Document:

<PAGE>

                                WARRANT AGREEMENT

                                     BETWEEN

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.

                                       AND

                    AMERICAN STOCK TRANSFER AND TRUST COMPANY

                            DATED AS OF JULY 22, 2004

<PAGE>

<TABLE>
<CAPTION>

                                                   TABLE OF CONTENTS

                                                                                                                PAGE
                                                                                                                ----
<S>            <C>                                                                                              <C>

ARTICLE I       DISTRIBUTION OF WARRANT CERTIFICATES...........................................................    1

                Section 1.1      Appointment of Warrant Agent..................................................    1

                Section 1.2      Form of Warrant Certificates..................................................    1

                Section 1.3      Execution of Warrant Certificates.............................................    1

                Section 1.4      Issuance and Distribution of Warrant Certificates.............................    2

                Section 1.5      Conditions to Distribution of Warrant Certificates............................    2

ARTICLE II      WARRANT EXERCISE PRICE AND EXERCISE OF WARRANTS................................................    2

                Section 2.1      Exercise Price................................................................    2

                Section 2.2      Registration of Common Stock and Exercisability of Warrants...................    2

                Section 2.3      Procedure for Exercise of Warrants............................................    3

                Section 2.4      Issuance of Common Stock......................................................    3

                Section 2.5      Certificates for Unexercised Warrants.........................................    3

                Section 2.6      Reservation of Shares.........................................................    3

                Section 2.7      Disposition of Proceeds.......................................................    3

                Section 2.8      Cancellation of Warrants......................................................    3

ARTICLE III     ADDITIONAL SECURITIES AND NOTICE PROVISIONS....................................................    4

                Section 3.1       Additional Securities.........................................................   4

                Section 3.2       Deferral of Adjustments to Warrant Shares.....................................   4

                Section 3.3       Adjustment to Number of Warrant Shares........................................   4

                Section 3.4       Reorganizations...............................................................   4

                Section 3.5       Verification of Computations..................................................   5

                Section 3.6       Exercise Price Not Less Than Par Value........................................   5

                Section 3.7       Notice of Certain Actions.....................................................   5

                Section 3.8       Notice of Certain Actions.....................................................   5

                Section 3.9       Warrant Certificate Amendments................................................   5

                Section 3.10      Fractional Shares.............................................................   5

                Section 3.11      Current Market Price..........................................................   6

                Section 3.12      Right to Adjust Exercise Price and Exercise Deadline..........................   6

ARTICLE IV      OTHER PROVISIONS RELATING TO RIGHTS OF REGISTERED HOLDERS OF WARRANT CERTIFICATES...............   6

                Section 4.1      Rights of Warrant Holders......................................................   6

                Section 4.2      Lost, Stolen, Mutilated, or Destroyed Warrant Certificates.....................   6

<PAGE>

ARTICLE V       SPLIT UP, COMBINATION, EXCHANGE, TRANSFER, AND CANCELLATION OF WARRANT CERTIFICATES............    6

                Section 5.1      Split Up, Combination, Exchange, and Transfer of Warrant Certificates.........    6

                Section 5.2      Cancellation upon Surrender of Warrant Certificates...........................    7

                Section 5.3      Agreement of Warrant Certificate Holders......................................    7

ARTICLE VI      PROVISIONS CONCERNING THE WARRANT AGENT AND OTHER MATTERS......................................    7

                Section 6.1      Payment of Taxes and Charges..................................................    7

                Section 6.2      Resignation or Removal of Warrant Agent.......................................    7

                Section 6.3      Notice of Appointment.........................................................    8

                Section 6.4      Merger of Warrant Agent.......................................................    8

                Section 6.5      Company Responsibilities......................................................    8

                Section 6.6      Certification for the Benefit of Warrant Agent................................    8

                Section 6.7      Books and Records.............................................................    8

                Section 6.8      Liability of Warrant Agent....................................................    8

                Section 6.9      Use of Attorneys, Agents, and Employees.......................................    9

                Section 6.10     Indemnification...............................................................    9

                Section 6.11     Acceptance of Agency..........................................................    9

                Section 6.12     Changes to Agreement..........................................................    9

                Section 6.13     Assignment....................................................................    9

                Section 6.14     Successor to Company..........................................................    9

                Section 6.15     Notices.......................................................................    9

                Section 6.16     Defects in Notice.............................................................   10

                Section 6.17     Governing Law.................................................................   10

                Section 6.18     Standing......................................................................   10

                Section 6.19     Headings......................................................................   10

                Section 6.20     Counterparts..................................................................   10

                Section 6.21     Conflict of Interest..........................................................   10

                Section 6.22     Availability of the Agreement.................................................   11

EXHIBIT A       FORM OF WARRANT CERTIFICATE
</TABLE>

                                       ii

<PAGE>

                                WARRANT AGREEMENT

       WARRANT AGREEMENT, dated as of July 22, 2004, between ATLANTIC COAST
ENTERTAINMENT HOLDINGS, INC., a Delaware corporation (the "Company") and
American Stock Transfer and Trust Company, as warrant agent (the "Warrant
Agent").

                                   WITNESSETH:

       WHEREAS, the Company is a wholly owned subsidiary of GB Holdings, Inc., a
Delaware corporation (the "Parent");

       WHEREAS, the Company proposes to enter into the transaction (the
"Transaction") described in that certain Proxy Statement and Registration
Statement on Form S-4 (the "Form S-4") pursuant to which the Company shall
distribute to the stockholders of Parent (the "Distribution") 10 million
warrants (the "Warrants") to purchase common stock, par value $.01 per share the
("Common Stock") of the Company, each Warrant entitling the holder thereof to
purchase .275 shares of Common Stock;

       WHEREAS, the Company proposes to issue certificates evidencing the
Warrants (such Warrant certificates issued pursuant to this Agreement being
hereinafter called the "Warrant Certificates");

       WHEREAS, the Company desires the Warrant Agent, and the Warrant Agent
agrees, to act on behalf of the Company in connection with the issuance,
transfer, exchange, replacement, redemption, and surrender of the Warrant
Certificates; and

       WHEREAS, the Company and the Warrant Agent desire to set forth in this
Warrant Agreement, among other things, the form and provisions of the Warrant
Certificates and the terms and conditions under which they may be issued,
transferred, exchanged, replaced, redeemed, and surrendered in connection with
the exercise and redemption of the Warrants;

       NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:

                                    ARTICLE I

                      DISTRIBUTION OF WARRANT CERTIFICATES

       Section 1.1 Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act on behalf of the Company in accordance with the
instructions hereinafter set forth, and the Warrant Agent hereby accepts such
appointment.

       Section 1.2 Form of Warrant Certificates. The Warrant Certificates shall
be issued in registered form only and, together with the purchase and assignment
forms to be printed on the reverse thereof, shall be substantially in the form
of Exhibit A attached hereto. The Warrant Certificates may have such letters,
numbers, or other marks of identification or designation and such legends,
summaries, or endorsements stamped, printed, lithographed, or engraved thereon
as the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement or as, in any particular case, may be required, in
the opinion of counsel for the

<PAGE>

Company, to comply with any law or with any rule or regulation of any regulatory
authority or agency, or to conform to customary usage.

       Section 1.3 Execution of Warrant Certificates. The Warrant Certificates
shall be executed on behalf of the Company by its Chairman, Vice Chairman,
President, or any Vice President and by its Chief Financial Officer, Treasurer,
Assistant Treasurer, Secretary, or Assistant Secretary, either manually or by
facsimile signature printed thereon. The Warrant Certificates shall be manually
countersigned and dated the date of countersignature by the Warrant Agent and
shall not be valid for any purpose unless so countersigned and dated. If any
authorized officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer of the Company either before or
after delivery thereof by the Company to the Warrant Agent, the signature of
such person on such Warrant Certificates nevertheless shall be valid and such
Warrant Certificates may be countersigned by the Warrant Agent and issued and
delivered to those persons entitled to receive the Warrants represented thereby
with the same force and effect as though the person who signed such Warrant
Certificates had not ceased to be such officer of the Company.

       Section 1.4 Issuance and Distribution of Warrant Certificates. Upon
completion of the Distribution, the Company shall deliver to the Warrant Agent
an adequate supply of Warrant Certificates executed on behalf of the Company as
described in Section 1.3 hereof. Upon receipt of an order from the Company, the
Warrant Agent shall within three business days complete and countersign Warrant
Certificates representing the total number of Warrants to be issued hereunder
and shall deliver such Warrant Certificates pursuant to written instructions of
the Company.

       Section 1.5 Conditions to Distribution of Warrant Certificates. If the
Distribution or the Transaction is not consummated for any reason, no Warrant
Certificates shall be distributed and this Agreement shall terminate and be of
no further force or effect.

                                   ARTICLE II

                 WARRANT EXERCISE PRICE AND EXERCISE OF WARRANTS

       Section 2.1 Exercise Price. Each Warrant Certificate shall, when signed
by the Chairman, Vice Chairman, President, or any Vice President and by the
Chief Financial Officer, Treasurer, Assistant Treasurer, Secretary, or Assistant
Secretary of the Company and countersigned by the Warrant Agent, entitle the
registered holder thereof to purchase from the Company .275 shares (each a
"Warrant Share") of Common Stock for each Warrant evidenced thereby, at the
purchase price of $.01 per share, or such adjusted number of shares at such
adjusted purchase price as may be established from time to time pursuant to the
provisions of Article III hereof, payable in full at the time of exercise of the
Warrant. Except as the context otherwise requires, the term "Exercise Price" as
used in this Agreement shall mean the purchase price of $.01 per share of Common
Stock upon exercise of a Warrant, reflecting all appropriate adjustments made in
accordance with the provisions of Article III hereof.

       Section 2.2 Registration of Common Stock and Exercisability of Warrants.
Each Warrant may be exercised at any time after the earliest to occur of the
following events (the first date on which any such event occurs being referred
to as the "Vesting Date"):

                                       2
<PAGE>

       (a)   the payment of the entire principal amount and accrued interest on
             any of the Company's outstanding 3% Notes due 2008 issued by the
             Company (the "New Notes"), pursuant to and in accordance with the
             terms thereof whether such payment is in the form of cash or by
             issuance of shares of Common Stock to the holder thereof in lieu of
             cash payment or any conversion of any of such notes into common
             stock pursuant to and in accordance with the terms thereof;

       (b)   a determination by a majority of the board of directors of the
             Company (the "Board") (including at least one independent director)
             that the Warrants may be exercised; and

       (c)   payment in full by the Parent of principal and accrued, but unpaid
             interest on all outstanding 11% Notes due 2005 issued by the Parent
             which have not been exchanged for the New Notes in the Transaction.

       Promptly after the Vesting Date, the Company shall send written notice to
the Warrant Agent that such Vesting Date has occurred (the "Vesting Notice").
The Warrant Agent shall within ten days after receipt of the Vesting Notice
cause a similar notice to be mailed to each registered holder of a Warrant
Certificate.

       The latest time and date at which the Warrants may be exercised (the
"Exercise Deadline") shall be 5:00 P.M. New York City time on the earlier of (i)
the date that is the seventh anniversary of the completion of the Distribution;
or (ii) the Cancellation Date (as defined in Section 2.8 below).

       The Company shall use its reasonable efforts to secure the effective
registration of the Warrant Shares under the Securities Act of 1933, as amended
(the "Securities Act"), and register or qualify such shares under applicable
state laws; provided, however, that the Company shall have no obligation to
register the Warrant Shares in the event that, by amendment to the Securities
Act or otherwise, such registration or qualification or the delivery of such
prospectus is not required at the time said Warrant Shares are to be issued; and
further that, if by amendment to the Securities Act or otherwise, some other or
different requirement shall be imposed by act of the Congress of the United
States which shall relate to the issuance of the Warrant Shares upon exercise of
the Warrants, the Company shall use its reasonable efforts to comply with such
requirements so long as the same shall not be more burdensome to the Company
than the registration statement under the Securities Act. Promptly after a
registration statement under the Securities Act covering the aforementioned
Warrant Shares has become effective, or such other action as contemplated hereby
and as may be required has been taken, as the case may be, the Company shall
cause notice thereof or a copy of the prospectus covering the Warrant Shares to
be mailed to each registered holder of a Warrant Certificate.

       Section 2.3 Procedure for Exercise of Warrants. During the period
specified in and subject to the provisions of Section 2.2 hereof, Warrants may
be exercised by surrendering the Warrant Certificates representing such Warrants
to the Warrant Agent at the principal office of its corporate trust department
(the "Principal Office"), which is presently at 59 Maiden Lane Plaza Level, New
York, NY 10038, with the election to purchase form set forth on the Warrant
Certificate duly completed and executed, with medallion signatures guaranteed by
a member of a medallion guarantee program ("Signatures Guaranteed"), accompanied
by payment in full of the Exercise Price as provided for in Section 2.1 hereof
in effect at the time of such exercise, together with such taxes as are
specified in Section 6.1 hereof, for each Warrant Share with

                                       3
<PAGE>

respect to which such Warrant is being exercised. Such Exercise Price and taxes
shall be paid in full by certified check or money order, payable in United
States currency to the order of the Company. The date on which Warrants are
exercised in accordance with this Section 2.3 is sometimes referred to herein as
the "Date of Exercise" of such Warrants.

       Section 2.4 Issuance of Common Stock. As soon as practicable after the
Date of Exercise of any Warrants, the Company shall issue, or cause the transfer
agent for the Common Stock, if any, to issue, a certificate or certificates for
the number of full shares of Common Stock to which such holder is entitled,
registered in accordance with the instructions set forth in the election to
purchase. All Warrant Shares shall be validly authorized and issued, fully paid,
and nonassessable, and free from all taxes, liens, and charges created by the
Company in respect of the issue thereof. Each person in whose name any such
certificate for shares of Common Stock is issued shall for all purposes be
deemed to have become the holder of record of the Common Stock represented
thereby on the Date of Exercise of the Warrants resulting in the issuance of
such shares, irrespective of the date of issuance or delivery of such
certificate for shares of Common Stock.

       Section 2.5 Certificates for Unexercised Warrants. If less than all of
the Warrants represented by a Warrant Certificate are exercised, the Warrant
Agent shall execute and mail, by first-class mail, within 30 days of the Date of
Exercise, to the registered holder of such Warrant Certificate, or such other
person as shall be designated in the election to purchase, a new Warrant
Certificate representing the number of full Warrants not exercised. In no event
shall a fraction of a Warrant be exercised, and the Warrant Agent shall
distribute no Warrant Certificates representing fractions of Warrants under this
or any other section of this Agreement. Final fractions of shares shall be
treated as provided in Section 3.11 hereof.

       Section 2.6 Reservation of Shares. The Company shall at all times reserve
and keep available for issuance upon the exercise of Warrants a number of its
authorized but unissued shares of Common Stock that will be sufficient to permit
the exercise in full of all outstanding Warrants.

       Section 2.7 Disposition of Proceeds. The Warrant Agent shall account
promptly to the Company with respect to Warrants exercised and concurrently
deliver to the Company all proceeds from such exercise.

       Section 2.8 Cancellation of Warrants. At any time after the Vesting Date,
the Company by action of the Board, may at its option, cancel all, but not less
than all of the Warrants provided that the Company is in compliance with its
obligations under Section 2.2 hereof to register the Warrant Shares under the
Securities Act. Notice of such cancellation shall be promptly given to the
Warrant Agent by the Company and such notice (the "Cancellation Notice") shall
be mailed to all registered holders of Warrant Certificates, specifying a date
(the "Cancellation Date") established by the Board which shall be at least 90
days after the date of such notice. The Cancellation Notice will specify the
Cancellation Date and will also state that the right to exercise the Warrants
will terminate at 5:00 p.m., New York City time on the Cancellation Date. The
Company will also make a prompt public announcement of the determination by the
Board of the Cancellation Date by news release and by notice to any national
securities exchange on which the Warrants are listed for trading.

                                       4
<PAGE>

                                   ARTICLE III

                   ADDITIONAL SECURITIES AND NOTICE PROVISIONS

       Section 3.1 Additional Securities. In addition to the Warrant Shares
issuable upon the exercise of this Warrant as contemplated in Section 2.1 above:

       (a)    In case the Company shall, at any time after the date hereof and
              on or prior to the Date of Exercise (i) declare a dividend or make
              a distribution on the Common Stock in shares of the Common Stock,
              (ii) subdivide the outstanding shares of the Common Stock into a
              greater number of shares, (iii) combine the outstanding shares of
              its Common Stock into a smaller number of shares, or (iv) issue
              any shares of its capital stock by reclassification of the Common
              Stock (including any such reclassification in connection with a
              consolidation or merger of the Company), then upon the exercise of
              a Warrant the holder of such Warrant shall be entitled to receive
              the aggregate number and kind of shares which, if such Warrant had
              been exercised immediately prior to such time, such holder would
              have been entitled to receive by virtue of such dividend,
              subdivision, combination, or reclassification.

       (b)    In case the Company shall, at any time after the date hereof and
              on or prior to the Date of Exercise, issue to all holders of the
              Common Stock rights, options, or warrants to subscribe for or
              purchase the Common Stock (or securities convertible into or
              exchangeable for the Common Stock), and if the same are not issued
              or otherwise provided to the holders of Warrants at such time pro
              rata on a fully-diluted basis as if all warrants, other rights,
              options or convertible securities in respect of Common Stock, and
              as if all such securities were exercised or paid, then upon the
              exercise of the Warrant, the holder of such Warrant exercised
              shall be entitled to receive the aggregate number and kind of
              rights, options, or warrants to subscribe for or purchase the
              Common Stock (or securities convertible into or exchangeable for
              the Common Stock) which if, such holder would have received by
              virtue of such issuance of rights, options, or warrants to
              subscribe for or purchase the Common Stock (or securities
              convertible into or exchangeable for the Common Stock), if such
              Warrant had been exercised immediately prior to such time.

       Section 3.2 Deferral of Adjustments to Warrant Shares. In any case in
which this Article III shall require that an adjustment in the Warrant Shares be
made effective as of a record date for a specified event, the Company may elect
to defer, until the occurrence of such event, issuing to the holders of the
Warrants, if any holder has exercised a Warrant after such record date, the
shares of Common Stock, if any, issuable upon such exercise over and above the
Warrant Shares; provided, however, that the Company shall deliver to such
exercising holder a due bill or other appropriate instrument evidencing such
holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment. All calculations under this Article III shall
be made to the nearest cent or one-hundredth of a share, as the case may be.

       Section 3.3 Adjustment to Number of Warrant Shares. Upon each action set
forth in Section 3.1 that requires an adjustment in the number of Warrant
Shares, each Warrant shall thereupon evidence the right to purchase that number
of Warrant Shares (calculated to the nearest hundredth of a share) obtained by
multiplying the number of shares of Common Stock

                                       5
<PAGE>

purchasable immediately prior, after giving effect to Section 3.1, to such
adjustment upon exercise of the Warrant by the Exercise Price in effect
immediately prior to such adjustment.

       Section 3.4 Reorganizations. In case of any consolidation or merger of
the Company with or into another corporation (other than a merger or
consolidation in which the Company is the continuing corporation and which does
not result in any reclassification of the outstanding shares of Common Stock or
the conversion of such outstanding shares of Common Stock into shares of other
stock or other securities or property) (such actions being hereinafter
collectively referred to as "Mergers"), there shall thereafter be deliverable
upon exercise of any Warrant (in lieu of the number of shares of Common Stock
theretofore deliverable) the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock which would
otherwise have been deliverable upon the exercise of such Warrant would have
been entitled upon such Merger if such Warrant had been exercised in full
immediately prior to such Merger. In case of any Merger, appropriate adjustment,
as determined in good faith by the Board shall be made in the application of the
provisions herein set forth with respect to the rights and interests of Warrant
holders so that the provisions set forth herein shall thereafter be applicable,
as nearly as possible, in relation to any shares or other property thereafter
deliverable upon exercise of Warrants. Any such adjustment shall be made by and
set forth in a supplemental agreement between the Company, or any successor
thereto, and the Warrant Agent and shall for all purposes hereof conclusively be
deemed to be an appropriate adjustment. The Company shall not effect any such
Merger unless upon or prior to the consummation thereof the successor
corporation, or if the Company shall be the surviving corporation in any such
Merger and is not the issuer of the shares of stock or other securities or
property to be delivered to holders of shares of the Common Stock outstanding at
the effective time thereof, then such issuer, shall assume by written instrument
the obligation to deliver to the registered holder of any Warrant Certificate
such shares of stock, securities, cash, or other property as such holder shall
be entitled to purchase in accordance with the foregoing provisions.

       Section 3.5 Verification of Computations. Whenever the Warrant Shares are
adjusted as provided pursuant to Section 3.1 hereof, the Company will promptly
obtain a certificate of a firm of independent public accountants of recognized
standing selected by the Board (who may be the regular auditors of the Company)
setting forth the Warrant Shares as so adjusted and a brief statement of the
facts accounting for such adjustment, and will make available a brief summary
thereof to the holders of the Warrant Certificates, at their addresses listed on
the register maintained for that purpose by the Warrant Agent.

       Section 3.6 Exercise Price Not Less Than Par Value. In no event shall the
Exercise Price be adjusted below the par value per share of the Common Stock.

       Section 3.7 Notice of Certain Actions. In the event the Company shall
publicly announce its intention to:

       (a)   pay any dividend or make any distribution on shares of Common Stock
             in shares of Common Stock or make any other distribution (other
             than regularly scheduled cash dividends which are not in an amount
             per share greater than the most recent such cash dividend) to all
             holders of Common Stock;

                                       6
<PAGE>

       (b)   issue any rights, warrants, or other securities to all holders of
             Common Stock entitling them to purchase any additional shares of
             Common Stock or any other rights, warrants, or other securities;

       (c)   effect any reclassification of its Common Stock (other than a
             reclassification involving merely the subdivision or combination of
             outstanding shares of Common Stock) or Merger (other than a merger
             in which no distribution of securities or other property is made to
             holders of Common Stock); or

       (d)    take any other action which would result in the issuance of
              additional consideration to the holders of Warrants;

then, in each such case, the Company shall cause notice of such proposed action
to be mailed to the Warrant Agent. Such notice shall specify the date on which
the books of the Company shall close, or a record be taken, for determining
holders of Common Stock entitled to receive such stock dividend or other
distribution or such rights or options, or the date on which such
reclassification, reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, dissolution, winding up, or exchange or other action
shall take place or commence, as the case may be, and the date as of which it is
expected that holders of record of Common Stock shall be entitled to receive
securities or other property deliverable upon such action, if any such date has
been fixed. The Company shall cause copies of such notice to be mailed to each
registered holder of a Warrant Certificate not later than 30 days after such
action.

       Section 3.8 Notice of Certain Actions. Whenever any additional
consideration or adjustment is required to be made pursuant to this Article III,
the Company shall cause notice of same to be mailed to the Warrant Agent within
15 days thereafter, such notice to include in reasonable detail (a) the events
precipitating the adjustment, (b) the computation of any such adjustment, and
(c) the Exercise Price and the number of shares or the securities or other
property purchasable upon exercise of each Warrant, after giving effect thereto.
The Warrant Agent shall within 15 days after receipt of such notice from the
Company cause a similar notice to be mailed to each registered holder of a
Warrant Certificate.

       Section 3.9 Warrant Certificate Amendments. Irrespective of any
adjustments pursuant to this Article III, Warrant Certificates theretofore or
thereafter issued need not be amended or replaced, but certificates thereafter
issued shall bear an appropriate legend or other notice of any adjustments.

       Section 3.10 Fractional Shares. The Company shall not be required upon
the exercise of any Warrant to issue fractional shares of Common Stock which may
result from adjustments in accordance with this Article III to the Exercise
Price or number of shares of Common Stock purchasable under each Warrant. If
more than one Warrant is exercised at one time by the same registered holder,
the number of full shares of Common Stock which shall be deliverable shall be
computed based on the number of shares deliverable in exchange for the aggregate
number of Warrants exercised. With respect to any final fraction of a share
called for upon the exercise of any Warrant or Warrants, the Company shall pay a
cash adjustment in respect of such final fraction in an amount equal to the same
fraction of the Current Market Price (as defined below) of a share of Common
Stock calculated in accordance with Section 3.12 hereof.

       Section 3.11 Current Market Price. The "Current Market Price" per share
at any date shall be the average of the "closing prices" for the 30 consecutive
trading days ending on the trading

                                       7
<PAGE>

day immediately preceding the date in question, where the "closing price" on any
day is (a) the last reported sales price regular way, in either case on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading (including, for purposes hereof, the Nasdaq National
Market), if on such date the Common Stock is not listed or admitted to trading
on any national securities exchange, the highest reported bid price for the
Common Stock as furnished by the National Association of Securities Dealers,
Inc. through Nasdaq or a similar organization if Nasdaq is no longer reporting
such information, or (c) if on such date the Common Stock is not listed or
admitted to trading on any national securities exchange and is not quoted by
Nasdaq or any similar organization, as determined by reference to the "pink
sheets" published by National Quotation Bureau or, if not so published, by such
other method of determining market value as the Board shall in good faith from
time to time deem to be fair and such other method shall be conclusive.

       Section 3.12 Right to Adjust Exercise Price and Exercise Deadline. The
Company may at any time, by notice to the Warrant Agent, reduce the Exercise
Price to such price, or extend the Exercise Deadline to such date, as the
Company may set forth in such notice or, following the Vesting Date, upon
receipt of the aggregate exercise price for all outstanding Warrants, deem all
such Warrants to have been exercised. Any such reduction shall remain in effect
for such period as may be set forth in such notice. The Warrant Agent shall
promptly after receipt of any such notice from the Company cause a similar
notice to be mailed to each registered holder of a Warrant Certificate.

                                   ARTICLE IV

                          OTHER PROVISIONS RELATING TO
              RIGHTS OF REGISTERED HOLDERS OF WARRANT CERTIFICATES

       Section 4.1 Rights of Warrant Holders. No Warrant Certificate shall
entitle the registered holder thereof to any of the rights of a stockholder of
the Company, including without limitation the right to vote, to receive
dividends and other distributions, or to receive any notice of, or to attend,
meetings of stockholders or any other proceedings of the Company.

       Section 4.2 Lost, Stolen, Mutilated, or Destroyed Warrant Certificates.
If any Warrant Certificate shall be mutilated, lost, stolen, or destroyed, the
Company in its discretion may direct the Warrant Agent to execute and deliver,
in exchange and substitution for and upon cancellation of a mutilated Warrant
Certificate, or in lieu of or in substitution for a lost, stolen, or destroyed
Warrant Certificate, a new Warrant Certificate for the number of Warrants
represented by the Warrant Certificate so mutilated, lost, stolen, or destroyed
but only upon receipt of evidence of such loss, theft, or destruction of such
Warrant Certificate, and of the ownership thereof, and indemnity, if requested,
all satisfactory to the Company and the Warrant Agent. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges incidental thereto as the
Company or the Warrant Agent may prescribe. Any such new Warrant Certificate
shall constitute an original contractual obligation of the Company, whether or
not the allegedly lost, stolen, mutilated, or destroyed Warrant Certificate
shall be at any time enforceable by anyone.

                                       8
<PAGE>

                                    ARTICLE V

                   SPLIT UP, COMBINATION, EXCHANGE, TRANSFER,
                    AND CANCELLATION OF WARRANT CERTIFICATES

       Section 5.1 Split Up, Combination, Exchange, and Transfer of Warrant
Certificates. Prior to the Exercise Deadline, Warrant Certificates, subject to
the provisions of Section 5.2, may be split up, combined, or exchanged for other
Warrant Certificates representing a like aggregate number of Warrants or may be
transferred in whole or in part. Any holder desiring to split up, combine, or
exchange a Warrant Certificate or Warrant Certificates shall make such request
in writing delivered to the Warrant Agent at its Principal Office and shall
surrender the Warrant Certificate or Warrant Certificates so to be split up,
combined, or exchanged at said office. Subject to any applicable laws, rules, or
regulations restricting transferability, any restriction on transferability that
may appear on a Warrant Certificate in accordance with the terms hereof, or any
"stop-transfer" instructions the Company may give to the Warrant Agent to
implement any such restrictions (which instructions the Company is expressly
authorized to give), transfer of outstanding Warrant Certificates may be
effected by the Warrant Agent from time to time upon the books of the Company to
be maintained by the Warrant Agent for that purpose, upon a surrender of the
Warrant Certificate to the Warrant Agent at its Principal Office, with the
assignment form set forth in the Warrant Certificate duly executed and with
Signatures Guaranteed. Upon any such surrender for split up, combination,
exchange, or transfer, the Warrant Agent shall execute and deliver to the person
entitled thereto a Warrant Certificate or Warrant Certificates, as the case may
be, as so requested. The Warrant Agent shall not be required to effect any split
up, combination, exchange, or transfer which will result in the issuance of a
Warrant Certificate evidencing a fraction of a Warrant. The Warrant Agent may
require the holder to pay a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any split up, combination,
exchange, or transfer of Warrant Certificates prior to the issuance of any new
Warrant Certificate.

       Section 5.2 Cancellation upon Surrender of Warrant Certificates. Any
Warrant Certificate surrendered upon the exercise of Warrants or for split up,
combination, exchange, or transfer, or purchased or otherwise acquired by the
Company, shall be cancelled and shall not be reissued by the Company; and,
except as provided in Section 2.5 hereof in case of the exercise of less than
all of the Warrants evidenced by a Warrant Certificate or in Section 5.1 hereof
in case of a split up, combination, exchange, or transfer, no Warrant
Certificate shall be issued hereunder in lieu of such cancelled Warrant
Certificate. Any Warrant Certificate so cancelled shall be destroyed by the
Warrant Agent unless otherwise directed by the Company.

       Section 5.3 Agreement of Warrant Certificate Holders. Every holder of a
Warrant Certificate by accepting the same consents and agrees with the Company
and the Warrant Agent and with every other holder of a Warrant Certificate that:

       (a)   transfer of the Warrant Certificates shall be registered on the
             books of the Company maintained for that purpose by the Warrant
             Agent only if surrendered at the Principal Office of the Warrant
             Agent, duly endorsed or accompanied by a proper instrument of
             transfer, with Signatures Guaranteed; and

       (b)   prior to due presentment for registration of transfer, the Company
             and the Warrant Agent may deem and treat the person in whose name
             the Warrant Certificate is

                                       9
<PAGE>

             registered as the absolute owner thereof and of the Warrants
             evidenced thereby (notwithstanding any notations of ownership or
             writing on the Warrant Certificates made by anyone other than the
             Company or the Warrant Agent) for all purposes whatsoever, and
             neither the Company nor the Warrant Agent shall be affected by any
             notice to the contrary.

                                   ARTICLE VI

                        PROVISIONS CONCERNING THE WARRANT
                             AGENT AND OTHER MATTERS

       Section 6.1 Payment of Taxes and Charges. The Company will from time to
time promptly pay to the Warrant Agent, or make provisions satisfactory to the
Warrant Agent for the payment of, all taxes and charges that may be imposed by
the United States or any state upon the Company or the Warrant Agent in
connection with the issuance or delivery of shares of Common Stock upon the
exercise of any Warrants, but any transfer taxes in connection with the issuance
of Warrant Certificates or certificates for shares of Common Stock in any name
other than that of the registered holder of the Warrant Certificate surrendered
shall be paid by such registered holder; and, in such case, the Company shall
not be required to issue or deliver any Warrant Certificate or certificate for
shares of Common Stock until such taxes shall have been paid or it has been
established to the Company's satisfaction that no tax is due.

       Section 6.2 Resignation or Removal of Warrant Agent. The Warrant Agent
may resign its duties and be discharged from all further duties and liabilities
hereunder after giving 30 days notice in writing to the Company, except that
such shorter notice may be given as the Company shall, in writing, accept as
sufficient. Upon comparable notice to the Warrant Agent, the Company may remove
the Warrant Agent; provided, however, that in such event the Company shall
appoint a new Warrant Agent, as hereinafter provided, and the removal of the
Warrant Agent shall not be effective until a new Warrant Agent has been
appointed and has accepted such appointment. If the office of Warrant Agent
becomes vacant by resignation or incapacity to act or otherwise, the Company
shall appoint in writing a new Warrant Agent. If the Company shall fail to make
such appointment within a period of 30 days after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Warrant Agent or by the registered holder of any Warrant Certificate, then the
registered holder of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a new Warrant Agent. Any new Warrant Agent
appointed hereunder shall execute, acknowledge, and deliver to the former
Warrant Agent last in office, and to the Company, an instrument accepting such
appointment under substantially the same terms and conditions as are contained
herein, and thereupon such new Warrant Agent without any further act or deed
shall become vested with the rights, powers, duties, and responsibilities of the
Warrant Agent and the former Warrant Agent shall cease to be the Warrant Agent;
but if for any reason it becomes necessary or expedient to have the former
Warrant Agent execute and deliver any further assurance, conveyance, act, or
deed, the same shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the former Warrant Agent.

       Section 6.3 Notice of Appointment. Not later than the effective date of
the appointment of a new Warrant Agent the Company shall cause notice thereof to
be mailed to the former Warrant

                                       10
<PAGE>

Agent and the transfer agent for the Common Stock, and shall forthwith cause a
copy of such notice to be mailed to each registered holder of a Warrant
Certificate. Failure to mail such notice, or any defect contained therein, shall
not affect the legality or validity of the appointment of the successor Warrant
Agent.

       Section 6.4 Merger of Warrant Agent. Any company into which the Warrant
Agent may be merged or with which it may be consolidated, or any company
resulting from any merger or consolidation to which the Warrant Agent shall be a
party, shall be the successor Warrant Agent under this Agreement without further
act, provided that such company would be eligible for appointment as a successor
Warrant Agent under the provisions of Section 6.2 hereof. Any such successor
Warrant Agent may adopt the prior countersignature of any predecessor Warrant
Agent and distribute Warrant Certificates countersigned but not distributed by
such predecessor Warrant Agent, or may countersign the Warrant Certificates in
its own name.

       Section 6.5 Company Responsibilities. The Company agrees that it shall
(a) pay the Warrant Agent reasonable remuneration for its services as Warrant
Agent hereunder and will reimburse the Warrant Agent upon demand for all
expenses, advances, and expenditures that the Warrant Agent may reasonably incur
in the execution of its duties hereunder (including fees and expenses of its
counsel); and (b) perform, execute, acknowledge, and deliver or cause to be
performed, executed, acknowledged, and delivered all further and other acts,
instruments, and assurances as may reasonably be required by the Warrant Agent
for the carrying out or performing by the Warrant Agent of the provisions of
this Agreement.

       Section 6.6 Certification for the Benefit of Warrant Agent. Whenever in
the performance of its duties under this Agreement the Warrant Agent shall deem
it necessary or desirable that any matter be proved or established or that any
instructions with respect to the performance of its duties hereunder be given by
the Company prior to taking or suffering any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established, or such instructions may be
given, by a certificate or instrument signed by the Chairman, any Vice Chairman,
the President, any Vice President, the Secretary, any Assistant Secretary, the
Chief Financial Officer, Treasurer, or any Assistant Treasurer of the Company
and delivered to the Warrant Agent. Such certificate or instrument may be relied
upon by the Warrant Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement; but in its discretion the Warrant Agent
may in lieu thereof accept other evidence of such matter or may require such
further or additional evidence as it may deem reasonable.

       Section 6.7 Books and Records. The Warrant Agent shall maintain the
Company's books and records for registration and registration of transfer of the
Warrant Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Warrant Certificates, the number of
Warrants evidenced on its face by each Warrant Certificate, and the date of each
Warrant Certificate.

       Section 6.8 Liability of Warrant Agent. The Warrant Agent shall be liable
hereunder for its own negligence or willful misconduct. The Warrant Agent shall
act hereunder solely as an agent for the Company and its duties shall be
determined solely by the provisions hereof. The Warrant Agent shall not be
liable for or by reason of any of the statements of fact or recitals contained
in this Agreement or in the Warrant Certificates (except its countersignature
thereof) or be required

                                       11
<PAGE>

to verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only. The Warrant Agent will not incur any
liability or responsibility to the Company or to any holder of any Warrant
Certificate for any action taken, or any failure to take action, in reliance on
any notice, resolution, waiver, consent, order, certificate, or other paper,
document, or instrument reasonably believed by the Warrant Agent to be genuine
and to have been signed, sent, or presented by the proper party or parties. The
Warrant Agent shall not be under any responsibility in respect of the validity
of this Agreement or the execution and delivery hereof by the Company or in
respect of the validity or execution of any Warrant Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Warrant Certificate; nor shall it be responsible for the making of any
adjustment required under the provisions of Article III hereof or responsible
for the manner, method, or amount of any such adjustment or the facts that would
require any such adjustment; nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
shares of Common Stock or other securities to be issued pursuant to this
Agreement or any Warrant Certificate or as to whether any shares of Common Stock
or other securities will when issued be validly authorized and issued and fully
paid and nonassessable.

       Section 6.9 Use of Attorneys, Agents, and Employees. The Warrant Agent
may execute and exercise any of the rights or powers hereby vested in it or
perform any duty hereunder either itself or by or through its attorneys, agents,
or employees.

       Section 6.10 Indemnification. The Company agrees to indemnify the Warrant
Agent and save it harmless against any and all losses, expenses, or liabilities,
including judgments, costs, and counsel fees arising out of or in connection
with its agency under this Agreement, except as a result of the negligence or
willful misconduct of the Warrant Agent.

       Section 6.11 Acceptance of Agency. The Warrant Agent hereby accepts the
agency established by this Agreement and agrees to perform the same upon the
terms and conditions herein set forth.

       Section 6.12 Changes to Agreement. The Warrant Agent may, without the
consent or concurrence of any registered holder of a Warrant Certificate, by
supplemental agreement or otherwise, join with the Company in making any changes
or corrections in this Agreement that they shall have been advised by counsel
(a) are required to cure any ambiguity or to correct any defective or
inconsistent provision or clerical omission or mistake or manifest error herein
contained, (b) add to the covenants and agreements of the Company or the Warrant
Agent in this Agreement such further covenants and agreements thereafter to be
observed, or (c) result in the surrender of any right or power reserved to or
conferred upon the Company or the Warrant Agent in this Agreement, but which
changes or corrections do not or will not adversely affect, alter, or change the
rights, privileges, or immunities of the registered holders of Warrant
Certificates.

       Section 6.13 Assignment. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns.

       Section 6.14 Successor to Company. The Company will not merge or
consolidate with or into any other corporation or sell or otherwise transfer its
property, assets, and business substantially as an entirety to a successor
corporation unless the corporation resulting from such

                                       12
<PAGE>

merger, consolidation, sale, or transfer (if not the Company) shall expressly
assume, by supplemental agreement satisfactory in form and substance to the
Warrant Agent and delivered to the Warrant Agent, the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Company.

       Section 6.15 Notices. Any notice or demand required by this Agreement to
be given or made by the Warrant Agent or by the registered holder of any Warrant
Certificate to or on the Company shall be sufficiently given if made in writing
and shall be mailed by certified mail, return receipt requested or sent by
Federal Express, Express Mail, or similar overnight delivery or courier service
or delivered (in person or by telecopy, telex, or similar telecommunications
equipment) against receipt to the party to whom it is to be given as follows:

             if to the Company:

             Atlantic Coast Entertainment Holdings, Inc.
             c/o Sands Hotel & Casino
             Indiana Avenue & Brighton Park
             Atlantic City, New Jersey 08401
             Phone: (609) 441-4432
             Attention: Douglas S. Niethold.

             If to the Warrant Agent:

             American Stock Transfer and Trust Company
             59 Maiden Lane
             Plaza Level
             New York, NY 10038
             Phone: 1-800-937-5449
             Attention: Office of General Counsel

Any notice or demand required by this Agreement to be given or made by the
Company or the Warrant Agent to or on the registered holder of any Warrant
Certificate shall be sufficiently given or made, whether or not such holder
receives the notice, if sent by first-class or registered mail, postage prepaid,
addressed to such registered holder at his last address as shown on the books of
the Company maintained by the Warrant Agent. Otherwise such notice or demand
shall be deemed given when received by the party entitled thereto.

       Section 6.16 Defects in Notice. Failure to file any certificate or notice
or to mail any notice, or any defect in any certificate or notice pursuant to
this Agreement, shall not affect in any way the rights of any registered holder
of a Warrant Certificate or the legality or validity of any adjustment made
pursuant to Section 3.1 hereof, or any transaction giving rise to any such
adjustment, or the legality or validity of any action taken or to be taken by
the Company.

       Section 6.17 Governing Law. This Agreement and the Warrant Certificates
shall be governed by and construed in accordance with the laws of the State of
New York, without regard

                                       13
<PAGE>

to principles of conflicts of law. Each of the parties submits to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement or
any of the transactions contemplated hereby, and hereby waives, to the maximum
extent permitted by law, any objection, including an objections based on forum
non conveniens, to the bringing of any such proceeding in such jurisdictions.

       Section 6.18 Standing. Nothing in this Agreement expressed and nothing
that may be implied from any of the provisions hereof is intended, or shall be
construed, to confer upon, or give to, any person or corporation other than the
Company, the Warrant Agent, and the registered holders of the Warrant
Certificates any right, remedy, or claim under or by reason of this Agreement or
of any covenant, condition, stipulation, promise, or agreement contained herein;
and all covenants, conditions, stipulations, promises, and agreements contained
in this Agreement shall be for the sole and exclusive benefit of the Company and
the Warrant Agent and their successors, and the registered holders of the
Warrant Certificates.

       Section 6.19 Headings. The descriptive headings of the articles and
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

       Section 6.20 Counterparts. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original;
but such counterparts shall together constitute but one and the same instrument.

       Section 6.21 Conflict of Interest. The Warrant Agent and any stockholder,
director, officer, or employee of the Warrant Agent may buy, sell, or deal in
any of the Warrant Certificates or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be interested
or contract with or lend money to the Company or otherwise act as fully and
freely as though the Warrant Agent were not Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company, including, without limitation, as trustee under any
indenture or as transfer agent for any securities of the Company or for any
other entity.

       Section 6.22 Availability of the Agreement. The Warrant Agent shall keep
copies of this Agreement available for inspection by holders of Warrants during
normal business hours at its Corporate Trust Department. Copies of this
Agreement may be obtained upon written request addressed to:

                               Douglas S. Niethold
                            c/o Sands Hotel & Casino
                         Indiana Avenue & Brighton Park
                         Atlantic City, New Jersey 08401
                                 (609) 441-4432

                                       14
<PAGE>

       IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the day and year first above written.

                            ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.

                            BY:  /s/ Douglas S. Niethold
                                 ----------------------------------------------
                            Name: Douglas S. Niethold
                            Title: Vice-President, Finance, Chief Financial
                                   Officer, and Principal Accounting Officer

                            AMERICAN STOCK TRANSFER AND TRUST COMPANY

                            BY: _______________________________________________
                            Name:
                            Title:

<PAGE>

                                    EXHIBIT A

                          [FORM OF WARRANT CERTIFICATE]

                                       NO.

                         CERTIFICATE FOR _____ WARRANTS

                   ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.
                    COMMON STOCK PURCHASE WARRANT CERTIFICATE

       THIS CERTIFIES that ____________________________________ or registered
assigns is the registered holder (the "Registered Holder") of the number of
Warrants set forth above, each of which represents the right to purchase .275
fully paid and nonassessable share of Common Stock, par value $.01 per share
(the "Common Stock"), of Atlantic Coast Entertainment Holdings, Inc., (the
"Company"), a Delaware corporation, at the initial exercise price (the "Exercise
Price") of $.01, at any time after the shares of Common Stock issuable upon
exercise of the Warrants evidenced hereby have been registered under the
Securities Act of 1933, as amended, or such other action as may be required by
Federal or state law relating to the issuance or distribution of securities
shall have been taken, but not before the Vesting Date hereinafter referred to,
and not after the Exercise Deadline hereinafter referred to, by surrendering
this Warrant Certificate, with the form of election to purchase set forth hereon
duly executed with signatures guaranteed as provided below, at the office
maintained pursuant to the Warrant Agreement hereinafter referred to for that
purpose by American Stock Transfer and Trust Company, or its successor as
warrant agent (any such warrant agent being herein called the "Warrant Agent"),
and by paying in full the Exercise Price, plus transfer taxes, if any. Payment
of the Exercise Price shall be made in United States currency, by certified
check or money order payable to the order of the Company. Capitalized terms used
herein, but not otherwise defined shall have the meaning set forth in the
Warrant Agreement, (the "Warrant Agreement") dated as of July 22, 2004 by and
between the Company and the Warrant Agent.

       Upon certain events provided for in the Warrant Agreement, the number of
shares of Common Stock issuable upon the exercise of each Warrant is required to
be adjusted.

       Each Warrant may be exercised at any time after the earliest to occur of
the following events (the first date on which any such event occurs being
referred to as the "Vesting Date") :

       (a)   the payment of the entire principal amount and accrued interest on
             any of the Company's outstanding 3% Notes due 2008 issued by the
             Company (the "New Notes"), pursuant to and in accordance with the
             terms thereof whether such payment
<PAGE>

             is in the form of cash or by issuance of shares of Common Stock to
             the holder thereof in lieu of cash payment or any conversion of
             any of such notes into common stock pursuant to and in accordance
             with the terms thereof;

       (b)   a determination by a majority of the board of directors of the
             Company (the "Board") (including at least one independent director)
             that the Warrants may be exercised; and

       (c)   payment in full by the Parent of principal and accrued, but unpaid
             interest on all outstanding 11% Notes due 2005 issued by the Parent
             which have not been exchanged for the New Notes in the Transaction.

       Promptly after the Vesting Date, the Company shall send written notice to
the Warrant Agent that such Vesting Date has occurred (the "Vesting Notice").
The Warrant Agent shall within ten days after receipt of the Vesting Notice
cause a similar notice to be mailed to each registered holder of a Warrant
Certificate.

       The latest time and date at which the Warrants may be exercised (the
"Exercise Deadline") shall be 5:00 P.M. New York City time on the earlier of (i)
the date that is the seventh anniversary of the completion of the Distribution;
or (ii) the Cancellation Date (as defined below).

       At any time after the Vesting Date, the Company by action of the Board,
may at its option, cancel all, but not less than all of the Warrants provided
that the Company uses reasonable efforts to register the Warrant Shares under
the Securities Act. Notice of such cancellation shall be promptly given to the
Warrant Agent by the Company and such notice (the "Cancellation Notice") shall
be mailed to all registered holders of Warrant Certificates, not less than 90
days prior to the date established by the Board (the "Cancellation Date"). The
Cancellation Notice will specify the Cancellation Date and will also state that
the right to exercise the Warrants will terminate at 5:00 p.m., New York City
time on the Cancellation Date. The Company will also make a prompt public
announcement by news release and by notice to any national securities exchange
on which the Warrants are listed for trading.

       After the Exercise Deadline, all Warrants evidenced hereby shall
thereafter become void.

       Prior to the Exercise Deadline, subject to any applicable laws, rules, or
regulations restricting transferability and to any restriction on
transferability that may appear on this Warrant Certificate in accordance with
the terms of the Warrant Agreement, the Registered Holder shall be entitled to
transfer this Warrant Certificate in whole or in part upon surrender of this
Warrant Certificate at the office of the Warrant Agent maintained for that
purpose with the form of assignment set forth hereon duly executed, with
signatures guaranteed by a member firm of a national securities exchange, a
commercial bank (not a savings bank or a savings and loan association) or a
trust company located in the United States, a member of the National Association
of Securities Dealers, Inc., or other eligible guarantor institution which is a

<PAGE>

participant in a signature guarantee program (as such terms are defined in Reg.
240.17Ad-15 under the Securities Exchange Act of 1934, as amended) acceptable to
the Warrant Agent. Upon any such transfer, a new Warrant Certificate or Warrant
Certificates representing the same aggregate number of Warrants will be issued
in accordance with instructions in the form of assignment.

       Upon the exercise of less than all of the Warrants evidenced by this
Warrant Certificate, there shall be issued to the Registered Holder a new
Warrant Certificate in respect of the Warrants not exercised.

       Prior to the Exercise Deadline, the Registered Holder shall be entitled
to exchange this Warrant Certificate, with or without other Warrant
Certificates, for another Warrant Certificate or Warrant Certificates for the
same aggregate number of Warrants, upon surrender of this Warrant Certificate at
the office maintained for such purpose by the Warrant Agent.

       No fractional shares will be issued upon the exercise of Warrants. As to
any final fraction of a share which the registered holder of one or more Warrant
Certificates, the rights under which are exercised in the same transaction,
would otherwise be entitled to purchase upon such exercise, the Company shall
pay the cash value thereof determined as provided in the Warrant Agreement.

       This Warrant Certificate is issued under and in accordance with the
Warrant Agreement and is subject to the terms and provisions contained in said
Warrant Agreement, to all of which terms and provisions the Registered Holder
consents by acceptance hereof.

       This Warrant Certificate shall not entitle the registered holder of such
Certificate to any of the rights of a stockholder of the Company, including,
without limitation, the right to vote, to receive dividends and other
distributions, or to attend or receive any notice of meetings of stockholders or
any other proceedings of the Company.

       This Warrant Certificate shall not be valid for any purpose until it
shall have been countersigned by the Warrant Agent.

<PAGE>

       IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its facsimile corporate seal.

                                    ATLANTIC COAST ENTERTAINMENT HOLDINGS,
                                    INC.

                                    BY: ________________________________________

                                        Vice-President

Seal                                    Attest:

                                        _______________________________________

                                        Secretary

Countersigned:
                                    AMERICAN STOCK TRANSFER AND TRUST COMPANY

                                    BY: ________________________________________

Dated

<PAGE>

                                    [FORM OF]
                              ELECTION TO PURCHASE

     The undersigned hereby irrevocably elects to exercise __________ of the
Warrants represented by this Warrant Certificate and to purchase the shares of
Common Stock issuable upon the exercise of said Warrants, and requests that
certificates for such shares be issued and delivered as follows:

ISSUE TO:

                                     (NAME)

                          (ADDRESS, INCLUDING ZIP CODE)

              (SOCIAL SECURITY OR OTHER TAX IDENTIFICATION NUMBER)

DELIVER TO:

                                     (NAME)

at

                          (ADDRESS, INCLUDING ZIP CODE)

       If the number of Warrants hereby exercised is less than all the Warrants
represented by this Warrant Certificate, the undersigned requests that a new
Warrant Certificate representing the number of full Warrants not exercised be
issued and delivered as set forth below.

       In full payment of the purchase price with respect to the Warrants
exercised and transfer taxes, if any, the undersigned hereby tenders payment of
$_________ by certified check or money order payable in United States currency
to the order of the Company.

Dated____________________, 20__

Name of Warrant Holder:
                          -----------------------------------------------------
Address:
            -------------------------------------------------------------------

<PAGE>

-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

Signature:
              -----------------------------------------------------------------

<PAGE>

                              [FORM OF] ASSIGNMENT

       FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto the Assignee named below all of the rights of the undersigned represented
by the within Warrant Certificate, with respect to the number of Warrants set
forth below:

NAME OF ASSIGNEE                   ADDRESS                    NO. OF WARRANTS
----------------                   -------                    ----------------

and does hereby irrevocably constitute and appoint ___________ Attorney to make
such transfer on the books of Atlantic Coast Entertainment Holdings, Inc.
maintained for that purpose, with full power of substitution in the premises.

Dated: ___.

                                             -----------------------------------
                                                          Signature

                                             -----------------------------------
SIGNATURE(S) GUARANTEED                                   Signature

                                              NOTICE: The signature(s) on this
                                              assignment must correspond with
                                              the name(s) as written upon the
                                              face of the Certificate, in every
                                              particular, without alteration or
                                              enlargement or any change
By  ________________________________________  whatever.

    THE SIGNATURE(S) SHOULD BE GUARANTEED BY
    AN ELIGIBLE GUARANTOR INSTITUTION.
    (Banks, Stock Brokers, Savings and Loan
    Associations, and Credit Unions) WITH
    MEMBERSHIP IN AN APPROVED SIGNATURE
    GUARANTEE MEDALLION PROGRAM PURSUANT TO
    S.E.C. RULE 17Ad-15.<PAGE>

                          REGISTRATION RIGHTS AGREEMENT

                                 by and between

                   Atlantic Coast Entertainment Holdings, Inc.

                                       And

                          The Other Signatories Hereto

                            Dated as of July 22, 2004

<PAGE>

                                TABLE OF CONTENTS

                  This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               -----
<S>      <C>     <C>                                                                                          <C>
ARTICLE I   SALE OF SHARES AND CLOSING............................................................................1
         Section 1.1  PURCHASE AND SALE...........................................................................1
ARTICLE II  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................2
         Section 2.1  CORPORATE EXISTENCE OF THE COMPANY..........................................................2
         Section 2.2  AUTHORITY...................................................................................2
         Section 2.3  CAPITAL AND DEBT STRUCTURE..................................................................2
         Section 2.4  NO CONFLICTS................................................................................2
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................................3
         Section 3.1  ORGANIZATION OF PURCHASER...................................................................3
         Section 3.2  AUTHORITY...................................................................................3
         Section 3.3  NO CONFLICTS................................................................................3
         Section 3.4  CASINO AUTHORIZATION........................................................................4
ARTICLE IV  COVENANTS OF THE COMPANY..............................................................................4
         Section 4.1  PIGGY-BACK REGISTRATION.....................................................................4
         Section 4.2  DEMAND REGISTRATION.........................................................................5
         Section 4.3  REGISTRATIONS ON FORM S-3...................................................................5
         Section 4.4  EFFECTIVENESS...............................................................................5
         Section 4.5  INDEMNIFICATION BY THE COMPANY..............................................................6
         Section 4.6  INDEMNIFICATION BY HOLDERS OF REGISTRABLE SHARES............................................8
         Section 4.7  EXCHANGE ACT REGISTRATION...................................................................9
         Section 4.8  DAMAGES....................................................................................10
         Section 4.9  FURTHER OBLIGATIONS OF THE COMPANY.........................................................10
         Section 4.10  EXPENSES..................................................................................12
         Section 4.11  TRANSFERABILITY...........................................................................12
         Section 4.12  MERGERS, ETC..............................................................................12
ARTICLE V   DEFINITIONS..........................................................................................12
         Section 5.1  DEFINITIONS................................................................................13
ARTICLE VI  MISCELLANEOUS........................................................................................15
         Section 6.1  ENTIRE AGREEMENT...........................................................................15
         Section 6.2  WAIVER.....................................................................................15
         Section 6.3  AMENDMENT..................................................................................15
         Section 6.4  NO THIRD PARTY BENEFICIARY.................................................................15
         Section 6.5  ASSIGNMENT; BINDING EFFECT.................................................................15
         Section 6.6  HEADINGS...................................................................................15
         Section 6.7  INVALID PROVISIONS.........................................................................16
         Section 6.8  GOVERNING LAW..............................................................................16
         Section 6.9  COUNTERPARTS...............................................................................16
</TABLE>

<PAGE>

         This REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
_______, 2004 is made and entered into by and between Atlantic Coast
Entertainment Holdings, Inc., a Delaware corporation (the "Company"), and the
other signatories listed hereto (collectively the "Holders"). Capitalized terms
used herein, but not otherwise defined shall have the meaning set forth in the
Registration Statement filed on Form S-4, dated as of _______, 2004, with
Registration No. 333-110484 and the Registration Statement on Form S-4, dated as
of _______, 2004, with the Registration number 333-110485, as amended.

         WHEREAS, pursuant to the Transaction, the Company shall distribute (the
"Distribution"), pro rata to the stockholders of GB Holdings, Inc. ("Parent")
(i) warrants (the "Warrants") to purchase an aggregate of 2,750,000 shares (the
"Warrant Shares") of common stock, par value $.01 per share (the "Common
Stock"), of the Company; or (ii) 2,750,000 shares (the "Shares") of Common
Stock;

         WHEREAS, pursuant to the Transaction, the Company shall distribute New
Notes to holders of Existing Notes that elect to tender such Notes for exchange
and following the election of the holders of a majority of principal amount of
the New Notes outstanding, the New Notes will be payable in or convertible into
up to 7,250,000 shares of Common Stock;

         WHEREAS, the Holders are stockholders of Parent and will receive
Warrants or Common Stock as part of the Distribution;

         WHEREAS, the Holders own Existing Notes and if they tender for exchange
they will receive New Notes which will be payable in or convertible into up to
4,250,000 shares (the "Note Conversion Shares") of Common Stock;

         WHEREAS, the Holders desire, and the Company agrees to grant to the
Holders, certain registration rights with respect to the Warrants, the Warrant
Shares, the Shares, and the Note Conversion Shares that they receive in the
Transaction.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                                    ARTICLE I
                       DISTRIBUTION OF SHARES AND WARRANTS

                  Section 1.1 RIGHTS GRANTED. The Company agrees that, upon
consummation of the Transaction, the Holders shall be entitled to the
registration rights described in Article IV herein.

<PAGE>

                                   ARTICLE II
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

                  The Company hereby represents and warrants to The Holders as
follows:

                  Section 2.1 CORPORATE EXISTENCE OF THE COMPANY. The Company is
a corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware. The Company has full corporate power and
authority to execute and deliver this Agreement and to perform the Company's
obligations hereunder and to consummate the transactions contemplated hereby.

                  Section 2.2 AUTHORITY. The execution and delivery by the
Company of this Agreement, and the performance by such party of its obligations
hereunder, have been duly and validly authorized by the Board of Directors of
the Company, no other corporate action on the part of the Company or its
stockholders being necessary. This Agreement has been duly and validly executed
and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.

                  Section 2.3 CAPITAL STRUCTURE. The Shares, upon issuance as
contemplated herein, the Warrant Shares, when issued upon exercise of the
Warrants in accordance with their terms, and the Note Conversion Shares, when
issued upon payment or conversion of the New Notes, will be duly authorized,
validly issued, fully paid and nonassessable.

                  Section 2.4 NO CONFLICTS. The execution and delivery by the
Company of this Agreement do not, and the performance by the Company of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not:

                        (a) conflict with or result in a violation or breach of
any of the terms, conditions or provisions of the certificate of incorporation
or by-laws (or other comparable corporate charter documents) of the Company;

                        (b) conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to the Company or any of
its Assets and Properties (other than such conflicts, violations or breaches (i)
which will not in the aggregate adversely affect the validity or enforceability
of this Agreement or have a material adverse effect on the Business or Condition
of the Company or (ii) as would occur solely as a result of the identity or the
legal or regulatory status of the Holders or any of its Affiliates); or

                        (c)(i) conflict with or result in a violation or breach
of, (ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require the Company to obtain

                                       2
<PAGE>

any consent, approval or action of, make any filing with or give any notice to
any Person as a result or under the terms of, (iv) result in or give to any
Person any right of termination, cancellation, acceleration or modification in
or with respect to, or (v) result in the creation or imposition of any Lien upon
the Company or any of its Assets and Properties under, any Contract or License
to which the Company is a party or by which any of its Assets and Properties is
bound.

                                  ARTICLE III
                 REPRESENTATIONS AND WARRANTIES OF THE HOLDERS

                  Each of the Holders severally represents and warrants to the
Company as follows:

                  Section 3.1 ORGANIZATION OF THE HOLDERS. Such Holder is duly
organized, validly existing and in good standing under the Laws of the state of
its organization. Such Holder is duly authorized to execute and deliver this
Agreement and to perform such Holder's obligations hereunder and to consummate
the transactions contemplated hereby.

                  Section 3.2 AUTHORITY. The execution and delivery by such
Holder of this Agreement, and the performance by such Holder of its obligations
hereunder, have been duly and validly authorized, no other action on the part of
such Holder being necessary. This Agreement has been duly and validly executed
and delivered by such Holder and constitutes a legal, valid and binding
obligation of the Holder enforceable against the Holder in accordance with its
terms.

                  Section 3.3 NO CONFLICTS. The execution and delivery by such
Holder of this Agreement does not, the performance by such Holder of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not:

                        (a) conflict with or result in a violation or breach of
any of the terms, conditions or provisions of its operating agreement (or other
comparable organizational documents) of such Holder;

                        (b) conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to such Holder or any of
its Assets and Properties (other than such conflicts, violations or breaches (i)
which will not in the aggregate adversely affect the validity or enforceability
of this Agreement or have a material adverse effect on the Business or Condition
of such Holder or (ii) as would occur solely as a result of the identity or the
legal or regulatory status of the Company or any of its Affiliates); or

                        (c) (i) conflict with or result in a violation or breach
of, (ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require such Holder to obtain any consent, approval or action of,
make any filing with or give any notice to any Person as a result or under the
terms of, (iv) result in or give to any Person any right of termination,
cancellation, acceleration or modification in or with respect to, or (v) result
in the creation or imposition of

                                       3
<PAGE>

any Lien upon such Holder or any of its Assets and Properties under, any
Contract or License to which such Holder is a party or by which any of its
Assets and Properties is bound.

                  Section 3.4 CASINO AUTHORIZATION. To the extent required, each
of the Holders has obtained Plenary Qualification from the New Jersey Casino
Control Commission.

                                   ARTICLE IV
                            COVENANTS OF THE COMPANY

                  The Company covenants and agrees with the Holders that the
Company will comply with the covenants and provisions of this ARTICLE IV, except
to the extent the Holders may otherwise consent in writing:

                  Section 4.1 PIGGY-BACK REGISTRATION. If at any time the
Company shall determine to register for its own account or the account of others
under the Securities Act (including pursuant to a demand for registration made
by any stockholder of the Company) any of its equity securities, or warrants to
purchase equity securities, other than on Form S-4 or Form S-8 or their then
equivalents relating to shares of Common Stock to be issued solely in connection
with any acquisition of any entity or business or shares of Common Stock
issuable in connection with stock option or other employee benefit plans, it
shall send to each holder of Registrable Securities as reflected on the books
and records of or maintained on behalf of the Company (each a "holder"),
including each holder who has the right to acquire, who is entitled to
registration rights under this SECTION 4.1 written notice of such determination
and, if within fifteen (15) days after receipt of such notice, such holder shall
so request in writing, the Company shall use its reasonable efforts to include
in such registration statement all or any part of the Registrable Securities
such holder requests to be registered, except that if, in connection with any
underwritten public offering of the Company the managing underwriter shall
impose a limitation on the number of shares of such Common Stock which may be
included in the registration statement because, in its judgment, such limitation
is necessary to effect an orderly public distribution, then the Company shall be
obligated to include in such registration statement only such limited portion of
the Registrable Securities with respect to which such holder has requested
inclusion hereunder. Any exclusion of Registrable Securities shall be made pro
rata among the holders seeking to include Registrable Securities, in proportion
to the number of Registrable Securities sought to be included by such holders;
provided, however, that the Company shall not exclude any Registrable Securities
unless the Company has first excluded all outstanding securities which are not
entitled by right to inclusion of securities in such registration statement
pursuant to this ARTICLE IV. No incidental right under this SECTION 4.1 shall be
construed to limit any registration required under SECTION 4.2. The obligations
of the Company to a holder under this SECTION 4.1 may be waived only by such
Holder. Anything herein to the contrary notwithstanding, no other registration
rights (demand or piggy-back) with respect to any debt or equity securities
shall be granted to any Person without the consent of the Holders.

                                       4
<PAGE>

                  Section 4.2 DEMAND REGISTRATION. If at any time and from time
to time after the date hereof holders of a majority of Registrable Securities
shall notify the Company in writing that it or they intend to offer or cause to
be offered for public sale Registrable Securities held by such holders, which
shares constitute at least twenty percent (20%) of the Registrable Securities of
any class, type or series, then the Company will so notify all holders of
Registrable Securities, including all holders who have a right to acquire
Registrable Securities. Upon written request of any holder given within fifteen
(15) days after the receipt by such holder from the Company of such
notification, the Company will use its best efforts to cause such of the
Registrable Securities as may be requested by any holder thereof (including the
holder or holders giving the initial notice of intent to offer) to be registered
under the Securities Act as expeditiously as possible. In connection with any
request by any holder of Registrable Securities for registration thereof
pursuant to this SECTION 4.2, the Company shall have the right (to be exercised
not more than one time in any 365 day period) to defer the filing of a
registration statement with the Commission for up to 30 days after such filing
would otherwise be required hereunder if the Company shall furnish to the
holders requesting such registration a certificate approved by the Board of
Directors stating that, in the good faith judgment of the Company, it would be
materially detrimental to the interests of the Company for such registration
statement to be filed at such time.

                  Section 4.3 REGISTRATIONS ON FORM S-3. In addition to the
rights provided the holders of Registrable Securities in SECTIONS 4.1 and 4.2,
if the registration of Registrable Securities under the Securities Act can be
effected on Form S-3 (or any similar form promulgated by the Commission), then
upon the written request of one or more holders of Registrable Securities for
the registration of Registrable Securities held by such holders, the Company
will so notify each holder of Registrable Securities, including each holder who
has a right to acquire Registrable Securities, and then will, as expeditiously
as possible, use its best efforts to effect qualification and registration under
the Securities Act on Form S-3 of all or such portion of the Registrable
Securities as the holder or holders shall specify in the initial request to the
Company or upon written request of a holder to the Company given within fifteen
(15) days after the receipt by the holder from the Company of such notification.

                  Section 4.4 EFFECTIVENESS. The Company will use its best
efforts to maintain the effectiveness for up to 90 days (or such shorter period
of time as the underwriters need to complete the distribution of the registered
offering, or one year in the case of a "shelf" registration statement on Form
S-3) of any registration statement pursuant to which any of the Registrable
Securities are being offered, and from time to time will use reasonable efforts
to amend or supplement such registration statement and the prospectus contained
therein to the extent necessary to comply with the Securities Act and any
applicable state securities statute or regulation. The Company will also provide
each holder of Registrable Securities with as many copies of the prospectus
contained in any such registration statement as it may reasonably request.

                                       5
<PAGE>

                  Section 4.5 INDEMNIFICATION BY THE COMPANY. (a) In the event
that the Company registers any of the Registrable Securities under the
Securities Act, the Company will indemnify and hold harmless each holder and
each underwriter of the Registrable Securities (including their officers,
directors, affiliates and partners) so registered (including any broker or
dealer through whom such shares may be sold) and each Person, if any, who
controls such holder or any such underwriter within the meaning of Section 15 of
the Securities Act from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them become
subject under the Securities Act, applicable state securities laws or under any
other statute or at common law or otherwise, as incurred, and, except as
hereinafter provided, will reimburse each such holder, each such underwriter and
each such controlling Person, if any, for any legal or other expenses reasonably
incurred by them or any of them in connection with investigating or defending
any actions whether or not resulting in any liability, as incurred, insofar as
such losses, claims, damages, expenses, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement, in any preliminary or amended
preliminary prospectus or in the final prospectus (or the registration statement
or prospectus as from time to time amended or supplemented by the Company) or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or any violation by the Company of any rule
or regulation promulgated under the Securities Act or any state securities laws
applicable to the Company and relating to action or inaction required of the
Company in connection with such registration, unless (i) such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or amended preliminary prospectus or final
prospectus in reliance upon and in conformity with information furnished in
writing to the Company in connection therewith by any such holder of Registrable
Securities (in the case of indemnification of such holder), any such underwriter
(in the case of indemnification of such underwriter) or any such controlling
Person (in the case of indemnification of such controlling Person) expressly for
use therein, or unless (ii) in the case of a sale directly by such holder of
Registrable Securities (including a sale of such Registrable Securities through
any underwriter retained by such holder of Registrable Securities to engage in a
distribution solely on behalf of such holder of Registrable Securities), such
untrue statement or alleged untrue statement or omission or alleged omission was
contained in a preliminary prospectus and corrected in a final or amended
prospectus copies of which were delivered to such holder of Registrable
Securities or such underwriter on a timely basis, and such holder of Registrable
Securities failed to deliver a copy of the final or amended prospectus at or
prior to the confirmation for the sale of the Registerable Shares to the person
asserting any such loss, claim, damage or liability in any case where such
delivery is required by the Securities Act.

                        (b) Promptly after receipt by any holder of Registrable
Securities, any underwriter or any controlling Person, of notice of the
commencement of any action in respect of which indemnity may be sought against
the Company, such holder of Registrable Securities, or such underwriter or such
controlling person, as the case may be, will notify the Company in writing of
the commencement thereof (provided, that failure by any such person to so notify
the

                                       6
<PAGE>

Company shall not relieve the Company from any liability it may have hereunder
to any other Person entitled to claim indemnity or contribution hereunder) and,
subject to the provisions hereinafter stated, the Company shall be entitled to
assume the defense of such action (including the employment of counsel, who
shall be counsel reasonably satisfactory to such holder of Registrable
Securities, such underwriter or such controlling Person, as the case may be),
and the payment of expenses insofar as such action shall relate to any alleged
liability in respect of which indemnity may be sought against the Company.

                        (c) Such holder of Registrable Securities, any such
underwriter or any such controlling Person shall have the right to employ
separate counsel in any such action and to participate in the defense thereof
but the fees and expenses of such counsel subsequent to any assumption of the
defense by the Company shall not be at the expense of the Company unless the
employment of such counsel has been specifically authorized in writing by the
Company. The Company shall not be liable to indemnify any Person for any
settlement of any such loss, claim, damage, expense, liability or action
effected without the Company's written consent. The Company shall not, except
with the approval of each party being indemnified under this SECTION 4.5,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to the parties being so indemnified of a release from all liability in respect
to such claim or litigation.

                        (d) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
any holder of Registrable Securities exercising rights under this ARTICLE IV, or
any controlling Person of any such holder, makes a claim for indemnification
pursuant to this SECTION 4.5 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this SECTION 4.5 provides for indemnification in such case, then, the Company
and such holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion as is appropriate to reflect the relative fault of the Company
on the one hand and of the holder of Registrable Securities on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
holder of Registrable Securities on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company on the one hand or by the holder of
Registrable Securities on the other, and each party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, however, that, in any such case, (A) no such
holder will be required to contribute any amount in excess of the public
offering price of all such Registrable Securities offered by it pursuant to such
registration statement, net of any underwriting discounts or commissions paid by
such holder; and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section

                                       7
<PAGE>

11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.

                  Section 4.6 INDEMNIFICATION BY HOLDERS OF REGISTRABLE
SECURITIES. (a) In the event that the Company registers any of the Registrable
Securities under the Securities Act, each holder of the Registrable Securities
so registered will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed or otherwise participated in the
preparation of the registration statement, each underwriter of the Registrable
Securities so registered (including any broker or dealer through whom such of
the shares may be sold) and each Person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act from and against any and all
losses, claims, damages, expenses or liabilities, joint or several, to which
they or any of them may become subject under the Securities Act, applicable
state securities laws or under any other statute or at common law or otherwise,
and, except as hereinafter provided, will reimburse the Company and each such
director, officer, underwriter or controlling Person for any legal or other
expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the final prospectus (or in
the registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as (i) any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by such
holder of Registrable Securities expressly for use therein and (ii) in the case
of a sale directly by such holder of Registrable Securities (including a sale of
such Registrable Securities through any underwriter retained by such holder of
Registrable Securities to engage in a distribution solely on behalf of such
holder of Registrable Securities), such untrue statement or alleged untrue
statement or omission or alleged omission was contained in a preliminary
prospectus and corrected in a final or amended prospectus copies of which were
delivered to such holder of Registrable Securities or such underwriter on a
timely basis, and such holder of Registrable Securities failed to deliver a copy
of the final or amended prospectus at or prior to the confirmation for the sale
of the Registerable Shares to the person asserting any such loss, claim, damage
or liability in any case where such delivery is required by the Securities Act;
provided, however, that such holder's obligations hereunder shall be limited to
an amount equal to the aggregate public offering price of the Registrable
Securities sold by such holder in such registration, net of any underwriting
discounts or commissions paid by such holder.

                        (b) Promptly after receipt of notice of the commencement
of any action in respect of which indemnity may be sought against such holder of
Registrable Securities hereunder, the Company will notify such holder of
Registrable Securities in writing of the commencement thereof (provided, that
failure by the Company to so notify such holder shall not

                                       8
<PAGE>

relieve such holder from any liability it may have hereunder to any other Person
entitled to claim indemnity or contribution hereunder), and such holder of
Registrable Securities shall, subject to the provisions hereinafter stated, be
entitled to assume the defense of such action (including the employment of
counsel, who shall be counsel reasonably satisfactory to the Company) and the
payment of expenses insofar as such action shall relate to the alleged liability
in respect of which indemnity may be sought against such holder of Registrable
Securities. The Company and each such director, officer, underwriter or
controlling Person shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel subsequent to any assumption of the defense by such holder of
Registrable Securities shall not be at the expense of such holder of Registrable
Securities unless employment of such counsel has been specifically authorized in
writing by such holder of Registrable Securities. Such holder of Registrable
Securities shall not be liable to indemnify any Person for any settlement of any
such loss, claim, damage, expense, or liability or action effected without such
holder's written consent.

                        (c) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
the Company or another Person entitled to indemnification pursuant to this
SECTION 4.6 makes a claim for indemnification pursuant to this SECTION 4.6, but
it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding that this SECTION 4.6 provides for
indemnification, in such case, then, the Company and such holder will contribute
to the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and of the holder of
Registrable Securities on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of the holder of Registrable Securities on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company on the one
hand or by the holder of Registrable Securities on the other, and each party's
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that, in any such case,
(A) no such holder will be required to contribute any amount in excess of the
public offering price of all such Registrable Securities offered by it pursuant
to such registration statement, net of any underwriting discounts or commissions
paid by such holder; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.

                  Section 4.7 EXCHANGE ACT REGISTRATION. If the Company at any
time shall list any class of equity securities on any national securities
exchange or obtain authorization for shares of such class to be quoted on an
automated quotation system and shall register such

                                       9
<PAGE>

class of equity securities under the Exchange Act, the Company will, at its
expense, simultaneously list on such exchange or qualify for trading on such
automated quotation system and maintain such listing or authorization of, the
Registrable Securities of such class. If the Company becomes subject to the
reporting requirements of either Section 13 or Section 15(d) of the Exchange
Act, the Company will use its best efforts to timely file with the Commission
such information as the Commission may require under either of said Sections;
and in such event, the Company shall use its best efforts to take all action as
may be required as a condition to the availability of Rule 144 or Rule 144A
under the Securities Act (or any successor exemptive rule hereafter in effect)
with respect to such equity securities. The Company shall furnish to any holder
of Registrable Securities forthwith upon request (i) a written statement by the
Company as to its compliance with the reporting requirements of Rule 144, (ii) a
copy of the most recent annual or quarterly report of the Company as filed with
the Commission, and (iii) such other reports and documents as a holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a holder to sell any such Registrable Securities without
registration. After the occurrence of the initial public offering, the Company
agrees to use its best efforts to facilitate and expedite transfers of the
Shares pursuant to Rule 144 under the Securities Act, which efforts shall
include timely notice to its transfer agent to expedite such transfers of
Shares.

                  Section 4.8 DAMAGES. The Company recognizes and agrees that
the holder of Registrable Securities will not have an adequate remedy if the
Company fails to comply with this ARTICLE IV and that damages may not be readily
ascertainable, and the Company expressly agrees that, in the event of such
failure, it shall not oppose an application by the holder of Registrable
Securities or any other Person entitled to the benefits of this ARTICLE IV
requiring specific performance of any and all provisions hereof or enjoining the
Company from continuing to commit any such breach of this ARTICLE.

                  Section 4.9 FURTHER OBLIGATIONS OF THE COMPANY. Whenever under
the preceding SECTIONS of this ARTICLE IV, the Company is required hereunder to
register Registrable Securities, it agrees that it shall also do the following:

                        (i) Furnish to each selling holder such copies of each
preliminary and final prospectus and such other documents as said holder may
reasonably request to facilitate the public offering of its Registrable
Securities;

                        (ii) Use its best efforts to register or qualify the
Registrable Securities covered by said registration statement under the
applicable securities or "blue sky" laws of such jurisdictions as any selling
holder may reasonably request; provided, however, that the Company shall not be
obligated to qualify to do business in any jurisdictions where it is not then so
qualified or to take any action which would subject it to the service of process
in suits other than those arising out of the offer or sale of the securities
covered by the registration statement in any jurisdiction where it is not then
so subject;

                                       10
<PAGE>

                        (iii) Furnish to each selling holder a signed
counterpart, addressed to the selling holders and any underwriter, of "comfort"
letters signed by the Company's independent public accountants who have examined
and reported on the Company's financial statements included in the registration
statement, to the extent permitted by the standards of the American Institute of
Certified Public Accountants, covering substantially the same matters with
respect to the registration statement (and the prospectus included therein) and
(in the case of the accountants' "comfort" letters) with respect to events
subsequent to the date of the financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' "comfort" letters delivered
to the underwriters in underwritten public offerings of securities, to the
extent that the Company is required to deliver or cause the delivery of such
opinion or "comfort" letters to the underwriters in an underwritten public
offering of securities;

                        (iv) Permit each selling holder of Registrable
Securities or such holder's counsel or other representatives to inspect and copy
such non-confidential corporate documents and records as may reasonably be
requested by them;

                        (v) Furnish to each selling holder of Registrable
Securities a copy of all documents filed with and all correspondence from or to
the Commission in connection with any such offering of securities;

                        (vi) Use its best efforts to insure the obtaining of all
necessary approvals from the NASD or other applicable regulatory authority, if
applicable;

                        (vii) Use its best efforts to cause all Registrable
Securities so registered pursuant hereto to be listed on any securities exchange
or authorized for quotation in any automated quotation system on or in which
outstanding shares of such class are listed or authorized for quotation at the
time such registration is declared effective by the Commission;

                        (viii) Designate a transfer agent and registrar for the
class or classes of shares which include such Registrable Securities and obtain
a CUSIP number for such class or classes of shares, in each case not later than
the date such registration is declared effective by the Commission; and

                        (ix) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earning statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
registration statement covering the initial public offering, which earning
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder.

                  Whenever under the preceding SECTIONS of this ARTICLE IV the
holders of Registrable Securities are registering such securities pursuant to
any registration statement, each such holder agrees to timely provide to the
Company, at its request, such information and

                                       11
<PAGE>

materials as it may reasonably request in order to effect the registration of
such Registrable Securities.

                  Section 4.10 EXPENSES. In the case of each registration
effected under this Article IV, the Company shall bear all reasonable costs and
expenses of each such registration on behalf of the selling holders of
Registrable Securities, including, but not limited to, the Company's printing,
legal and accounting fees and expenses, Commission and NASD filing fees and
"Blue Sky" fees; provided, however, that the Company shall have no obligation to
pay or otherwise bear any portion of the underwriters' commissions or discounts
attributable to the Registrable Securities being offered and sold by the holders
of the Registrable Securities, or the fees and expenses of counsel for the
selling holders of Registrable Securities in connection with the registration of
the Registrable Securities. The Company shall also pay all expenses of the
holders of the Registrable Securities in connection with any registration
initiated pursuant to this ARTICLE IV which is withdrawn or abandoned at the
request of the Company.

                  Section 4.11 TRANSFERABILITY. (a) For all purposes of ARTICLE
IV of this Agreement, a Holder or assignee thereof who becomes a party to this
Agreement in accordance with SECTION 4.11(b) hereof shall be deemed at any
particular time to be the holder of all Registrable Securities of which such
Person shall at such time be the "beneficial owner," determined in accordance
with Rule 13d-3 under the Exchange Act.

                        (b) For all purposes of ARTICLE IV of this Agreement,
the holder of Registrable Securities shall include not only the Holder, but also
any assignee or transferee of the Registrable Securities; provided, however,
that such assignee or transferee agrees in writing to be bound by all of the
provisions of this Agreement.

                  Section 4.12 MERGERS, ETC. The Company shall not, directly or
indirectly, enter into any merger, consolidation or reorganization in which the
Company shall not be the surviving corporation unless the proposed surviving
corporation shall, prior to such merger, consolidation or reorganization, agree
in writing to assume the obligations of the Company under this Agreement, and
for that purpose references hereunder to Registrable Securities shall be deemed
to be references to the securities which the Holders would be entitled to
receive in exchange for Registrable Securities under any such merger,
consolidation or reorganization; provided, however, that the provisions of this
SECTION 4.12 shall not apply in the event of any merger, consolidation, or
reorganization in which the Company is not the surviving corporation if all
stockholders are entitled to receive in exchange for their Registrable
Securities consideration consisting solely of (i) cash, or (ii) securities of
the acquiring corporation which may be immediately sold to the public without
registration under the Securities Act.

                                    ARTICLE V
                                   DEFINITIONS

                                       12
<PAGE>

                  Section 5.1 DEFINITIONS. As used in this Agreement, the
following defined terms have the meanings indicated below:

                  "ACTIONS OR PROCEEDINGS" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.

                  "AFFILIATE" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is under
common control with the Person specified. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by Contract or
otherwise.

                  "ASSETS AND PROPERTIES" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, and wherever situated),
including the goodwill related thereto, operated, owned or leased by such
Person.

                  "BOARD OF DIRECTORS" or "Board" means the board of directors
of the Company as constituted from time to time.

                  "BUSINESS OR CONDITION OF THE COMPANY" means the business,
financial condition or results of operations of the Company and the Subsidiaries
taken as a whole.

                  "CODE" means the Internal Revenue Code of 1986, as amended.

                  "COMMISSION" shall mean the United States Securities and
Exchange Commission or any other federal agency at the time administering the
Securities Act or the Exchange Act.

                  "COMPANY" has the meaning ascribed to it in the forepart of
this Agreement.

                  "CONTRACT" means any agreement, lease, license, evidence of
indebtedness, mortgage, indenture, security agreement or other contract.

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission (or of any other Federal agency then administering the Exchange Act)
thereunder, all as the same shall be in effect at the time.

                  "GOVERNMENTAL OR REGULATORY AUTHORITY" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States or any state, county, city or other
political subdivision.

                                       13
<PAGE>

                  "HOLDERS" has the meaning ascribed to it in the forepart of
this Agreement.

                  "LAWS" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States or any state, county, city or other political subdivision or of any
Governmental or Regulatory Authority.

                  "LICENSE" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.

                  "LIENS" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.

                  "NASD" means the National Association of Securities Dealers,
Inc.

                  "NOTE CONVERSION SHARES" shall have the meaning ascribed in
the Recitals of this Agreement.

                  "ORDER" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).

                  "PERSON" means any natural person, corporation, limited
liability company, general partnership, limited partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.

                  "REGISTRABLE SECURITIES" shall mean and include the Shares,
the Warrants the Warrant Shares, and the Note Conversion Shares issued, in the
aggregate, to the Holders; provided, however, that shares of Common Stock or
other securities which are Registrable Securities shall cease to be Registrable
Securities upon the consummation of any sale pursuant to a registration
statement or Rule 144 under the Securities Act.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
(or of any other federal agency then administering the Securities Act)
thereunder, all as the same shall be in effect at the time.

                  "SEC" means Commission.

                  "SHARES" has the meaning ascribed to it in the Recitals of
this Agreement.

                                       14
<PAGE>

                  "SUBSIDIARY" means any Person in which the Company, directly
or indirectly through Subsidiaries or otherwise, beneficially owns more than 50%
of either the equity interests in, or the voting control of, such Person.

                  "WARRANTS" has the meaning ascribed to it in the Recitals of
this Agreement.

                  "WARRANT SHARES" has the meaning ascribed to it in the
Recitals of this Agreement.

                                   ARTICLE VI
                                  MISCELLANEOUS

                  Section 6.1 ENTIRE AGREEMENT. This Agreement supersedes all
prior discussions and agreements between the parties with respect to the subject
matter hereof and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.

                  Section 6.2 WAIVER. Any term or condition of this Agreement
may be waived at any time by the party that is entitled to the benefit thereof,
but no such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by Law or otherwise afforded, will be
cumulative and not alternative.

                  Section 6.3 AMENDMENT. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by or on
behalf of each party hereto.

                  Section 6.4 NO THIRD PARTY BENEFICIARY. The terms and
provisions of this Agreement are intended solely for the benefit of each party
hereto and their respective successors or permitted assigns, and it is not the
intention of the parties to confer third-party beneficiary rights upon any other
Person.

                  Section 6.5 ASSIGNMENT; BINDING EFFECT. This Agreement and any
right, interest or obligation hereunder may be assigned by Holder without the
prior written consent of the Company. This Agreement is binding upon, inures to
the benefit of and is enforceable by the parties hereto and their respective
successors and assigns.

                  Section 6.6 HEADINGS. The headings used in this Agreement have
been inserted for convenience of reference only and do not define or limit the
provisions hereof.

                                       15
<PAGE>

                  Section 6.7 INVALID PROVISIONS. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or
future Law, and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (a) such
provision will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, and (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance here from.

                  Section 6.8 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the Laws of the State of New York applicable to
a Contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.

                  Section 6.9 COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.

                                       16
<PAGE>

                IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.

                             ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.

                             By: /s/ Douglas S. Niethold
                                 ----------------------------------------------
                             Name:  Douglas S. Niethold
                             Title: Vice-President, Finance, Chief Financial
                                    Officer, and Principal Accounting Officer

                             CYPRUS, LLC

                               By: BARBERRY CORP.
                               Title: Managing Member

                               By: /s/ Edward E. Mattner
                                   --------------------------------------------
                                   Name: Edward E. Mattner
                                   Title: Authorized Signatory

                             AMERICAN REAL ESTATE HOLDINGS
                             LIMITED PARTNERSHIP

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

                               By: /s/ Keith Meister
                                   --------------------------------------------
                                   Name:  Keith Meister
                                   Title: President and CEO, API

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}]]