Document:

Exhibit 32.2 Certification 906 CFO

    

    May
      26,
      2006

    

    

    [Name]

    

    

    

    Dear_______:

    

    This
      letter will confirm our understanding concerning your employment with Borders
      Group, Inc. (the “Company”). You are sometimes referred to herein as the
“Executive.”

    

    1. Subject
      to all of the other provisions of this agreement, if your employment with the
      Company is terminated by the Company other than for Cause or Disability, the
      Company will pay to you:

    

    (a) Your
      base
      salary through the month during which termination occurred, plus any other
      amount due you at the time of termination under any bonus plan of the Company;
      and

    

    (b) Monthly
      severance payments for the period specified in Section 6 equal to (i) your
      monthly base salary at the time of termination, plus (ii) 1/12th
      of the
“target” bonus amount targeted for you for the fiscal year in which termination
      occurred. 

    

    No
      payments shall be made under this agreement if your employment with the Company
      is terminated because of your death or is terminated by the Company for Cause
      or
      Disability or if you terminate your employment for any reason. 

     

    2. Subject
      to all of the other provisions of this agreement, if your employment is
      terminated by the Company other than for Cause or Disability during the one-year
      period following the commencement of service as chief executive officer of
      the
      Company (“CEO”) of the CEO that replaces Mr. Josefowicz; (i) the monthly
      severance payments to be made to you under Section 1(b) shall be 1.5 times
      the
      amount specified therein, and (ii) the Company will make a cash payment to
      you
      as soon as practicable following your termination of employment equal to the
      fair market value of the restricted shares (but not the restricted share units)
      awarded to you in March 2006. The fair market value of the restricted shares
      shall be based upon the closing price of the Company’s shares on the New York
      Stock Exchange on the day prior to your termination date, without any reduction
      for the restrictions. 

    

    3.
       Subject
      to all of the other provisions of this agreement, if your employment is
      terminated by the Company other than for Cause or Disability during the one-year
      period following a Change in Control, the monthly severance payments to be
      made
      to you under Section 1(b) shall be for an extended period as specified in
      Section 6 and shall be based upon (a) your monthly base salary at the time
      of
      termination or immediately prior to the Change in Control, whichever base salary
      amount is greater, plus (b) 1/12th
      of the
“target” bonus amount targeted for you for 

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    the
      fiscal year in which termination occurred or the fiscal year immediately prior
      to the Change in Control, whichever bonus amount is greater.

     

    4.
       You
      agree
      to make reasonable efforts to seek (and to immediately notify the Company of)
      other employment and to the extent that you receive compensation from other
      employment, the severance payments provided herein, other than the payment
      in
      lieu of restricted shares described in Section 2 (ii), shall be correspondingly
      reduced.

     

    5. All
      payments hereunder shall be subject to applicable withholding and
      deductions.

     

    6. Monthly
      severance payments shall commence in the month following termination and shall
      continue for twelve months or, in the case of payments under Section 3, for
      twenty-four months; provided however, that, if the monthly payment period would
      otherwise extend beyond the later of: (i) March 15th
      of the
      year following the calendar year in which your termination of employment occurs,
      or (ii) 2 1/2 months following the end of the fiscal year in which your
      termination of employment occurs, an amount equal to the sum of all of the
      remaining payments that would have been made to you in monthly installments
      shall, in lieu thereof, be paid to you in one lump sum on the last day of the
      month immediately preceding the month in which the later of the dates specified
      in (i) or (ii) above falls. In calculating the amount of any lump sum payment,
      it shall be assumed that any income that you are earning from other employment
      on the payment date would continue for the remainder of the applicable period
      following your termination of employment. No repayment shall be required if
      your
      income increases after the lump-sum payment date, and no additional payments
      shall be made by the Company after the lump sum payment.

     

    7. Termination
      by the Company for “Cause” means termination based on (i) conduct which is a
      material violation of Company policy or which is fraudulent or unlawful or
      which
      materially interferes with your ability to perform your duties, (ii) misconduct
      which damages or injures the Company or substantially damages the Company’s
      reputation, or (iii) gross negligence in the performance of, or willful failure
      to perform, your duties and responsibilities.

     

    8. Termination
      by you for “Disability” means termination based on inability to perform your
      duties and responsibilities by reason of illness or incapacity for a total
      of
      180 days in any twelve-month period. 

    

    9. A
“Change
      in Control” shall mean:

    

    (a)   The
      acquisition by any individual, entity or group (within the meaning of Section
      13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
      "Exchange Act") (a "Person") of beneficial ownership (within the meaning of
      Rule
      13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the
      then
      outstanding shares of common stock of the Company (the "Outstanding Company
      Common Stock") or (ii) the combined voting power of the then outstanding voting
      securities of the Company entitled to vote generally in the election of
      directors (the "Outstanding Company Voting Securities"); provided, however,
      that
      for purposes of this subsection (a), the following acquisitions shall not
      constitute a Change of Control: (i) any acquisition directly from the Company,
      (ii) any acquisition by the Company, (iii) any acquisition by any employee
      benefit plan (or related trust) sponsored or maintained by the Company or any
      corporation controlled by the Company or (iv) any acquisition by any corporation
      pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
      subsection (c) of this Section 9; or

     

    
       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

    

    (b)   Individuals
      who, as of the date hereof, constitute the Board (the "Incumbent Board") cease
      for any reason to constitute at least a majority of the Board; provided,
      however, that any individual becoming a director subsequent to the date hereof
      whose election, or nomination for election by the Company's shareholders, was
      approved by a vote of at least a majority of the directors then comprising
      the
      Incumbent Board shall be considered as though such individual were a member
      of
      the Incumbent Board, but excluding, for this purpose, any such individual whose
      initial assumption of office occurs as a result of an actual or threatened
      election contest with respect to the election or removal of directors or other
      actual or threatened solicitation of proxies or consents by or on behalf of
      a
      Person other than the Board; or

    

    (c)   Consummation
      of a reorganization, merger or consolidation or sale or other disposition of
      all
      or substantially all of the assets of the Company (a "Business Combination"),
      in
      each case, unless, following such Business Combination, (i) all or substantially
      all of the individuals and entities who were the beneficial owners,
      respectively, of the Outstanding Company Common Stock and Outstanding Company
      Voting Securities immediately prior to such Business Combination beneficially
      own, directly or indirectly, more than 60% of, respectively, the then
      outstanding shares of common stock and the combined voting power of the then
      outstanding voting securities entitled to vote generally in the election of
      directors, as the case may be, of the corporation resulting from such Business
      Combination (including, without limitation, a corporation which as a result
      of
      such transaction owns the Company or all or substantially all of the Company's
      assets either directly or through one or more subsidiaries) in substantially
      the
      same proportions as their ownership, immediately prior to such Business
      Combination of the Outstanding Company Common Stock and Outstanding Company
      Voting Securities, as the case may be, (ii) no Person (excluding any corporation
      resulting from such Business Combination or any employee benefit plan (or
      related trust) of the Company or such corporation resulting from such Business
      Combination) beneficially owns, directly or indirectly, 20% or more of,
      respectively, the then outstanding shares of common stock of the corporation
      resulting from such Business Combination or the combined voting power of the
      then outstanding voting securities of such corporation except to the extent
      that
      such ownership existed prior to the Business Combination and (iii) at least
      a
      majority of the members of the board of directors of the corporation resulting
      from such Business Combination were members of the Incumbent Board at the time
      of the execution of the initial agreement, or of the action of the Board,
      providing for such Business Combination; or 

    

    (d)   Approval
      by the shareholders of the Company of a complete liquidation or dissolution
      of
      the Company. 

    

    10.  Payments
      shall be reduced to the extent, if any, determined in accordance with the
      following provisions: 

    

    (a)   For
      purposes of this Section 10: (i) a "Payment" shall mean any payment or
      distribution in the nature of compensation to or for the benefit of the
      Executive, whether paid or payable pursuant to this Agreement or otherwise;
      (ii)
      "Agreement Payment" shall mean a Payment paid or payable pursuant to this
      Agreement (disregarding this Section); (iii) “Net After-Tax Receipt” shall mean
      the Present

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

        Value
      of a
      Payment net of all taxes imposed on the Executive with respect thereto under
      Sections 1 and 4999 of the Code and under applicable state and local laws,
      determined by applying the highest marginal rate under Section 1 of the Code
      and
      under state and local laws which applied to the Executive’s taxable income for
      the immediately preceding taxable year, or such other rate(s) as the Executive
      shall certify, in the Executive’s sole discretion, as likely to apply to the
      Executive in the relevant tax year(s); (iv) "Present Value" shall mean such
      value determined in accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4)
      of
      Code; (v) "Reduced Amount" shall mean the amount of Agreement Payments that
      (A)
      has a Present Value that is less than the Present Value of all Agreement
      Payments and (B) results in aggregate Net After-Tax Receipts for all Payments
      that are greater than the Net After-Tax Receipts for all Payments that would
      result if the aggregate Present Value of Agreement Payments were any other
      amount that is less than the Present Value of all Agreement Payments; and (vi)
      “Code” shall mean the Internal Revenue Code of 1986, as amended.

    

    (b)   Anything
      in the Agreement to the contrary notwithstanding, in the event Ernst & Young
      or such other accounting firm as shall be designated by the Company (the
      "Accounting Firm") shall determine that receipt of all Payments would subject
      the Executive to tax under Section 4999 of the Code, the Accounting Firm shall
      determine whether some amount of Agreement Payments meets the definition of
      “Reduced Amount.” If the Accounting Firm determines that there is a Reduced
      Amount, then the aggregate Agreement Payments shall be reduced to such Reduced
      Amount. 

    

    (c)  If
      the
      Accounting Firm determines that aggregate Agreement Payments should be reduced
      to the Reduced Amount, the Company shall promptly give the Executive notice
      to
      that effect and a copy of the detailed calculation thereof, and the Executive
      may then elect, in his or her sole discretion, which and how much of the
      Agreement Payments shall be eliminated or reduced (as long as after such
      election the Present Value of the aggregate Agreement Payments equals the
      Reduced Amount), and shall advise the Company in writing of his or her election
      within ten days of his or her receipt of notice. If no such election is made
      by
      the Executive within such ten-day period, the Company may elect which of such
      Agreement Payments shall be eliminated or reduced (as long as after such
      election the Present Value of the aggregate Agreement Payments equals the
      Reduced Amount) and shall notify the Executive promptly of such election. All
      determinations made by the Accounting Firm under this Section shall be binding
      upon the Company and the Executive and shall be made within 60 days of a
      termination of employment of the Executive. As promptly as practicable following
      such determination, the Company shall pay to or distribute for the benefit
      of
      the Executive such Agreement Payments as are then due to the Executive under
      this Agreement and shall promptly pay to or distribute for the benefit of the
      Executive in the future such Agreement Payments as become due to the Executive
      under this Agreement. 

    

    (d)   As
      a
      result of the uncertainty in the application of Section 4999 of the Code at
      the
      time of the initial determination by the Accounting Firm hereunder, it is
      possible that amounts will have been paid or distributed by the Company to
      or
      for the benefit of the Executive pursuant to this Agreement which should not
      have been so paid or distributed ("Overpayment") or that additional amounts
      which will have not 

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

        been
      paid or
      distributed by the Company to or for the benefit of the Executive pursuant
      to
      this Agreement could have been so paid or distributed ("Underpayment"), in
      each
      case, consistent with the calculation of the Reduced Amount hereunder. In the
      event that the Accounting Firm, based upon the assertion of a deficiency by
      the
      Internal Revenue Service against either the Company or the Executive which
      the
      Accounting Firm believes has a high probability of success determines that
      an
      Overpayment has been made, any such Overpayment paid or distributed by the
      Company to or for the benefit of the Executive shall be treated for all purposes
      as a loan to the Executive which the Executive shall repay to the Company
      together with interest at the applicable federal rate provided for in Section
      7872(f)(2) of the Code; provided,
      however, that no such loan shall be deemed to have been made and no amount
      shall
      be payable by the Executive to the Company if and to the extent such deemed
      loan
      and payment would not either reduce the amount on which the Executive is subject
      to tax under Section 1 and Section 4999 of the Code or generate a refund of
      such taxes. In the event that the Accounting Firm, based upon controlling
      precedent or substantial authority, determines that an Underpayment has
      occurred, any such Underpayment shall be promptly paid by the Company to or
      for
      the benefit of the Executive together with interest at the applicable federal
      rate provided for in Section 7872(f)(2) of the Code. 

     

    (e)  All
      fees and expenses of
      the Accounting Firm in implementing the provisions of this Section 10 shall
      be
      borne by the Company.

     

    11.
       The
      obligation to make the payments hereunder is conditioned upon your execution
      and
      delivery to the Company of a release, in form satisfactory to the Company,
      of
      any claims you may have as a result of your employment or termination of
      employment under any federal, state or local law, excluding any claim for
      benefits which may be due you in normal course under any employee benefit plan
      of the Company which provides benefits after termination of employment.

     

    12. You
      agree
      that any right to receive severance payments hereunder will cease if during
      the
      one-year period following your termination of employment you directly or
      indirectly become an employee, director, advisor of, or otherwise affiliated
      with, any other entity or enterprise whose business is in competition with
      the
      business of the Company or any of its subsidiaries or affiliates.

    

    13. The
      severance payments hereunder may not be transferred, assigned or encumbered
      in
      any manner, either voluntarily or involuntarily. In the event of your death
      after your employment has been terminated by the Company other than for Cause
      or
      Disability, any payments then or thereafter due hereunder will be made to your
      estate.

    

    14. The
      payments provided hereunder shall constitute the exclusive payments due you
      from, and the exclusive obligation of, the Company in the event of any
      termination of your employment, except for any benefits which may be due you
      in
      normal course under any employee benefit plan of the Company which provides
      benefits after termination of employment, it being understood and agreed that
      no
      severance plan shall be deemed to be an employee benefit plan for this
      purpose.

    

    15. Notwithstanding
      anything herein to the contrary, your employment with the Company is terminable
      at will with or without cause; subject, however, to the obligations of the
      Company under this agreement.

     

    
 

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    16. If
      a
      dispute arises concerning any provisions of this agreement, it shall be resolved
      by arbitration in Ann Arbor, Michigan in accordance with the rules of the
      American Arbitration Association. Judgment on the award rendered may be entered
      in any court having jurisdiction and enforced accordingly.

    

    17. This
      letter agreement sets forth the entire understanding with respect to the subject
      matter hereof and supersedes all prior agreements, written or oral or express
      or
      implied, between you and the Company or any subsidiary or other affiliate of
      the
      Company as to such subject matter. This letter agreement may not be amended,
      nor
      may any provision hereof be modified or waived, except by an instrument in
      writing duly signed by you and the Company.

    

    18. If
      any
      provision of this letter agreement, or any application thereof to any
      circumstances, is invalid, in whole or in part, such provision or application
      shall to that extent be severable and shall not affect other provisions or
      applications of this letter agreement.

    

     

    Please
      indicate your agreement by signing below and retain one copy for your
      records.

    

     

    Agreed
      and Accepted:                                

       

      Sincerely,

    BORDERS
      GROUP, INC.

    

                                                                                                           
      By:                                                                      

    Name:
      Gregory P. Josefowicz

    Its:
      Chairman, CEO and President

    
 

     

    
      
         

      

      
        6EX-10.1

 

Exhibit 10.1

EXECUTION COPY

CALL AGREEMENT

DATED AS OF JUNE 5, 2006

BETWEEN

AMERICAN REAL ESTATE HOLDINGS LIMITED PARTNERSHIP

AND

ACE GAMING, LLC

 

 

EXECUTION COPY

CALL AGREEMENT

     CALL AGREEMENT (this “Agreement”) dated as of June 5, 2006, by and between American Real
Estate Holdings Limited Partnership, a Delaware limited partnership (“AREH”) and ACE Gaming, LLC, a
New Jersey limited liability company (“ACE”). Capitalized terms used in this Agreement but not
otherwise defined shall have the meanings ascribed to such terms in the Purchase Agreement (as
defined below).

     Whereas, AREH directly and indirectly owns or controls all of the membership interests (the
“Equity Interests”) of AREP Boardwalk Properties LLC, a Delaware limited liability company (the
“Company”) (as assignee of AREP Boardwalk LLC) which, on November 28, 2005 executed an agreement
(the “Purchase Agreement”) with, among others, Martial Development Corp., a New Jersey corporation
and Boardwalk Regency Corporation, a New Jersey corporation, to acquire, among other things, the
Traymore Site (as defined in the Purchase Agreement) in Atlantic City, New Jersey for a price
allocated to the Traymore Site of $61 million (subject to adjustment for pro rated rents, utilities
and assessments);

     Whereas, ACE is a wholly-owned subsidiary of Atlantic Coast Entertainment Holdings, Inc.
(“Atlantic Coast”), which is a majority-owned subsidiary of AREH; and

     Whereas, the Traymore Site is adjacent to properties owned by ACE but ACE, neither at the date
of the Purchase Agreement nor at this time, has capital or financing available to acquire the
Traymore Site.

     In consideration of the foregoing, and the representations, covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

     1. Call Right.

        (a) ACE’s Right to Acquire Equity Interests. Upon the terms and subject to the
conditions of this Agreement, ACE shall have the right to require AREH to sell to ACE the Equity
Interests (the “Call Right”), and upon exercise by ACE of the Call Right in accordance with the
terms hereof, AREH agrees to sell to ACE the Equity Interests at a purchase price equal to the Call
Price, as hereinafter defined.

        (b) Exercise of Call Right; Call Closing. On or prior to the Call Termination Date
(as defined below), if ACE is entitled to exercise its Call Right and desires to do so, ACE shall
deliver a written notice (the “Call Notice”) to AREH specifying a place and date not earlier than
thirty (30) nor later than sixty (60) days after the Inspection Documents (as defined below) are
received by ACE for the closing of the purchase of the Equity Interests (the “Call Closing”),
provided that such date shall be deferred to ten (10) days after the date of obtaining any consents
or approvals of any Governmental Entity which are required by any Requirement of Law (as defined
below) to effect the transfer to ACE of the Equity Interest in accordance with this Section. The
date on which the Call Closing occurs is referred to herein as the “Call Closing Date.” The Call
Closing shall be held at such location within New York, New York as shall be

 

 

designated in the Call Notice. At the Call Closing, ACE shall deliver to AREH, subject to the
continuing accuracy of AREH’s representations, warranties and covenants in Section 6 hereof, the
Call Price and AREH shall deliver to ACE a certificate or certificates representing the Equity
Interests, free and clear of all Liens, duly endorsed or accompanied by appropriate powers or such
other instruments as may be necessary or appropriate to effect the transfer to ACE of the Equity
Interests.

        (c) Risk of Loss. Risk of loss prior to the Call Closing shall be on AREH.

       (i) If, prior to the Call Closing, the Traymore Site shall be damaged by fire or other
casualty, and if any destruction or damage is not repaired by AREH prior to the Call Closing
or arrangements for repairs reasonably satisfactory to ACE are not made prior to the Call
Closing so that the Traymore Site shall be in substantially as good condition at the Call
Closing as existed prior to such damage or destruction, then this Agreement shall, at the
option of ACE, be terminated, and with the exception of those obligations which expressly
survive the termination of this Agreement, neither party shall have any further obligations
or liability to the other hereunder. If, after the occurrence of any such casualty, this
Agreement is not so terminated, ACE may elect to purchase the Traymore Site in the damaged
condition without credit or adjustments to the Call Price, provided, subject to the rights
of the tenants under Traymore Leases, AREH shall assign its rights to any sums collected
under any policies of insurance because of such damage due to casualty to ACE.

       (ii) In the event a condemnation proceeding or payment in lieu of condemnation occurs
in respect of any part of the Traymore Site prior to the Call Closing, and such proceeding
does not result in a Condemnation Termination Event, all payments in respect of such
condemnation shall be paid by the Company or AREH, or the rights to receive such payments
shall be assigned, to ACE at the Call Closing, or, at AREH’s election, the Call Price shall
be reduced by such payments. If prior to the Call Closing, a Condemnation Termination Event
occurs, then this Agreement shall, at the option of ACE, be terminated, and with the
exception of those obligations which expressly survive the termination of this Agreement,
neither party shall have any further obligations or liability to the other hereunder.

     2. ACE’s Inspection and Review Rights.

        (a) Promptly after receipt of the Call Notice, but in no event more than fifteen (15) days
thereafter, AREH or the Company shall deliver to ACE to the extent in AREH’s or the Company’s
possession or control with regard to the Traymore Site and the Company, and to the extent not
previously delivered to ACE, the following: (i) title reports and policies, survey, tax bills or
statements, utility bills, insurance certificates, warranties, vendor contracts, and all other
documents relating of similar nature and import; (ii) the Traymore Leases, and tenant estoppel
certificates and subordination or nondisturbance agreements for each of the Traymore Leases; (iii)
the organizational documents of the Company, including all corporate books, documents and records
relating thereto, if any; (iv) a list of all Liabilities of the Company including, without
limitation, the Boardwalk Assumed Liabilities; (v) any environmental reports and engineering

2

 

reports relating to the Traymore Site; (vi) all relevant contracts, books and records, and all
financial data and information and other information, including tax returns and filings; and (vii)
such other documents and records as ACE may reasonably request relating to the Company and the
Traymore Site (all such documents are hereinafter collectively referred to as the “Inspection
Documents”).

        (b) ACE shall have until thirty (30) days after receipt of the Inspection Documents (the “Due
Diligence Period”) (i) to inspect the Inspection Documents, (ii) upon reasonable notice to AREH,
have reasonable access to the Traymore Site Land and Traymore Site Improvements, and (iii) to
inspect and conduct such other due diligence into any other matters pertaining to the Company or
the Traymore Site. At any time prior to the expiration of the Due Diligence Period, ACE may, in
its sole discretion and in writing, terminate its Call Notice and this Agreement, for any reason or
no reason at all, and with the exception of those obligations which expressly survive the
termination of this Agreement, neither party shall have any further obligations or liability to the
other hereunder.

        (c) In the event that ACE does not terminate this Agreement by the end of the 30-day Due
Diligence Period then ACE shall be deemed to have, subject to the terms hereof, reviewed and
accepted the Inspection Documents and completed its investigation of the Traymore Site Land and
Traymore Site Improvements, the Traymore Leases, the tenants and all other matters relating to the
exercise of the Call Right. The furnishing of the Inspection Documents to ACE or its attorneys,
accountants, agent or other representatives or any investigation by any of the foregoing, shall not
affect ACE’s right to rely on any representations, warranties and covenants expressly made in this
Agreement.

     3. Exercise. ACE may exercise the Call Right at any time after the Closing Date (as
defined in the Purchase Agreement) until 5:00 PM on June 5, 2007 (such date, the “Call Termination
Date”). Time shall be of the essence with regard to delivery of the Call Notice. If the Call
Notice that complies with Section 1(b) is delivered by ACE to AREH prior to the Call Termination
Date, the Call Closing may occur after the Call Termination Date, including to give effect to the
deferral of the Call Closing, as provided in Section 1(b) to obtain any consents or approvals of
any Governmental Entity which are required by any Requirement of Law. In no event shall the Call
Closing occur prior to the expiration of the Due Diligence Period or later than 75 days after
delivery of the Call Notice (such 75th day, the “Call Closing Termination”).

     4. Call Price.

        (a) The Call Price shall equal (A) the sum of (i) the price allocated pursuant to the Purchase
Agreement to the Traymore Site of $61 million (subject to adjustment for pro rated rents,
utilities and assessments), (ii) the Traymore Closing Costs, (iii) the Traymore Financing Costs and
(iv) the Traymore Operating Costs, plus, in each case, interest thereon at the rate of 8% per annum
from the date such costs are incurred, calculated on the basis of a 360 day year, through and
including the Call Closing Date, less (B) any revenues received by the Company or AREH with respect
to the Traymore Site through and including the Call Closing Date; provided that the proceeds of any
financing shall not be deemed revenues for purposes of this clause (B). The Call Price shall be
further adjusted in accordance with the provisions of Section 4(b) hereof.

3

 

        (b) AREH, in its sole discretion, and subject to the approval of the holder of the Traymore
Debt (the “Lender”), if required under the terms of the Traymore Debt loan documents, may decide to
sell to ACE the Equity Interests and/or the Traymore Site subject to the Traymore Debt. To the
extent AREH chooses to sell the Equity Interests and/or the Traymore Site to ACE subject to the
Traymore Debt, ACE executes a novation and assumption agreement related to such indebtedness
reasonably satisfactory to AREH and the Lender releases AREH from all obligations under the
Traymore Debt (except any guarantee obligation in effect on the date of the Call Closing and in
favor of the Lender that is required to remain in effect following a transfer of the borrower’s
obligations under the Traymore Debt documents to an affiliate), then the Call Price shall be
reduced by an amount equal to the outstanding principal amount of the Traymore Debt and any accrued
and unpaid interest thereon at the Call Closing Date. In addition to payment of the Call Price,
ACE shall reimburse AREH for all escrow amounts posted in connection with the Traymore Debt. To
the extent AREH sells the Equity Interests (and the Traymore Site) to ACE free and clear of the
Traymore Debt (either because it chooses to or because the Lender does not approve of the sale to
ACE for any reason in its absolute discretion, if such approval is required under the Traymore Debt
documents), ACE shall, in addition to the Call Price, pay to the Lender any prepayment penalties
and other fees in connection with the prepayment of the Traymore Debt.

        (c) The Traymore Closing Costs shall include all costs and expenses actually incurred by AREH
and its affiliates in connection with the acquisition, ownership and financing of the Traymore Site
and the transfer of the Equity Interests to ACE including, without limitation, legal fees, title
insurance, recording, transfer or similar taxes, survey and inspection costs. The Traymore
Financing Costs shall include all fees, costs and expenses incurred by AREH and its affiliates in
connection with obtaining financing to acquire the Traymore Site pursuant to the Purchase
Agreement, including, without limitation, legal fees and expenses, and any fees payable to any
financing source in connection with obtaining such financing, all principal and interest payments
made on the Traymore Debt and all costs associated with the assignment of the Traymore Debt, if
applicable. The Traymore Operating Expenses shall include all costs and expenses actually incurred
by AREH and its affiliates in owning or operating the Traymore Site. The Traymore Debt means the
loan made to AREH by Bear Stearns Commercial Mortgage Inc. (or any affiliate thereof).

     5. Payment of Call Price. ACE shall pay the Call Price to AREH at the Call Closing in
cash delivered by wire transfer of immediately available funds to the account or accounts
designated at least two (2) Business Days prior to such Call Closing by AREH to ACE.

     6. Representations, Warranties and Covenants.

        (a) AREH. AREH hereby represents, warrants and covenants to ACE as follows as of the
date hereof and as of the Call Closing (and ACE’s obligation to acquire the Equity Interests at the
Call Closing shall be subject to such representations and warranties being true and accurate as of
such date):

       (i) Organization. AREH is a limited partnership duly organized and validly
existing under the laws of the State of Delaware.

4

 

       (ii) Power and Authority. AREH has the requisite limited partnership power and
authority to enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and performance by
AREH and the consummation by AREH of the transactions contemplated hereby have been duly
authorized by all requisite limited partnership action on the part of AREH, and no other
proceedings on the part of its partners are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and delivered by,
and constitutes the valid and binding obligation of, AREH, enforceable against it in
accordance with its terms.

       (iii) Equity Interests Free of Liens. The transfer of the Equity Interests
pursuant to this Agreement (A) (1) does not and will not result in the creation or
imposition of any mortgage, pledge, security interest, encumbrance, lien, option to purchase
or sell, right of first refusal or charge of any kind (“Lien”) (other than any Lien created
by action of any person other than AREH or the Company) upon the Equity Interests, (2) does
not and will not violate any law, rule, regulation, order, judgment, decree or determination
of any arbitrator, court or other Governmental Entity (“Requirement of Law”) applicable to
AREH or the Company or to which the properties of either is subject and (3) does not and
will not conflict with or result in any breach of any term, condition or provision of, or
constitute (with due notice or lapse of time or both) a default under, or pursuant to the
terms of, any mortgage, deed or trust or other agreement or instrument to which AREH or the
Company is a party or by which either or any of its properties is bound except that ACE
acknowledges that the Lender’s consent may be required to transfer the Equity Interests
pursuant to this Agreement, and (B) does not and will not conflict with the charter
documents of either AREH or the Company. As of the Call Closing, the Equity Interests will
be (1) duly authorized, validly issued, fully paid and non-assessable membership interests,
(2) the only membership interests issued and outstanding and (3) delivered free and clear of
all Liens (other than any Lien solely created by action of ACE or relating to the Traymore
Debt) and not be subject to any voting or trust agreement, proxy, buy-sell agreement, right
of first refusal, preemptive-right or similar restriction. As of the Call Closing, no
individual, Governmental Entity or entity of whatever nature (“Person”), including AREH,
will have the right to acquire from the Company any membership interest or any other
securities of the Company.

       (iv) No Conflict. The execution, delivery and performance by AREH of this
Agreement, and the consummation by AREH of the transactions contemplated hereby (A) (1) does
not and will not violate any Requirement of Law applicable to AREH or the Company and (2)
does not and will not conflict with or result in any breach of any term, condition or
provision of, or constitute (with due notice or lapse of time or both) a default under, or
pursuant to the terms of, any mortgage, deed of trust or other agreement or instrument to
which AREH or the Company is a party or by which AREH, the Company or the properties of
either is bound except that ACE acknowledges that the Lender’s consent may be required to
transfer the Equity Interests pursuant to this Agreement, and (B) does not and will not
conflict with the organizational documents of AREH or the Company.

5

 

       (v) Consents/Approvals. As of the Call Closing, (A) no consents of, filings
with, authorizations or other actions of, any Governmental Entity will be required to be
received, made or filed by, or taken on behalf of, AREH’s transfer of the Equity Interests
pursuant to this Agreement, other than those that have or will have been received, made,
filed or taken, and (B) no consent, approval, waiver or other action by any Person under any
contract, agreement, indenture, lease or other similar document to which AREH or any of its
properties is bound is required for the transfer of the Equity Interests pursuant to the
Agreement, except for any such consents, approvals, waivers or other actions that have been
or will have been previously obtained or completed.

       (vi) Inspection Documents. The Inspection Documents (other than any Inspection
Documents produced or prepared by third parties) are complete and accurate in all material
respects.

       (vii) Company Business. The Company has not engaged, and will not engage in
any business other than the acquisition, ownership and operation of the Traymore Site.

        (b) ACE. ACE hereby represents, warrants and covenants to AREH as follows as of the
date hereof and as of the Call Closing:

       (i) Organization. ACE is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware.

       (ii) Power and Authority. ACE has the requisite limited liability company
power and authority to enter into this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution, delivery and performance
by it of this Agreement and the consummation by it of the transactions contemplated hereby
have been duly authorized by all requisite limited liability company action and no other
proceedings on its part or its members or managers is necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement has been duly executed and
delivered by ACE and constitutes its valid and binding obligation, enforceable against ACE
in accordance with its terms.

       (iii) No Conflict. The execution, delivery and performance by ACE of this
Agreement, and the consummation by ACE of the transactions contemplated hereby (A)(1) does
not and will not violate any Requirement of Law applicable to it and (2) does not and will
not conflict with or result in any breach of any term, condition or provision of, or
constitute (with due notice or lapse of time or both) a default under, or pursuant to the
terms of, any mortgage, deed of trust or other agreement or instrument to which it is a
party or by which it or any of its properties is bound and (B) does not and will not
conflict with its organizational documents.

       (iv) Consents/Approvals. As of the Call Closing (A) no consents of, filings
with, authorizations or other actions of, any Governmental Entity will be required to be
received, made or filed by, or taken on behalf of, ACE in connection with its

6

 

  purchase of the Equity Interests pursuant to this Agreement, other than those that have
or will have been received, made, filed or taken, and (B) no consent, approval, waiver or
other action by any Person under any contract, agreement, indenture, lease or other similar
document to which ACE or Atlantic Coast or any of their properties is bound is required for
the transfer of the Equity Interests pursuant to the Agreement, except for any such
consents, approvals, waivers or other actions that have been or will have been previously
obtained or completed.

       (v) Liabilities of the Company. ACE acknowledges the existence of the
obligations of the Company as lessor under the Traymore Leases (as defined in the Purchase
Agreement), the Boardwalk Assumed Liabilities (as defined in the Purchase Agreement) and, to
the extent AREH chooses to sell the Equity Interests and/or the Traymore Site subject to the
Traymore Debt, the Traymore Debt, and provided that the exercise of the Call Right closes in
accordance with Section 1(b), agrees to accept the Equity Interests and the Traymore Site
subject to all the terms and conditions contained in the Traymore Leases, copies of which
will be included in the Inspection Documents, the Boardwalk Assumed Liabilities, and the
Traymore Debt, and the other liabilities listed and disclosed in the Inspection Documents.

     7. Conditions to Each Party’s Obligation to Effect the Call Closing. The respective
obligations of each party to this Agreement to effect the Call Closing are subject to the
satisfaction of each of the following conditions on or prior to the Call Closing Date, any of which
may be waived in whole or in part to the extent permitted by applicable Law in a writing executed
by both of the parties hereto:

        (a) Consents/Approvals. All consents of, filings with, authorizations or other
actions of, any Governmental Entity required to be received, made or filed by, or taken on behalf
of, AREH in connection with its transfer, and ACE in connection with its purchase, of the Equity
Interests pursuant to this Agreement, have been received, made, filed or taken, and (B) all
consents, approvals, waivers or other action by any Person under any contract, agreement,
indenture, lease or other similar document to which AREH, ACE or any of their properties is bound
is required for the transfer of the Equity Interests pursuant to this Agreement have been obtained
or completed.

        (b) Performance of Obligations. Each of AREH and ACE shall have performed in all
material respects all covenants, agreements and obligations required to be performed by it under
this Agreement at or prior to the Call Closing.

        (c) Financing. To the extent, but only to the extent, AREH, in accordance with Section
4(b), decides to sell to ACE the Equity Interests free and clear of the Traymore Debt (either
because AREH chooses to or because the Lender does not consent to the sale of the Equity Interests
to ACE for any reason (if such consent is required under the Traymore Debt documents)), then ACE
shall have obtained financing on commercially reasonable terms and conditions sufficient to enable
it to consummate the transaction contemplated hereby.

7

 

     To the extent the conditions set forth in this Section 7 are not satisfied or waived at or
prior to the Call Closing Termination, then the Call Notice and this Agreement, with the exception
of those obligations that expressly survive the termination of this Agreement, shall automatically
terminate, and neither party shall have any further obligations or liability to the other
hereunder.

     8. Miscellaneous.

        (a) Further Assurances. Subject to the terms and conditions herein provided, each of
the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and
regulations to perform its obligations hereunder and to consummate and make effective the
transactions contemplated to be consummated by such party under this Agreement. Without limitation
of the generality of the foregoing, each party hereto agrees to cooperate with the other parties in
obtaining as promptly as practicable after the exercise of the Call Right, any and all consents or
approvals of any Governmental Entity referred to in Section 1(b), with respect to such exercise and
the related Call Closing.

        (b) Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the respective successors and permitted assigns of the parties hereto, provided that neither this
Agreement nor any rights or obligations hereunder may be assigned or delegated by AREH or ACE
without the prior written consent of the other party except that (i) ACE may assign, in whole or in
part, its rights and obligations to Atlantic Coast or any subsidiary of ACE or Atlantic Coast
provided that ACE continues to be bound by its obligations hereunder, (ii) ACE may assign its
rights and obligations to any subsidiary of Atlantic Coast or ACE into which ACE is merged,
consolidated or otherwise combined and (iii) AREH may assign in whole its rights and obligations
hereunder to any Person in connection with a transfer of the Equity Interests to such Person,
provided such Person agrees with ACE in writing to be bound by all of the terms of this Agreement
applicable to AREH.

        (c) Costs and Expenses. Except as otherwise set forth herein, each party agrees to
bear its own expenses, fees and costs incurred in connection with the transactions contemplated by
this Agreement.

        (d) Brokerage. There are no valid claims for brokerage commissions, finder’s fees or
similar compensation in connection with the transactions contemplated by this Agreement based on
any arrangement or agreement made by or on behalf of any party hereto and each party will indemnify
and hold the other party harmless against any liability or expense to it arising out of such a
claim.

        (e) Amendment. Any amendment hereto shall be effective only if in writing and signed
by each of AREH and ACE.

        (f) Waiver; Cumulative Rights. No provision of this Agreement shall be deemed to have
been waived by any act or knowledge of any party or of such party’s agents, officers or employees,
but only by an instrument in writing specifying such waiver signed by

8

 

AREH and delivered to ACE, if AREH is the waiving party, or in writing signed by ACE and
delivered to AREH, if ACE is the waiving party. The failure or delay of any party to require
performance by another party of any provision hereof shall not affect its right to require
performance of such provision unless and until such performance has been waived in writing. Each
and every right hereunder is cumulative and may be exercised in whole or in party from time to
time.

        (g) Notices. All notices, demands, requests, certificates or other communications
under this Agreement shall be in writing and shall be mailed by certified or registered mail
(return receipt requested) with charges prepaid, hand delivered or sent by facsimile transmission
or by commercial courier to the address set forth below for each of the parties (or at such other
address as shall be specified by a party by like notice to the other parties):

       (i) If to AREH:

American Real Estate Holdings Limited Partnership

100 South Bedford Road

Mt. Kisco, NY 10549

Attn.: Felicia Buebel

Fax.: (914) 242-9282

        with copies to:

DLA Piper Rudnick Gray Cary US LLP

1251 Avenue of the Americas

New York, NY 10020

Attn.: Steven Wasserman

Fax.: (212) 835-6001

       (ii) If to ACE:

Sands Casino Hotel

Indiana Avenue & Brighton Park

Atlantic City, NJ 08401

Attn: General Counsel

Fax: (609) 441-4937

        with copies to:

Katten Muchin Rosenman LLP

575 Madison Avenue

New York, NY 10022

Attn.: Joel Yunis

Fax.: (212) 894-5666

9

 

Notices shall be deemed delivered when received; provided that any notice delivered after business
hours or on a Saturday, Sunday or legal holiday at the place of such delivery shall be deemed for
purposes of computing any time period hereunder to have been delivered on the next business day in
such place of business.

        (h) Governing Law. This Agreement shall be governed by and interpreted in accordance
with the internal laws of the State of New York, without reference to its conflicts of law
principles.

        (i) 1031 Exchange. ACE acknowledges that AREH intends to structure its acquisition of
the Traymore Site as a 1031 Exchange in accordance with applicable Internal Revenue regulations.
ACE acknowledges and hereby consents to such transaction and the transfer by AREH of the Equity
Interests to the nominee exchange agent. Notwithstanding such transfer, AREH agrees to cause such
exchange agent to comply with the terms of this Agreement applicable to AREH to the extent the same
have been assigned to the nominee exchange agent.

        (j) Counterparts. This Agreement may be signed in two or more counterparts, each of
which shall be deemed an original but which together shall constitute one and the same instrument.

        (k) Headings. The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.

        (l) Remedies. Each party shall be entitled to obtain specific performance of the
obligations of another party hereunder and immediate injunctive relief, and in the event any action
or proceeding is brought in equity to enforce this Agreement, no party will present as a defense
that there is an adequate remedy at law. Such remedies shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.

        (m) “As-Is” Condition; Waiver and Release. Except for the express representations and
warranties contained in Section 6(a) of this Agreement, the Equity Interests to be transferred
hereunder will be transferred “as is, where is,” in their present condition and state of repair,
with all faults, limitations and defects (hidden and apparent). Without limitation, ACE
acknowledges that, except as specifically set forth to the contrary in Section 6(a) of this
Agreement, no warranties or representations, expressed or implied, of any kind whatsoever have been
made by AREH, any of its affiliates or any other person, or will be relied upon by ACE.

        (n) Survival of Representations, Warranties and Covenants. The representations,
warranties and covenants contained in Section 6 of this Agreement shall survive the Call Closing
for a period of six months. Except as set forth in the immediately preceding sentence no other
representation, warranty or covenant of AREH shall survive the Call Closing or termination of this
Agreement, and upon the earlier of the Call Closing, the Call Termination Date or other termination
of this Agreement, all obligations and duties of AREH shall be deemed fully satisfied, and AREH
shall have no further obligation, duty or liability hereunder, contingent or otherwise.

10

 

        (o) Limitation of Claims. Notwithstanding anything to the contrary contained herein,
the aggregate liability of AREH with respect to any claims, losses, liabilities, damages,
judgments, proceedings, causes of actions, costs and expenses shall not exceed the Call Price
actually paid by ACE at the Call Closing.

     [Remainder of page intentionally left blank]

11

 

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto on the date first
above written.

	 	 	 	 	 	 	 
	 	 	AMERICAN REAL ESTATE HOLDINGS LIMITED PARTNERSHIP
	 
	 	 	 	 	 	 
	 	 	By:	 	American Property Investors, Inc., its general
partner
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Jon F. Weber
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Jon F. Weber
	 

	 	 	 	Title:
	 	President
	 
	 	 	 	 	 	 
	 	 	ACE GAMING, LLC
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Richard P. Brown
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Richard Brown
	 

	 	 	 	Title:
	 	President and Chief Executive Officer

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

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

	 	 	 	Name:
	 	Keith Meister
	 

	 	 	 	Title:
	 	President

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}]]