EXHIBIT 10.13
SUBSCRIPTION AGENT AGREEMENT
This Subscription Agent Agreement (the "Agreement") is
made as of February 22, 1995 between American Real Estate Partners,
L.P., a Delaware limited partnership (the "Partnership"), and
Registrar and Transfer Company, a New York corporation (the
"Agent"). All terms not defined herein shall have the meaning
given in the prospectus (the "Prospectus") included in the
Registration Statement on Form S-3 (Registration No. 33-54767)
filed by the Partnership with the Securities and Exchange
Commission on July 27, 1994, as amended by any amendment filed with
respect thereto (the "Registration Statement").
WHEREAS, the Partnership proposes to make a subscription
offer by issuing certificates or other evidences of subscription
rights, in the form designated by the Partnership (the
"Subscription Certificates") to unitholders of record (the "Record
Date Unitholders") of its depositary units representing limited
partner interests ("Depositary Units"), as of a record date
specified by the Partnership (the "Record Date"), pursuant to which
each Unitholder will have certain rights (the "Rights") to
subscribe for Depositary Units and 5% cumulative pay-in-kind
redeemable preferred units representing limited partner interests
in the Partnership (the "Preferred Units"), as described in and
upon such terms as are set forth in the Prospectus, a final copy of
which has been or, upon availability will promptly be, delivered to
the Agent; and
WHEREAS, the Partnership wishes the Agent to perform
certain acts on behalf of the Partnership, and the Agent is willing
to so act, in connection with the distribution of the Subscription
Certificates and the issuance and exercise of the Rights to
subscribe therein set forth, all upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and of
the mutual agreements set forth herein, the parties agree as
follows:
1. APPOINTMENT. The Partnership hereby appoints the Agent to act
as subscription agent in connection with the distribution of
Subscription Certificates and the issuance and exercise of the
Rights in accordance with the terms set forth in this Agreement and
Exhibit A hereto, and the Agent hereby accepts such appointment.
2. FORM AND EXECUTION OF SUBSCRIPTION CERTIFICATES.
-----------------------------------------------
(a) Each Subscription Certificate shall be irrevocable and
fully transferable. The Agent shall, in its capacity as Transfer
Agent of the Partnership, maintain a register of Subscription
Certificates and the holders of record thereof (each of whom shall
be deemed a "Unitholder" hereunder for purposes of determining the
rights of holders of Subscription Certificates). Each Subscription
Certificate shall, subject to the provisions thereof, entitle the
Unitholder in whose name it is recorded to the following:
(1) The right to acquire during the Subscription Period,
as defined in the Prospectus, at the Subscription Price, six
Depositary Units and one Preferred Unit for each Right (the
"Basic Subscription Right"); and
(2) If all Basic Subscription Rights are not exercised,
the right to subscribe for additional Depositary Units and
Preferred Units, at the Subscription Price, subject to the
availability of such Depositary Units and Preferred Units and
to the allotment of such units as may be available among
Unitholders who exercise their Over-Subscription Privilege on
the basis specified in the Prospectus (the "Over-Subscription
Privilege").
3. RIGHTS AND ISSUANCE OF SUBSCRIPTION CERTIFICATES.
------------------------------------------------
(a) Each Subscription Certificate shall evidence the Rights
of the Unitholder therein named to purchase Depositary Units and
Preferred Units upon the terms and conditions therein set forth.
(b) Upon the written advice of the Partnership, signed by any
of its duly authorized officers, as to the Record Date, the Agent
shall, from a list of the Unitholders as of the Record Date to be
prepared by the Agent in its capacity as Transfer Agent of the
Partnership, prepare and record Subscription Certificates in the
names of the Unitholders, setting forth the number of Rights to
subscribe for the Partnership's Depositary Units and Preferred
Units calculated on the basis of one Right for each seven
Depositary Units recorded on the books in the name of each such
Unitholder as of the Record Date. The number of Rights that are
issued to Record Date Holders of a number of Depositary Units not
evenly divisible by seven will be determined by multiplying the
number of Depositary Units held by such Record Date Holder by
.1428571 and then rounding up to the nearest whole number if the
fractional amount is greater than or equal to .5 and rounding down
to the nearest whole number if the fractional amount is less than
.5. In the case of Depositary Units held of record by a Nominee
Holder, the number of Rights issued to such Nominee Holder will be
adjusted, by the Agent, to permit rounding up (to the nearest whole
number of Rights evenly divisible by seven) of the Rights to be
received by beneficial holders for whom the Nominee Holder is the
holder of record only if the Nominee Holder provides to the Agent
on or before the close of business on the fifth business day prior
to March 30, 1995 (the "Expiration Date"), written representation
of the number of Rights required for such rounding. Each
Subscription Certificate shall be dated as of the Record Date and
shall be executed by a duly authorized officer of the Partnership.
Upon the written advice, signed as aforesaid, as to the effective
date of the Registration Statement, the Agent shall deliver the
Subscription Certificates, together with a copy of the Prospectus,
2
instruction letter and any other document as the Partnership deems
necessary or appropriate, to all Unitholders with record addresses
in the United States (including its territories and possessions and
the District of Columbia). Delivery shall be by first class mail
(without registration or insurance), except for those Unitholders
having a registered address outside the United States (who will
only receive copies of the Prospectus, instruction letter and other
documents as the Partnership deems necessary or appropriate, if
any), delivery shall be by air mail (without registration or
insurance) and by first class mail (without registration or
insurance) to those Unitholders having Army Post Office or Foreign
Post Office addresses. No Subscription Certificate shall be valid
for any purpose unless so executed. Should any officer of the
Partnership whose signature has been placed upon any Subscription
Certificate cease to hold such office at any time thereafter, such
event shall have no effect on the validity of such Subscription
Certificate.
(c) The Agent will mail a copy of the Prospectus, instruction
letter, a special notice and other documents as the Partnership
deems necessary or appropriate, if any, but not Subscription
Certificates to Record Date Holders whose record addresses are
outside the United States (including its territories and
possessions and the District of Columbia) ("Foreign Record Date
Unitholders"). The Rights to which such Subscription Certificates
relate will be held by the Agent for such Foreign Record Date
Unitholders' accounts until instructions are received to exercise,
sell or transfer the Rights. If no instructions have been received
by 12:00 Noon, New York City time, three Business Days prior to the
Expiration Date, the Agent will use its best efforts to sell the
Rights of those registered Foreign Record Date Unitholders. The
proceeds net of commissions, if any, to the Agent from the sale of
those Rights by the Agent will be remitted to those Foreign Record
Date Unitholders on a pro rata basis.
4. EXERCISE.
--------
(a) Exercising Rights Holders may acquire Depositary Units
and Preferred Units pursuant to Basic Subscription Rights and the
Over-Subscription Privilege by delivery to the Agent as specified
in the Prospectus of (i) the Subscription Certificate with respect
thereto, duly executed by such Unitholder in accordance with and as
provided by the terms and conditions of the Subscription
Certificate, together with (ii) the purchase price of $_____ for
each six Depositary Units and one Preferred Unit subscribed for by
exercise of Basic Subscription Rights and the Over-Subscription
Privilege, in U.S. dollars by money order or check drawn on a bank
in the United States, in each case payable to the order of the
Agent for the account of the Partnership.
(b) Rights may be exercised at any time after the date of
issuance of the Subscription Certificates with respect thereto but
no later than 5:00 P.M. New York time on the Expiration Date. For
the purpose of determining the time of the exercise of any Rights,
3
delivery of any material to the Agent shall be deemed to occur when
such materials are received at the Unitholder Services Division of
the Agent specified in the Prospectus.
(c) Notwithstanding the provisions of Section 4(a) and 4(b)
regarding delivery of an executed Subscription Certificate to the
Agent prior to 5:00 p.m. New York time on the Expiration Date, if
prior to such time the Agent receives a Notice of Guaranteed
Delivery from a bank, a trust company or a New York Stock Exchange
member guaranteeing delivery of (i) payment of the full
Subscription Price for the Depositary Units and Preferred Units
subscribed for pursuant to the exercise of Basic Subscription
Rights and any additional Preferred Units and/or Depositary Units
subscribed for pursuant to the Over-Subscription Privilege and (ii)
a properly completed and executed Subscription Certificate, then
such exercise of Basic Subscription Rights and the Over-
Subscription Privilege shall be regarded as timely, subject,
however, to receipt of the duly executed Subscription Certificate
and full payment for the Depositary Units and Preferred Units by
the Agent within five business days after the Expiration Date (the
"Protect Period").
(d) Within seven business days following the end of the
Protect Period, the Agent shall send to each Exercising Rights
Holder (or, if Depositary Units on the Record Date are held by Cede
& Co. or any other depository or nominee, to Cede & Co. or such
other depository or nominee) the certificates representing the
Depositary Units and Preferred Units acquired pursuant to the Basic
Subscription Rights, and, if applicable, the Over-Subscription
Privilege. Any excess payment to be refunded by the Partnership to
an Exercising Rights Holder who is not allocated the full amount of
Depositary Units and Preferred Units subscribed for pursuant to the
Over-Subscription Privilege, shall be mailed by the Agent to him or
her within seven business days following the Protect Period.
5. TRANSFER OF RIGHTS.
------------------
(a) Rights Holders who do not wish to exercise any or all of
their Rights may sell any unexercised Rights. The Agent will use
its best efforts to sell all Rights which remain unclaimed as a
result of Subscription Certificates being returned by the postal
authorities to the Agent as undeliverable as of the fourth business
day prior to the Expiration Date and Rights of non-U.S.
shareholders who do not respond to the Agent at least four days
prior to the Expiration Date. Such sales will be made, net of
commissions, on behalf of the nonclaiming Unitholders. The Agent
will hold the proceeds from those sales for the benefit of such
nonclaiming Unitholders until such proceeds are either claimed or
escheat.
(b) Rights Holders may transfer a portion of the Rights
evidenced by a single Subscription Certificate by delivering to the
Agent at least one business day prior to the Expiration Date a
Subscription Certificate properly endorsed for transfer, with
4
instructions to register such portion of the Rights evidenced
thereby in the name of the transferee and to issue a new
Subscription Certificate to the transferee evidencing such
transferred Rights. In such event, the Agent shall issue a new
Subscription Certificate evidencing the balance of the Rights to
the transferring Rights Holder or, if the transferring Rights
Holder so instructs, to an additional transferee.
6. VALIDITY OF SUBSCRIPTIONS. Irregular subscriptions not
otherwise covered by specific instructions herein shall be
submitted to an appropriate officer of the Partnership and handled
in accordance with his or her instructions. Such instructions will
be documented by the Agent indicating the instructing officer and
the date thereof.
7. OVER-SUBSCRIPTION. If all Basic Subscription Rights are not
exercised, the remaining Depositary Units and Preferred Units (the
"Remaining Units") shall be allocated to persons exercising the
Over-Subscription Privilege in the amounts of such over-
subscriptions. If the number of Depositary Units and Preferred
Units for which the Over-Subscription Privilege has been exercised
is greater than the Remaining Units, the Agent shall allocate the
Remaining Units to the persons exercising the Over-Subscription
Privilege pro rata according to the aggregate number of Basic
Subscription Rights exercised so that the aggregate amount of
Depositary Units and Preferred Units issued to Unitholders who
subscribe pursuant to the Over-Subscription Privilege will
generally be in proportion to the aggregate amount of Depositary
Units and Preferred Units purchased through the exercise of Basic
Subscription Rights. The Agent shall advise the Partnership
immediately upon the completion of the allocation set forth above
as to the total number of Depositary Units and Preferred Units
subscribed and distributable.
8. DELIVERY OF CERTIFICATES. Within seven business days
following the end of the Protect Period, the Agent will deliver
(i) certificates representing those Depositary Units and Preferred
Units purchased pursuant to exercise of Basic Subscription Rights
and (ii) certificates representing those Depositary Units and
Preferred Units purchased pursuant to the exercise of the Over-
Subscription Privilege.
9. HOLDING PROCEEDS OF RIGHTS OFFERING IN ESCROW.
---------------------------------------------
(a) All proceeds received by the Agent from Unitholders in
respect of the exercise of Rights shall be held by the Agent, on
behalf of the Partnership, in a segregated, interest-bearing escrow
account (the "Escrow Account"). Pending disbursement in the manner
described in Section 4(d) above, funds held in the Escrow Account
shall be invested by the Agent at the direction of the Partnership.
(b) The Agent shall deliver all proceeds received in respect
of the exercise of Rights (including interest earned thereon) to
the Partnership as promptly as practicable, but in no event later
5
than seven business days after the end of the Protect Period.
Proceeds held in respect of excess payments (including interest
earned thereon) shall be refunded to Unitholders entitled to such
a refund within seven business days after the end of the Protect
Period.
10. REPORTS. Daily, during the period commencing on the Record
Date, until termination of the Subscription Period, the Agent will
report by telephone or telecopier (by 12:00 Noon, New York time),
confirmed by letter, to a designated officer of the Partnership,
daily data regarding Rights exercised, the selling price of Rights,
the total number of Depositary Units and Preferred Units subscribed
for, payments received therefor, the number of Rights sold and the
net proceeds thereof, bringing forward the figures from the
previous day's report in each case so as to also show the
cumulative totals and any such other information as may be mutually
determined by the Partnership and the Agent.
11. LOSS OR MUTILATION. If any Subscription Certificate is lost,
stolen, mutilated or destroyed, the Agent may, on such terms which
will indemnify and protect the Partnership and the Agent as the
Agent may in its discretion impose (which shall, in the case of a
mutilated Subscription Certificate include the surrender and
cancellation thereof), issue a new Subscription Certificate of like
denomination in substitution for the Subscription Certificate so
lost, stolen, mutilated or destroyed.
12. COMPENSATION FOR SERVICES. The Partnership agrees to pay to
the Agent compensation for its services as such in accordance with
its Fee Schedule set forth hereto as Exhibit A. The Agent agrees
that such compensation shall include all services as Transfer Agent
and Registrar provided in connection with the offering of the
Rights. The Partnership further agrees that it will reimburse the
Agent for its reasonable out-of-pocket expenses incurred in the
performance of its duties as such.
13. INSTRUCTIONS AND INDEMNIFICATION. The Agent undertakes the
duties and obligations imposed by this Agreement upon the following
terms and conditions:
(a) The Agent shall be entitled to rely upon any instructions
or directions furnished to it by an appropriate officer of the
Partnership, whether in conformity with the provisions of this
Agreement or constituting a modification hereof or a supplement
hereto. Without limiting the generality of the foregoing or any
other provision of this Agreement, the Agent, in connection with
its duties hereunder, shall not be under any duty or obligation to
inquire into the validity or invalidity or authority or lack
thereof of any instruction or direction from an officer of the
Partnership which conforms to the applicable requirements of this
Agreement and which the Agent reasonably believes to be genuine and
shall not be liable for any delays, errors or loss of data
occurring by reason of circumstances beyond the Agent's control,
including, without limitation, acts of civil or military authority,
6
national emergencies, labor difficulties, fire, flood, catastrophe,
acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
(b) The Partnership will indemnify the Agent and its nominees
against, and hold it harmless from, all liability and expense which
may arise out of or in connection with the services described in
this Agreement or the instructions or directions furnished to the
Agent relating to this Agreement by an appropriate officer of the
Partnership, except for any liability or expense which shall arise
out of the negligence, bad faith or willful misconduct of the Agent
or such nominees.
14. CHANGES IN SUBSCRIPTION CERTIFICATE. The Agent may, without
the consent or concurrence of the Unitholders in whose names
Subscription Certificates are registered, by supplemental agreement
or otherwise, concur with the Partnership in making any changes or
corrections in a Subscription Certificate that it shall have been
advised by counsel (who may be counsel for the Partnership) is
appropriate to cure any ambiguity or to correct any defective or
inconsistent provision or clerical omission or mistake or manifest
error therein or herein contained, and which shall not be
inconsistent with the provision of the Subscription Certificate
except insofar as any such change may confer additional rights upon
the Unitholders.
15. ASSIGNMENT; DELEGATION.
----------------------
(a) Neither this Agreement nor any rights or obligations
hereunder may be assigned or delegated by either party without the
written consent of the other party.
(b) This Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted successors
and assigns. Nothing in this Agreement is intended or shall be
construed to confer upon any other person any right, remedy or
claim or to impose upon any other person any duty, liability or
obligation.
16. GOVERNING LAW. The validity, interpretation and performance
of this Agreement shall be governed by the laws of the State of New
York.
17. SEVERABILITY. The parties hereto agree that if any of the
provisions contained in this Agreement shall be determined invalid,
unlawful or unenforceable to any extent, such provisions shall be
deemed modified to the extent necessary to render such provisions
enforceable. The parties hereto further agree that this Agreement
shall be deemed severable, and the invalidity, unlawfulness or
unenforceability of any term or provision thereof shall not affect
the validity, legality or enforceability of this Agreement or of
any term or provision hereof.
7
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of
which together shall be considered one and the same agreement.
19. CAPTIONS. The captions and descriptive headings herein are
for the convenience of the parties only. They do not in any way
modify, amplify, alter or give full notice of the provisions
hereof.
20. FURTHER ACTIONS. Each party agrees to perform such further
acts and execute such further documents as are necessary to effect
the purposes of this Agreement.
21. ADDITIONAL PROVISIONS. Except as specifically modified by
this Agreement, the Agent's rights and responsibilities set forth
in the Agreement for Stock Transfer Services between the
Partnership and the Agent are hereby ratified and confirmed and
continue in effect.
AMERICAN REAL ESTATE PARTNERS, L.P.
By: American Property Investors, Inc.,
General Partner
By:/s/John P. Saldarelli Treasurer
_______________________________
REGISTRAR AND TRANSFER COMPANY
By:/s/Thomas L. Montrone
_____________________________________
Name: Thomas L. Montrone
Title: President
8
EXHIBIT A
Transfer Service Agreement between American Real Estate Partners,
L.P. (the "Company") and Registrar and Transfer Company ("Agent").
FEES AND SERVICES
-----------------
Agent will receive will receive $6.00 for each Subscription
Certificate that is exercised in the Rights Offering, provided
however, the minimum fee payable to Agent for its role in the
Rights Offering will be $10,000 and the maximum fee for such role
will be $32,000. The fee for the Rights Offering includes the
following services:
* Acceptance and initial review of
certificates;
* Programming expenses for the
proration of rights or over
subscription requests;
* Responding to routine investor
correspondence;
* Calculation, imprinting and
enclosing Subscription Certificates
and related materials, up to four
enclosures;
* Curing defective Subscription
Certificates;
* Proration calculation and issuance of
Depositary Units, Preferred Units and
refund checks;
* Maintenance of an interest bearing
escrow account;
* Nominee fulfillment.
Out-of-pocket expenses including stationery, telephone,
postage delivery and other expenses are not included and will be
itemized and billed as incurred.
9