Exhibit 10.1
EXECUTION COPY
CALL AGREEMENT
DATED AS OF JUNE 5, 2006
BETWEEN
AMERICAN REAL ESTATE HOLDINGS LIMITED PARTNERSHIP
AND
ACE GAMING, LLC

 

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EXECUTION COPY
CALL AGREEMENT
     CALL AGREEMENT (this “Agreement”) dated as of June 5, 2006, by and between
American Real Estate Holdings Limited Partnership, a Delaware limited
partnership (“AREH”) and ACE Gaming, LLC, a New Jersey limited liability company
(“ACE”). Capitalized terms used in this Agreement but not otherwise defined
shall have the meanings ascribed to such terms in the Purchase Agreement (as
defined below).
     Whereas, AREH directly and indirectly owns or controls all of the
membership interests (the “Equity Interests”) of AREP Boardwalk Properties LLC,
a Delaware limited liability company (the “Company”) (as assignee of AREP
Boardwalk LLC) which, on November 28, 2005 executed an agreement (the “Purchase
Agreement”) with, among others, Martial Development Corp., a New Jersey
corporation and Boardwalk Regency Corporation, a New Jersey corporation, to
acquire, among other things, the Traymore Site (as defined in the Purchase
Agreement) in Atlantic City, New Jersey for a price allocated to the Traymore
Site of $61 million (subject to adjustment for pro rated rents, utilities and
assessments);
     Whereas, ACE is a wholly-owned subsidiary of Atlantic Coast Entertainment
Holdings, Inc. (“Atlantic Coast”), which is a majority-owned subsidiary of AREH;
and
     Whereas, the Traymore Site is adjacent to properties owned by ACE but ACE,
neither at the date of the Purchase Agreement nor at this time, has capital or
financing available to acquire the Traymore Site.
     In consideration of the foregoing, and the representations, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
     1. Call Right.
        (a) ACE’s Right to Acquire Equity Interests. Upon the terms and subject
to the conditions of this Agreement, ACE shall have the right to require AREH to
sell to ACE the Equity Interests (the “Call Right”), and upon exercise by ACE of
the Call Right in accordance with the terms hereof, AREH agrees to sell to ACE
the Equity Interests at a purchase price equal to the Call Price, as hereinafter
defined.
        (b) Exercise of Call Right; Call Closing. On or prior to the Call
Termination Date (as defined below), if ACE is entitled to exercise its Call
Right and desires to do so, ACE shall deliver a written notice (the “Call
Notice”) to AREH specifying a place and date not earlier than thirty (30) nor
later than sixty (60) days after the Inspection Documents (as defined below) are
received by ACE for the closing of the purchase of the Equity Interests (the
“Call Closing”), provided that such date shall be deferred to ten (10) days
after the date of obtaining any consents or approvals of any Governmental Entity
which are required by any Requirement of Law (as defined below) to effect the
transfer to ACE of the Equity Interest in accordance with this Section. The date
on which the Call Closing occurs is referred to herein as the “Call Closing
Date.” The Call Closing shall be held at such location within New York, New York
as shall be

 

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designated in the Call Notice. At the Call Closing, ACE shall deliver to AREH,
subject to the continuing accuracy of AREH’s representations, warranties and
covenants in Section 6 hereof, the Call Price and AREH shall deliver to ACE a
certificate or certificates representing the Equity Interests, free and clear of
all Liens, duly endorsed or accompanied by appropriate powers or such other
instruments as may be necessary or appropriate to effect the transfer to ACE of
the Equity Interests.
        (c) Risk of Loss. Risk of loss prior to the Call Closing shall be on
AREH.
       (i) If, prior to the Call Closing, the Traymore Site shall be damaged by
fire or other casualty, and if any destruction or damage is not repaired by AREH
prior to the Call Closing or arrangements for repairs reasonably satisfactory to
ACE are not made prior to the Call Closing so that the Traymore Site shall be in
substantially as good condition at the Call Closing as existed prior to such
damage or destruction, then this Agreement shall, at the option of ACE, be
terminated, and with the exception of those obligations which expressly survive
the termination of this Agreement, neither party shall have any further
obligations or liability to the other hereunder. If, after the occurrence of any
such casualty, this Agreement is not so terminated, ACE may elect to purchase
the Traymore Site in the damaged condition without credit or adjustments to the
Call Price, provided, subject to the rights of the tenants under Traymore
Leases, AREH shall assign its rights to any sums collected under any policies of
insurance because of such damage due to casualty to ACE.
       (ii) In the event a condemnation proceeding or payment in lieu of
condemnation occurs in respect of any part of the Traymore Site prior to the
Call Closing, and such proceeding does not result in a Condemnation Termination
Event, all payments in respect of such condemnation shall be paid by the Company
or AREH, or the rights to receive such payments shall be assigned, to ACE at the
Call Closing, or, at AREH’s election, the Call Price shall be reduced by such
payments. If prior to the Call Closing, a Condemnation Termination Event occurs,
then this Agreement shall, at the option of ACE, be terminated, and with the
exception of those obligations which expressly survive the termination of this
Agreement, neither party shall have any further obligations or liability to the
other hereunder.
     2. ACE’s Inspection and Review Rights.
        (a) Promptly after receipt of the Call Notice, but in no event more than
fifteen (15) days thereafter, AREH or the Company shall deliver to ACE to the
extent in AREH’s or the Company’s possession or control with regard to the
Traymore Site and the Company, and to the extent not previously delivered to
ACE, the following: (i) title reports and policies, survey, tax bills or
statements, utility bills, insurance certificates, warranties, vendor contracts,
and all other documents relating of similar nature and import; (ii) the Traymore
Leases, and tenant estoppel certificates and subordination or nondisturbance
agreements for each of the Traymore Leases; (iii) the organizational documents
of the Company, including all corporate books, documents and records relating
thereto, if any; (iv) a list of all Liabilities of the Company including,
without limitation, the Boardwalk Assumed Liabilities; (v) any environmental
reports and engineering

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reports relating to the Traymore Site; (vi) all relevant contracts, books and
records, and all financial data and information and other information, including
tax returns and filings; and (vii) such other documents and records as ACE may
reasonably request relating to the Company and the Traymore Site (all such
documents are hereinafter collectively referred to as the “Inspection
Documents”).
        (b) ACE shall have until thirty (30) days after receipt of the
Inspection Documents (the “Due Diligence Period”) (i) to inspect the Inspection
Documents, (ii) upon reasonable notice to AREH, have reasonable access to the
Traymore Site Land and Traymore Site Improvements, and (iii) to inspect and
conduct such other due diligence into any other matters pertaining to the
Company or the Traymore Site. At any time prior to the expiration of the Due
Diligence Period, ACE may, in its sole discretion and in writing, terminate its
Call Notice and this Agreement, for any reason or no reason at all, and with the
exception of those obligations which expressly survive the termination of this
Agreement, neither party shall have any further obligations or liability to the
other hereunder.
        (c) In the event that ACE does not terminate this Agreement by the end
of the 30-day Due Diligence Period then ACE shall be deemed to have, subject to
the terms hereof, reviewed and accepted the Inspection Documents and completed
its investigation of the Traymore Site Land and Traymore Site Improvements, the
Traymore Leases, the tenants and all other matters relating to the exercise of
the Call Right. The furnishing of the Inspection Documents to ACE or its
attorneys, accountants, agent or other representatives or any investigation by
any of the foregoing, shall not affect ACE’s right to rely on any
representations, warranties and covenants expressly made in this Agreement.
     3. Exercise. ACE may exercise the Call Right at any time after the Closing
Date (as defined in the Purchase Agreement) until 5:00 PM on June 5, 2007 (such
date, the “Call Termination Date”). Time shall be of the essence with regard to
delivery of the Call Notice. If the Call Notice that complies with Section 1(b)
is delivered by ACE to AREH prior to the Call Termination Date, the Call Closing
may occur after the Call Termination Date, including to give effect to the
deferral of the Call Closing, as provided in Section 1(b) to obtain any consents
or approvals of any Governmental Entity which are required by any Requirement of
Law. In no event shall the Call Closing occur prior to the expiration of the Due
Diligence Period or later than 75 days after delivery of the Call Notice (such
75th day, the “Call Closing Termination”).
     4. Call Price.
        (a) The Call Price shall equal (A) the sum of (i) the price allocated
pursuant to the Purchase Agreement to the Traymore Site of $61 million (subject
to adjustment for pro rated rents, utilities and assessments), (ii) the Traymore
Closing Costs, (iii) the Traymore Financing Costs and (iv) the Traymore
Operating Costs, plus, in each case, interest thereon at the rate of 8% per
annum from the date such costs are incurred, calculated on the basis of a
360 day year, through and including the Call Closing Date, less (B) any revenues
received by the Company or AREH with respect to the Traymore Site through and
including the Call Closing Date; provided that the proceeds of any financing
shall not be deemed revenues for purposes of this clause (B). The Call Price
shall be further adjusted in accordance with the provisions of Section 4(b)
hereof.

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        (b) AREH, in its sole discretion, and subject to the approval of the
holder of the Traymore Debt (the “Lender”), if required under the terms of the
Traymore Debt loan documents, may decide to sell to ACE the Equity Interests
and/or the Traymore Site subject to the Traymore Debt. To the extent AREH
chooses to sell the Equity Interests and/or the Traymore Site to ACE subject to
the Traymore Debt, ACE executes a novation and assumption agreement related to
such indebtedness reasonably satisfactory to AREH and the Lender releases AREH
from all obligations under the Traymore Debt (except any guarantee obligation in
effect on the date of the Call Closing and in favor of the Lender that is
required to remain in effect following a transfer of the borrower’s obligations
under the Traymore Debt documents to an affiliate), then the Call Price shall be
reduced by an amount equal to the outstanding principal amount of the Traymore
Debt and any accrued and unpaid interest thereon at the Call Closing Date. In
addition to payment of the Call Price, ACE shall reimburse AREH for all escrow
amounts posted in connection with the Traymore Debt. To the extent AREH sells
the Equity Interests (and the Traymore Site) to ACE free and clear of the
Traymore Debt (either because it chooses to or because the Lender does not
approve of the sale to ACE for any reason in its absolute discretion, if such
approval is required under the Traymore Debt documents), ACE shall, in addition
to the Call Price, pay to the Lender any prepayment penalties and other fees in
connection with the prepayment of the Traymore Debt.
        (c) The Traymore Closing Costs shall include all costs and expenses
actually incurred by AREH and its affiliates in connection with the acquisition,
ownership and financing of the Traymore Site and the transfer of the Equity
Interests to ACE including, without limitation, legal fees, title insurance,
recording, transfer or similar taxes, survey and inspection costs. The Traymore
Financing Costs shall include all fees, costs and expenses incurred by AREH and
its affiliates in connection with obtaining financing to acquire the Traymore
Site pursuant to the Purchase Agreement, including, without limitation, legal
fees and expenses, and any fees payable to any financing source in connection
with obtaining such financing, all principal and interest payments made on the
Traymore Debt and all costs associated with the assignment of the Traymore Debt,
if applicable. The Traymore Operating Expenses shall include all costs and
expenses actually incurred by AREH and its affiliates in owning or operating the
Traymore Site. The Traymore Debt means the loan made to AREH by Bear Stearns
Commercial Mortgage Inc. (or any affiliate thereof).
     5. Payment of Call Price. ACE shall pay the Call Price to AREH at the Call
Closing in cash delivered by wire transfer of immediately available funds to the
account or accounts designated at least two (2) Business Days prior to such Call
Closing by AREH to ACE.
     6. Representations, Warranties and Covenants.
        (a) AREH. AREH hereby represents, warrants and covenants to ACE as
follows as of the date hereof and as of the Call Closing (and ACE’s obligation
to acquire the Equity Interests at the Call Closing shall be subject to such
representations and warranties being true and accurate as of such date):
       (i) Organization. AREH is a limited partnership duly organized and
validly existing under the laws of the State of Delaware.

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       (ii) Power and Authority. AREH has the requisite limited partnership
power and authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery and performance by AREH and the consummation by AREH of the
transactions contemplated hereby have been duly authorized by all requisite
limited partnership action on the part of AREH, and no other proceedings on the
part of its partners are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by, and constitutes the valid and binding obligation of, AREH,
enforceable against it in accordance with its terms.
       (iii) Equity Interests Free of Liens. The transfer of the Equity
Interests pursuant to this Agreement (A) (1) does not and will not result in the
creation or imposition of any mortgage, pledge, security interest, encumbrance,
lien, option to purchase or sell, right of first refusal or charge of any kind
(“Lien”) (other than any Lien created by action of any person other than AREH or
the Company) upon the Equity Interests, (2) does not and will not violate any
law, rule, regulation, order, judgment, decree or determination of any
arbitrator, court or other Governmental Entity (“Requirement of Law”) applicable
to AREH or the Company or to which the properties of either is subject and
(3) does not and will not conflict with or result in any breach of any term,
condition or provision of, or constitute (with due notice or lapse of time or
both) a default under, or pursuant to the terms of, any mortgage, deed or trust
or other agreement or instrument to which AREH or the Company is a party or by
which either or any of its properties is bound except that ACE acknowledges that
the Lender’s consent may be required to transfer the Equity Interests pursuant
to this Agreement, and (B) does not and will not conflict with the charter
documents of either AREH or the Company. As of the Call Closing, the Equity
Interests will be (1) duly authorized, validly issued, fully paid and
non-assessable membership interests, (2) the only membership interests issued
and outstanding and (3) delivered free and clear of all Liens (other than any
Lien solely created by action of ACE or relating to the Traymore Debt) and not
be subject to any voting or trust agreement, proxy, buy-sell agreement, right of
first refusal, preemptive-right or similar restriction. As of the Call Closing,
no individual, Governmental Entity or entity of whatever nature (“Person”),
including AREH, will have the right to acquire from the Company any membership
interest or any other securities of the Company.
       (iv) No Conflict. The execution, delivery and performance by AREH of this
Agreement, and the consummation by AREH of the transactions contemplated hereby
(A) (1) does not and will not violate any Requirement of Law applicable to AREH
or the Company and (2) does not and will not conflict with or result in any
breach of any term, condition or provision of, or constitute (with due notice or
lapse of time or both) a default under, or pursuant to the terms of, any
mortgage, deed of trust or other agreement or instrument to which AREH or the
Company is a party or by which AREH, the Company or the properties of either is
bound except that ACE acknowledges that the Lender’s consent may be required to
transfer the Equity Interests pursuant to this Agreement, and (B) does not and
will not conflict with the organizational documents of AREH or the Company.

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       (v) Consents/Approvals. As of the Call Closing, (A) no consents of,
filings with, authorizations or other actions of, any Governmental Entity will
be required to be received, made or filed by, or taken on behalf of, AREH’s
transfer of the Equity Interests pursuant to this Agreement, other than those
that have or will have been received, made, filed or taken, and (B) no consent,
approval, waiver or other action by any Person under any contract, agreement,
indenture, lease or other similar document to which AREH or any of its
properties is bound is required for the transfer of the Equity Interests
pursuant to the Agreement, except for any such consents, approvals, waivers or
other actions that have been or will have been previously obtained or completed.
       (vi) Inspection Documents. The Inspection Documents (other than any
Inspection Documents produced or prepared by third parties) are complete and
accurate in all material respects.
       (vii) Company Business. The Company has not engaged, and will not engage
in any business other than the acquisition, ownership and operation of the
Traymore Site.
        (b) ACE. ACE hereby represents, warrants and covenants to AREH as
follows as of the date hereof and as of the Call Closing:
       (i) Organization. ACE is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware.
       (ii) Power and Authority. ACE has the requisite limited liability company
power and authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery and performance by it of this Agreement and the consummation by it of
the transactions contemplated hereby have been duly authorized by all requisite
limited liability company action and no other proceedings on its part or its
members or managers is necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by ACE and constitutes its valid and binding obligation, enforceable
against ACE in accordance with its terms.
       (iii) No Conflict. The execution, delivery and performance by ACE of this
Agreement, and the consummation by ACE of the transactions contemplated hereby
(A)(1) does not and will not violate any Requirement of Law applicable to it and
(2) does not and will not conflict with or result in any breach of any term,
condition or provision of, or constitute (with due notice or lapse of time or
both) a default under, or pursuant to the terms of, any mortgage, deed of trust
or other agreement or instrument to which it is a party or by which it or any of
its properties is bound and (B) does not and will not conflict with its
organizational documents.
       (iv) Consents/Approvals. As of the Call Closing (A) no consents of,
filings with, authorizations or other actions of, any Governmental Entity will
be required to be received, made or filed by, or taken on behalf of, ACE in
connection with its

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  purchase of the Equity Interests pursuant to this Agreement, other than those
that have or will have been received, made, filed or taken, and (B) no consent,
approval, waiver or other action by any Person under any contract, agreement,
indenture, lease or other similar document to which ACE or Atlantic Coast or any
of their properties is bound is required for the transfer of the Equity
Interests pursuant to the Agreement, except for any such consents, approvals,
waivers or other actions that have been or will have been previously obtained or
completed.
       (v) Liabilities of the Company. ACE acknowledges the existence of the
obligations of the Company as lessor under the Traymore Leases (as defined in
the Purchase Agreement), the Boardwalk Assumed Liabilities (as defined in the
Purchase Agreement) and, to the extent AREH chooses to sell the Equity Interests
and/or the Traymore Site subject to the Traymore Debt, the Traymore Debt, and
provided that the exercise of the Call Right closes in accordance with
Section 1(b), agrees to accept the Equity Interests and the Traymore Site
subject to all the terms and conditions contained in the Traymore Leases, copies
of which will be included in the Inspection Documents, the Boardwalk Assumed
Liabilities, and the Traymore Debt, and the other liabilities listed and
disclosed in the Inspection Documents.
     7. Conditions to Each Party’s Obligation to Effect the Call Closing. The
respective obligations of each party to this Agreement to effect the Call
Closing are subject to the satisfaction of each of the following conditions on
or prior to the Call Closing Date, any of which may be waived in whole or in
part to the extent permitted by applicable Law in a writing executed by both of
the parties hereto:
        (a) Consents/Approvals. All consents of, filings with, authorizations or
other actions of, any Governmental Entity required to be received, made or filed
by, or taken on behalf of, AREH in connection with its transfer, and ACE in
connection with its purchase, of the Equity Interests pursuant to this
Agreement, have been received, made, filed or taken, and (B) all consents,
approvals, waivers or other action by any Person under any contract, agreement,
indenture, lease or other similar document to which AREH, ACE or any of their
properties is bound is required for the transfer of the Equity Interests
pursuant to this Agreement have been obtained or completed.
        (b) Performance of Obligations. Each of AREH and ACE shall have
performed in all material respects all covenants, agreements and obligations
required to be performed by it under this Agreement at or prior to the Call
Closing.
        (c) Financing. To the extent, but only to the extent, AREH, in
accordance with Section 4(b), decides to sell to ACE the Equity Interests free
and clear of the Traymore Debt (either because AREH chooses to or because the
Lender does not consent to the sale of the Equity Interests to ACE for any
reason (if such consent is required under the Traymore Debt documents)), then
ACE shall have obtained financing on commercially reasonable terms and
conditions sufficient to enable it to consummate the transaction contemplated
hereby.

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     To the extent the conditions set forth in this Section 7 are not satisfied
or waived at or prior to the Call Closing Termination, then the Call Notice and
this Agreement, with the exception of those obligations that expressly survive
the termination of this Agreement, shall automatically terminate, and neither
party shall have any further obligations or liability to the other hereunder.
     8. Miscellaneous.
        (a) Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
perform its obligations hereunder and to consummate and make effective the
transactions contemplated to be consummated by such party under this Agreement.
Without limitation of the generality of the foregoing, each party hereto agrees
to cooperate with the other parties in obtaining as promptly as practicable
after the exercise of the Call Right, any and all consents or approvals of any
Governmental Entity referred to in Section 1(b), with respect to such exercise
and the related Call Closing.
        (b) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the respective successors and permitted assigns of the parties
hereto, provided that neither this Agreement nor any rights or obligations
hereunder may be assigned or delegated by AREH or ACE without the prior written
consent of the other party except that (i) ACE may assign, in whole or in part,
its rights and obligations to Atlantic Coast or any subsidiary of ACE or
Atlantic Coast provided that ACE continues to be bound by its obligations
hereunder, (ii) ACE may assign its rights and obligations to any subsidiary of
Atlantic Coast or ACE into which ACE is merged, consolidated or otherwise
combined and (iii) AREH may assign in whole its rights and obligations hereunder
to any Person in connection with a transfer of the Equity Interests to such
Person, provided such Person agrees with ACE in writing to be bound by all of
the terms of this Agreement applicable to AREH.
        (c) Costs and Expenses. Except as otherwise set forth herein, each party
agrees to bear its own expenses, fees and costs incurred in connection with the
transactions contemplated by this Agreement.
        (d) Brokerage. There are no valid claims for brokerage commissions,
finder’s fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of any party hereto and each party will indemnify and hold the other
party harmless against any liability or expense to it arising out of such a
claim.
        (e) Amendment. Any amendment hereto shall be effective only if in
writing and signed by each of AREH and ACE.
        (f) Waiver; Cumulative Rights. No provision of this Agreement shall be
deemed to have been waived by any act or knowledge of any party or of such
party’s agents, officers or employees, but only by an instrument in writing
specifying such waiver signed by

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AREH and delivered to ACE, if AREH is the waiving party, or in writing signed by
ACE and delivered to AREH, if ACE is the waiving party. The failure or delay of
any party to require performance by another party of any provision hereof shall
not affect its right to require performance of such provision unless and until
such performance has been waived in writing. Each and every right hereunder is
cumulative and may be exercised in whole or in party from time to time.
        (g) Notices. All notices, demands, requests, certificates or other
communications under this Agreement shall be in writing and shall be mailed by
certified or registered mail (return receipt requested) with charges prepaid,
hand delivered or sent by facsimile transmission or by commercial courier to the
address set forth below for each of the parties (or at such other address as
shall be specified by a party by like notice to the other parties):
       (i) If to AREH:
American Real Estate Holdings Limited Partnership
100 South Bedford Road
Mt. Kisco, NY 10549
Attn.: Felicia Buebel
Fax.: (914) 242-9282
        with copies to:
DLA Piper Rudnick Gray Cary US LLP
1251 Avenue of the Americas
New York, NY 10020
Attn.: Steven Wasserman
Fax.: (212) 835-6001
       (ii) If to ACE:
Sands Casino Hotel
Indiana Avenue & Brighton Park
Atlantic City, NJ 08401
Attn: General Counsel
Fax: (609) 441-4937
        with copies to:
Katten Muchin Rosenman LLP
575 Madison Avenue
New York, NY 10022
Attn.: Joel Yunis
Fax.: (212) 894-5666

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Notices shall be deemed delivered when received; provided that any notice
delivered after business hours or on a Saturday, Sunday or legal holiday at the
place of such delivery shall be deemed for purposes of computing any time period
hereunder to have been delivered on the next business day in such place of
business.
        (h) Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of New York, without reference
to its conflicts of law principles.
        (i) 1031 Exchange. ACE acknowledges that AREH intends to structure its
acquisition of the Traymore Site as a 1031 Exchange in accordance with
applicable Internal Revenue regulations. ACE acknowledges and hereby consents to
such transaction and the transfer by AREH of the Equity Interests to the nominee
exchange agent. Notwithstanding such transfer, AREH agrees to cause such
exchange agent to comply with the terms of this Agreement applicable to AREH to
the extent the same have been assigned to the nominee exchange agent.
        (j) Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
        (k) Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
        (l) Remedies. Each party shall be entitled to obtain specific
performance of the obligations of another party hereunder and immediate
injunctive relief, and in the event any action or proceeding is brought in
equity to enforce this Agreement, no party will present as a defense that there
is an adequate remedy at law. Such remedies shall be in addition to any other
remedies which any party may have under this Agreement or otherwise.
        (m) “As-Is” Condition; Waiver and Release. Except for the express
representations and warranties contained in Section 6(a) of this Agreement, the
Equity Interests to be transferred hereunder will be transferred “as is, where
is,” in their present condition and state of repair, with all faults,
limitations and defects (hidden and apparent). Without limitation, ACE
acknowledges that, except as specifically set forth to the contrary in Section
6(a) of this Agreement, no warranties or representations, expressed or implied,
of any kind whatsoever have been made by AREH, any of its affiliates or any
other person, or will be relied upon by ACE.
        (n) Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants contained in Section 6 of this
Agreement shall survive the Call Closing for a period of six months. Except as
set forth in the immediately preceding sentence no other representation,
warranty or covenant of AREH shall survive the Call Closing or termination of
this Agreement, and upon the earlier of the Call Closing, the Call Termination
Date or other termination of this Agreement, all obligations and duties of AREH
shall be deemed fully satisfied, and AREH shall have no further obligation, duty
or liability hereunder, contingent or otherwise.

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        (o) Limitation of Claims. Notwithstanding anything to the contrary
contained herein, the aggregate liability of AREH with respect to any claims,
losses, liabilities, damages, judgments, proceedings, causes of actions, costs
and expenses shall not exceed the Call Price actually paid by ACE at the Call
Closing.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto on
the date first above written.

                  AMERICAN REAL ESTATE HOLDINGS LIMITED PARTNERSHIP
 
                By:   American Property Investors, Inc., its general partner
 
                By:   /s/ Jon F. Weber          
 
      Name:   Jon F. Weber
 
      Title:   President
 
                ACE GAMING, LLC
 
                By:   /s/ Richard P. Brown          
 
      Name:   Richard Brown
 
      Title:   President and Chief Executive Officer

     The undersigned, AREP Sands Holding, LLC, the holder of approximately
$27 million aggregate principal amount of the 3% Notes due July 22, 2008 (the
“Notes”) issued by Atlantic Coast Entertainment Holdings, Inc. (“Atlantic”) and
guaranteed by ACE Gaming, LLC (“ACE”) under an indenture dated July 22, 2004
(the “Indenture”), by and among Atlantic, as issuer, ACE, as guarantor, and
Wells Fargo National Bank Association, as trustee, in its capacity as the holder
of a majority of the outstanding principal amount of the Notes, hereby consents
to all of the matters set forth in the above agreement and waives any and all
defaults, conflicts, failures of compliance and future compliance with, under or
in respect of the Indenture, resulting from or arising out of, the execution,
delivery or performance of the above agreement.

                  AGREED AND ACCEPTED:
 
                AREP SANDS HOLDING, LLC
 
                By:   /s/ Keith Meister          
 
      Name:   Keith Meister
 
      Title:   President

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