Document:

EX-10.2

 

Exhibit 10.2

ESCROW AGREEMENT

          THIS ESCROW AGREEMENT, dated as of November 17, 2006 (this “Agreement”), is entered
into by and between American Real Estate Holdings Limited Partnership, a Delaware limited
partnership (“AREH”), Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation
(“ACE Hi”), and JPMorgan Chase Bank N.A., a national banking association (the “Escrow
Agent”). All capitalized terms used and not otherwise defined herein are used herein as
defined in the Indemnification Agreement (as hereinafter defined).

RECITALS:

          WHEREAS, on September 3, 2006, AREH, ACE Hi, Pinnacle Entertainment, Inc., a Delaware
corporation (“Buyer”), ACE Gaming, LLC, a New Jersey limited liability company, AREP
Boardwalk Properties LLC, a Delaware limited liability company (“Boardwalk”), PSW
Properties LLC, a Delaware limited liability company (“PSW”), AREH MLK LLC, a Delaware
limited liability company (“MLK”), and Mitre Associates LLC, a Delaware limited liability
company (“Mitre” and collectively with Boardwalk, PSW and MLK, the “AREH Subs” and
collectively the AREH Subs and AREH, the “AREH Selling Parties”), entered into an
Acquisition Agreement (the “Acquisition Agreement”);

          WHEREAS, the Escrow Agent is not a party to the Acquisition Agreement and has no obligations
thereunder;

          WHEREAS, the AREH Selling Parties acquired the assets of the AREH Subs for the benefit of ACE
Hi because ACE Hi, neither at the respective dates of such acquisitions nor at the time of
execution of the Acquisition Agreement had capital or financing available to acquire such assets;

          WHEREAS, the AREH Selling Parties entered into the Acquisition Agreement and agreed to
undertake their obligations thereunder, including without limitation, their indemnification
obligations thereunder, as an inducement for Buyer to enter into the Acquisition Agreement and in
order to facilitate the sale of the ACE Lo Equity Interests (as defined in the Acquisition
Agreement) by ACE Hi thereunder;

          WHEREAS, ACE Hi and AREH desire to appoint the Escrow Agent as the escrow agent under this
Agreement, and the Escrow Agent desires to accept such appointment, and to hold, invest and
distribute the Escrow Deposit in accordance with the provisions of this Escrow Agreement;

          WHEREAS, simultaneously with the execution of the Acquisition Agreement, AREH and ACE Hi
entered into an Indemnification Agreement (the “Indemnification Agreement”), pursuant to
which ACE Hi agreed to indemnify AREH in respect of any Losses resulting from or arising out of
certain of AREH’s obligations under the Acquisition Agreement in accordance with the terms of the
Indemnification Agreement, as an inducement for AREH to enter into the Acquisition Agreement and in
order to facilitate the sale of the ACE Lo Equity Interests by ACE Hi under the Acquisition
Agreement. The Escrow Agent is not a party to the Indemnification Agreement;

          WHEREAS, in order to secure ACE Hi’s obligations under the Indemnification Agreement and to
facilitate any payment in respect of Indemnifiable Losses thereunder, ACE Hi is

 

 

required to deposit the Escrow Amount, following the payment of all fees and expenses incurred
in connection with the Acquisition Agreement, with the Escrow Agent into the Escrow Account from
time to time as provided in the Indemnification Agreement; and

          WHEREAS, the parties hereto are entering into this Agreement to set forth the terms and
conditions upon which the Escrow Amount shall be held, invested, reinvested, managed, administered,
distributed and disposed of by the Escrow Agent.

          NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, for
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged
and intending to be legally bound, the parties to this Agreement hereby agree as follows:

          1. Appointment of Escrow Agent; Escrow Amount.

          (a) AREH and ACE Hi hereby appoint the Escrow Agent as the escrow agent under the
terms of this Agreement, and the Escrow Agent hereby accepts such appointment according to the
terms and subject to the conditions set forth herein.

          (b) On the date hereof, ACE Hi has deposited into the Escrow Account such amount
of the Escrow Amount, as ACE Hi is required to so deposit on the date hereof in accordance with the
terms of the Indemnification Agreement (including but not limited to the ACE Closing Payment) (such
amount, the “Initial Escrow Amount”) and from time to time hereafter ACE Hi will deposit
into the Escrow Account such additional amounts of the Escrow Amount, as ACE Hi is required to so
deposit from time to time in accordance with the terms of the Indemnification Agreement. The
Escrow Agent hereby acknowledges receipt of the Initial Escrow Amount and shall acknowledge receipt
of additional Escrow Amounts from time to time deposited with the Escrow Agent promptly upon
receipt thereof by providing written notice thereof to AREH and ACE Hi. The Escrow Agent shall
hold the Escrow Amount and, subject to the terms and conditions hereof, shall invest and reinvest
the Escrow Amount and the proceeds thereof as directed in Section 2 hereof. For the avoidance of
doubt, the Escrow Amount hereunder shall include any and all interest, dividends or other earnings
accrued or earned thereon. The parties hereto hereby acknowledge and agree that any and all
interest, dividends or other earnings accrued or earned on the Escrow Amount shall accrue for the
benefit of ACE Hi and shall be included in income by ACE Hi for all tax purposes.

          2. Investment of Escrow Amount. During the term of this Agreement, the
Escrow Amount shall be invested and reinvested by the Escrow Agent in the investment indicated on
Schedule I attached hereto or such other investments as shall be directed in writing by AREH and
ACE Hi and shall be acceptable to the Escrow Agent. All investment orders involving U.S. Treasury
obligations, commercial paper and other direct investments will be executed through JPMorgan
Fleming Asset Management (JPMFAM), in the investment management division of JPMorgan Chase Bank
N.A. Subject to principles of best execution, transactions are effected on behalf of the Escrow
Amount through broker-dealers selected by JPMFAM. In this regard, JPMFAM seeks to attain the best
overall result for the Escrow Amount, taking into consideration quality of service and reliability.
An agency fee will be assessed in connection with each transaction, such agency set forth on
Schedule 1 attached hereto. Periodic statements will be provided to AREH and ACE Hi
reflecting transactions executed on behalf of the Escrow Amount. AREH and ACE Hi, upon written
request, will receive a statement of transaction details upon completion of any securities
transaction in the Escrow Amount without any additional cost. The Escrow Agent shall have the right
to liquidate any

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investments held in order to provide funds necessary to make required payments under this
Escrow Agreement. The Escrow Agent shall have no liability for any loss sustained as a result of
any investment in an investment indicated on Schedule 1 attached hereto or any investment
made pursuant to the instructions of the parties hereto or as a result of any liquidation of any
investment prior to its maturity or for the failure of the parties to give the Escrow Agent
instructions to invest or reinvest the Escrow Amount.

          3. Payments From the Escrow Account. The Escrow Agent shall hold the Escrow
Amount in escrow in the Escrow Account in accordance with the terms and conditions set forth in
this Agreement and shall make payments from the Escrow Account only as provided in Section
4 below.

          4. Payment Procedures. Amounts from the Escrow Amount shall remain on deposit in the
Escrow Account until released from time to time as follows:

          (a) In the event ACE Hi is required to make a payment to Buyer (any such payment, a
“Direct Payment Obligation”) under the Acquisition Agreement, ACE Hi (with the prior
written consent of AREH, which shall not be unreasonably withheld or delayed) may provide a written
instruction to the Escrow Agent directing the Escrow Agent to release the amount of such Direct
Payment Obligation from the Escrow Amount directly to Buyer in satisfaction of such Direct Payment
Obligation by wire transfer of immediately available funds to the wire transfer instructions set
forth in such written instruction to the Escrow Agent.

          (b) In the event an AREH Party seeks payment from ACE Hi in respect of an Indemnifiable Loss
pursuant to Section 1 of this Agreement, AREH shall provide written notice to ACE Hi
indicating that an AREH Party has become obligated to and has or will make a payment in respect of
an Indemnifiable Loss, briefly setting forth the nature of the underlying claim and the amount of
such Indemnifiable Loss (any such amount, the “Indemnification Amount”) and setting forth
the wire transfer instructions (any such wire transfer instructions the “Applicable Wire
Transfer Instructions”) to which the applicable payment is to be made (any such notice, a
“Payment Notice”). Within three (3) business days following the receipt by ACE Hi of a
Payment Notice, ACE Hi and AREH shall provide a joint written instruction to the Escrow Agent
directing the Escrow Agent to release the Indemnification Amount from the Escrow Account (or in the
event the remaining Escrow Amount is less than the Indemnification Amount, the entire remaining
Escrow Amount) by wire transfer of immediately available funds to the Applicable Wire Transfer
Instructions. In the event that ACE Hi does not execute such joint written instruction within such
three (3) business day period, AREH shall have the right to provide a unilateral notice to the
Escrow Agent directing such payment; provided, however, that in the event AREH does
not provide such unilateral notice in good faith and is determined by a court of competent
jurisdiction (by final and non-appealable order) to not be entitled to such payment, AREH shall
reimburse ACE Hi for the portion of such payment to which AREH was so determined to not be entitled
plus interest at a rate of 8% per annum accruing from the date such payment was made from the
Escrow Amount.

          (c) Upon the later of (x) the eighteen month anniversary of the Closing Date provided any and
all outstanding obligations relating to any claims for which notice has then been given under
Article 12 of the Acquisition Agreement has been then fully discharged and all

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obligations that could result in Losses to the AREH Parties under the terms of Article 12 of
the Acquisition Agreement (other than as a result of breaches of post closing obligations not
included in Article 12) for AREH Obligations have expired or (y) the termination of the GB
Indemnification Escrow Agreement and the satisfaction of the Holdback Condition, ACE Hi and AREH
shall provide a joint written instruction to the Escrow Agent directing the Escrow Agent to release
any Escrow Amounts remaining in the Escrow Account to ACE Hi by wire transfer of immediately
available funds to an account designated by ACE Hi in writing to the Escrow Agent.

     For the avoidance of doubt, ACE Hi’s obligations in respect of Indemnifiable Losses pursuant
to this Agreement are not contingent upon any obligation of any AREH Party to first make payment or
otherwise incur out-of-pocket Losses in respect of any Indemnifiable Losses. Rather, ACE Hi’s
obligations in respect of Indemnifiable Losses pursuant to this Agreement shall accrue and ACE Hi
shall be obligated to make the applicable payments to the AREH Parties and the same may be released
from the Escrow Amounts in respect thereof, upon written notice from AREH to ACE Hi stating that
AREH has concluded that an AREH Obligation is required to be paid.

     In the event that the remaining Escrow Amount is insufficient to satisfy any of ACE Hi’s
obligations in respect of Indemnifiable Losses pursuant to the Indemnification Agreement, AREH
shall be entitled to proceed against any and all other assets of ACE Hi and to exercise any and all
other rights available under applicable law.

     In the event of any conflict between the terms of the Indemnification Agreement and this
Agreement, the terms of the Indemnification Agreement shall govern.

          5. Conditions to Escrow. The Escrow Agent undertakes to perform only such
duties as are expressly set forth herein and no duties shall be implied. The Escrow Agent shall
have no liability under and no duty to inquire as to the provisions of any agreement other than
this Agreement. The Escrow Agent may rely upon and shall not be liable for acting or refraining
from acting upon any written notice, instruction or request furnished to it hereunder and believed
by it to be genuine and to have been signed or presented by the proper party or parties. The
Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or
content of any such document. The Escrow Agent shall have no duty to solicit any payments which
may be due it or the Escrow Amount. The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith except to the extent that a court of competent jurisdiction determines
that the Escrow Agent’s gross negligence or willful misconduct was the primary cause of any loss to
ACE Hi or AREH. The Escrow Agent may execute any of its powers and perform any of its duties
hereunder directly or through agents or attorneys (and shall be liable only for the careful
selection of any such agent or attorney) and may consult with counsel, accountants and other
skilled persons to be selected and retained by it. The Escrow Agent shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of
any such counsel, accountants or other skilled persons. In the event that the Escrow Agent shall
be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands
from any party hereto which, in its opinion, conflict with any of the provisions of this Agreement,
it shall be entitled to refrain from taking any action and its sole obligation shall be to keep
safely all property held in escrow until it shall be directed otherwise in writing by all of the
other parties hereto or by a final order or judgment of a court of competent jurisdiction.
Anything in this Agreement to the contrary notwithstanding, in no event

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shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of action.

          6. Indemnification. AREH and ACE Hi shall jointly and severally
indemnify, defend and save harmless the Escrow Agent and its directors, officers, agents and
employees (the “indemnitees”) from all loss, liability or expense (including the reasonable
fees and expenses of outside counsel) arising out of or in connection with (i) the Escrow Agent’s
execution and performance of this Agreement, except in the case of any indemnitee to the extent
that such loss, liability or expense is due to the gross negligence or willful misconduct of such
indemnitee, or (ii) its following any instructions or other directions from AREH and ACE Hi, except
to the extent that its following any such instruction or direction is expressly forbidden by the
terms hereof. The parties hereto acknowledge that the foregoing indemnities shall survive the
resignation or removal of the Escrow Agent or the termination of this Agreement. The Escrow Agent
acknowledges and agrees that it is holding the Escrow Account (and all amounts on deposit therein)
in its capacity as escrow agent and that it has no right to apply amounts (including any
investments) in the Escrow Account against any obligations of the other parties to this Agreement,
without the prior written consent of both AREH and ACE Hi.

          7. Succession. The Escrow Agent may resign and be discharged from its
duties or obligations hereunder by giving thirty (30) days advance notice in writing of such
resignation to the other parties hereto specifying a date when such resignation shall take effect.
If, after twenty (20) days from the date of its written notice of intent to resign, the Escrow
Agent has not received a written designation, executed by the AREH and ACE Hi, of a successor
Escrow Agent, the Escrow Agent shall be permitted to determine, in its sole discretion, either (a)
to retain custody of the funds in the Escrow Amount until it receives such designation, or (b) to
apply to a court of competent jurisdiction for appointment of a successor Escrow Agent, following
which such appointment the Escrow Agent shall have no further responsibilities or duties hereunder.
The Escrow Agent shall have the right to withhold an amount equal to any amount due and owing to
the Escrow Agent, plus any costs and expenses the Escrow Agent shall reasonably believe may be
incurred by the Escrow Agent in connection with the termination of the Agreement. Any corporation
or association into which the Escrow Agent may be merged or converted or with which it may be
consolidated, or any corporation or association to which all or substantially all the escrow
business of the Escrow Agent’s corporate trust line of business may be transferred, shall be the
Escrow Agent under this Agreement without further act.

          8. Termination. This Agreement shall terminate on the date on which all
of the Escrow Amounts have been disbursed in accordance with the Indemnification Agreement.

          9. Notices. All communications hereunder shall be in writing and shall be
deemed to be duly given and received:

          (a) upon delivery if delivered personally or upon confirmed transmittal if by
facsimile;

          (b) on the next Business Day (as hereinafter defined) if sent by overnight
courier; or

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          (c) four (4) Business Days after mailing if mailed by prepaid registered mail,
return receipt requested (or if later, the date on which such return receipt indicates such
communication was so received), to the appropriate notice address set forth on Schedule 1
attached hereto or at such other address as any party hereto may have furnished to the other
parties in writing by registered mail, return receipt requested.

          Notwithstanding the above, in the case of communications delivered to the Escrow Agent
pursuant to subclauses (b) and (c) of this Section 9, such communications shall be deemed to have
been given on the date received by the Escrow Agent. In the event that the Escrow Agent, in its
sole discretion, shall determine that an emergency exists, the Escrow Agent may use such other
means of communication as the Escrow Agent deems appropriate. “Business Day” shall mean
any day other than a Saturday, Sunday or any other day on which the Escrow Agent located at the
notice address set forth on Schedule 1 attached hereto is authorized or required by law or
executive order to remain closed:

          10. Account Opening Information/TINs. IMPORTANT INFORMATION ABOUT
PROCEDURES FOR OPENING A NEW ACCOUNT:

For accounts opened in the US:

To help the government fight the funding of terrorism and money laundering activities, Federal
law requires all financial institutions to obtain, verify, and record information that
identifies each person who opens an account. When an account is opened, the Escrow Agent will
ask for information that will allow the Escrow Agent to identify relevant parties.

For non-US accounts:

To help in the fight against the funding of terrorism and money laundering activities, the
Escrow Agent is required along with all financial institutions to obtain, verify, and record
information that identifies each person who opens an account. When AREH and/or

ACE Hi open an account, the Escrow Agent will ask for information that will allow the Escrow
Agent to identify such persons.

TINs

AREH and ACE Hi each represent that its correct Taxpayer Identification Number (“TIN”)
assigned by the Internal Revenue Service (“IRS”) or any other taxing authority is set
forth in Schedule 1 attached hereto. Upon execution of this Agreement, AREH and ACE Hi
shall provide the Escrow Agent with a fully executed W-8 or W-9 IRS form, which shall include
AREH’s and ACE Hi’s TIN, respectively. In addition, all interest or other income earned under
the Agreement shall be allocated and/or paid as directed in a joint written direction of AREH
and ACE Hi and reported by the recipient to the Internal Revenue Service or any other taxing
authority. Notwithstanding such written directions, the Escrow Agent shall report and, as
required withhold any taxes as it determines may be required by any law or regulation in effect
at the time of the distribution. In the absence of timely direction, all proceeds of the Escrow
Amount shall be retained in the Escrow Amount and reinvested from time to time by the Escrow
Agent as provided in Section 2 hereof. In the event that any earnings remain undistributed at
the end of any calendar year, the Escrow Agent shall report to the Internal Revenue Service or
such other authority such earnings as it deems appropriate or as required by any applicable law
or

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regulation or, to the extent consistent therewith, as directed in writing by AREH and ACE Hi.
In addition, the Escrow Agent shall withhold any taxes it deems appropriate and shall remit such
taxes to the appropriate authorities.

          11. Certain Representations and Warranties. Each party hereto hereby
represents and warrants to the other parties hereto as follows:

          (a) Its execution and delivery of this Agreement and the performance by such party
of its obligations hereunder does not require it to obtain any consent, approval or action of, or
make any filing with or give any notice to any Person or any governmental or judicial authority,
except where the failure to obtain any consent or approval or to take any action or to make any
filing or give any notice would not materially impair or delay the ability of such party to perform
its obligations under this Agreement.

          (b) It has duly and validly authorized the execution, delivery, and performance of
this Agreement. No other action is necessary to authorize the execution, delivery and performance
of this Agreement, and upon such party’s execution and delivery of this Agreement, this Agreement
shall constitute the valid and binding obligation of such party, enforceable against it in
accordance with the terms hereof, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of
creditors’ rights generally.

          12. Certain Definitions. For purposes of this Agreement, the term
“Person” means any individual, corporation, limited liability company, partnership,
association, trust, unincorporated organization or other entity.

          13. Security Procedures. In the event funds transfer instructions are
given (other than in writing at the time of execution of this Agreement, as indicated in
Schedule 1 attached hereto), whether in writing or by telecopier, the Escrow Agent is
authorized to seek confirmation of such instructions by telephone call-back to the person or
persons designated on Schedule 2 attached hereto, and the Escrow Agent may rely upon the
confirmation of anyone purporting to be the person or persons so designated. Each funds transfer
instruction shall be executed by an authorized signatory, a list of such authorized signatories is
set forth on Schedule 2. The undersigned is authorized to certify that the signatories on
Schedule 2 are authorized signatories. The persons and telephone numbers for call-backs
may be changed only in a writing actually received and acknowledged by the Escrow Agent. If the
Escrow Agent is unable to contact any of the authorized representatives identified in Schedule
2, the Escrow Agent is hereby authorized to seek confirmation of such instructions by telephone
call-back to any one or more of such parties’ executive officers (“Executive Officers”),
which shall include the titles of Chief Executive Officer, President, Chief Financial Officer,
General Counsel or Treasurer, as the Escrow Agent may select. Such “Executive Officer” shall
deliver to the Escrow Agent a fully executed Incumbency Certificate, and the Escrow Agent may rely
upon the confirmation of anyone purporting to be any such officer. The Escrow Agent and the
beneficiary’s bank in any funds transfer may rely solely upon any account numbers or similar
identifying numbers provided by AREH or ACE Hi to identify (i) the beneficiary, (ii) the
beneficiary’s bank, or (iii) an intermediary bank. The Escrow Agent may apply any of the escrowed
funds for any payment order it executes using any such identifying number, even when its use may
result in a person other than the beneficiary being paid, or the transfer of funds to a bank other
than

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the beneficiary’s bank or an intermediary bank designated. The parties to this Agreement
acknowledge that these security procedures are commercially reasonable.

          14. Successors and Assigns Bound. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their respective successors and assigns,
administrators and representatives, and shall not be enforceable by or inure to the benefit of any
third party except as provided in Section 6 with respect to a resignation by the Escrow
Agent. No party may assign any of its rights or obligations under this Agreement without the
written consent of the other parties.

          15. Amendment and Waiver. This Agreement may be modified only by a
writing signed by all of the parties hereto, and no waiver hereunder shall be effective unless in a
writing signed by the party to be charged.

          16. Counterparts. This Agreement may be executed in any number of
counterparts and be delivered via facsimile transmission, each of which shall be an original but
all of which shall constitute one and the same Agreement. Facsimile copies may be deemed
originals for the purpose of this agreement.

          17. Severability. The invalidity, illegality, or unenforceability of any
provision of this Agreement pursuant to judicial decree shall not affect the validity or
enforceability of any other provision of this Agreement, all of which shall remain in full force
and effect.

          18. Creditor Rights. AREH and ACE Hi hereby acknowledge and agree that
they will be entitled to delivery of the Escrow Account solely in accordance with the terms hereof,
and no creditor of any of AREH or ACE Hi will have any rights in or to the Escrow Amounts so long
as it remains subject to the terms of this Agreement.

          19. Miscellaneous. The provisions of this Agreement may be waived,
altered, amended or supplemented, in whole or in part, only by a writing signed by all of the
parties hereto. Neither this Agreement nor any right or interest hereunder may be assigned in
whole or in part by any party, except as provided in Section 7 hereof, without the prior consent of
the other parties. This Agreement shall be governed by and construed under the laws of the State
of New York without giving effect to the principles of conflicts of laws thereof. Each party
hereto irrevocably waives any objection on the grounds of venue, forum non-conveniens or any
similar grounds and irrevocably consents to service of process by mail or in any other manner
permitted by applicable law and consents to the jurisdiction of the state and federal courts
located in the County of New York in the State of New York. The parties further hereby waive any
right to a trial by jury with respect to any lawsuit or judicial proceeding arising or relating to
this Agreement. No party to this Agreement is liable to any other party for losses due to, or if
it is unable to perform its obligations under the terms of this Agreement because of, acts of God,
fire, floods or other causes reasonably beyond its control. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

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

	 	 	 	 	 
	 	AMERICAN REAL ESTATE HOLDINGS LIMITED PARTNERSHIP

 	 
	 	By:  	/s/ Hillel Moerman
 	 
	 	 	Name:  	Hillel Moerman 	 
	 	 	Title:  	CFO 	 
	 
	 	ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC.

 	 
	 	By:  	/s/ Nancy Axilrod
 	 
	 	 	Name:  	Nancy Axilrod 	 
	 	 	Title:  	Vice President 	 
	 
	 	JPMORGAN CHASE BANK N.A.

 	 
	 	By:  	/s/ Daren M. Di Nicola
 	 
	 	 	Name:  	Daren M. Di Nicola 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page to Escrow Agreement]

 

 

Schedule I

AREH: American Real Estate Holdings Limited Partnership:

			
	AREH Notice Address:	 	White Plains Plaza

445 Hamilton Avenue

Suite 1210

White Plains, NY 10601

AREH Telecopy No: (914) 614-7001

AREH Contact Name: Felicia Buebel, Esq.

AREH TIN: 13-3398767

Wiring Instructions:

	 	 	 	 	 	 	 
	 
	 	Bank Name:	 	Bank of America
	 
	 	ABA:	 	026009593
	 
	 	A/C Number:	 	0048 3443 8307
	 
	 	A/C Name:	 	American Real Estate Holdings L.P.

ACE Hi: Atlantic Coast Entertainment Holdings, Inc.

			
	ACE Hi Notice Address:	 	c/o Icahn Associates Corp.

767 Fifth Avenue, 47th Floor

New York, New York 10153

ACE Hi and Fax Number: Tel: (212) 702-4300; Fax: (212) 688-1158

ACE Hi Contact Name: Nancy Axilrod, Esq.

ACE Hi TIN: 54-2131349

Wiring Instructions:

	 	 	 	 	 	 	 
	 

	 	    Account #:
	 	9429354435
	 

	 	    Account Name:
	 	Atlantic Coast Entertainment Holding Inc.

	 

	 	    Bank Name:
	 	Bank of America

	 

	 	    ABA #:
	 	026009593

With a copy to:

Katten Muchin Rosenman LLP

575 Madison Avenue

New York, NY 10022-2585

Telecopy No: (212) 940-8776

Attention: Joel A. Yunis, Esq.

                   Evan L. Greebel, Esq.

Investment:                [specify]

	 	o	 	JPMorgan Chase Bank N.A. Money Market Account;
	 
	 	þ	 	A trust account with JPMorgan Chase Bank N.A.;
	 
	 	o	 	A money market mutual fund, including without limitation the JPMorgan Fund or
any other mutual fund for which the Escrow Agent or any affiliate of the Escrow Agent
serves as investment manager, administrator, shareholder servicing agent and/or
custodian or subcustodian, notwithstanding that (i) the Escrow Agent or an affiliate of
the Escrow Agent receives fees from such funds for services rendered, (ii) the Escrow
Agent charges and collects fees for services rendered pursuant to this

 

 

	 	 	 	Agreement, which fees are separate from the fees received from such funds, and (iii)
services performed for such funds and pursuant to this Agreement may at times
duplicate those provided to such funds by the Escrow Agent or its affiliates.
	 
	 	o	 	Such other investments as AREH, ACE Hi and the Escrow Agent may from time to
time mutually agree upon in a writing executed and delivered by AREH and ACE Hi and
accepted by the Escrow Agent.

			
	Escrow Agent notice address:	 	JPMorgan Chase Bank N.A.

Escrow Services

560 Mission Street, 13th Floor

San Francisco, CA 94105

Attention: Maital Shemesh-Rasmussen

Phone / Fax: (415) 315-3986

Escrow Agent’s compensation:

 

 

Schedule 2

Telephone Number(s) and authorized signature(s) for

Person(s) Designated to give Funds Transfer Instructions

If to AREH:

	 	 	 	 	 	 	 
	 	 	Name	 	Telephone Number	 	Signature
	1.

	 	Hillel Moerman
	 	(212) 702-4349
	 	/s/ Hillel Moerman
	 

	 	 	 	 	 	 
	2.

	 	Felicia Buebel, Esq.
	 	(914) 614-7000
	 	/s/ Felicia Buebel, Esq.
	 

	 	 	 	 	 	 
	3.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 

If to Seller:

	 	 	 	 	 	 	 
	 	 	Name	 	Telephone Number	 	Signature
	1.

	 	Denise Barton
	 	(702) 380-7777
	 	/s/ Denise Barton
	 

	 	 	 	 	 	 
	2.

	 	Nancy Axilrod
	 	(212) 702-4300
	 	/s/ Nancy Axilrod
	 

	 	 	 	 	 	 
	3.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 

 

 

	 	 	

Telephone Number(s) for Call-Backs and

Person(s) Designated to Confirm Funds Transfer Instructions

If to AREH:

	 	 	 	 	 	 	 
	 	 	Name	 	Telephone Number	 	Signature
	1.

	 	Hillel Moerman
	 	(212) 702-4349
	 	/s/ Hillel Moerman
	 

	 	 	 	 	 	 
	2.

	 	Felicia Buebel, Esq.
	 	(914) 614-7000
	 	/s/ Felicia Buebel, Esq.
	 

	 	 	 	 	 	 
	3.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 

If to Seller:

	 	 	 	 	 	 	 
	 	 	Name	 	Telephone Number	 	Signature
	1.

	 	Denise Barton
	 	(702) 380-7777
	 	/s/ Denise Barton
	 

	 	 	 	 	 	 
	2.

	 	Nancy Axilrod
	 	(212) 702-4300
	 	/s/ Nancy Axilrod
	 

	 	 	 	 	 	 
	3.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 

Telephone call backs shall be made to both AREH and ACE Hi if joint instructions are required
pursuant to the Agreement. All funds transfer instructions must include the signature of the
person(s) authorizing said funds transfer and must not be the same person confirming said transfer.EX-4.1.3

 

    Exhibit
    4.1.3

 

    SUPPLEMENTAL INDENTURE, dated as
    of          ,
    2006 (the “Supplemental Indenture”), among
    LUCENT TECHNOLOGIES INC., a Delaware corporation (the
    “Company”), and THE BANK OF NEW YORK, a New
    York banking corporation, as trustee (the “Trustee”).

 

    RECITALS

 

    WHEREAS, the Company and the Trustee have entered into that
    Indenture, dated as of June 4, 2003 (as supplemented by the
    First Supplement (as defined below), the
    “Indenture”), which provided for the issuance
    of one or more series of securities (the
    “Securities”);

 

    WHEREAS, the Company and the Trustee have entered into that
    First Supplemental Indenture, dated as of June 4, 2003 (the
    “First Supplement”), which provided for the
    issuance of the Company’s
    23/4%
    Series A Convertible Senior Debentures due 2023 (the
    “Series A Debentures”) and the
    Company’s
    23/4%
    Series B Convertible Senior Debentures due 2025 (the
    “Series B Debentures”, and together with
    the Series A Debentures, the “Debentures”);

 

    WHEREAS, pursuant to an Agreement and Plan of Merger, dated as
    of April 2, 2006 (the “Merger Agreement”),
    by and among the Company, Alcatel, a societe anonyme organized
    under the laws of the Republic of France
    (“Alcatel”), and Aura Merger Sub, Inc., a
    Delaware corporation and a direct, wholly owned subsidiary of
    Alcatel (“Merger Sub”), Merger Sub will be
    merged with and into the Company, with the Company continuing as
    the surviving corporation (the “Merger”);

 

    WHEREAS, the Board of Directors of Alcatel has determined it to
    be in the best interest of Alcatel to guarantee the principal
    of, premium, if any, interest on, and all other monetary
    obligations arising under the Debentures upon consummation of
    the Merger;

 

    WHEREAS, the Company desires to execute and deliver this
    Supplemental Indenture to (i) amend the Indenture to
    provide that the reports and other information required to be
    provided by the Company and in respect of the Company may
    instead be provided only with respect to Alcatel effective upon
    Alcatel’s execution of the aforementioned guaranty and
    (ii) add certain defined terms and related text in the
    Indenture (collectively, the “Proposed
    Amendments”);

 

    WHEREAS, the Board of Directors of the Company has determined
    that it be in the best interest of the Company to make the
    Proposed Amendments;

 

    WHEREAS, Section 9.02 of the Indenture provides that the
    Company and the Trustee may amend or supplement the Indenture or
    the Securities with the written consent of the Holders of at
    least a majority in principal amount of the Securities of each
    Series then outstanding (the “Required
    Consent”);

 

    WHEREAS, the Company has obtained the Required Consent; and

 

    WHEREAS, pursuant to Section 9.02 of the Indenture, the
    Company and the Trustee are authorized to execute and deliver
    this Supplemental Indenture.

 

    NOW, THEREFORE, for and in consideration of the premises and
    other valuable consideration, the receipt and sufficiency of
    which are hereby acknowledged, and intending to be legally bound
    hereby, it is hereby agreed between the Company and the Trustee,
    for the equal and proportionate benefit of the respective
    Holders from time to time, as follows:

 

    ARTICLE I

    

 

    DEFINITIONS

 

    Section 1.1.  Definition
    of Terms.   Capitalized terms used and not
    otherwise defined herein have the respective meanings assigned
    to such terms in the Indenture.

    

    1

 

    ARTICLE II

    

 

    AMENDMENTS

 

    Section 2.1.  Section 1.01
    of the Indenture is amended to include the following definitions
    in their proper alphabetical location:

 

    “Beneficial Owner” has the meaning assigned to
    such term in
    Rule 13d-3
    and
    Rule 13d-5
    under the Exchange Act, except that in calculating the
    beneficial ownership of any particular “person,” as
    such term is used in Section 13(d)(3) of the Exchange Act,
    such “person” shall be deemed to have beneficial
    ownership of all securities that such “person” has the
    right to acquire, whether such right is currently exercisable or
    is exercisable only upon the occurrence of a subsequent
    condition.

 

    “Parent” means any person (as such term is used
    in Sections 13(d) and 14(d) of the Exchange Act and the
    regulations thereunder) who is or becomes the Beneficial Owner,
    directly or indirectly, of more than 50% of the total voting
    stock or total common equity of the Company.

 

    “Parent Guaranty” means a guaranty by a
    Parent (whether or not subordinated to the Parent’s senior
    debt) of all obligations of the Company under the Indenture and
    any outstanding Debentures.

 

    Section 2.2.  Section 4.02
    of the Indenture is amended by inserting the following text as a
    new paragraph at the end of Section 4.02:

 

    Notwithstanding the foregoing, if the Parent executes and
    delivers a Parent Guaranty, the Parent may furnish to the
    Holders copies of its annual report and the information,
    documents and other reports (without including the condensed
    consolidating footnote contemplated by
    Rule 3-10
    of
    Regulation S-X
    promulgated under the Securities Act) that Parent is required to
    file pursuant to Sections 13 and 15(d) of the Exchange Act
    in lieu of those required to be furnished or filed by the Company. At
    such time as the Parent Guaranty is released or terminated,
    the Parent that issued such terminated or released Parent Guaranty shall no longer be obligated to provide the reports and
    information provided for in this paragraph and shall be released
from any other obligations under this Supplemental Indenture.

 

    ARTICLE III

    

 

    ACCEPTANCE
    OF SUPPLEMENTAL INDENTURE

 

    Section 3.1.  Acceptance.  The
    Trustee hereby accepts this Supplemental Indenture and agrees to
    perform the same under the terms and conditions set forth in the
    Indenture.

 

    ARTICLE IV

    

 

    MISCELLANEOUS

 

    Section 4.1.  Effectiveness
    of the Supplemental Indenture.  This
    Supplemental Indenture shall be effective on the date hereof but
    shall not be operative until the effective date of the
    Merger.

 

    Section 4.2.  Termination
    of Merger Agreement.  If the Merger Agreement
    shall be terminated prior to the consummation of the Merger,
    this Supplemental Indenture shall be null and void and of no
    force or effect

 

    Section 4.3.  Effect
    of Supplemental Indenture.  Upon the execution
    and delivery of this Supplemental Indenture by the Company and
    the Trustee, the Indenture shall be supplemented and amended in
    accordance herewith, and this Supplemental Indenture shall form
    a part of the Indenture for all purposes, and every holder of
    Debentures heretofore or hereafter authenticated and delivered
    under the Indenture shall be bound thereby.

 

    Section 4.4.  Indenture
    Remains in Full Force and Effect.  Except as
    supplemented or amended hereby, all provisions in the Indenture
    shall remain in full force and effect.

 

    Section 4.5.  Incorporation
    of Indenture.  All the provisions of this
    Supplemental Indenture shall be deemed to be incorporated in,
    and made a part of, the Indenture; and the Indenture, as
    supplemented and amended by this Supplemental Indenture, shall
    be read, taken and construed as one and the same instrument.

    

    2

 

    Section 4.6.  Headings.  The
    headings of the Articles and Sections of this Supplemental
    Indenture are inserted for convenience of reference and shall
    not be deemed to be a part thereof.

 

    Section 4.7.  Counterparts.  This
    Supplemental Indenture may be executed in any number of
    counterparts, each of which so executed shall be deemed to be an
    original, but all such counterparts shall together constitute
    but one and the same instrument.

 

    Section 4.8.  Conflict
    with Trust Indenture Act.  If any provision of
    this Supplemental Indenture limits, qualifies or conflicts with
    any provision of the Trust Indenture Act that is required under
    the Trust Indenture Act to be part of and govern any provision
    of this Supplemental Indenture, such provision of the Trust
    Indenture Act shall control. If any provision of this
    Supplemental Indenture modifies or excludes any provision of the
    Trust Indenture Act that may be so modified or excluded,
    the provision of the Trust Indenture Act shall be deemed to
    apply to the Indenture as so modified or to be excluded by this
    Supplemental Indenture, as the case may be.

 

    Section 4.9.  Successors
    and Assigns.  All covenants and agreements in
    this Supplemental Indenture by the Company and Alcatel shall
    bind their respective successors and assigns, whether so
    expressed or not.

 

    Section 4.10.  Separability
    Clause.  In case any provision in this
    Supplemental Indenture shall be invalid, illegal or
    unenforceable, the validity, legality and enforceability of the
    remaining provisions shall not in any way be affected or
    impaired thereby.

 

    Section 4.11.  Benefits
    of Supplemental Indenture, Etc.  Nothing in
    this Supplemental Indenture, express or implied, shall give to
    any Person, other than the parties hereto and thereto and their
    successors hereunder, any benefit or any legal or equitable
    right, remedy or claim under this Supplemental Indenture, the
    Indenture or the Debentures.

 

    Section 4.12.  Recitals.  The
    recitals contained herein are made by the Company and the
    Trustee assumes no responsibility for their correctness. The
    Trustee makes no representations as to the validity or
    sufficiency of this Supplemental Indenture.

 

    Section 4.13.  Certain
    Duties and Responsibilities of the
    Trustee.  In entering into this Supplemental
    Indenture, the Trustee shall be entitled to the benefit of every
    provision of the Indenture relating to the conduct or affecting
    the liability of or affording protection to the Trustee, whether
    or not elsewhere herein so provided.

 

    Section 4.14.  No
    Security Interest Created.  Nothing in this
    Supplemental Indenture, express or implied, shall be construed
    to constitute a security interest under the Uniform Commercial
    Code or similar legislation, as now or hereafter enacted and in
    effect, in any jurisdiction in which property of the Company and
    its Subsidiaries is located.

 

    Section 4.15.  Governing
    Law.  This Supplemental Indenture shall be
    governed by and construed in accordance with the laws of the
    State of New York, without regard to the conflict of laws
    provisions thereof.

    [SIGNATURE PAGES FOLLOW]

    

    3

 

    IN WITNESS WHEREOF, the parties hereto have caused this
    Supplemental Indenture to be duly executed and attested, all as
    of the date and year first written above.

 

    LUCENT TECHNOLOGIES INC.

 

    By: _
    _

    Name:

    Title:

 

    THE BANK OF NEW YORK, as Trustee

 

    By: _
    _

    Name:

    Title:

    

    4

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