Exhibit 10.2
PLEDGE AND SECURITY AGREEMENT
dated as of August 21, 2006
among
AREP HOME FASHION HOLDINGS LLC
AMERICAN CASINO & ENTERTAINMENT LLC
AREP NEW JERSEY LAND HOLDINGS LLC
AREP OIL & GAS HOLDINGS, LLC
AREP REAL ESTATE HOLDINGS, LLC
collectively as the AREH Subsidiary Guarantors
and
BEAR STEARNS CORPORATE LENDING INC.,
as Collateral Agent

 

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TABLE OF CONTENTS

                      PAGE
Section 1.
  DEFINITIONS     2  
Section 2.
  GRANT OF SECURITY     8  
Section 3.
  SECURITY FOR OBLIGATIONS     10  
Section 4.
  REPRESENTATIONS AND WARRANTIES AND COVENANTS     10  
Section 5.
  DIVIDENDS, DISTRIBUTIONS AND VOTING     19  
Section 6.
  ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES     20  
Section 7.
  COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT, IRREVOCABLE POWER OF ATTORNEY    
21  
Section 8.
  REMEDIES     22  
Section 9.
  COLLATERAL AGENT     27  
Section 10.
  CONTINUING SECURITY INTEREST; TRANSFER OF SECURED OBLIGATIONS     28  
Section 11.
  STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM     29  
Section 12.
  INDEMNITY AND EXPENSES     29  
Section 13.
  MISCELLANEOUS     29  

     
SCHEDULE I -
  GENERAL INFORMATION
SCHEDULE II -
  INVESTMENT RELATED PROPERTY
SCHEDULE III -
  LETTERS OF CREDIT
SCHEDULE IV -
  INTELLECTUAL PROPERTY
SCHEDULE V -
  COMMERCIAL TORT CLAIMS

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          This PLEDGE AND SECURITY AGREEMENT, dated as of August 21, 2006 (this
“Agreement”), among each of the undersigned (together with any other Person that
executes a Joinder Agreement, each, a “Grantor” and collectively, the
“Grantors”), and Bear Stearns Corporate Lending Inc. (“BSCL”), acting in its
capacity as collateral agent for the benefit of those lenders and issuing banks
from time to time party to the Credit Agreement (as defined herein) and the
other Secured Parties (as defined below), (the “Collateral Agent”).
RECITALS
          WHEREAS, reference is made to that certain Credit Agreement (the
“Credit Agreement”), dated as of August 21, 2006, among AMERICAN REAL ESTATE
PARTNERS, L.P., a Delaware limited partnership, as borrower (“AREP” or
“Borrower”) and AMERICAN REAL ESTATE FINANCE CORP., a Delaware corporation, as
borrower (“AREP Finance” or “Borrower”, and together with AREP, the
“Borrowers”), certain Subsidiaries of the Borrowers from time to time party to
this Agreement (the “Guarantors”), the several banks and other financial
institutions or entities from time to time parties to the Credit Agreement (the
“Lenders”), BEAR, STEARNS & CO. INC., as sole lead arranger and sole bookrunner
(in such capacity, the “Lead Arranger”), and BSCL, as administrative agent for
the Lenders and the other Agents (in such capacity, the “Administrative Agent”)
and as Collateral Agent, pursuant to which the lenders party thereto have
extended or will extend credit and other financial accommodations to or for the
benefit of the Borrowers;
          WHEREAS, pursuant to Section 10 of the Credit Agreement the Grantors
(collectively, the “AREH Subsidiary Guarantors”) guarantee the performance of
the Borrower Obligations under the Credit Agreement and the other Loan Documents
(the “Guarantee”);
          WHEREAS, the Borrowers are members of an affiliated group of companies
that includes each Grantor;
          WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrowers to make valuable
transfers to one or more of the Grantors in connection with the operation of
their respective businesses;
          WHEREAS, the Borrowers and the Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
          WHEREAS, in consideration of the extensions of credit as set forth in
the Credit Agreement, each of the Grantors has agreed to secure all obligations
under the Credit Agreement and the other Loan Documents, including the
Guarantee;
          NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each of the Grantors and the
Collateral Agent hereby agree as follows:

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SECTION 1. DEFINITIONS
     (a) General Definitions. In this Agreement, the following terms shall have
the following meanings:
          “Account Debtor” shall mean each Person who is obligated on a
Receivable or any Supporting Obligation related thereto.
          “Accounts” shall mean all “accounts” as defined in Article 9 of the
UCC.
          “Account Control Agreement” shall mean such control agreements as are
from time to time delivered to the Collateral Agent as further set forth in
Section 4(e)(iii).
          “Agreement” shall have the meaning set forth in the preamble.
          “Authenticate” shall mean “authenticate” as defined in Article 9 of
the UCC.
          “Borrower Obligations” shall have the meaning set forth in the Credit
Agreement.
          “Cash Proceeds” shall mean all proceeds of any Collateral consisting
of cash, checks and other near-cash items.
          “Certificated Security” shall have the meaning specified in Article 8
of the UCC.
          “Chattel Paper” shall mean all “chattel paper” as defined in Article 9
of the UCC, including “electronic chattel paper” or “tangible chattel paper”, as
each term is defined in the UCC.
          “Code” shall mean the Internal Revenue Code of 1986, as amended.
          “Collateral” shall have the meaning set forth in Section 2(a) hereof.
          “Collateral Agent” shall have the meaning set forth in the preamble.
          “Collateral Records” shall mean books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications, manuals,
computer software, computer printouts, tapes, disks and other electronic storage
media and related data processing software and similar items that at any time
evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon.
          “Collateral Support” shall mean all property (real or personal)
assigned, hypothecated or otherwise securing any Collateral and shall include
any security agreement or other agreement granting a Lien in such real or
personal property.
          “Commercial Tort Claims” shall mean all “commercial tort claims” as
defined in the UCC, including all commercial tort claims listed and described
with specification on Schedule V hereto (as such Schedule may be amended or
supplemented from time to time in accordance with Section 4(i)).

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          “Commodities Accounts” shall mean all “commodity accounts” as defined
in Article 9 of the UCC.
          “Copyright Licenses” shall mean any and all agreements granting any
right in, to or under Copyrights (whether such Grantor is licensee or licensor
thereunder) including each agreement referred to in Schedule IV(B) (as such
Schedule may be amended or supplemented from time to time in accordance with
Section 4(i)).
          “Copyrights” shall mean all United States, state and foreign
copyrights owned by any Grantor, including copyrights in software and databases,
and all Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act),
whether registered or unregistered, now or hereafter in force throughout the
world, all registrations and applications for any of the foregoing including the
applications referred to in Schedule IV(A) (as such Schedule may be amended or
supplemented from time to time in accordance with Section 4(i)), all rights
corresponding thereto throughout the world, and all extensions and renewals of
any thereof.
          “Credit Agreement” shall have the meaning set forth in the preamble.
          “Deposit Accounts” shall mean all “deposit accounts” as defined in
Article 9 of the UCC.
          “Documents” shall mean all “documents” as defined in Article 9 of the
UCC.
          “Documents Evidencing Goods” shall mean all Documents evidencing,
representing or issued in connection with Goods.
          “Equipment” shall mean: (i) all “equipment” as defined in the UCC,
(ii) all machinery, manufacturing equipment, data processing equipment,
computers, office equipment, furnishings, furniture, appliances, and tools (in
each case, regardless of whether characterized as equipment under the UCC),
(iii) all Fixtures and (iv) all accessions or additions thereto, all parts
thereof, whether or not at any time of determination incorporated or installed
therein or attached thereto, and all replacements therefor, wherever located,
now or hereafter existing.
          “Fixtures” shall mean all “fixtures” as defined in Article 9 of the
UCC.
          “General Intangibles” (i) shall mean all “general intangibles” as
defined in Article 9 of the UCC and (ii) shall include all Hedge Agreements, all
contracts, all tax refunds and all licenses, permits, concessions and
authorizations, (in each case, regardless of whether characterized as general
intangibles under the UCC).
          “Goods” (i) shall mean all “goods” as defined in Article 9 of the UCC
and (ii) shall include all Inventory, Equipment (whether or not constituting
Fixtures), Documents Evidencing Goods and Software Embedded In Goods.
          “Instruments” shall mean all “instruments” as defined in Article 9 of
the UCC.
          “Insurance” shall mean all insurance policies covering any or all of
the Collateral (regardless of whether the Collateral Agent is the loss payee
thereof).

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          “Intellectual Property” shall mean, the collective reference to all
rights, priorities and privileges relating to any intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and the
Trade Secret Licenses, together with URLs, domain names, content of websites and
databases, and rights of publicity.
          “Intellectual Property Licenses” shall mean, collectively, the
Copyright Licenses, Patent Licenses, Trademark Licenses, and Trade Secret
Licenses.
          “Inventory” shall mean: (i) all “inventory” as defined in the UCC and
(ii) all goods held for sale or lease or to be furnished under contracts of
service or so leased or furnished, all raw materials, work in process, finished
goods, and materials used or consumed in the manufacture, packing, shipping,
advertising, selling, leasing, furnishing or production of such inventory or
otherwise used or consumed in any Grantor’s business; all goods in which any
Grantor has an interest in mass or a joint or other interest or right of any
kind; and all goods which are returned to or repossessed by any Grantor, and all
accessions thereto and products thereof (in each case, regardless of whether
characterized as inventory under the UCC).
          “Investment Accounts” shall mean Securities Accounts, Commodities
Accounts and Deposit Accounts.
          “Investment Related Property” shall mean: (i) all “investment
property” (as such term is defined in Article 9 of the UCC) (other than as
described in Section 2(b)) and (ii) all of the following (regardless of whether
classified as investment property under the UCC): all (1) Pledged Equity
Interests, (2) Pledged Debt, (3) the Investment Accounts and (4) Certificates of
Deposit.
          “Joinder Agreement” means an agreement in substantially the form of
Exhibit A hereto whereby an additional person becomes a Grantor hereunder as
required by the Credit Agreement.
          “Letter of Credit Right” shall mean “letter-of-credit right” as
defined in the UCC.
          “Material Intellectual Property” shall have the meaning set forth in
Section 4(g)(i)(1) hereof.
          “Money” shall mean “money” as defined in the UCC.
          “Patent Licenses” shall mean all agreements granting any right in, to,
or under Patents (whether such Grantor is licensee or licensor thereunder)
including each agreement referred to in Schedule IV(D) hereto (as such Schedule
may be amended or supplemented from time to time in accordance with
Section 4(i)).
          “Patents” shall mean all United States, state and foreign letters
patents and applications for letters patent owned by any Grantor, including each
patent and patent application referred to in Schedule IV(C) hereto (as such
Schedule may be amended or supplemented from time to time in accordance with
Section 4(i)), all reissues, divisions, continuations,

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continuations-in-part, extensions, renewals, and reexaminations of any of the
foregoing, and all rights corresponding thereto throughout the world.
          “Payment Intangible” shall have the meaning specified in Article 9 of
the UCC.
          “Pledged Collateral” shall mean all Pledged Debt and Pledged Equity
Interests.
          “Pledged Debt” shall mean all indebtedness for borrowed money owed to
such Grantor, whether or not evidenced by any instrument or promissory note,
including all indebtedness described on Schedule II hereto under the heading
“Pledged Debt” (as such Schedule may be amended or supplemented from time to
time in accordance with Section 4(i)), all monetary obligations owing to any
Grantor from any other Grantor the instruments evidencing any of the foregoing,
and all interest, cash, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the foregoing.
          “Pledged Equity Interests” shall mean all Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests, Pledged Trust Interests and any other
participation or other interests in any equity or profits of any business
entity.
          “Pledged LLC Interests” shall mean all interests in any limited
liability company owned by such Grantor (other than as described in Section 2(b)
herein) including all limited liability company or member’s interests listed on
Schedule II hereto under the heading “Pledged LLC Interests” (as such Schedule
may be amended or supplemented from time to time in accordance with
Section 4(i)) and the certificates, if any, representing such limited liability
company or member’s interests and any interest of such Grantor on the books and
records of such limited liability company or on the books and records of any
securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such limited
liability company or member’s interests and any other warrant, right or option
to acquire any of the foregoing.
          “Pledged Partnership Interests” shall mean all interests in any
general partnership, limited partnership, limited liability partnership or other
partnership owned by such Grantor (other than as described in Section 2(b)
herein) including all partnership interests listed on Schedule II hereto under
the heading “Pledged Partnership Interests” (as such Schedule may be amended or
supplemented from time to time in accordance with Section 4(i)) and the
certificates, if any, representing such partnership interests and any interest
of such Grantor on the books and records of such partnership or on the books and
records of any securities intermediary pertaining to such interest and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
partnership interests and any other warrant, right or option to acquire any of
the foregoing.
          “Pledged Stock” shall mean all shares of Capital Stock owned by such
Grantor (other than as described in Section 2(b) herein), including all shares
of Capital Stock described on Schedule II hereto under the heading “Pledged
Stock” (as such Schedule may be amended or

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supplemented from time to time in accordance with Section 4(i)), and the
certificates, if any, representing such shares and any interest of such Grantor
in the entries on the books of the issuer of such shares or on the books of any
securities intermediary pertaining to such shares, and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares and any
other warrant, right or option to acquire any of the foregoing.
          “Pledged Trust Interests” shall mean all interests in a Delaware
statutory trust or other trust owned by such Grantor (other than as described in
Section 2(b) herein) including all trust interests listed on Schedule II hereto
under the heading “Pledged Trust Interests” (as such Schedule may be amended or
supplemented from time to time in accordance with Section 4(i)) and the
certificates, if any, representing such trust interests and any interest of such
Grantor on the books and records of such trust or on the books and records of
any securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such trust interests
and any other warrant, right or option to acquire any of the foregoing.
          “Proceeds” shall mean: (i) all “proceeds” as defined in Article 9 of
the UCC, (ii) payments or distributions made with respect to any Investment
Related Property and (iii) whatever is receivable or received when Collateral or
proceeds are sold, leased, licensed, exchanged, collected or otherwise disposed
of, whether such disposition is voluntary or involuntary.
          “Receivables” shall mean all (i) Accounts, (ii) Chattel Paper,
(iii) Payment Intangibles, (iv) Instruments (including, to the extent
constituting Instruments, the Pledged Debt) and (v) to the extent not otherwise
covered above, all other rights to payment, whether or not earned by
performance, for goods or other property sold, leased, licensed, assigned or
otherwise disposed of, or services rendered or to be rendered, regardless of how
classified under the UCC together with all of each Grantor’s rights, if any, in
any goods or other property giving rise to such right to payment and all
Collateral Support and Supporting Obligations related thereto and all
Receivables Records.
          “Receivables Records” shall mean (i) all original copies of all
documents, instruments or other writings or electronic records or other Records
evidencing the Receivables, (ii) all books, correspondence, credit or other
files, Records, ledger sheets or cards, invoices, and other papers relating to
Receivables, including all tapes, cards, computer tapes, computer discs,
computer runs, record keeping systems and other papers and documents relating to
the Receivables, whether in the possession or under the control of Grantor or
any computer bureau or agent from time to time acting for Grantor or otherwise,
(iii) all evidences of the filing of financing statements and the registration
of other instruments in connection therewith, and amendments, supplements or
other modifications thereto, notices to other creditors or agents thereof, and
certificates, acknowledgments, or other writings, including lien search reports,
from filing or other registration officers, (iv) all credit information, reports
and memoranda relating thereto and (v) all other written or non-written forms of
information related in any way to the foregoing or any Receivable.

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          “Record” shall have the meaning specified in the UCC.
          “Registered Organization” shall mean an organization organized solely
under the law of a single State or the United States and as to which the State
or the United States must maintain a public record showing the organization to
have been organized.
          “Representation Date” shall mean each of (i) the date hereof and
(ii) each other day on which the Borrowers reaffirm any representation and
warranty contained in the Credit Agreement.
          “Secured Obligations” shall mean each of the AREH Subsidiary
Guarantor’s Obligations under the Credit Agreement and each agreement executed
therewith to which it is a party.
          “Secured Party” shall mean the collective reference to the Lenders,
the Agents (as defined in the Credit Agreement), the Qualified Counterparties
(as defined in the Credit Agreement) and the Issuing Lender (as defined in the
Credit Agreement), and each of their respective successors, assignees and
transferees.
          “Securities” shall have the meaning specified in Article 8 of the UCC.
          “Securities Accounts” shall mean all “securities accounts” as defined
in Article 8 of the UCC.
          “Software Embedded in Goods” means, with respect to any Goods, any
computer program embedded in Goods and any supporting information provided in
connection with a transaction relating to the program if (i) the program is
associated with the Goods in such a manner that it customarily is considered
part of the Goods or (ii) by becoming the owner of the Goods a person acquires a
right to use the program in connection with the Goods.
          “State” shall mean a State of the United States, the District of
Columbia, Puerto Rico, the United States Virgin Islands, or any territory or
insular possession subject to the jurisdiction of the United States.
          “Supporting Obligation” shall mean all “supporting obligations” as
defined in the UCC.
          “Trade Secret Licenses” shall mean any and all agreements granting any
right in or to Trade Secrets (whether such Grantor is licensee or licensor
thereunder) including each agreement referred to in Schedule IV(G) hereto (as
such Schedule may be amended or supplemented from time to time in accordance
with Section 4(i)).
          “Trade Secrets” shall mean all trade secrets and all other
confidential or proprietary information and know-how owned by any Grantor (all
of the foregoing being collectively called a “Trade Secret”), whether or not
reduced to a writing or other tangible form, including all documents and things
embodying, incorporating, or referring in any way to such Trade Secret.

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          “Trademark Licenses” shall mean any and all agreements granting any
right in or to Trademarks (whether such Grantor is licensee or licensor
thereunder) including each agreement referred to in Schedule IV(F) hereto (as
such Schedule may be amended or supplemented from time to time in accordance
with Section 4(i)).
          “Trademarks” shall mean all United States, state and foreign
trademarks, service marks, certification marks, collective marks, trade names,
corporate names, d/b/as, business names, fictitious business names, internet
domain names, trade styles, logos, other source or business identifiers, designs
and general intangibles of a like nature, rights of publicity and privacy
pertaining to the right to use names likeness and biographical data, all
registrations and applications for any of the foregoing owned by any Grantor,
including the registrations and applications referred to in Schedule IV(E)
hereto (as such Schedule may be amended or supplemented from time to time in
accordance with Section 4(i)), and the goodwill of the business symbolized by
the foregoing.
          “UCC” shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York.
     (b) Definitions; Interpretation. All capitalized terms used herein
(including the preamble and recitals hereto) and not otherwise defined herein
shall have the meanings ascribed thereto in the Credit Agreement or, if not
defined therein, in the UCC. With respect to terms defined in more than one
article of the UCC, unless otherwise specified such terms shall have the meaning
specified in Article 9 of the UCC. References to “Sections”, “Exhibits”,
“Annexes” and “Schedules” shall be to Sections, Exhibits, Annexes and Schedules,
as the case may be, of this Agreement (as such Sections, Exhibits, Annexes and
Schedules may be amended or supplemented from time to time in accordance with
the terms of this Agreement), unless otherwise specifically provided. Section
headings in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose or be
given any substantive effect. Any of the terms defined herein may, unless the
context otherwise requires, be used in the singular or the plural, depending on
the reference. The use herein of the word “include” or “including”, when
following any general statement, term or matter, shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as “without limitation” or “but not limited to” or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter. If any conflict or
inconsistency exists between this Agreement and the Credit Agreement, the Credit
Agreement shall govern. All references herein to provisions of the UCC shall
include all successor provisions under any subsequent version or amendment to
any Article of the UCC.
SECTION 2. GRANT OF SECURITY
     (a) Grant of Security. Each Grantor hereby grants to the Collateral Agent,
for itself and for the ratable benefit of the Secured Parties, a security
interest and continuing lien on all of such Grantor’s right, title and interest
in, to and under all personal property of such Grantor including the following,
in each case whether now owned or existing or hereafter acquired or

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arising and wherever located (all of which being hereinafter collectively
referred to as, the “Collateral”):
          (1) all Documents;
          (2) all General Intangibles;
          (3) all Goods (including Documents Representing Goods and Software
Embedded in Goods);
          (4) all Insurance;
          (5) all Intellectual Property;
          (6) all Investment Related Property (including Deposit Accounts);
          (7) all Letter of Credit Rights and letters of credit;
          (8) all Money;
          (9) all Receivables and Receivable Records;
          (10) all Commercial Tort Claims identified on Schedule V hereto;
          (11) all, to the extent not otherwise included above (except for any
property specifically excluded from any defined term used in any clause of the
section above), contracts, motor vehicles, choses in action and all other
personal property of any kind and all Collateral Records, Collateral Support and
Supporting Obligations relating to any of the foregoing; and
          (12) all, to the extent not otherwise included above, Proceeds,
products, accessions, rents and profits of or in respect of any of the
foregoing.
     (b) Certain Limited Exclusions. Notwithstanding anything herein to the
contrary, in no event shall the security interest granted under Section 2(a)
attach to (i) any lease, license, instrument, document, contract, property
rights or agreement (including, with respect to any Investment Related Property,
Pledged Debt or Pledged Equity Interest, any applicable shareholder or similar
agreement) to which any Grantor is a party, or any of its rights or interests
thereunder, if and for so long as the grant of such security interest shall
constitute or result in: (A) the abandonment, invalidation or unenforceability
of any right, title or interest of such Grantor therein or (B) a breach or
termination pursuant to the terms of, or a default under, any such lease,
license, instrument, document, contract property rights or agreement (other than
to the extent that any such term would be rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the UCC or the Uniform Commercial Code
in effect in any relevant jurisdiction or any other Requirement of Law or
principle of equity), provided, however, that such security interest shall
attach immediately at such time as the condition causing such abandonment,
invalidation or unenforceability shall be remedied and, to the extent severable,
shall attach immediately to any portion of such lease, license, contract,
property rights or agreement that

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does not result in any of the consequences specified in (A) or (B) including any
proceeds of such lease, license, contract, property rights or agreement; or
(ii) any property or asset to the extent that such grant of a security interest
is prohibited by any Requirement of Law or requires a consent not obtained of
any Governmental Authority pursuant to such Requirement of Law (other than to
the extent that any such term would be rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the UCC or the Uniform Commercial Code
in effect in any relevant jurisdiction or any other Requirement of Law or
principles of equity).
     (c) It is understood that the security interests created hereby shall not
prevent the Grantors from using the Collateral in the ordinary course of
business for purposes not inconsistent with this Agreement and the other Loan
Documents.
SECTION 3. SECURITY FOR OBLIGATIONS.
     (a) Security for Obligations. This Agreement secures, and the Collateral is
collateral security for, the prompt and complete payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. §362(a) (and any successor provision thereof)),
of all Secured Obligations.
     (b) Continuing Liability under Collateral. Notwithstanding anything herein
to the contrary, (i) neither the Collateral Agent nor any Secured Party shall be
liable for any obligations under the Collateral and nothing contained herein is
intended or shall be a delegation of duties to the Collateral Agent or any
Secured Party, (ii) neither the Collateral Agent nor any Secured Party shall
have any obligation or liability under any of the agreements included in the
Collateral, including any agreements relating to Pledged Partnership Interests
or Pledged LLC Interests by reason of or arising out of this Agreement or any
other document related thereto nor shall the Collateral Agent nor any Secured
Party have any obligation to make any inquiry as to the nature or sufficiency of
any payment received by it or have any obligation to take any action to collect
or enforce any rights under any agreement included in the Collateral, including
any agreements relating to Pledged Partnership Interests or Pledged LLC
Interests, and (iii) the exercise by the Collateral Agent of any of its rights
hereunder shall not release any Grantor from any of its duties or obligations
under the contracts and agreements included in the Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS,
     (a) Generally.
     (i) Representations and Warranties. Each Grantor hereby represents and
warrants, on each Representation Date, that:
     (1) It owns the Collateral purported to be owned by it or otherwise has the
rights it purports to have in each item of Collateral, in each case free and
clear of any and all Liens, other than those Liens permitted by Section 7.2 of
the Credit Agreement.

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     (2) Subject to the limitations set forth in Section 4(a)(iii), (A) upon the
filing of UCC financing statements naming each Grantor as “debtor” and the
Collateral Agent as “secured party” and describing the Collateral in the filing
offices set forth opposite such Grantor’s name on Schedule I(B) hereof (as such
Schedule may be amended or supplemented from time to time in accordance with
Section 4(i)), (B) the execution and delivery of Account Control Agreements, (C)
the filing of the Patent Security Agreement, Trademark Security Agreement and
Copyright Security Agreement with the United States Copyright Office or the
United States Patent and Trademark Office, as applicable, (D) in the case of
Instruments, Chattel Paper and Certificated Securities, upon the earlier of
delivery thereof to the Collateral Agent and the filing of financing statements
referred to in clause (A) above or (E) in the case of Equipment that is covered
by a certificate of title, upon the filing with the registrar of motor vehicles
or other appropriate authority in the applicable jurisdiction of an application
requesting the notation of the security interests created hereby on such
certificate of title, the security interests granted to the Collateral Agent
hereunder will constitute valid and perfected Liens subject only to those Liens
permitted pursuant to Section 7.2 of the Credit Agreement.
     (3) No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority or regulatory body is required for
either (i) the pledge or grant by any Grantor of the Liens purported to be
created in favor of the Collateral Agent hereunder or (ii) as of the Closing
Date, the exercise by Collateral Agent of any rights or remedies in respect of
any Collateral (whether specifically granted or created hereunder or created or
provided for by any Requirement of Law), except (A) for the filings contemplated
by clause (2) above, (B) as may be required, in connection with the disposition
of any Investment Related Property, by laws generally affecting the offering and
sale of Securities and as may be required under federal laws pertaining to
Intellectual Property, (C) except for approvals required by the Nevada and New
Jersey gaming authorities, and (D) those obtained on or before the Closing Date.
     (4) As of the Closing Date, all actions and consents, including all
filings, notices, registrations and recordings necessary for the exercise by the
Collateral Agent of the voting or other rights provided for in this Agreement or
the exercise of remedies in respect of the Collateral have been made or obtained
(except those required by applicable Gaming Laws as noted in Section 13(o)).
     (5) It has indicated on Schedule I(A) hereto (as such Schedule may be
amended or supplemented from time to time in accordance with Section 4(i)): (A)
the type of organization of such Grantor, (B) the jurisdiction of organization
of such Grantor, and (C) its tax identification number, if any.
     (6) None of the Collateral constitutes, or is the Proceeds of, “farm
products” (as defined in the UCC).

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     (ii) Notwithstanding anything to the contrary herein, no Grantor shall be
required to perfect security interests created hereby by any means other than
(in each case subject to the applicable limitations provided herein) (A) filings
pursuant to the UCC of the relevant States, (B) filings with the registrars of
motor vehicles or other appropriate authorities in the relevant jurisdictions,
(C) filings with the United States Copyright Office or the United States Patent
and Trademark Office, as applicable, (D) in the case of Collateral that consists
of Chattel Paper, Instruments or Certificated Securities, possession by the
Collateral Agent in the State of New York (or Nevada or New Jersey if required
by the laws of such jurisdiction), (E) control of Deposit Accounts, Securities
Accounts and Commodities Accounts and (F) control of uncertificated Securities.
No Grantor shall be required to complete any filings or take other actions with
respect to the perfection of the security interests created hereby in any
jurisdiction outside of the United States.
     (b) Equipment and Inventory.
     (i) Covenants and Agreements. Each Grantor covenants and agrees that:
     (1) It shall keep correct and accurate records of the material Inventory,
as is customarily maintained under similar circumstances by Persons of
established reputation engaged in similar business, and in any event in
conformity with GAAP.
     (2) It shall not deliver any Document Evidencing Goods to any Person other
than the issuer of such Document to claim the Goods evidenced therefor or the
Collateral Agent.
     (3) With respect to any item of Equipment which is covered by a certificate
of title under a statute of any jurisdiction under the law of which indication
of a security interest on such certificate is required as a condition of
perfection thereof, upon the reasonable request of the Collateral Agent, (A)
provide information with respect to any such Equipment, (B) if the book value of
motor vehicles owned by all of the Grantors exceeds $5,000,000 in the aggregate
at any time, execute and file with the registrar of motor vehicles or other
appropriate authority in such jurisdiction an application or other document
requesting the notation or other indication of the security interest created
hereunder on such certificate of title, and (C) at any time after the occurrence
and during the continuance of an Event of Default, deliver to the Collateral
Agent copies of all such applications or other documents filed and copies of all
such certificates of title issued indicating the security interest created
hereunder in the items of Equipment covered thereby.
     (4) The parties hereto acknowledge that as of the Closing Date, each of the
AREH Subsidiary Guarantors has limited operations other than owning the Pledged
Equity Interests.

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     (c) Receivables.
     (i) Representations and Warranties. Each Grantor represents and warrants,
on each Representation Date, that none of the Account Debtors in respect of any
material Receivable is the government of the United States, any agency or
instrumentality thereof, any state or municipality or any foreign sovereign. No
material Receivable requires the consent of the Account Debtor in respect
thereof in connection with the security interest hereunder, except any consent
which has been obtained.
     (ii) Covenants and Agreements: Each Grantor hereby covenants and agrees
that:
     (1) Other than in the ordinary course of business as generally conducted by
it, and except as otherwise provided in subsection (3) below, after the
occurrence and during the continuation of any Event of Default, such Grantor
shall not (w) grant any extension or renewal of the time of payment of any
Receivable, (x) compromise or settle any dispute, claim or legal proceeding with
respect to any Receivable for less than the total unpaid balance thereof, (y)
release, wholly or partially, any Person liable for the payment thereof, or
(z) allow any credit or discount thereon.
     (2) If an Event of Default shall occur and be continuing, it shall mark
conspicuously, in form and manner reasonably satisfactory to the Collateral
Agent, all Chattel Paper, Instruments and other evidence of Receivables (other
than any delivered to the Collateral Agent as provided herein), as well as the
Receivables Records with an appropriate reference to the fact that the
Collateral Agent has a security interest therein.
     (3) At any time following the occurrence and during the continuation of an
Event of Default, the Collateral Agent may: (x) direct the Account Debtors under
any Receivables to make payment of all amounts due or to become due to such
Grantor thereunder directly to the Collateral Agent; (y) notify, or require any
Grantor to notify, each Person maintaining a lockbox or similar arrangement to
which Account Debtors under any Receivables have been directed to make payment
to remit all amounts representing collections on checks and other payment items
from time to time sent to or deposited in such lockbox or other arrangement
directly to the Collateral Agent; and (z) enforce, at the expense of such
Grantor, collection of any such Receivables and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done. If the Collateral Agent notifies any Grantor that it
has elected to collect the Receivables in accordance with the preceding
sentence, any payments of Receivables received by such Grantor shall be
forthwith (and in any event within two (2) Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the
Collateral Agent if required, in any account designated by the Collateral Agent
and maintained under the sole dominion and control of the Collateral Agent, and
until so turned over, all amounts and proceeds (including checks and other

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instruments) received by such Grantor in respect of the Receivables, any
Supporting Obligation or Collateral Support shall be received in trust for the
benefit of the Collateral Agent hereunder and shall be segregated from other
funds of such Grantor and such Grantor shall not adjust, settle or compromise
the amount or payment of any Receivable, or release wholly or partly any Account
Debtor or obligor thereof, or allow any credit or discount thereon.
     (iii) Delivery and Control of Receivables. If any Event of Default shall
have occurred and be continuing, with respect to any Receivables in excess of
$5,000,000 individually that are evidenced by, or constitute, Tangible Chattel
Paper or Instruments, each Grantor shall cause each originally executed copy
thereof to be delivered to the Collateral Agent (or its agent or designee)
appropriately indorsed to the Collateral Agent or indorsed in blank. If any
Event of Default shall have occurred and be continuing, with respect to any
Receivables in excess of $5,000,000 individually which would constitute
“electronic chattel paper” under the UCC, each Grantor shall take all steps
necessary to give the Collateral Agent control (within the meaning of
Section 9-105 of the UCC) over such Receivables. If any Event of Default shall
have occurred and be continuing, any Receivable not otherwise required to be
delivered or subjected to the control of the Collateral Agent in accordance with
this subsection (iii) shall be delivered or subjected to such control upon the
reasonable request of the Collateral Agent.
     (d) Pledged Equity Interests and Pledged Debt.
     (i) Representations and Warranties. Each Grantor hereby represents and
warrants, on each Representation Date, that:
     (1) Schedule II hereto (as such Schedule may be amended or supplemented
from time to time in accordance with Section 4(i)) sets forth under the headings
“Pledged Stock,” “Pledged LLC Interests,” “Pledged Partnership Interests,” and
“Pledged Trust Interests,” respectively, all of the Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests owned by
any Grantor and such Pledged Equity Interests constitute the percentage of
issued and outstanding shares of stock, percentage of membership or member’s
interests, percentage of partnership interests or percentage of beneficial
interest of the respective issuers thereof indicated on such Schedule.
     (2) It is the record and beneficial owner of the Pledged Equity Interests
free of all Liens other than those Liens permitted pursuant to Section 7.2 of
the Credit Agreement.
     (3) Except with respect to Pledged LLC Interests and Pledged Partnership
Interests for which certificates have been delivered to the Collateral Agent,
none of the Pledged LLC Interests nor Pledged Partnership Interests of any
Subsidiary of the Borrowers or any other Grantor which is required to be pledged
pursuant to Section 4(d)(iii) are or represent interests in issuers that are:
(a) registered as investment companies, (b) are dealt in or traded on securities

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exchanges or markets or (c) have opted to be treated as securities under the
uniform commercial code of any jurisdiction.
     (4) Schedule II hereto (as such Schedule may be amended or supplemented
from time to time in accordance with Section 4(i)) sets forth under the heading
“Pledged Debt” all Pledged Debt with an aggregate principal amount outstanding
in excess of $5,000,000 owned by any Grantor (other than any Pledged Debt
evidenced by the Subordinated Intercompany Note).
     (ii) Covenants and Agreements. Each Grantor hereby covenants and agrees
that:
     (1) Without the prior written consent of the Collateral Agent, it shall not
vote to enable or take any other action to cause any issuer of any Pledged
Partnership Interests or Pledged LLC Interests which are not Securities on the
date hereof to elect or otherwise take any action to cause such Pledged
Partnership Interests or Pledged LLC Interests to be treated as Securities
unless such Grantor has taken, on or prior to the date thereof, all steps
necessary or advisable to establish the Collateral Agent’s “control” thereof.
     (2) It consents to the grant by each other Grantor of a security interest
in accordance with the provisions of this Agreement in all Investment Related
Property to the Collateral Agent and consents to the transfer of any Pledged
Partnership Interest and any Pledged LLC Interest to the Collateral Agent or its
designee following the occurrence and during the continuance of an Event of
Default and to the substitution of the Collateral Agent or its designee as a
partner in any partnership or as a member in any limited liability company with
all the rights and powers related thereto.
     (iii) Delivery and Control. With respect to any Pledged Equity Interest
that is represented by a certificate or that is an “instrument” (other than any
Investment Related Property credited to a Securities Account) it shall cause
such certificate or instrument to be delivered to the Collateral Agent, indorsed
in blank by an “effective endorsement” (as defined in Section 8-107 of the UCC),
regardless of whether such certificate constitutes a “certificated security” for
purposes of the UCC. With respect to any Pledged Equity Interest that is an
“uncertificated security” for purposes of the UCC (other than any
“uncertificated securities” credited to a Securities Account), it shall cause
the issuer of such uncertificated security to either (i) register the Collateral
Agent as the registered owner thereof on the books and records of the issuer or
(ii) execute an agreement, in form and substance reasonably satisfactory to the
Collateral Agent, pursuant to which such issuer agrees to comply with the
Collateral Agent’s instructions with respect to such uncertificated security
without further consent by such Grantor. Upon the occurrence and during the
continuation of an Event of Default, the Collateral Agent shall have the right,
without notice to any Grantor, to transfer all or any portion of Pledged Equity
Interest or Pledged Debt to its name or the name of its nominee or agent. In
addition, upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right at any time, without notice to any
Grantor, to exchange any certificates or instruments representing any Pledged
Equity Interest or Pledged Debt for certificates or instruments of smaller or
larger denominations.

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     (e) Investment Accounts
     (i) Representations and Warranties. Each Grantor hereby represents and
warrants, on each Representation Date, that:
     (1) Schedule II hereto (as such Schedule may be amended or supplemented
from time to time in accordance with Section 4(i)) sets forth under the headings
“Securities Accounts” and “Commodities Accounts,” respectively, all of the
Securities Accounts and Commodities Accounts in which any Grantor has an
interest, in each case, which has a value in excess of $5,000,000 in the
aggregate. A Grantor is the sole entitlement holder of each Securities Account
and Commodities Account, and such Grantor has not consented to, and is not
otherwise aware of, any Person (other than the Collateral Agent pursuant hereto
and the “securities intermediary”) having “control” (within the meanings of
Sections 8-106 and 9-106 of the UCC) over, or any other interest in, any
Securities Account or Commodity Account or any securities or other property
credited thereto.
     (2) Schedule II hereto (as such Schedule may be amended or supplemented
from time to time in accordance with Section 4(i)) sets forth under the heading
“Deposit Accounts” all of the Deposit Accounts in which any Grantor has an
interest, in each case, which has a value in excess of $5,000,000 in the
aggregate, and a Grantor is the sole account holder of each Deposit Account and
such Grantor has not consented to, and is not otherwise aware of, any Person
(other than the Collateral Agent pursuant hereto and the “bank”) having either
sole dominion and control (within the meaning of common law) or “control”
(within the meaning of Section 9-104 of the UCC) over, or any other interest in,
any Deposit Account or any money or other property deposited therein.
     (ii) Covenants & Agreements. It is understood and agreed that the security
interest of the Collateral Agent shall attach to all Securities Accounts,
Securities Entitlements, Deposit Accounts or Commodity Accounts immediately upon
any Grantor’s acquisition of rights therein and shall not be affected by the
failure of any Grantor to deliver a supplement to Schedule II as required
hereby.
     (iii) Delivery and Control. Subject to clause (iv) below, each Grantor
agrees that with respect to any Investment Related Property consisting of
Securities Accounts or Securities Entitlements, it shall cause the securities
intermediary maintaining such Securities Account or Securities Entitlement to
enter into an Account Control Agreement, in form and substance reasonably
satisfactory to the Collateral Agent, pursuant to which it shall agree to comply
with the Collateral Agent’s “entitlement orders” without further consent by such
Grantor and shall establish the Collateral Agent shall have “control” (within
the meaning of Section 9-106 of the UCC) over such Securities Accounts or
Securities Entitlements.

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          Subject to clause (iv) below, with respect to any Investment Related
Property that is a “Deposit Account”, it shall cause the depositary institution
maintaining such account to enter into an Account Control Agreement, in form and
substance reasonably satisfactory to the Collateral Agent, pursuant to which the
depositary institution shall agree to comply with the Collateral Agent’s
instructions without further consent by such Grantor and shall establish the
Collateral Agent shall have “control” (within the meaning of Section 9-104 of
the UCC) over such Deposit Account.
          Subject to clause (iv) below, with respect to any Investment Related
Property that is a “Commodity Account,” it shall cause the commodity
intermediary maintaining such account to enter into an Account Control
Agreement, in form and substance reasonably satisfactory to the Collateral
Agent, pursuant to which the Collateral Agent shall have “control” (within the
meaning of Section 9-106 of the UCC) over such Commodity Account.
          The Collateral Agent agrees it shall not exercise control over any
such Securities Account, Deposit Account or Commodities Account unless an Event
of Default shall have occurred and be continuing.
     (iv) Each Grantor shall be required by this Agreement to enter into such
control agreement or agreements only with respect to: (i) any Securities
Accounts, Securities Entitlements, Deposit Accounts or Commodity Accounts that
exist on the Closing Date, on or prior to the date that is 60 days after the
Closing Date and (ii) any Securities Accounts, Securities Entitlements, Deposit
Accounts or Commodity Accounts that are created or acquired after the Closing
Date, on or prior to the date that is 30 days after the deposit or transfer of
any such Securities Entitlements or funds, whether constituting moneys or
investments, into such Securities Accounts, Deposit Accounts or Commodity
Accounts, except, in each case, for Securities Accounts, Securities
Entitlements, Deposit Accounts and Commodity Accounts the value of which does
not exceed $5,000,000 in the aggregate.
     (f) Letter of Credit Rights.
     (i) Representations and Warranties. Each Grantor hereby represents and
warrants, on each Representation Date, that:
     (1) All letters of credit with a face amount in excess of $5,000,000 to
which such Grantor has rights are listed on Schedule III hereto (as such
Schedule may be amended or supplemented from time to time in accordance with
Section 4(i)).
     (2) To the extent that any Letter of Credit Right does not represent a
Supporting Obligation with respect to some other type of Collateral secured
hereby, it has obtained the consent of each issuer of any letter of credit with
a face amount in excess of $5,000,000 to the assignment of the proceeds of the
letter of credit to the Collateral Agent.

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     (ii) Covenants and Agreements. It is understood and agreed that the
security interest of the Collateral Agent shall attach to all letters of credit
immediately upon any Grantor’s acquisition of rights therein and shall not be
affected by the failure of any Grantor to deliver a supplement to Schedule III
as required hereby.
     (g) Intellectual Property.
     (i) Representations and Warranties. Each Grantor hereby represents and
warrants, on each Representation Date, that:
     (1) Except as disclosed in Schedule IV(H) (as such Schedule may be amended
or supplemented from time to time in accordance with Section 4(i)), that
Schedule IV (as such Schedule may be amended or supplemented from time to time
in accordance with Section 4(i)) sets forth a true and complete list of (i) all
material United States, state and foreign registrations of and applications for
Patents, Trademarks, and Copyrights owned by each Grantor (collectively, the
“Material Intellectual Property”) and (ii) all material Patent Licenses,
Trademark Licenses and Copyright Licenses, granting exclusive rights in any
Patents, Trademarks or Copyrights owned by a third party.
     (ii) Covenants and Agreements. Each Grantor hereby covenants and agrees as
follows:
     (1) Except for Intellectual Property that is not in use and has immaterial
commercial value, such Grantor shall not do any act or omit to do any act that
would adversely affect the validity, grant, or enforceability of the security
interest granted on any Intellectual Property which is material to the business
of such Grantor except for such acts or omissions that such Grantor deems
necessary or prudent in its reasonable business judgment.
     (2) Upon the request of the Collateral Agent, it shall execute, a Patent
Security Agreement, a Trademark Security Agreement and a Copyright Security
Agreement, each in form and substance reasonably acceptable to the Collateral
Agent, in order to record the security interest granted herein to the Collateral
Agent for the ratable benefit of each Secured Party with the United States
Patent and Trademark Office, the United States Copyright Office, and any other
applicable Governmental Authority.
     (h) Commercial Tort Claims
     (i) Representations and Warranties. Each Grantor hereby represents and
warrants, on each Representation Date, that Schedule V (as such Schedule may be
amended or supplemented from time to time in accordance with Section 4(i)) sets
forth all Commercial Tort Claims of such Grantor in an amount reasonably
estimated to exceed $1,000,000.

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     (i) Updated Schedules
     (i) Each Grantor hereby covenants and agrees that it shall furnish to the
Collateral Agent, on behalf of the Secured Parties, (i) no later than 45 days
following the end of each fiscal quarter of AREP or (ii) at any time and from
time to time at the request of the Collateral Agent upon the occurrence and
during the continuance of an Event of Default, such supplements to the schedules
hereof as are necessary to accurately reflect at such time the information
required by this Agreement to be stated therein.
SECTION 5. DIVIDENDS, DISTRIBUTIONS AND VOTING
     (a) Dividends and Distributions. Except as provided in the next sentence,
in the event any Grantor receives (x) any dividends, interest or distributions
on any Investment Related Property, or (y) any securities or other property upon
the merger, consolidation, liquidation or dissolution of any issuer of any
Investment Related Property, then (1) such dividends, interest or distributions
and securities or other property shall be included in the definition of
Collateral without further action and (2) such Grantor shall immediately take
all steps, if any, necessary or advisable to ensure the validity, perfection,
priority and, if applicable, control of the Collateral Agent over such
dividends, distributions, interest, securities or other property (including
delivery thereof to the Collateral Agent to the extent required herein) and
pending any such action such Grantor shall be deemed to hold such dividends,
distributions, interest, securities or other property in trust for the benefit
of the Collateral Agent. Notwithstanding the foregoing, so long as no Event of
Default shall have occurred and be continuing, the Collateral Agent authorizes
each Grantor to retain and use all cash dividends and distributions paid by any
issuer and all scheduled payments of interest, in each case, in compliance with
the Credit Agreement.
     (b) Voting.
     (i) So long as no Event of Default shall have occurred and be continuing,
each Grantor shall be entitled to exercise or refrain from exercising any and
all voting and other consensual rights pertaining to the Investment Related
Property or any part thereof for any purpose not inconsistent with the terms of
this Agreement or the Credit Agreement; provided, no Grantor shall exercise or
refrain from exercising any such right if the Collateral Agent shall have
notified such Grantor that, in the Collateral Agent’s reasonable judgment, such
action could reasonably be expected to have a material adverse effect on the
rights and remedies of the Secured Parties or the Collateral Agent’s ability to
exercise such rights; and provided further, such Grantor shall give the
Collateral Agent at least five (5) Business Days prior written notice of the
manner in which it intends to exercise, or the reasons for refraining from
exercising, any such right in a manner or for any purpose inconsistent with the
terms of this Agreement or the Credit Agreement; it being understood, however,
that neither the voting by such Grantor of any Pledged Stock for, or such
Grantor’s consent to, the election of directors (or similar governing body) at a
regularly scheduled annual or other meeting of stockholders or with respect to
incidental matters at any such meeting, nor such Grantor’s consent to or
approval of any action otherwise permitted under this Agreement and the Credit
Agreement, shall be deemed inconsistent with the terms of this Agreement or the
Credit Agreement within the meaning of this Section 5(b)(i), and no notice of
any such voting or consent need be given to the Collateral Agent.

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     (ii) Upon the occurrence and during the continuation of an Event of
Default:
     (1) All rights of each Grantor to exercise or refrain from exercising the
voting and other consensual rights which it would otherwise be entitled to
exercise pursuant hereto shall cease and all such rights shall thereupon become
vested in the Collateral Agent who shall thereupon have the sole right to
exercise such voting and other consensual rights.
     (2) In order to permit the Collateral Agent to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant hereto and
to receive all dividends and other distributions which it may be entitled to
receive hereunder: upon the occurrence and during the continuation of an Event
of Default (a) each Grantor shall promptly execute and deliver (or cause to be
executed and delivered) to the Collateral Agent all proxies, dividend payment
orders and other instruments as the Collateral Agent may from time to time
reasonably request and (b) each Grantor acknowledges that the Collateral Agent
may utilize the power of attorney set forth in Section 7.
SECTION 6. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES.
     (a) Access; Right of Inspection. The Collateral Agent shall have access to
the books, correspondence and records of each Grantor to the extent set forth in
Section 6.6 of the Credit Agreement.
     (b) Further Assurances.
     (i) Subject to Section 4(a)(iii), each Grantor agrees that from time to
time, at the expense of such Grantor, that it shall promptly Authenticate,
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Collateral Agent may
reasonably request, in order to create and/or maintain the validity, perfection
or priority of and protect any security interest granted or purported to be
granted hereby or to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Each Grantor
shall:
     (1) File such financing or continuation statements, or amendments thereto,
and execute and deliver such other agreements, instruments, endorsements, powers
of attorney or notices, as may be necessary or desirable, or as the Collateral
Agent may reasonably request, in order to perfect and preserve the security
interests granted or purported to be granted hereby.
     (2) At the Collateral Agent’s request, take all actions necessary to ensure
the recordation of appropriate evidence of the liens and security interest
granted hereunder in the Intellectual Property with any intellectual property
registry in which said Intellectual Property is registered or in which an
application for registration is pending including the United States Patent and
Trademark Office, the United States Copyright Office, the various Secretaries of
State, any state agencies and the foreign counterparts on any of the foregoing.

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     (3) At the Collateral Agent’s request, appear in and defend any action or
proceeding that may affect the Collateral Agent’s security interest in all or
any part of the Collateral.
     (ii) Each Grantor hereby authorizes the filing of any financing statements
or continuation statements, and amendments to financing statements, or any
similar document in any jurisdictions and with any filing offices (and any
filings for recordation in any intellectual property registry) as the Collateral
Agent may determine, in its sole discretion, are necessary or advisable to
perfect or otherwise protect the security interest granted to the Collateral
Agent herein. Such financing statements may describe the Collateral in the same
manner as described herein or may contain an indication or description of
collateral describing such property as “all assets”, “all personal property” or
“all personal property, whether now owned or hereafter acquired”. Each Grantor
shall furnish to the Collateral Agent from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Collateral Agent may reasonably request,
all in reasonable detail.
     (iii) Each Grantor hereby authorizes the Collateral Agent to modify this
Agreement after obtaining such Grantor’s approval of or signature to such
modification by amending Schedule IV hereto (as such Schedule may be amended or
supplemented from time to time in accordance with Section 4(i)) to include
reference to any right, title or interest in any existing Intellectual Property
or any Intellectual Property acquired or developed by any Grantor after the
execution hereof.
SECTION 7. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT, IRREVOCABLE POWER OF
ATTORNEY
     Subject to applicable Gaming Laws, each Grantor hereby irrevocably appoints
the Collateral Agent (such appointment being coupled with an interest) as such
Grantor’s attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor, the Collateral Agent or otherwise, from
time to time in the Collateral Agent’s discretion to take any action and to
execute any instrument that the Collateral Agent may deem reasonably necessary
or advisable to accomplish the purposes of this Agreement, including the
following:
     (a) Upon the occurrence and during the continuance of any Event of Default,
to obtain and adjust insurance required to be maintained by such Grantor or paid
to the Collateral Agent pursuant to the Loan Documents.
     (b) Upon the occurrence and during the continuance of any Event of Default,
to ask for, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral.
     (c) Upon the occurrence and during the continuance of any Event of Default,
to receive, endorse and collect any drafts or other instruments, documents and
chattel paper in connection with clause (b) above.
     (d) Upon the occurrence and during the continuance of any Event of Default,
to file any claims or take any action or institute any proceedings that the
Collateral Agent may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of the Collateral Agent with
respect to any of the Collateral.

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     (e) Upon the occurrence and during the continuance of an Event of Default,
to prepare, sign, and file for recordation in any intellectual property
registry, appropriate evidence of the lien and security interest granted herein
in the Intellectual Property in the name of such Grantor as assignor.
     (f) Upon the occurrence and during the continuance of any Event of Default,
to take or cause to be taken all actions necessary to perform or comply or cause
performance or compliance with the terms of this Agreement, including access to
pay or discharge taxes or Liens other than those Liens permitted pursuant to
Section 7.2 of the Credit Agreement levied or placed upon or threatened against
the Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Collateral Agent in its reasonable
discretion, any such payments made by the Collateral Agent to become obligations
of such Grantor to the Collateral Agent, due and payable immediately without
demand.
     (g) Upon the occurrence and during the continuance of any Event of Default,
generally to sell, transfer, lease, license, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though the Collateral Agent were the absolute owner thereof for all purposes,
and to do, at the Collateral Agent’s option and such Grantor’s expense, at any
time or from time to time, all acts and things that the Collateral Agent deems
reasonably necessary to protect, preserve or realize upon the Collateral and the
Collateral Agent’s security interest therein in order to effect the intent of
this Agreement, all as fully and effectively as such Grantor might do.
          The Collateral Agent agrees that it will not exercise any rights under
the foregoing power of attorney unless an Event of Default shall have occurred
and be continuing.
SECTION 8. REMEDIES.
     (a) Generally.
     (i) If any Event of Default shall have occurred and be continuing, subject
to applicable Gaming Laws, the Collateral Agent may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it at law or in equity, all the rights and remedies of
the Collateral Agent under the UCC (whether or not the UCC applies to the
affected Collateral) to collect, enforce or satisfy any Secured Obligations then
owing, whether by acceleration or otherwise, and also may pursue any of the
following separately, successively or simultaneously:
     (1) Require any Grantor to, and each Grantor hereby agrees that it shall at
its expense and promptly upon request of the Collateral Agent forthwith,
assemble all or part of the Collateral as directed by the Collateral Agent and
make it available to the Collateral Agent at a place to be designated by the
Collateral Agent that is reasonably convenient to both parties.

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     (2) Enter onto the property where any Collateral is located and take
possession thereof with or without judicial process.
     (3) Prior to the disposition of the Collateral, store, process, repair or
recondition the Collateral or otherwise prepare the Collateral for disposition
in any manner to the extent the Collateral Agent deems appropriate.
     (4) Without notice except as specified below or under the UCC, sell,
assign, lease, license (on an exclusive or nonexclusive basis) or otherwise
dispose of the Collateral or any part thereof at public or private sale, at any
of the Collateral Agent’s offices or elsewhere, for cash, on credit or for
future delivery, at such time or times and at such price or prices and upon such
other terms as the Collateral Agent may deem commercially reasonable.
     (ii) The Collateral Agent or any Secured Party may be the purchaser of any
or all of the Collateral at any public or private (to the extent the portion of
the Collateral being privately sold is of a kind that is customarily sold on a
recognized market or the subject of widely distributed standard price
quotations) sale in accordance with the UCC and the Collateral Agent, as
Collateral Agent for and representative of the Secured Parties, shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such sale
made in accordance with the UCC, to use and apply any of the Secured Obligations
as a credit on account of the purchase price for any Collateral payable by the
Collateral Agent at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by all
Requirements of Law) all rights of redemption, stay and/or appraisal which it
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted. Each Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days notice to such
Grantor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. Each Grantor hereby waives any
claims against the Collateral Agent arising by reason of the fact that the price
at which any Collateral may have been sold at such a private sale was less than
the price which might have been obtained at a public sale, even if the
Collateral Agent accepts the first offer received and does not offer such
Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all the Secured
Obligations, each Grantor shall be liable for the deficiency and the fees of any
attorneys employed by the Collateral Agent to collect such deficiency. Each
Grantor further agrees that a breach of any of the covenants contained in this
Section will cause irreparable injury to the Collateral Agent, that the
Collateral Agent has no adequate remedy at law in respect of such breach and, as
a consequence, that each and every covenant contained in this Section shall be
specifically enforceable against such Grantor, and such Grantor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that no default has occurred giving rise
to the Secured Obligations becoming due and payable prior to their stated
maturities. Nothing in this Section shall in any way alter the rights of the
Collateral Agent hereunder.

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     (iii) If any Event of Default shall have occurred and be continuing, the
Collateral Agent may sell the Collateral without giving any warranties as to the
Collateral. The Collateral Agent may specifically disclaim or modify any
warranties of title or the like. This procedure will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.
     (iv) The Collateral Agent shall have no obligation to marshall any of the
Collateral.
     (v) If any Event of Default shall have occurred and be continuing, the
Collateral Agent shall have the right to (a) notify, or require each Grantor to
notify, any obligors with respect to amounts due or to become due to such
Grantor in respect of the Collateral or of the existence of the security
interest created herein, (b) to direct such obligors to make payment of all such
amounts directly to the Collateral Agent, and (c) upon such notification and at
the expense of such Grantor, to enforce collection of any such amounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as such Grantor might have done.
     (1) If any Event of Default shall have occurred and be continuing, all
amounts and proceeds (including checks and other instruments) received by any
Grantor in respect of amounts due to such Grantor in respect of the Collateral
or any portion thereof shall be received in trust for the benefit of the
Collateral Agent hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to the Collateral Agent in the
same form as so received (with any necessary endorsement) to be held as cash
Collateral and applied as provided by the Section in this Agreement relating to
Cash Proceeds (Section 7(d) hereof).
     (2) If any Event of Default shall have occurred and be continuing, each
Grantor shall not adjust, settle or compromise the amount or payment of any such
amount or release wholly or partly any obligor with respect thereto or allow any
credit or discount thereon.
     (b) Application of Proceeds. Except as expressly provided elsewhere in this
Agreement, all proceeds received by the Collateral Agent in respect of any sale,
any collection from, or other realization upon all or any part of the Collateral
shall be applied in full or in part by the Collateral Agent against the Secured
Obligations in the following order of priority: first, to the ratable payment of
(i) all costs and expenses of such sale, collection or other realization,
including reasonable expenses, liabilities and advances made or incurred by the
Collateral Agent and/or the Administrative Agent (including reasonable fees and
expenses of counsel) in connection with the exercise of any right or remedy
hereunder or under any other Loan Document, all in accordance with the terms
hereof and thereof, and all amounts for which the Collateral Agent and/or the
Administrative Agent is entitled to indemnification hereunder (in its

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capacity as the Collateral Agent or Administrative Agent, as the case may be)
and all advances made by the Collateral Agent and/or the Administrative Agent
hereunder for the account of the applicable Grantor and (ii) any amounts owed to
any Issuing Lender in respect of any Unpaid Drawings; second, to the extent of
any excess of such proceeds, to the payment of all other Secured Obligations for
the ratable benefit of the applicable Secured Parties; and third, to the extent
of any excess of such proceeds, to the payment to or upon the order of such
Grantor or to whosoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct.
     (c) Sales on Credit. If the Collateral Agent sells any of the Collateral
upon credit, Grantor will be credited only with payments actually made by
purchaser and received by the Collateral Agent and applied to indebtedness of
the purchaser. In the event the purchaser fails to pay for the Collateral, the
Collateral Agent may resell the Collateral and the applicable Grantor shall be
credited with proceeds of the sale.
     (d) Cash & Cash Proceeds. If an Event of Default shall have occurred and be
continuing, (1) the Collateral Agent shall have the right to apply the balance
from any Deposit Account or instruct the bank at which any Deposit Account is
maintained to pay the balance of any Deposit Account to or for the benefit of
the Collateral Agent and (2) all Cash and Cash Proceeds shall be held by such
Grantor in trust for the Collateral Agent, segregated from other funds of such
Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to
the Collateral Agent in the exact form received by such Grantor (duly indorsed
by such Grantor to the Collateral Agent, if required) and held by the Collateral
Agent. If an Event of Default shall have occurred and be continuing, all such
funds from any Deposit Account, Cash and Cash Proceeds or any other Money held
by the Collateral Agent may, in the sole discretion of the Collateral Agent,
(A) be held by the Collateral Agent for the ratable benefit of each Secured
Party, as collateral security for the Secured Obligations (whether matured or
unmatured) and/or (B) then or at any time thereafter may be applied by the
Collateral Agent against the Secured Obligations then due and owing.
     (e) Investment Related Property. In addition to the rights and remedies
specified above, the following provisions shall also be applicable to Investment
Related Property. Each Grantor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
“Securities Act”), and applicable state securities laws, the Collateral Agent
may be compelled, with respect to any sale of all or any part of the Investment
Related Property conducted without prior registration or qualification of such
Investment Related Property under the Securities Act and/or such state
securities laws, to limit purchasers to those who will agree, among other
things, to acquire the Investment Related Property for their own account, for
investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges that any such private sale may be at prices and on terms
less favorable than those obtainable through a public sale without such
restrictions (including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such circumstances,
each Grantor agrees that any such private sale shall be deemed to have been made
in a commercially reasonable manner and that the Collateral Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Investment Related Property for the period of time necessary to permit the
issuer thereof to register it for a form of public sale requiring registration
under the Securities Act or under applicable state securities laws, even if such
issuer

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would, or should, agree to so register it. If the Collateral Agent determines to
exercise its right to sell any or all of the Investment Related Property, upon
the occurrence of and during the continuation of any Event of Default, upon
written request, each Grantor shall and shall cause each issuer of any Pledged
Stock to be sold hereunder from time to time to furnish to the Collateral Agent
all such information as the Collateral Agent may request in order to determine
the number and nature of interest, shares or other instruments included in the
Investment Related Property which may be sold by the Collateral Agent in exempt
transactions under the Securities Act and the rules and regulations of the SEC
thereunder, as the same are from time to time in effect.
     (f) Intellectual Property. In addition to the rights and remedies specified
above, the following provisions shall also be applicable to Intellectual
Property.
     (i) Anything contained herein to the contrary notwithstanding, upon the
occurrence and during the continuation of an Event of Default:
     (1) The Collateral Agent shall have the right (but not the obligation) to
bring suit or otherwise commence any action or proceeding in the name of any
Grantor, the Collateral Agent or otherwise, in the Collateral Agent’s reasonable
discretion, to enforce any right in any Intellectual Property, in which event
such Grantor shall, at the request of the Collateral Agent, do any and all
lawful acts and execute any and all documents required by the Collateral Agent
in aid of such enforcement and such Grantor shall promptly, upon demand,
reimburse and indemnify the Collateral Agent as provided in the Section in this
Agreement relating to indemnity and expenses in connection with the exercise of
its rights under this Section, and, to the extent that the Collateral Agent
shall elect not to bring suit to enforce any rights in any Intellectual Property
as provided in this Section, each Grantor agrees to use all reasonable measures,
whether by action, suit, proceeding or otherwise, to prevent the infringement of
any of the Material Intellectual Property by others and for that purpose agrees
to diligently maintain any action, suit or proceeding against any Person so
infringing as shall be necessary to prevent such infringement;
     (2) upon written demand from the Collateral Agent, each Grantor shall
grant, assign, convey or otherwise transfer to the Collateral Agent or such
Collateral Agent’s designee all of such Grantor’s right, title and interest in
and to the Intellectual Property and shall execute and deliver to the Collateral
Agent such documents as are necessary or appropriate to carry out the intent and
purposes of this Agreement;
     (3) within five (5) Business Days after written notice from the Collateral
Agent, each Grantor shall make available to the Collateral Agent, to the extent
within such Grantor’s power and authority, such personnel in such Grantor’s
employ on the date of such Event of Default as the Collateral Agent may
reasonably designate, by name, title or job responsibility, to permit such
Grantor to continue, directly or indirectly, to produce, advertise and sell the
products and services sold or delivered by such Grantor under or in connection

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with the Trademarks or Trademark Licenses, such persons to be available to
perform their prior functions on the Collateral Agent’s behalf and to be
compensated by the Collateral Agent at such Grantor’s expense on a per diem,
pro-rata basis consistent with the salary and benefit structure applicable to
each as of the date of such Event of Default.
     (ii) Solely for the purpose of enabling the Collateral Agent to exercise
rights and remedies under this Section 8(f) and at such time as the Collateral
Agent shall be lawfully entitled to exercise such rights and remedies, each
Grantor hereby grants to the Collateral Agent, to the extent it has the right to
do so, an irrevocable, nonexclusive worldwide license (exercisable without
payment of royalty or other compensation to such Grantor), subject, in the case
of Trademarks, to sufficient rights to quality control and inspection in favor
of the Trademark owner to avoid the risk of invalidation of said Trademarks, to
use, operate under, license, or sublicense any Intellectual Property now or
hereafter owned by or licensed to such Grantor.
SECTION 9. COLLATERAL AGENT.
          The Collateral Agent has been appointed to act as Collateral Agent
hereunder by each Secured Party either pursuant to the Loan Documents or by
their acceptance of the benefits hereof. The Collateral Agent shall be
obligated, and shall have the right hereunder, to make demands, to give notices,
to exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including the release or substitution of Collateral), solely
in accordance with this Agreement and the Credit Agreement. Without the written
consent of any Secured Party that would be affected thereby, no amendment,
modification, termination, or consent shall be effective if the effect thereof
would release all or substantially all of the Collateral except as expressly
provided herein. In furtherance of the foregoing provisions of this Section,
each Secured Party, by its acceptance of the benefits hereof, agrees that it
shall have no right individually to realize upon any of the Collateral
hereunder, it being understood and agreed by such Secured Party that all rights
and remedies hereunder may be exercised solely by the Collateral Agent for the
benefit of each Secured Party in accordance with the terms of this Section. The
Collateral Agent may resign and any successor Collateral Agent may be appointed
in accordance with the terms of the Credit Agreement. The successor Collateral
Agent shall succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent under this Agreement, and the
retiring Collateral Agent under this Agreement shall promptly (i) transfer to
such successor Collateral Agent all sums, Securities and other items of
Collateral held hereunder, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of the
successor Collateral Agent under this Agreement, and (ii) deliver to such
successor Collateral Agent such amendments to financing statements, and take
such other actions, as may be necessary or appropriate in connection with the
assignment to such successor Collateral Agent of the security interests created
hereunder, whereupon such retiring Collateral Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring Collateral
Agent’s resignation hereunder as the Collateral Agent, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was the Collateral Agent hereunder.

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SECTION 10. CONTINUING SECURITY INTEREST; TRANSFER OF SECURED OBLIGATIONS
     (a) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect as to any Grantor until
the release of Obligations as provided in the Credit Agreement, (ii) be binding
upon each Grantor, its successors and assigns, and (iii) inure, together with
the rights and remedies of the Collateral Agent hereunder, to the benefit of the
Collateral Agent and its successors, transferees and assigns. Subject to the
terms of the Loan Documents, each Secured Party may assign or otherwise transfer
any Secured Obligations held by it to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to each Secured Party herein or otherwise as provided in the Credit Agreement.
Upon the termination of obligations as provided in Section 11.14 of the Credit
Agreement, the security interest granted hereby shall terminate hereunder and of
record and all rights to the Collateral shall revert to each Grantor, as
applicable.
     (b) An AREH Subsidiary Guarantor shall automatically be released from its
obligations hereunder and the security interest in the Collateral of such AREH
Subsidiary Guarantor shall be automatically released upon the consummation of
any transaction permitted by the Credit Agreement, as a result of which such
AREH Subsidiary Guarantor ceases to be an AREH Subsidiary Guarantor.
     (c) Upon any Disposition by any Grantor of any Collateral that is not
prohibited under the Credit Agreement, or upon the effectiveness of any written
consent to the release of the security interest granted hereby in any Collateral
pursuant to the terms of Section 11.14 of the Credit Agreement on or after the
Closing Date, the security interest in such Collateral shall be automatically
released and such Collateral sold free and clear of the Lien and security
interests created hereby.
     (d) In connection with any termination or release pursuant to clause (a),
(b) or (c), the Collateral Agent shall execute and deliver to any Grantor, at
such Grantor’s expense, all documents that such Grantor shall reasonably request
to evidence such termination or release.

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SECTION 11. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.
          The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Collateral and the interests of the Secured Parties
and shall not impose any duty upon it to exercise any such powers. Except for
the exercise of reasonable care in the custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which the Collateral Agent accords its own property. Neither the Collateral
Agent nor any of its directors, officers, employees or agents shall be liable
for failure to demand, collect or realize upon all or any part of the Collateral
or for any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of any Grantor or
otherwise. If any Grantor fails to perform any agreement contained herein, the
Collateral Agent may itself perform, or cause performance of, such agreement,
and the expenses of the Collateral Agent incurred in connection therewith shall
be payable by each Grantor and pending such payment shall be included in the
obligations secured hereby.
SECTION 12. INDEMNITY AND EXPENSES.
          Each of the Grantors agrees:
     (a) to pay or reimburse the Collateral Agent for all its out-of-pocket
costs and expenses reasonably incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including the reasonable fees and
disbursements of counsel to such Collateral Agent and filing and recording fees
and expenses, with statements with respect to the foregoing to be submitted to
the Grantors prior to the Closing Date (in the case of amounts to be paid on the
Closing Date) and from time to time thereafter on a quarterly basis or such
other periodic basis as such Collateral Agent shall deem appropriate;
     (b) to pay or reimburse the Collateral Agent, each Lender and Agent for all
its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, in each case, after the occurrence and during the
continuance of an Event of Default, including the fees and disbursements of
counsel (including the allocated fees and expenses of in-house counsel) to the
Collateral Agent, each Lender and of counsel to such Agent;
     (c) to pay, indemnify, and hold the Collateral Agent, each Lender and Agent
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, that may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents, and

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     (d) to pay, indemnify, and hold the Collateral Agent, Lender and Agent and
their respective officers, directors, employees, affiliates, agents and
controlling persons (each, an “Indemnitee”) harmless from and against any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to (i) the execution, delivery, enforcement, performance
and administration of this Agreement, the other Loan Documents and any such
other documents, including any of the foregoing relating to the use of proceeds
of the Loans or the unauthorized use by Persons of information or other
materials sent through electronic, telecommunications or other information
transmission systems that are intercepted by such Persons, (ii) any untrue
statement or alleged untrue statement of a material fact contained in, or
omissions or alleged omissions in, information furnished by any Group Member to
the Administrative Agent or its affiliates and (iii) the reasonable fees and
expenses of legal counsel in connection with claims, actions or proceedings by
any Indemnitee against any Group Member under any Loan Document (all the
foregoing in this clause (d), collectively, the “Indemnified Liabilities”),
provided, that the Grantors shall not have any obligation hereunder to any
Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee. All amounts due under this Section 12
shall be payable not later than 10 days after written demand therefor.
Statements payable by the Grantor pursuant to this Section 12 shall be submitted
to the Grantors as set forth in Section 13(a), or to such other Person or
address as may be hereafter designated by the Grantor in a written notice to the
Collateral Agent. The agreements in this Section 12 shall survive repayment of
the Loans and all other amounts payable hereunder.
If any action, suit, proceeding or investigation is commenced, with respect to
an Indemnified Liability, the Indemnitee shall notify the Grantors with
reasonable promptness, provided, however, that any failure by an Indemnitee to
so notify the Grantors shall not relieve the Grantors from their obligations
hereunder. The Indemnitees shall have the right to retain counsel of their
choice to represent it, and the Grantors shall pay the reasonable fees, expenses
and disbursement of such counsel, and such counsel shall, to the extent
consistent with its professional responsibilities, cooperate with the Grantors
and any counsel designated by the Grantors. The Grantors shall be liable for any
settlement of any claim against an Indemnitee made with the Grantors written
consent, which consent shall not be unreasonably withheld. Without the prior
written consent of the Indemnitees, the Grantors shall not settle or compromise
any claim, permit a default or consent to the entry of any judgment in respect
thereof, unless such settlement includes an explicit and unconditional release
from the party bringing such claim against the Indemnitee and does not admit any
wrong doing on the part of such Indemnitee.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these indemnification provisions is made but is
found by a judgment of a court of competent jurisdiction (not subject to further
appeal) that such indemnification may not be enforced in such case, even though
the express provisions hereof provided for indemnification in such case, then
the Grantors, on the one hand, and the Indemnitee, on the other hand, shall
contribute to the

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losses, claims, damages, obligations, penalties, judgments, awards, liabilities,
costs, expenses and disbursements to which such Indemnitee may be subject in
accordance with the relative benefits received by the Grantors, on the one hand,
and such Indemnitee, on the other hand, and also the relative fault of the
Grantors, on the one hand, and such Indemnitee, on the other hand, in connection
with the statements, acts or omissions which resulted in such losses, claims,
damages, obligations, penalties, judgments, awards, liabilities, costs, expenses
and disbursements and the relevant equitable considerations shall also be
considered. No person found liable for a fraudulent misrepresentation shall be
entitled to contribution from any other person who is not also found liable for
such fraudulent misrepresentation.
SECTION 13. MISCELLANEOUS.
     (a) Notices. Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given to a Grantor or the
Collateral Agent, shall be sent to the Collateral Agent at its address set forth
in the Credit Agreement and to Borrower on behalf of each Grantor at Borrower’s
address as set forth in Credit Agreement or in the other Loan Documents. All
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered, or three Business Days after being deposited in the mail, postage
prepaid, or, in the case of telecopy notice, when received.
     (b) Amendments and Waivers.
     (i) Collateral Agent’s Consent. Subject to Section 9, no amendment,
modification, termination or waiver of any provision of this Agreement, or
consent to any departure by any Grantor therefrom, shall in any event be
effective without the written concurrence of both the Grantor affected thereby
and the Collateral Agent.
     (ii) No Waiver; Remedies Cumulative. No failure or delay on the part of the
Collateral Agent in the exercise of any power, right or privilege hereunder or
under any other Loan Document shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other power, right or privilege. All
rights, powers and remedies existing under this Agreement and the other Loan
Documents are cumulative, and not exclusive of, any rights or remedies otherwise
available. Any forbearance or failure to exercise, and any delay in exercising,
any right, power or remedy hereunder shall not impair any such right, power or
remedy or be construed to be a waiver thereof, nor shall it preclude the further
exercise of any such right, power or remedy.
     (c) Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns including all persons
who become bound as debtor to this Agreement. No Grantor shall, without the
prior written consent of the Collateral Agent, assign any right, duty or
obligation hereunder.

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     (d) Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements made herein shall survive the
execution and delivery hereof. Notwithstanding anything herein or implied by law
to the contrary, the agreements of each Grantor set forth in Sections 11 and 12
shall survive the payment of the Secured Obligations and the termination hereof.
     (e) [intentionally omitted]
     (f) Severability. In case any provision in or obligation hereunder shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
     (g) Headings. Section headings herein are included herein for convenience
of reference only and shall not constitute a part hereof for any other purpose
or be given any substantive effect.
     (h) APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
     (i) CONSENT TO JURISDICTION. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT
IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK, THE COURTS OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND APPELLATE COURTS FROM ANY THEREOF; CONSENTS THAT ANY SUCH ACTION OR
PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME; AGREES THAT SERVICE OF ALL PROCESS IN ANY
SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED (OR SUBSTANTIALLY SIMILAR FORM OF MAIL) MAIL, POSTAGE
PREPAID, TO THE APPLICABLE GRANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SECTION 10; AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE
OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE
IN ANY OTHER JURISDICTION; AND WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING
REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES.

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     (j) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING HEREUNDER OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
     (k) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
     (l) Effectiveness. This Agreement shall become effective upon the execution
of a counterpart hereof by each of the parties hereto and receipt by the
Grantors and the Collateral Agent of written or telephonic notification of such
execution and authorization of delivery thereof.
     (m) Entire Agreement. This Agreement and the other Loan Documents embody
the entire agreement and understanding between Grantors and the Collateral Agent
and supersede all prior agreements and understandings between such parties
relating to the subject matter hereof and thereof. Accordingly, the Loan
Documents may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties.
     (n) Agency of AREP. Each of the Grantors appoints AREP as its agent for all
purposes relevant to this Agreement and the other Loan Documents, including the
giving and receipt of notices and the execution and delivery of all documents,
instruments and certificates contemplated herein and therein and all
modifications hereto and thereto. Any acknowledgment, consent, direction,
certification or other action which might otherwise be valid or effective only
if given or taken by all of the Grantors acting singly or jointly, or both,
shall be valid and effective if given or taken only by AREP, whether or not any
of the Grantors joins therein.
     (o) Regulatory Matters. The Collateral Agent, on behalf of the Secured
Parties, acknowledges and agrees that:
     (i) At such time as any Grantor becomes subject to the jurisdiction of the
gaming authorities as a licensee or registered company under the Gaming Laws (or
prior to such time in furtherance of any Grantor’s application to become a
licensee or registered company under the Gaming Laws), the pledge of any Pledged
Equity Interests issued by such Grantor (“Pledged Gaming Equity Interests”)
under this Agreement and any restrictions on transfer and agreements not to
encumber the Pledged Equity Interests or other equity securities of any
corporations licensed by or registered with the gaming authorities will require
the approval of the gaming authorities in order to remain effective, and any
subsequent amendment of this Agreement shall not be effective until all required
approvals of the gaming authorities have been obtained.
     (ii) In the event that the Collateral Agent exercises a remedy set forth in
this Agreement with respect to any Pledged Gaming Equity Interests, that is a
foreclosure, transfer of a possessory security interest in such Collateral, the
exercise of voting and consensual rights with respect thereto afforded hereunder
and/or re-registration of such

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Collateral, such exercise of remedies would be deemed a separate transfer of
such Collateral and would require the separate and prior approval of the gaming
authorities pursuant to applicable Gaming Laws as in effect on the date hereof
and the licensing of the Collateral Agent or other transferee, unless such
licensing requirement is waived by the gaming authorities.
     (iii) In the event that the Secured Parties exercise a remedy set forth in
this Agreement with respect to Collateral consisting of gaming devices, cashless
wagering systems and associated equipment (as those terms are defined in the
Gaming Laws) and a transfer, sale, distribution, or other disposition of such
Collateral occurs, such transfer, sale, distribution, or other disposition of
such Collateral would require the separate and prior approval of the gaming
authorities pursuant to applicable Gaming Laws as in effect on the date hereof
or the licensing of the Secured Parties or other transferee.
     (iv) The approval by the applicable gaming authorities of this Agreement
shall not act or be construed as the approval, either express or implied, for
the Secured Parties to take any actions or steps provided for in this Agreement
for which prior approval of the gaming authorities is required, without first
obtaining such prior and separate approval of the applicable gaming authorities
to the extent then required applicable Gaming Laws.
     (v) The physical location of all certificates evidencing Pledged Gaming
Equity Interests shall at all times remain within the territory of the State of
Nevada or the State of New Jersey, as applicable, at a location designated to
the gaming authorities, and each of such certificates shall be made available
for inspection by agents of the gaming authorities immediately upon request
during normal business hours. Neither the Collateral Agent nor any agent of the
Collateral Agent shall surrender possession of the Pledged Gaming Equity
Interests to any Person other than the Grantor pledging such Pledged Gaming
Equity Interests without the prior approval of the gaming authorities or as
otherwise permitted by applicable Gaming Laws.
     (vi) The Secured Parties shall cooperate with the gaming authorities in
connection with the administration of their regulatory jurisdiction over certain
of the Grantors, including, without limitation, through the provision of such
documents or other information as may be requested by the gaming authorities
relating to the Secured Parties or such Grantors.
     (vii) The Secured Parties and their respective assignees are subject to
being called forward by the gaming authorities, in their discretion, for
licensing or a finding of suitability in order to remain entitled to the
benefits of this Agreement as it relates to Pledged Gaming Equity Interests.
[SIGNATURES PAGES FOLLOW]

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IN WITNESS WHEREOF, each Grantor and the Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.

                  AREP HOME FASHION HOLDINGS LLC
AMERICAN CASINO & ENTERTAINMENT LLC
AREP NEW JERSEY LAND HOLDINGS LLC
AREP OIL & GAS HOLDINGS LLC
AREP REAL ESTATE HOLDINGS LLC, each as a Grantor         By: American Real
Estate Holdings Limited Partnership,
a Delaware limited partnership, Sole Member
 
          By: American Property Investors, Inc.,
a Delaware corporation, General Partner
 
           
 
  By:     /s/ Jon F. Weber        
 
      Jon F. Weber
President

[Pledge and Security Agreement]

 

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                  BEAR STEARNS CORPORATE LENDING INC., as
Collateral Agent
 
           
 
  By:   /s/ Keith C. Barnish                
 
      Name:  KEITH C. BARNISH    
 
      Title:     EXECUTIVE VICE PRESIDENT    
 
           
 
           

PLEDGE AND SECURITY AGREEMENT