Exhibit 10.1

DISTRIBUTION REINVESTMENT PLAN

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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