital or operating expenditure permitted hereunder.


"Net Sale Proceeds" means the cash proceeds received by the Partnership in connection with a sale of any asset by or on behalf of the Partnership after deduction of any costs or expenses incurred by the Partnership, or payable specifically out of the proceeds of such sale (including, without limitation, any repayment of any indebtedness required to be repaid as a result of such sale or which the General Partner elects to repay out of the proceeds of such sale, together with accrued interest and premium, if any, thereon and any sales commissions or other costs and expenses due and payable to any Person in connection with a sale).


"Nonrecourse Liabilities" shall have the meaning set forth in Section 6.l(d)(l) hereof.


"Offered Interests" shall mean the Partnership Interests of the Exercising Partners identified in an Exercise Notice which, pursuant to the exercise of Conversion Rights, can be acquired by the General Partner under the terms hereof.


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"Offering" shall have the meaning set forth in the Registration Statement.


"Ownership Limit" shall have the meaning set forth in Section 11.4 hereof.


"Partner Nonrecourse Debt" shall have the meaning set forth in Section 6.1(d)(2) hereof.


"Partner Nonrecourse Debt Minimum Gain" shall have the meaning set forth in Section 6.1(d)(2) hereof.


"Partner Nonrecourse Deduction" shall have the meaning set forth in Section 6.1(d)(2) hereof.


"Partners" shall mean the General Partner and the Limited Partners, their duly admitted successors or assigns or any Person who is a partner of the Partnership at the time of reference thereto.


"Partnership" shall mean the limited partnership hereby constituted, as such limited partnership may from time to time be constituted.


"Partnership Fiscal Year" shall mean the calendar year.


"Partnership Interest" shall mean with respect to a Partner, such Partner's right to the allocations (and each item thereof), specified in Section 6.1 hereof and all distributions from the Partnership, and its rights of management, consent, approval, or participation, if any, as provided in this Agreement.


"Partnership Minimum Gain" shall have the meaning set forth in Section 1.704-2(b)(2) of the Regulations.


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"Percentage Interest" shall mean, with respect to any Partner, the percentage ownership interest of such Partner in the Partnership. The initial Percentage Interest of each Partner is as set forth opposite its respective name on attached Exhibit A.


"Person" shall mean any individual or Entity.


"Pledge" means a pledge or grant of a mortgage,


security interest, lien or other encumbrance in respect of a Partnership Interest.


"Profits" shall have the meaning set forth in Section 6.1 hereof.


"Property" shall mean any real estate in which the Partnership, directly or indirectly, acquires ownership of a fee or leasehold interest.


"Purchase Price" shall have the meaning set forth in Section 11.5.


"Registration Statement" shall mean the Registration Statement No. 33-63120 (including the prospectus contained therein) heretofore filed by the General Partner with the SEC, and any amendments at any time hereafter made thereto (other than post-effective amendments) pursuant to which the General Partner proposes to offer and sell certain of its Shares.


"Regulations" shall mean the final, temporary or proposed Income Tax Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations)


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"REIT" shall mean a real estate investment trust as defined in Section 856 of the Code.


"REIT Expenses" shall mean (i) costs and expenses relating to the formation and continuity of existence of the General Partner and its subsidiaries (which subsidiaries shall, for purposes of this definition be included within the definition of General Partner), including taxes, fees and assessments associated therewith, any and all costs, expenses or fees payable to any director of the General Partner or such subsidiaries, (ii) costs and expenses relating to any offer or registration of securities by the General Partner and all statements, reports, fees and expenses incidental thereto, including underwriting discounts and selling commissions applicable to any such offer of securities, (iii) costs and expenses associated with the preparation and filing of any periodic reports by the General Partner under federal, state or local laws or regulations, including filings with the SEC and any stock exchanges on which the Shares are listed, (iv) costs and expenses associated with compliance by the General Partner with laws, rules and regulations promulgated by any regulatory body, including the SEC, and (v) all other operating or administrative costs of the General Partner incurred in the ordinary course of its business on behalf of the Partnership.


"REIT Requirements" shall have the meaning set forth in Section 7.11 hereof.


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"Required Funds" shall have the meaning set forth in Section 4.3 hereof.


"Rights" shall have the meaning set forth in Section 11.1 hereof.


"SEC" shall mean the United States Securities and Exchange Commission.


"Shares" shall mean the shares of Common Stock, par value $.001 per share, of the General Partner.


"Share Value" as of any date shall mean the total number of Shares issued and outstanding at the close of business on such date (and excluding any treasury shares) multiplied by the Current Per Share Market Price on such date.


"Stock Incentive Plan" means the General Partner's 1993 Omnibus Incentive Plan.


"Substituted Limited Partner" shall have the meaning set forth in Section 9.2 hereof.


"Third Party": or "Third Parties" means a Person or Persons who is or are neither a Partner or Partners nor an Affiliate or Affiliates of a Partner or Partners.


"Third Party Financing" means financing or refinancing obtained from a Third Party by the Partnership.


"Trading Day" shall mean a day on which the principal national securities exchange on which the Shares are listed or admitted to trading is open for the transaction of business or, if the Shares are not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a


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Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.


"Transfer" means any assignment, sale, transfer, conveyance, Pledge, grant of an option or proxy, or other disposition or act of alienation, whether voluntary or involuntary, or by operation of law.


"Underwriting Agreement" shall mean that certain Underwriting Agreement among the General Partner and the underwriters named therein, in substantially the form attached hereto as Exhibit D.


1.2 Exhibit, Etc. References to "Exhibit" are, unless otherwise specified, to one of the Exhibits attached to this Agreement, and references to an "Article" or a "Section" are, unless otherwise specified, to one of the Articles or Sections of this Agreement. Each Exhibit attached hereto and referred to herein is hereby incorporated herein by reference.


ARTICLE II


Organization


2.1 Formation. The parties hereto do hereby form a limited partnership pursuant to the provisions of the Act, and all other pertinent laws of the State of Delaware, for the purposes and upon the terms and conditions hereinafter set forth. The Partners agree that the rights and liabilities of the Partners


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shall be as provided in the Act except as otherwise herein expressly provided. Promptly upon the execution and delivery hereof, the General Partner sha ...