EXHIBIT 10.44
                                 [Face of Note]
-------------------------------------------------------------------------------
                                                           CUSIP/CINS 029169 AA7

                Variable Rate Senior Convertible Notes due 2013
No. ___                                                           $____________

                      AMERICAN REAL ESTATE PARTNERS, L.P.
                       AMERICAN REAL ESTATE FINANCE CORP.

promises to pay to ______________________________________or registered assigns,

the principal sum of ___________________________________________________DOLLARS

on August 15, 2013.

Interest Payment Dates:  January 15, April 15, July 15 and October 15

Record Dates:  January 1, April 1, July 1 and October 1

Dated:


                     AMERICAN REAL ESTATE PARTNERS, L.P.

                     By: American Property Investors, Inc.,its general partner

                     By:_____________________________________________________
                     Name:
                     Title:

                     AMERICAN REAL ESTATE FINANCE CORP.

                     By:_____________________________________________________
                     Name:
                     Title:

This is one of the Notes referred to
in the within-mentioned Indenture:

WILMINGTON TRUST COMPANY,
  as Trustee

By: ______________________
   Authorized Signatory

<PAGE>


                                 [Back of Note]
                Variable Rate Senior Convertible Notes due 2013

THIS  GLOBAL  NOTE  IS HELD  BY THE  DEPOSITARY  (AS  DEFINED  IN THE  INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF,  AND IS NOT  TRANSFERABLE  TO ANY PERSON UNDER ANY  CIRCUMSTANCES
EXCEPT THAT (1) THE TRUSTEE  MAY MAKE SUCH  NOTATIONS  HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,  (3) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF AMERICAN REAL ESTATE PARTNERS, L.P.

UNLESS  AND UNTIL IT IS  EXCHANGED  IN WHOLE OR IN PART FOR NOTES IN  DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED  EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER  NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR  DEPOSITARY  OR A NOMINEE OF SUCH  SUCCESSOR  DEPOSITARY.  UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET,  NEW YORK,  NEW YORK)  ("DTC"),  TO THE COMPANY OR ITS
AGENT FOR  REGISTRATION  OF TRANSFER,  EXCHANGE OR PAYMENT,  AND ANY CERTIFICATE
ISSUED  IS  REGISTERED  IN THE NAME OF CEDE & CO. OR SUCH  OTHER  NAME AS MAY BE
REQUESTED  BY AN  AUTHORIZED  REPRESENTATIVE  OF DTC (AND ANY PAYMENT IS MADE TO
CEDE  & CO.  OR  SUCH  OTHER  ENTITY  AS  MAY  BE  REQUESTED  BY  AN  AUTHORIZED
REPRESENTATIVE  OF DTC),  ANY TRANSFER,  PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE  BY OR TO ANY PERSON IS  WRONGFUL  INASMUCH  AS THE  REGISTERED  OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE SECURITY (OR ITS PREDECESSOR)  EVIDENCED  HEREBY WAS ORIGINALLY  ISSUED IN A
TRANSACTION  EXEMPT  FROM  REGISTRATION  UNDER  SECTION 5 OF THE  UNITED  STATES
SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES  ACT") AND THE  SECURITY
EVIDENCED  HEREBY AND THE DEPOSITARY  UNITS ISSUABLE UPON CONVERSION  HEREOF MAY
NOT  BE  OFFERED,   SOLD  OR  OTHERWISE  TRANSFERRED  IN  THE  ABSENCE  OF  SUCH
REGISTRATION  OR AN  APPLICABLE  EXEMPTION  THEREFROM.  EACH  PURCHASER  OF  THE
SECURITY  EVIDENCED  HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT. THE HOLDER
OF THE SECURITY  EVIDENCED HEREBY AGREES FOR THE BENEFIT OF AMERICAN REAL ESTATE
PARTNERS, L.P. AND AMERICAN REAL ESTATE FINANCE CORP. THAT (A) SUCH SECURITY AND
THE DEPOSITARY UNITS ISSUABLE UPON CONVERSION  HEREOF MAY BE RESOLD,  PLEDGED OR
OTHERWISE  TRANSFERRED  ONLY (1) (a) IN THE  UNITED  STATES TO A PERSON  WHO THE
SELLER  REASONABLY  BELIEVES IS A QUALIFIED  INSTITUTIONAL  BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE  144A,  (b)  OUTSIDE  THE  UNITED  STATES  IN AN  OFFSHORE  TRANSACTION  IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (c) IN A TRANSACTION  MEETING
THE  REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (d) TO AN  INSTITUTIONAL
"ACCREDITED  INVESTOR"  (AS DEFINED IN RULE 501 (a) (1),  (2), (3) OR (7) OF THE
SECURITIES  ACT) THAT,  PRIOR TO SUCH  TRANSFER,  FURNISHES THE TRUSTEE A SIGNED

<PAGE>

LETTER CONTAINING CERTAIN  REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN
BE  OBTAINED  FROM THE  TRUSTEE)  AND,  IF SUCH  TRANSFER  IS IN  RESPECT  OF AN
AGGREGATE  PRINCIPAL  AMOUNT OF NOTES LESS THAN $250,000,  AN OPINION OF COUNSEL
ACCEPTABLE  TO AMERICAN  REAL ESTATE  PARTNERS,  L.P.  THAT SUCH  TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE  WITH ANOTHER  EXEMPTION
FROM THE  REGISTRATION  REQUIREMENTS  OF THE  SECURITIES  ACT (AND BASED UPON AN
OPINION OF COUNSEL IF AMERICAN REAL ESTATE PARTNERS,  L.P. SO REQUESTS),  (2) TO
AMERICAN REAL ESTATE PARTNERS, L.P. OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE  WITH ANY APPLICABLE  SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER  APPLICABLE  JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE.  IF AT ANY TIME THE NEVADA GAMING  COMMISSION  FINDS THAT A HOLDER OF
THIS  SECURITY  OR THE  DEPOSITARY  UNITS  ISSUABLE  UPON  CONVERSION  HEREOF IS
UNSUITABLE  TO CONTINUE TO OWN THE SECURITY (OR THE  DEPOSITARY  UNITS  ISSUABLE
UPON  CONVERSION  HEREOF),  AMERICAN REAL ESTATE  PARTNERS,  L.P. SHALL HAVE THE
RIGHT TO REQUIRE SUCH HOLDER TO DISPOSE OF SUCH SECURITY OR DEPOSITARY UNITS, AS
APPLICABLE,  AS  PROVIDED  BY THE  GAMING  LAWS OF THE STATE OF  NEVADA  AND THE
REGULATIONS   PROMULGATED  THEREUNDER.   ALTERNATIVELY,   AMERICAN  REAL  ESTATE
PARTNERS,  L.P. SHALL HAVE THE RIGHT TO REDEEM THE SECURITY FROM THE HOLDER AT A
PRICE SPECIFIED IN THE INDENTURE GOVERNING THE SECURITY.  NEVADA GAMING LAWS AND
REGULATIONS  RESTRICT  THE  RIGHT  UNDER  CERTAIN  CIRCUMSTANCES:  (A) TO PAY OR
RECEIVE ANY INTEREST UPON SUCH  SECURITY;  (B) TO EXERCISE,  DIRECTLY OR THROUGH
ANY TRUSTEE OR NOMINEE,  ANY VOTING RIGHT CONFERRED BY SUCH SECURITY;  OR (C) TO
RECEIVE ANY REMUNERATION IN ANY FORM FROM AMERICAN REAL ESTATE  PARTNERS,  L.P.,
FOR SERVICES RENDERED OR OTHERWISE.

     Capitalized terms used herein have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.

          (1) INTEREST.  American Real Estate Partners, L.P., a Delaware limited
     partnership  ("AREP"),  and  American  Real  Estate  Finance  Corp.  ("AREP
     Finance",  together with AREP, the  "Company"),  promise to pay interest on
     the principal amount of this Note at the interest rate set forth below from
     April 5, 2007 until maturity and shall pay the Additional Interest, if any,
     payable pursuant to Section 2 of the Registration Rights Agreement referred
     to below.  The Company will pay interest and Additional  Interest,  if any,
     quarterly  in arrears on January  15,  April 15,  July 15 and October 15 of
     each year, or if any such day is not a Business Day, on the next succeeding
     Business Day (each, an "Interest Payment Date"). Interest on the Notes will
     accrue from the most recent date to which  interest has been paid or, if no
     interest has been paid,  from April 5, 2007;  provided  that if there is no
     existing  Default  in  the  payment  of  interest,  and  if  this  Note  is
     authenticated  between a record date referred to on the face hereof and the
     next succeeding Interest Payment Date, interest shall accrue from such next
     succeeding  Interest Payment Date; provided further that the first Interest
     Payment  Date shall be July 15,  2007 and the last  interest  payment  date
     shall be August 15, 2013 (the "Maturity Date").  Interest on the Notes (the
     "Interest  Rate")  shall  accrue at a rate equal to LIBOR minus one and one
     quarter percent (1.25%) per annum; provided that the Interest Rate shall at
     no time be less than four  percent  (4.0%) per annum nor greater  than five
     and one half percent  (5.5%) per annum.  The  applicable  Interest  Rate in
     respect of the Notes shall be determined by the Calculation  Agent for each
     quarterly  interest  period  on the  last  Trading  Day of the  immediately
     preceding  quarterly  period.  The  Company  will pay  interest  (including
     post-petition  interest  in any  proceeding  under any  Bankruptcy  Law) on
     overdue  principal  and premium,  if any,  from time to time on demand at a
     rate  that is 1% per  annum in  excess  of the rate  then in  effect to the
     extent lawful; it will pay interest  (including  post-petition  interest in
     any  proceeding  under  any  Bankruptcy  Law) on  overdue  installments  of
     interest and Additional Interest, if any, (without regard to any applicable
     grace  periods)  from time to time on demand at the same rate to the extent
     lawful.  Interest will be computed on the basis of a 360-day year of twelve
     30-day months.
<PAGE>

          (2)  METHOD  OF  PAYMENT.  The  Company  will  pay or cause to be paid
     interest on the Notes (except defaulted interest) and Additional  Interest,
     if any, to the Persons who are registered  Holders of Notes at the close of
     business on the January 1, April 1, July 1 and October 1 next preceding the
     Interest  Payment Date,  even if such Notes are canceled  after such record
     date and on or before such  Interest  Payment  Date,  except as provided in
     Section 2.12 of the Indenture with respect to defaulted interest. The Notes
     will be payable as to principal,  premium and Additional Interest,  if any,
     and  interest  at the office or agency of the Company  maintained  for such
     purpose within or without the City and State of New York, or, at the option
     of the Company, payment of interest and Additional Interest, if any, may be
     made by check  mailed to the  Holders at their  addresses  set forth in the
     register  of  Holders;  provided  that,  in respect  of any Holder  with an
     aggregate principal amount of Notes in excess of $2,000,000, at the request
     of such Holder in writing to the Company,  interest on such Holder's  Notes
     shall be paid by wire transfer in immediately available funds. Such payment
     will be in such coin or currency of the United  States of America as at the
     time of payment is legal tender for payment of public and private debts.


          (3) REGISTRAR,  PAYING AGENT,  CONVERSION AGENT AND CALCULATION AGENT.
     Initially,  Wilmington Trust Company, the Trustee under the Indenture, will
     act as Registrar, Paying Agent, Conversion Agent and Calculation Agent. The
     Company may change any Registrar, Paying Agent or Calculation Agent without
     notice to any Holder. The Company or any of its Subsidiaries may act in any
     such capacity.

          (4) INDENTURE.  The Company issued the Notes under an Indenture  dated
     as of April 5, 2007 (the "Indenture") among the Company,  the Guarantor and
     the Trustee.  The terms of the Notes  include those stated in the Indenture
     and those made part of the Indenture by reference to the TIA. The Notes are
     subject to all such terms,  and Holders are referred to the  Indenture  and
     such Act for a statement of such terms. To the extent any provision of this
     Note conflicts with the express provisions of the Indenture, the provisions
     of the Indenture shall govern and be  controlling.  The Notes are unsecured
     obligations of the Company.

          (5)  REDEMPTION  PURSUANT  TO GAMING  LAWS.  If any  Gaming  Authority
     requires that a Holder or Beneficial Owner of Notes be licensed,  qualified
     or found  suitable  under  any  applicable  Gaming  Law and such  Holder or
     Beneficial Owner:

               (a) fails to apply for a license,  qualification  or a finding of
          suitability  within 30 days (or such shorter period as may be required
          by the applicable  Gaming Authority) after being requested to do so by
          the Gaming Authority; or

               (b)  is  denied  such  license  or  qualification  or  not  found
          suitable;

     AREP shall then have the right, at its option:
<PAGE>

          (a) to require each such Holder or Beneficial  Owner to dispose of its
     Notes  within  30 days  (or such  earlier  date as may be  required  by the
     applicable  Gaming  Authority) of the occurrence of the event  described in
     clause (a) or (b) above, or

          (b) to redeem the Notes of each such Holder or  Beneficial  Owner,  in
     accordance  with  Rule  14e-1 of the  Exchange  Act,  if  applicable,  at a
     redemption price equal to the lowest of:

               (i) the  principal  amount  thereof,  together  with  accrued and
          unpaid interest and Additional Interest, if any, to the earlier of the
          date of  redemption,  the date 30 days after such Holder or Beneficial
          Owner is required to apply for a license,  qualification or finding of
          suitability  (or  such  shorter  period  that may be  required  by any
          applicable  Gaming Authority) if such Holder or Beneficial Owner fails
          to do so  ("Application  Date") or of the date of denial of license or
          qualification  or of the  finding  of  unsuitability  by  such  Gaming
          Authority;

               (ii) the price at which such Holder or Beneficial  Owner acquired
          the Notes,  together with accrued and unpaid  interest and  Additional
          Interest,  if any,  to the  earlier  of the  date of  redemption,  the
          Application Date or the date of the denial of license or qualification
          or of the finding of unsuitability by such Gaming Authority; and

               (iii) such other  lesser  amount as may be required by any Gaming
          Authority.

          Immediately  upon a determination  by a Gaming Authority that a Holder
     or Beneficial  Owner of the Notes will not be licensed,  qualified or found
     suitable  and must  dispose of the Notes,  the Holder or  Beneficial  Owner
     will,  to the extent  required by applicable  Gaming Laws,  have no further
     right:


          (a) to  exercise,  directly  or  indirectly,  through  any  trustee or
     nominee or any other  person or entity,  any right  conferred by the Notes,
     the Note Guarantee or the Indenture; or

          (b) to receive any interest,  Additional Interest,  dividend, economic
     interests or any other  distributions or payments with respect to the Notes
     and the Note Guarantee or any  remuneration in any form with respect to the
     Notes and the Note  Guarantee  from the Company,  any Note Guarantor or the
     Trustee, except the redemption price referred to above.


          AREP  shall  notify the  Trustee  in  writing  of any such  redemption
     pursuant to the provisions of the Indenture. Any Holder or Beneficial Owner
     that is  required  to apply for a  license,  qualification  or a finding of
     suitability  will be responsible for all fees and costs of applying for and
     obtaining the license,  qualification  or finding of suitability and of any
     investigation by the applicable Gaming  Authorities and the Company and any
     Note Guarantor  will not reimburse any Holder or Beneficial  Owner for such
     expense.

          (6) MANDATORY REDEMPTION.  Other than in connection with redemption in
     the event of a Fundamental  Transaction as described  below, the Company is
     not required to make  mandatory  redemption  or sinking fund  payments with
     respect to the Notes.

          (7) CONVERSION.  Subject to the terms and conditions of the Indenture,
     a Holder  may  convert  at any time  each of its Notes  into the  Company's
     Depositary Units at the Conversion Price. The Conversion Price in effect at
     any given time is subject to  adjustment.  A Holder may convert  fewer than
     all of such Holder's  Notes so long as the Notes  converted are an integral
     multiple of $1,000 principal  amount. If this Note shall be surrendered for
     conversion  during the period from the close of business on the Record Date
     to the opening of business on the day  immediately  following  the Interest
     Payment Date, it shall be  accompanied by payment,  in funds  acceptable to
     the Company,  of an amount equal to the interest  otherwise payable on such
     Interest Payment Date on the Principal  Amount being  converted;  provided,
     however, that no such payment need be made if there shall exist at the time
     of conversion a default in the payment of interest on the Notes.

<PAGE>

          (8) FORCED CONVERSION.  The Company may, at its option,  automatically
     convert all or a portion of the Notes at any time on or after April 5, 2009
     and prior to the  Maturity  Date if: (i) the VWAP per  Depositary  Unit has
     exceeded  150% of the  Conversion  Price  then in  effect  for at  least 20
     Trading Days within a period of 30 consecutive Trading Days ending within 5
     Trading  Days of the Forced  Conversion  Notice  Date;  and (ii) the Equity
     Conditions  shall  have  been  satisfied  as of  the  date  of  the  Forced
     Conversion  Notice.  The Holders  shall be entitled to receive a Make-Whole
     Premium  in  accordance  with  Article 15 of the  Indenture  for any Forced
     Conversion which occurs following the public  announcement of a Fundamental
     Change during the applicable  Fundamental  Change Repurchase  Period. If at
     any time during the Forced Conversion  Period, the Equity Conditions are no
     longer  satisfied,  the Company  shall  provide a notice to the Trustee and
     each  Holder of such  failure  and,  unless the  Holders of not less than a
     majority in aggregate  principal amount of the then outstanding Notes waive
     such  failure,  the  Company  shall be  required  to  withdraw  the  Forced
     Conversion Notice.


          (9) REPURCHASE AT THE OPTION OF HOLDER.  If prior to the Maturity Date
     there shall have occurred a Fundamental  Change, each Holder shall have the
     option to require all or a portion of its Notes to be  repurchased  in cash
     by the Company on the Fundamental  Change Settlement Date for the principal
     amount of the Notes to be  repurchased,  together  with  accrued and unpaid
     interest  and  Additional  Interest,   if  any,  to,  but  excluding,   the
     Fundamental  Change  Settlement  Date,  plus  a  Make-Whole   Premium,   if
     applicable.

          (10) DENOMINATIONS,  TRANSFER,  EXCHANGE.  The Notes are in registered
     form without coupons in denominations  of $1,000 and integral  multiples of
     $1,000.  The transfer of Notes may be registered and Notes may be exchanged
     as provided in the  Indenture.  The Registrar and the Trustee may require a
     Holder,  among  other  things,  to  furnish  appropriate  endorsements  and
     transfer  documents  and the  Company may require a Holder to pay any taxes
     and fees  required by law or permitted by the  Indenture.  The Company need
     not  exchange  or  register  the  transfer of any Note or portion of a Note
     selected for forced conversion,  except for the unconverted  portion of any
     Note being converted in part.

          (11) PERSONS  DEEMED OWNERS.  The  registered  Holder of a Note may be
     treated as its owner for all purposes.

          (12) AMENDMENT,  SUPPLEMENT AND WAIVER. Subject to certain exceptions,
     the  Indenture  or the  Notes  or the Note  Guarantees  may be  amended  or
     supplemented  with the  consent of the  Holders  of at least a majority  in
     aggregate   principal  amount  of  the  then  outstanding  Notes  including
     Additional  Notes,  if any,  voting  as a single  class,  and any  existing
     Default  or Event or  Default  or  compliance  with  any  provision  of the
     Indenture  or the  Notes  or the Note  Guarantees  may be  waived  with the
     consent of the Holders of a majority in aggregate  principal  amount of the
     then  outstanding  Notes  including  Additional  Notes, if any, voting as a
     single class. Without the consent of any Holder of a Note, the Indenture or
     the Notes or the Note Guarantees may be amended or supplemented to cure any
     ambiguity, defect or inconsistency,  to provide for uncertificated Notes in
     addition  to  or in  place  of  certificated  Notes,  to  provide  for  the
     assumption of the Company's or a Guarantor's  obligations to Holders of the
     Notes and Note Guarantees in case of a merger or consolidation, to make any
     change that would provide any additional  rights or benefits to the Holders
     of the Notes or that does not  adversely  affect the legal rights under the
     Indenture of any such Holder,  to comply with the  requirements of the SEC,
     to  decrease  the  Conversion  Price as set forth in the  Indenture,  or to
     provide  for the  issuance  of  Additional  Notes  in  accordance  with the
     limitations  set  forth in the  Indenture,  or to allow  any  Guarantor  to
     execute a supplemental  indenture to the Indenture  and/or a Note Guarantee
     with respect to the Notes,  or to amend,  modify,  revise or supplement the
     Indenture  to conform to certain  amendments,  modifications,  revisions or
     supplements  made to  substantially  identical  provisions of the Company's
     outstanding unsecured Indebtedness. Under certain circumstances,  including
     proportional  payment  of  consideration  in respect  of such  waiver,  the
     Holders  of the  Notes  will be  deemed to have  waived  compliance  by the
     Company of provisions of the Notes or the Indenture,  if the holders of the
     Company's outstanding unsecured Indebtedness waive compliance with the same
     requirements.

<PAGE>

          (13) DEFAULTS AND REMEDIES. Events of Default include: (i) default for
     30 days in the payment when due of interest on, or Additional Interest,  if
     any, with respect to the Notes; (ii) default in the payment when due of the
     principal of, or premium  (including any Make-Whole  Premium),  if any, on,
     the Notes when the same becomes due and payable at maturity,  or otherwise,
     (iii)  failure by the Company to comply with  Article 13 of the  Indenture;
     (iv)  failure by the  Company or any  Guarantor  for 60 days after  written
     notice to the  Company  by the  Trustee  or the  Holders of at least 25% in
     aggregate principal amount of the Notes including Additional Notes, if any,
     then  outstanding  voting as a single class to comply with any of the other
     agreements in the  Indenture or the Notes;  (v) default under certain other
     agreements  relating to  Indebtedness of the Company or any Guarantor which
     default results in the acceleration  thereof;  (vi) certain final judgments
     for the payment of money that remain  undischarged for a period of 60 days;
     (vii) failure to convert the Notes as required  pursuant to the  Indenture;
     (viii)  certain  events of  bankruptcy  or  insolvency  with respect to the
     Company or any Guarantor that is a Significant Subsidiary;  and (ix) except
     as permitted by the  Indenture,  any Note Guarantee is held in any judicial
     proceeding to be unenforceable or invalid or ceases for any reason to be in
     full force and effect or AREH or any other  Guarantor or any Person  acting
     on behalf of any Guarantor denies or disaffirms its obligations  under such
     Guarantor's  Note  Guarantee.   Under  certain   circumstances,   including
     proportional  payment  of  consideration  in respect  of such  waiver,  the
     Holders of the Notes will be deemed to have  waived  the  occurrence  of an
     Event  of  Default  by  the  Company,  if  the  holders  of  the  Company's
     outstanding  unsecured  Indebtedness  waive the same  event of  default  as
     provided  in  the   governing   documents  of  the   applicable   unsecured
     Indebtedness. If any Event of Default occurs and is continuing, and has not
     been  waived  or  deemed  waived  pursuant  to  the  immediately  preceding
     sentence, the Trustee or the Holders of at least 25% in aggregate principal
     amount of the then  outstanding  Notes may  declare all the Notes to be due
     and payable immediately.  Notwithstanding the foregoing,  in the case of an
     Event of Default  arising from certain  events of bankruptcy or insolvency,
     all  outstanding  Notes will  become due and  payable  immediately  without
     further  action or notice.  Holders may not enforce  the  Indenture  or the
     Notes except as provided in the Indenture.  Subject to certain limitations,
     Holders of a majority in aggregate principal amount of the then outstanding
     Notes may direct the  Trustee in its  exercise  of any trust or power.  The
     Trustee may withhold  from  Holders of the Notes  notice of any  continuing
     Default or Event of Default (except a Default or Event of Default  relating
     to the payment of principal or interest or premium or Additional  Interest,
     if any,) if it determines that withholding notice is in their interest. The
     Holders of a majority in aggregate principal amount of the then outstanding
     Notes by notice to the Trustee  may, on behalf of the Holders of all of the
     Notes,  rescind an acceleration  or waive any existing  Default or Event of
     Default  and its  consequences  under  the  Indenture  except a  continuing
     Default  or Event of  Default  in the  payment  of  interest  or premium or
     Additional  Interest,  if any,  on, or the  principal  of, the  Notes.  The
     Company  is  required  to  deliver  to the  Trustee  annually  a  statement
     regarding compliance with the Indenture,  and the Company is required, upon
     becoming  aware of any  Default  or Event of  Default,  to  deliver  to the
     Trustee a statement specifying such Default or Event of Default.

<PAGE>

          (14) TRUSTEE DEALINGS WITH COMPANY.  The Trustee, in its individual or
     any other  capacity,  may make loans to, accept  deposits from, and perform
     services for the Company or its Affiliates, and may otherwise deal with the
     Company or its Affiliates, as if it were not the Trustee.


          (15) NO RECOURSE  AGAINST  OTHERS.  A director,  officer,  manager (or
     managing   member),   direct  or  indirect   member,   partner,   employee,
     incorporator or stockholder of the Company,  API, or the general partner of
     the Company or any Guarantor,  as such, will not have any liability for any
     obligations  of the  Company or the  Guarantors  under the Notes,  the Note
     Guarantees or the Indenture or for any claim based on, in respect of, or by
     reason of, such  obligations or their creation.  Each Holder by accepting a
     Note waives and  releases  all such  liability.  The waiver and release are
     part of the consideration for the issuance of the Notes.

          (16)  AUTHENTICATION.  This Note will not be valid until authenticated
     by the manual signature of the Trustee or an authenticating agent.


          (17) ABBREVIATIONS. Customary abbreviations may be used in the name of
     a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
     tenants  by  the  entireties),  JT TEN  (=  joint  tenants  with  right  of
     survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
     (= Uniform Gifts to Minors Act).

          (18)  ADDITIONAL  RIGHTS OF HOLDERS  OF  RESTRICTED  GLOBAL  NOTES AND
     RESTRICTED  DEFINITIVE NOTES. In addition to the rights provided to Holders
     of Notes  under the  Indenture,  Holders  of  Restricted  Global  Notes and
     Restricted  Definitive  Notes  will  have all the  rights  set forth in the
     Registration Rights Agreement dated as of April 4, 2007, among the Company,
     the Guarantor  and the other  parties named on the signature  pages thereof
     or, in the case of Additional Notes, Holders of Restricted Global Notes and
     Restricted  Definitive  Notes will have the rights set forth in one or more
     registration  rights agreements,  if any, among the Company,  the Guarantor
     and the other parties thereto,  relating to rights given by the Company and
     the Guarantor to the purchasers of any Additional Notes (collectively,  the
     "Registration Rights Agreement").

          (19) CUSIP NUMBERS.  Pursuant to a  recommendation  promulgated by the
     Committee on Uniform Security  Identification  Procedures,  the Company has
     caused  CUSIP  numbers to be printed on the Notes,  and the Trustee may use
     CUSIP  numbers in notices of  redemption,  repurchase  or  conversion  as a
     convenience  to Holders.  No  representation  is made as to the accuracy of
     such  numbers  either as printed on the Notes or as contained in any notice
     of redemption, repurchase or conversion, and reliance may be placed only on
     the other  identification  numbers placed thereon.

          (20)  GOVERNING  LAW.  THE  INTERNAL LAW OF THE STATE OF NEW YORK WILL
     GOVERN  AND BE USED TO  CONSTRUE  THE  INDENTURE,  THIS  NOTE  AND THE NOTE
     GUARANTEES  WITHOUT GIVING EFFECT TO APPLICABLE  PRINCIPLES OF CONFLICTS OF
     LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER  JURISDICTION
     WOULD BE REQUIRED THEREBY.

<PAGE>

     The Company  will  furnish to any Holder upon  written  request and without
charge  a copy  of the  Indenture  and/or  the  Registration  Rights  Agreement.
Requests may be made to:

American Real Estate Partners,  L.P.
American Real Estate Finance Corp.
767 Fifth Avenue,  Suite 4700
New York, New York 10153
Facsimile No.: (646) 365-2833
Attention: Felicia P. Buebel, Esq.

<PAGE>

                                ASSIGNMENT FORM

        To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: __________________________________
                                                (Insert assignee's legal name)
________________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
             (Print or type assignee's name, address and zip code)

and irrevocably appoint ________________________________________________________
to  transfer  this Note on the books of the  Company.  The agent may  substitute
another to act for him.

Date:  _______________

                Your Signature: _______________________________________________
                    (Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:  _________________________

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

<PAGE>

            SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE *

     The  following  exchanges  of a part of this Global Note for an interest in
another Global Note or for a Definitive  Note, or exchanges of a part of another
Global Note or  Definitive  Note for an interest in this Global Note,  have been
made:

<TABLE>
<S>     <C>    <C>    <C>    <C>
                                                                         Principal Amount
                      Amount of decrease in      Amount of increase in   at maturity of this
                        Principal Amount           Principal Amount     Global Note following        Signature of authorized
                        at maturity of             at maturity of         such decrease                officer of Trustee or
Date of Exchange      this Global Note           this Global Note         (or increase)                    Custodian
----------------     ------------------         ------------------        -------------                 ------------------

</TABLE>




































* This schedule should be included only if the Note is issued in global form.