Accommodation Pledge Agreement

Exhibit 10.19


ACCOMMODATION PLEDGE AGREEMENT


THIS ACCOMMODATION PLEDGE AGREEMENT (this "Agreement") is made on December 27, 2001 by each of the undersigned (each herein, referred to as "Pledgor" and collectively as "Pledgors" with an address as it appears with the signature below to AMERICAN REAL ESTATE HOLDINGS, L.P. (herein referred to as "Lender").


RECITALS


WHEREAS, Lender is extending credit to Carl C. Icahn, individually ("Borrower"); and


WHEREAS, for good and valuable consideration in hand received by Pledgors from Borrower and to induce Lender to extend credit to Borrower, each Pledgor wishes to grant security for Borrower's performance of its obligations to Lender under the note in the principal amount of $250 million, dated the date hereof, made by Borrower in favor of Lender (the "Note") and, to that effect, to pledge and assign to Lender all of its rights, title and interest in securities owned by each Pledgor, listed on Schedule A hereto (with respect to the securities pledged by each Pledgor, as the same may be adjusted in amount in accordance with the provisions of Section 2 of this Agreement, the "Pledged Securities"):


WHEREAS, Borrower is delivering to Lender a Pledge Agreement dated the date hereof in respect of certain securities owned by Borrower (the "Borrower Pledge Agreement");


NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, each Pledgor agrees as follows:


1. Security Interest.


(a) As security for the Obligations (as defined below), each Pledgor hereby delivers, pledges and assigns to Lender, and creates in Lender, a first perfected security interest in all of its right, title and interest in and to all of the Pledged Securities together with all rights and privileges of Pledgor with respect thereto, all proceeds, income and profits thereof and all property received with respect to the Pledged Securities in addition thereto, in exchange thereof or in substitution therefor (the "Collateral").


(b) This Pledge Agreement secures the payment of all obligations of Borrower to Lender under the Note, whether primary or secondary, direct or indirect, absolute or contingent, joint or several, secured or unsecured, due or not, liquidated or unliquidated, arising by operation of law or otherwise whether for principal, interest, fees, expenses or otherwise, together with all costs of collection or enforcement, including, without limitation, reasonable attorneys' fees incurred in any collection efforts or in any action or proceeding (all such obligations being the "Obligations").


2. Stock Dividends, Options, or Other Adjustments; Revaluation of Pledged Securities.


(a) Until the date on which this Pledge Agreement terminates as provided in Section 11 hereof, Lender shall receive as Collateral any and all additional shares of stock or any other property of any kind distributable on or by reason of the Collateral, whether in the form of or by way of stock dividends, warrants, liquidation, partial liquidation, conversion, prepayments or redemptions (in whole or in part) or otherwise. If any additional shares of capital stock, instruments, or other property against which a security interest can only be perfected by possession by Lender, which are distributable on or by reason of the Collateral shall come into the possession or control of any Pledgor, such Pledgor shall hold or control and forthwith transfer and deliver the same to Lender, subject to the provisions hereof.


(b) The number of securities constituting Pledged Securities shall be maintained by Pledgors, jointly and severally, in an amount such that, at the end of each calendar quarter during the term of this Agreement (each a "Valuation Date"), such Pledged Securities shall have a value equal to the value on the date hereof or such lesser amount as shall equal the outstanding principal amount of the Note plus accrued but unpaid interest thereon (the "Threshold Amount") based upon the Market Value (as defined below) thereof on the Valuation Date. In the event the Market Value of the Pledged Securities exceeds the Threshold Amount on any Valuation Date, Lender shall within ten business days thereafter take all such action necessary to return such portion of the Pledged Securities required to maintain the Market Value of the Pledged Securities at (but no greater than) the Threshold Amount (rounded up to the nearest whole unit). In the event the Market Value of the Pledged Securities is less than the Threshold Amount on any Valuation Date, Pledgor shall within ten business days thereafter take all such action necessary to pledge additional units of the securities then representing the Pledged Securities required to maintain the Market Value of the Pledged Securities at the Threshold Amount (rounded up to the nearest whole unit). Any such return of Pledged Securities or additional pledges thereof shall be in such proportion (by class of security) so as to maintain the proportion of Pledged Securities (by class of security) pledged by each Pledgor on the date of this Agreement (rounded to the nearest whole unit). For purposes of this Agreement, the term "Market Value" on any Valuation Date shall equal the average of the daily closing prices per unit of such security for the ten (10) consecutive New York Stock Exchange ("NYSE") trading days up to and including the date which is the fifth business date prior to the Valuation Date or, if the NYSE is no longer the primary marketplace on which the Pledged Securities are traded, then in such primary marketplace.


3. Delivery of Share Certificates; Stock Powers; Registration of Pledge. All instruments and share certificates representing the Collateral are being delivered to the account of the Lender at Icahn & Co., Inc. simultaneously herewith. Each Pledgor shall deliver or cause the entity issuing the Collateral to deliver directly to Lender all instruments, share certificates or other documents representing Collateral acquired or received after the date of this Agreement with a stock power duly executed by such Pledgor. If at any time Lender notifies any Pledgor that additional stock powers endorsed in blank held by Lender with respect to the Collateral are required, such Pledgor shall promptly execute in blank and deliver such stock powers as Pledgee


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may request. If advisable in the sole descretion of the Audit Committee of American Property Investors, Inc. ("API"), as general partner of American Real Estate Partners, L.P., the parent partnership of the Lender, Pledgor shall cause the Issuer of the Pledged Securities to register Lender as the record owner of the Pledged Securities on its books.


4. Power of Attorney. Whether or not any Event of Default (as defined below) has occurred, Pledgor hereby constitutes and irrevocably appoints the Audit Committee of API, with full power of substitution and revocation by Lender, as Pledgor's true and lawful attorney-in-fact, to the full extent permitted by law, to transfer or cause the transfer of the Collateral, or any part thereof on the books of the entity issuing the same, to the name of Lender or Lender's nominee and thereafter exercise as to such Collateral all the rights, power and remedies of an owner and otherwise to take such actions and execute such instruments as the Audit Committee of API may deem necessary or advisable to accomplish the purposes of this Agreement. The power of attorney granted pursuant to this Agreement and all authority hereby conferred are granted and conferred solely to protect the interest of Lender in the Collateral and shall not impose any duty upon Lender to exercise any power. This power of attorney shall be irrevocable as one coupled with an interest prior to the payment in full or other satisfaction of all of the Obligations to Lender.


5. Inducing Representations of Pledgor. Pledgor represents and warrants to Lender that:


(a) Borrower is the sole beneficial owner (directly or indirectly) of all of the issued and outstanding shares of capital stock or other equity interests of each Pledgor;


(b) Neither the making of the loan pursuant to the Note, nor the use of the proceeds thereof, will violate or be inconsistent with the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System and no part of such loan (or the proceeds thereof) will be used to purchase or carry any margin stock or to extend credit for the purpose of purchasing or carrying any margin stock;


(c) The Market Value of the Pledged Securities, determined in accordance with Section 2(b) as of the close of trading on December 26, 2001, is not less than $250 million;


(d) Each Pledgor has delivered to Lender and has filed with the Secretary of State of the state of its incorporation a UCC-1 financing statement relating to the pledge of Collateral hereunder;


(e) Pledgor is the sole legal and beneficial owner of, and has good and marketable title to, the Collateral pledged by such Pledgor, free and clear of all pledges, liens, security interests and other encumbrances other than the security interest created by this Agreement, and each Pledgor has the unqualified right and authority to execute this Agreement and to pledge such Collateral to Lender, as provided for herein;


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(f) There are no outstanding options, warrants or other agreements with respect to the Collateral;


(g) The Pledged Securities have been validly issued and are fully paid and non-assessable; the holder thereof is not and will not be subject to any personal liability as such holder; and are not subject to any charter, bylaw, statutory, contractual or other restriction governing their issuance, pledge, transfer, ownership or control except that sale or transfer may be limited in the absence of an effective registration statement (i) under the Securities Act of 1933, as amended (the "Act"), (ii) under applicable state securities laws, and (iii) under applicable non-U.S. laws (provided however that if any such registration statement is unnecessary, Pledgors shall provide Lender an opinion of counsel satisfactory to Lender that the sale or transfer is exempt from registration under said Act and laws);


(h) Any consent, approval or authorization of or designation or filing with any authority on the part of any Pledgor which is required in connection with the pledge and security interest granted under this Agreement has been obtained or effected and is in full force and effect;


(i) The execution and delivery of this Agreement by the Pledgors, and the performance by Pledgors of their respective obligations hereunder, will not result in a violation of any mortgage, indenture, contract, instrument, judgment, decree, order, statute, rule or regulation to which any Pledgor is subject;


(j) As of October 31, 2001, (i) the collective net worth of High Coast Limited Partnership ("High Coast") and Leyton LLC ("Leyton") is not less than $57 million, (ii) the net worth of Barberry Corp. is not less than $500 million;


(k) Neither Leyton nor High Coast have any liabilities other than to entities in which Borrower owns 100% of the equity interests; and


(l) Pledgors have delivered to Lender and have filed with the Secretary of State of the Sta ...