**EMPLOYMENT
      AGREEMENT**




**THIS
      EMPLOYMENT AGREEMENT** (‘‘Agreement’’) is made and entered into as of the 8 th day of
      August, 2007 (the “Effective Date”), by and between American Real Estate
      Partners, L.P., a Delaware limited partnership (“AREP”), Icahn Capital
      Management LP, a Delaware limited partnership (the ‘‘Manager’’ and, together
      with AREP, the “Employer”), and Carl C. Icahn (‘‘Executive’’). Where the context
      permits, references to “the Employer” shall include AREP, the Manager and any
      successor entities thereto. Capitalized terms used and not otherwise defined
      herein shall have the meanings set forth in Section 10 herein.




**W
      I T N E S S E T H:**





**WHEREAS,** AREP
      is a
      master limited partnership that is a diversified holding company engaged in
      a
      variety of businesses, including real estate and home fashions;




**WHEREAS,** AREP
      is
      acquiring the asset management operations operated by the predecessor of the
      Manager and with respect to which the Executive has provided
      services;




**WHEREAS** ,
      the
      Manager is an indirect wholly-owned subsidiary of AREP and provides certain
      services to the Funds;




**WHEREAS** ,
      AREP
      and the Manager desire to secure the services of Executive for their benefit
      and
      the benefit of their controlled Affiliates from and after the date hereof;
      and




**WHEREAS** ,
      Executive desires to provide such services subject to the terms and conditions
      set forth herein;




**NOW,
      THEREFORE,** in
      consideration of the mutual promises, covenants and agreements herein contained,
      together with other good and valuable consideration the receipt of which is
      hereby acknowledged, the parties hereto do hereby agree as follows:




1.  SERVICES
      AND DUTIES .
      From
      and after the Effective Date, Executive shall be employed by AREP in the
      capacity of its executive Chairman and by the Manager in the capacity of its
      Chairman and Chief Executive Officer; in such capacity Executive shall be a
      member and Chairman of the Manager’s Management Committee (the “MC”). In
      addition, Executive shall act as and perform the duties of the chief executive
      officer of each of the general partners of the Funds. The principal location
      of
      Executive’s employment with Employer shall be such present location at which
      Employer maintains its principal location, although Executive understands and
      agrees that Executive may also be required to travel from time to time for
      business reasons. Executive shall devote his substantial time and efforts to
      overseeing the strategic and business affairs of AREP and the asset management
      operations of the Manager, subject in each case to his ability to continue
      to
      engage in his current outside business activities and such other future outside
      business activities as are otherwise consistent with Section 7 of this Agreement
      and comparable in scope to the outside business activities now conducted by
      Executive. Executive will perform such duties as are required by Employer from
      time to time and normally associated with Executive’s position, together with
      such additional duties, commensurate with Executive’s positions with Employer
      and with its Affiliates, as may be assigned to Executive from time to time
      by
      the Board of Directors of American Property Investors, Inc., the general partner
      of AREP (the “Board”), or the MC consistent with the terms of this Agreement.
      Executive shall follow and comply with all policies and procedures and
      compliance manuals adopted by or in respect of Employer and its Affiliates,
      as
      may be applicable to Executive. Notwithstanding the foregoing, nothing herein
      shall prohibit Executive from (i) subject to prior approval of the Board
      and the MC, accepting directorships unrelated to Employer that do not give
      rise
      to any conflict of interests with Employer or its Affiliates and
      (ii) engaging in charitable and civic activities, so long as such outside
      interests, individually or in the aggregate, do not materially interfere with
      the performance of Executive’s duties hereunder.









2.  TERM .
      Executive’s employment under the terms and conditions of this Agreement will
      commence on the Effective Date. The term of this Agreement shall commence on
      the
      Effective Date and end on December 31, 2012 or immediately following such
      earlier time that Executive’s employment terminates under Section 5 (such
      period, the “Term”). The Term may be renewed or extended by mutual agreement of
      the parties up to sixty (60) days prior to the end of the Term and if Executive
      does not intend to renew or extend the term, he shall provide notice prior
      to
      such sixty (60) day period. The decision by the Employer not to extend the
      Term
      shall not be deemed a termination of Executive’s employment by Employer without
      Cause for purposes of this Agreement. If the Term expires, and Executive is
      employed by Employer thereafter, unless the parties agree otherwise in writing,
      such employment shall be ‘‘at-will’’ on terms and conditions to be set by
      Employer.




3.  COMPENSATION .




(a)  Base
      Salary .
      In
      consideration of Executive’s full and faithful satisfaction of Executive’s
      duties under this Agreement, Employer agrees to pay to Executive a salary in
      the
      amount of $900,000 per annum (the ‘‘Base Salary’’), payable in such installments
      as Employer pays its similarly placed employees (but not less frequently than
      each calendar month), subject to usual and customary deductions for withholding
      taxes and similar charges, and customary employee contributions to the health,
      welfare and retirement programs in which Executive is enrolled from time to
      time. The Base Salary shall be reviewed on an annual basis by the Board and
      the
      MC and adjusted at the sole discretion of the Board and the MC; provided , however ,
      in no
      event shall the Base Salary be reduced without Executive’s written approval.




(b)  Annual
      Bonus Incentive .
      In
      addition to Base Salary, Executive shall be eligible for an annual bonus
      incentive (the “Annual Bonus Incentive” or “Bonus”) as determined in accordance
      with Exhibit A for each calendar year or portion thereof during the Term,
      provided that Executive remains employed by Employer during such period. Any
      Bonus earned by Executive pursuant to Exhibit A shall be paid in the manner
      provided in Exhibit A, provided such payment (other than Deferral Amount(s))
      shall be made no later than two and one-half months after the end of the period
      to which such Bonus relates or ten days after the earnings for the calendar
      year
      are announced, whichever occurs first. Payment of the Bonus for each year shall
      in all circumstances be contingent upon a certification of the Board that the
      determination, calculation and payment of the Bonus is correct.




(c)  Withholding .
      All
      taxable compensation payable to Executive pursuant to this Section 3 or
      otherwise pursuant to this Agreement shall be subject to all applicable and
      customary withholding taxes and such other excise or employment taxes as are
      required under Federal law or the applicable law of any state or governmental
      body to be collected with respect to compensation paid by Employer to an
      employee.









(d)  Other
      AREP Compensation. Other
      than as provided for in this Agreement, Executive in his capacity as an employee
      under this Agreement shall not be entitled to any other form of direct or
      indirect compensation from AREP or its controlled Affiliates (including any
      fees, remuneration or other benefits) without the express prior consent of
      the
      Board.




4.  BENEFITS
      AND EXPENSE REIMBURSEMENT .




(a)  Retirement
      and Welfare Benefits .
      During
      the Term, Executive will be entitled to participate in the usual and customary
      employee benefit plans and programs offered to employees at Executive’s level by
      Employer or its Affiliates, including sick time, vacation or paid time off,
      and
      participation in Employer’s or Affiliates’ medical, dental and insurance
      programs, as well as the ability to participate in Employer’s or Affiliates
      401(k) retirement savings plan, in each case in accordance with and subject
      to
      the terms of such plans as in effect from time to time. Nothing in this Section
      4, however, shall require Employer or its Affiliates, if applicable, to adopt
      or
      maintain any benefit plan or provide any type or level of benefits to its
      employees, including Executive.




(b)  Reimbursement
      of Expenses .
      Employer shall reimburse Executive for any expenses reasonably and necessarily
      incurred by Executive in furtherance of Executive’s duties hereunder, including
      travel, meals and accommodations, upon submission by Executive of vouchers
      or
      receipts and in compliance with such rules and policies relating thereto as
      Employer may from time to time adopt.




5.  TERMINATION .
      Executive’s employment shall be terminated at the earliest to occur of the
      following: (i) at the end of the Term unless Executive agrees to continue
      working for Employer on mutually agreeable terms, (ii) the date on which the
      Board delivers written notice that Executive is being terminated for Disability
      (as defined below), or (iii) the date of Executive’s death. In addition,
      Executive’s employment with Employer may be terminated: (A) by Employer for
‘‘Cause’’ (as defined below), effective on the date on which a written notice to
      such effect is delivered to Executive; (B) by Employer at any time without
      Cause, effective on the date on which a written notice to such effect is
      delivered to Executive or such other date as is reasonably designated by
      Employer; or (C) by Executive with “Good Reason” (as defined below).




(a)  Termination
      by Employer with Cause .
      If
      Executive’s employment with Employer is terminated by Employer with Cause,
      Executive shall not be entitled to any further compensation or benefits other
      than accrued but unpaid Base Salary (payable as provided in Section 3(a)
      hereof), any accrued and unused vacation pay through the date of such
      termination (collectively, the ‘‘Accrued Benefits”) and fifty percent (50%) of
      the Unpaid Bonus (as defined below).




(b)  Termination
      by Employer without Cause or by Executive with Good Reason .
      If
      Executive’s employment is terminated by Employer without Cause or by Executive
      with Good Reason prior to the end of the Term hereof, then Executive shall
      be
      entitled to: (i) the Accrued Benefits and any earned and unpaid portion of
      an Annual Bonus Incentive for the year prior to the year of termination (the
      “Unpaid Bonus”); (ii) a lump sum separation payment equal to one (1) time
      the annual Base Salary plus one (1) time the Average Bonus (as defined below);
      and (iii) for any year other than 2007, the Annual Bonus Incentive determined
      for the full year based solely upon the operations and investment performance
      of
      AREP and its controlled Affiliates through the date of termination and
      annualized for the remainder of the year multiplied by a fraction, the numerator
      of which is the number of months (including the month of termination) during
      the
      then current year that Executive was employed under this Agreement and the
      denominator of which is twelve (12) (the “Pro-Rata Annual Bonus Incentive”).
“Average Bonus” means the three-year average (or such lesser period during the
      Term, if applicable) of the Annual Bonus Incentive; provided , however ,
      that in
      the event such termination occurs on or after December 31, 2007 and prior to
      the
      end of the 2008 Bonus period, the amount of the Average Bonus shall be equal
      to
      the average of (A) the 2007 Annual Bonus Incentive actually paid (or payable)
      to
      Executive and increased to represent an annualized amount and (B) the 2008
      Annual Bonus Incentive which would have been paid if Executive had been employed
      at the end of the 2008 Bonus period based solely upon the operations and
      investment performance of AREP and its controlled Affiliates through the
      termination date (and as otherwise determined in accordance with Exhibit A).
      In
      the event such termination occurs prior to the end of the 2007 Bonus period,
      the
      Average Bonus shall be equal to the 2007 Annual Bonus Incentive which would
      have
      been paid if Executive had been employed at the end of the 2007 Bonus period
      based solely upon the operations and investment performance of AREP and its
      controlled Affiliates through the termination date and annualized for the
      remainder of the year (and as otherwise determined in accordance with Exhibit
      A).









(c)  Voluntary
      Resignation, Death or Disability .
      If
      Executive’s employment is terminated voluntarily by Executive or by reason of
      Executive’s death or Disability prior to the end of the Term, in lieu of any
      other payments or benefits, Executive (or Executive’s estate, as applicable)
      shall be entitled to (i) the Accrued Benefits and any Unpaid Bonus; (ii) a
      lump sum payment equal to the remaining Base Salary payable through December
      31
      of the year of termination (assuming Executive’s employment had continued
      through December 31); and (iii) fifty percent (50%) of the Pro-Rata Annual
      Bonus
      Incentive as provided for in Exhibit A, but which shall be determined based
      upon
      an interpolation of full year results for the year of termination based on
      actual results as of the date of termination; provided that in the event of
      Executive’s voluntary termination hereunder, Executive shall only be entitled to
      fifty percent (50%) of the Unpaid Bonus payable under subsection (i) and shall
      not be entitled to any payments under subsection (ii) herein.




(d)  Termination
      in Connection with a Change in Control .
      If
      Executive’s employment is terminated by Employer without Cause or by Executive
      with Good Reason within the twelve-month period following the occurrence of
      a
      Change in Control, then in lieu of any other payments set forth in this Section
      5, Executive shall be entitled to: (i) the Accrued Benefits and any Unpaid
      Bonus; (ii) a lump sum separation payment equal to two (2) times the annual
      Base Salary plus two (2) times the Average Bonus; and (iii) a pro-rata Annual
      Bonus Incentive for the year of termination.




(e)  Resignation
      as Officer or Director .    Upon
      the termination of employment for any reason, Executive shall resign each
      position (if any) that Executive then holds as an officer or director of
      Employer or any of its Subsidiaries or controlled Affiliates.









(f)  Section
      409A .
      To the
      extent required to comply with Section 409A of the Code, as determined by
      Executive’s counsel, if requested by Executive, one or more payments under this
      Section 5 shall be delayed to the six-month anniversary of the date of
      Executive’s separation from service, within the meaning of Section 409A of the
      Code.




(g)  Release
      and Payment. All
      payments to the Executive provided for in this Section 5 shall be conditioned
      upon Executive’s (or Executive’s estate, as applicable) providing Employer with
      a signed release limited in scope to employment related claims in a form
      acceptable to the Board. All such payments shall be made to Executive in cash
      within sixty (60) days of his death or other termination of employment.




6.  MAINTENANCE
      OF FUNDS .
      If at
      any time between the Effective Date and the fifth (5 th )
      anniversary of the Effective Date, Executive shall, for any reason, cease to
      serve as Chairman and Chief Executive Officer of the Manager and as the
      individual primarily responsible for the management of the Funds’ investment
      portfolios (a “Triggering Event”), Executive may elect to withdraw investments
      in one of more of the Funds, provided that Executive (directly or through his
      Affiliates, other than AREP and its controlled Affiliates) shall, from the
      date
      of the Triggering Event until the later of (x) the fifth anniversary of the
      Effective Date and (y) the third anniversary of the Triggering Event (such
      later
      date, the “End Date”), maintain investments in one or more of the Funds in an
      aggregate amount equal to not less than $1 billion, and shall not withdraw
      such
      amount or any amounts earned with respect thereto (the “Icahn Fund Commitment”); provided that for
      purposes of this Section 6 only, if both a majority of the Board and a
      majority of the independent Directors, on the Board vote to terminate
      Executive's employment without cause, Executive shall not be subject to the
      Icahn Fund Commitment. For the avoidance of doubt, at the time of the Triggering
      Event, Executive may withdraw any investments of Executive or his Affiliates
      (other than AREP or its controlled Affiliates) in the Funds exceeding an
      aggregate of $1 billion. From and after the Triggering Event, the Icahn
      Fund Commitment shall be subject to a management fee of 2% and an incentive
      allocation of 20%. If at any time between the date of the Triggering Event
      and
      the End Date the value of the Icahn Fund Commitment is less than $1 billion,
      the
      management fee and incentive allocation assessed against the Icahn Committed
      Funds shall equal to the fees applicable if the value of the Icahn Fund
      Commitment were $1 billion.




7.  RESTRICTIVE
      COVENANTS .




(a)  The
      parties agree that the restrictive covenants set forth in Exhibit B hereto
      (the
‘‘Restrictive Covenants’’) are incorporated herein by reference and shall be
      deemed to be contained herein. Executive understands, acknowledges and agrees
      that the Restrictive Covenants apply (i) during his employment under this
      Agreement and during any period of employment by Employer or any controlled
      Affiliate following the termination of this Agreement or the expiration of
      the
      Term of this Agreement, and (ii), as provided in Exhibit B hereto, during the
      Non-Compete Period or any additional periods specified following termination
      of
      his employment with Employer and by any controlled Affiliate which may have
      employed him.




(b)  Executive
      hereby acknowledges that the provisions of Exhibit B hereto are reasonable
      and
      necessary for the protection of Employer and its controlled Affiliates (the
      “Other Parties”) and are not unduly burdensome to Executive and that Executive
      acknowledges such obligations under such covenants. Executive further
      acknowledges that the Other Parties will be irreparably harmed if such covenants
      are not specifically enforced. Accordingly, Executive agrees that, in addition
      to any other relief to which the Other Parties may be entitled, including claims
      for damages, the Other Parties shall be entitled to seek and obtain injunctive
      relief (without the requirement of any bond) from a court of competent
      jurisdiction for the purpose of restraining Executive from an actual or
      threatened breach of such covenants.









8.  ASSIGNMENT .
      This
      Agreement, and all of the terms and conditions hereof, shall bind Employer
      and
      its successors and assigns and shall bind Executive and Executive’s heirs,
      executors and administrators. No transfer or assignment of this Agreement shall
      release Employer from any obligation to Executive hereunder. Neither this
      Agreement, nor any of Employer’s rights or obligations hereunder, may be
      assigned or are otherwise subject to hypothecation by Executive. Employer may
      assign the rights and obligations of Employer hereunder, in whole or in part,
      to
      any of Employer’s Subsidiaries or Affiliates, or to any other successor or
      assign in connection with the sale of all or substantially all of Employer’s
      assets or equity or in connection with any merger, acquisition and/or
      reorganization, provided the assignee assumes, in an assumption agreement in
      form reasonably satisfactory to Executive, the obligations of Employer
      hereunder.




9.  REPRESENTATIONS
      AND WARRANTIES .
      Executive represents as follows:




(a)  To
      the
      best of his knowledge, except as known to Employer, he is not a party to, or
      involved in, or under investigation in, any pending or threatened litigation,
      proceeding or investigation of any governmental body or authority or any private
      person, corporation or other entity.




(b)  Executive
      is not subject to any restriction whatsoever which would cause him to not be
      able fully to fulfill his duties under this Agreement.




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




(a)  ‘‘ Affiliate ”
or
      “ Affiliates ”
means
      with respect to any specified Person, any other Person that, directly or
      indirectly, owns or controls, is under common ownership or control with, or
      is
      owned or controlled by, such specified Person; provided “controlled Affiliates”
shall only mean a person that, directly or indirectly, is controlled by
      AREP.




(b)  ‘‘ Cause ’’
      means:




(i)  the
      willful engaging by Executive in illegal, fraudulent or unethical conduct or
      gross misconduct which, in each case, is materially and demonstrably injurious
      (x) to Employer or its Subsidiaries or Affiliates, (y) to the reputation of
      Executive, Employer or its Subsidiaries or Affiliates, or (z) to any of
      Employer’s funds or businesses; or




(ii)  conviction
      of a felony or guilty or nolo contendere plea by Executive with respect thereto;
      or




(iii)  a
      material breach by Executive of this Agreement (x) if such breach is curable
      (in
      the reasonable judgment of the Board) and is not cured within ten (10) business
      days following receipt of a notice of such breach or (y) if such breach is
      not
      curable (in the reasonable judgment of the Board); provided that Employer shall
      be required to provide notice under this sentence only one time during any
      calendar year in connection with any single category of events constituting
      Cause hereunder.









For
      purposes of this definition, no act or failure to act on the part of Executive
      shall be considered ‘‘willful’’ unless it is done, or omitted to be done, by
      Executive in bad faith or without reasonable belief that Executive’s action or
      omission was in the best interests of Employer (or its Affiliates, if
      applicable) or was done or omitted to be done with reckless disregard to the
      consequences. Any act, or failure to act, based upon authority given pursuant
      to
      a resolution duly adopted by the Board or based upon the advice of counsel
      for
      Employer shall be conclusively presumed to be done, or omitted to be done,
      by
      Executive in good faith and in the best interests of Employer. Cause shall
      not
      exist hereunder unless and until Employer has delivered to Executive, along
      with
      a notice of termination for Cause, a copy of a resolution duly adopted by the
      Board (excluding Executive if Executive is a member of the Board) at a meeting
      thereof called and held for such purpose (after reasonable notice to Executive
      and an opportunity for Executive, together with counsel, to be heard before
      the
      Board), finding that in the good faith opinion of the Board an event set forth
      in clauses (i) through (iii) has occurred and specifying the particulars thereof
      in detail.




(c)  “ Change
      in Control ”
means
      an event described in Section 409A(a)(2)(A)(v) of the Code, and regulations
      promulgated thereunder.




(d)  “ Code ”
means
      the Internal Revenue Code of 1986, as amended.




(e)  ‘‘ Disability ’’
means,
      as determined by the Board in good faith, Executive’s inability, due to
      disability or incapacity, to perform all of Executive’s duties hereunder on a
      full-time basis for (i) periods aggregating one-hundred-eighty (180) days,
      whether or not continuous, in any continuous period of
      three-hundred-and-sixty-five (365) days or, (ii) where Executive’s absence is
      adversely affecting the performance of Employer in a significant manner, periods
      greater than ninety (90) days and Executive is unable to resume Executive’s
      duties on a full time basis within ten (10) days of receipt of written notice
      of
      the Board’s determination under this clause (ii).




(f)  “ Fund ”
or
      “ Funds ”
mean
      any one or more funds or similar collective investment vehicles or managed
      accounts formed primarily for the purpose of investing the capital of third
      parties (whether formed as a limited partnership, a corporation, a limited
      liability company or other similar form) managed by Employer or its controlled
      Affiliates.




(g)  “ Good
      Reason ”
means
      the occurrence of one of the following:




(i)  a
      material diminution or other material adverse change in Executive’s office,
      duties, salary, benefits or responsibilities;




(ii)  a
      material breach by the Employer of this Agreement; or




(iii)  a
      requirement by the Employer that Executive’s principal place of work be moved to
      a location more than fifty (50) miles away from its then current
      location.









Good
      Reason shall not exist hereunder unless Executive first provides sixty (60)
      days
      prior written notice to the Board which notice alleges the occurrence of one
      of
      the aforementioned events in specific detail. Notwithstanding the foregoing,
      however, Executive shall not have the ability to terminate this Agreement if
      the
      facts alleged in such written notice have been cured prior to the expiration
      of
      such sixty (60) day notice period.




(h)  “ Non-Compete
      Period ”
means:




(i)  in
      the
      event of a termination of employment upon the expiration of the Term or any
      employment with Employer or its controlled Affiliates following the Term, or
      in
      the event of a termination by Employer for Cause or by Executive without Good
      Reason, a period consisting of the Term plus the two (2) year period following
      the termination of employment;




(ii)  in
      the
      event of a termination by Executive with Good Reason or by Employer without
      Cause (other than in connection with the occurrence of a Change in Control),
      the
      period consisting of the Term plus the one (1) year period following the
      termination of employment; and




(iii)  in
      the
      event of a termination of employment because of death or Disability, or in
      the
      event of a termination by Executive with Good Reason or by Employer without
      Cause in connection with the occurrence of a Change in Control, the period
      consisting of the Term only.




(i)  “ Person ”
means
      any natural person, corporation, limited liability company, general partnership,
      limited partnership, proprietorship, other business organization, trust, union,
      association or governmental entity.




(j)  ‘‘ Subsidiary ’’
means
      a subsidiary of Employer (or other referenced entity, as the case may be) as
      defined in Rule 405 of Regulation C of the Securities Act of 1933, as
      amended.




11.  GENERAL .




(a)  Notices .
      Any
      notices provided hereunder must be in writing and shall be deemed effective
      upon
      the earlier of one business day following personal delivery (including personal
      delivery by telecopy or telex), or the third business day after mailing by
      first
      class mail to the recipient at the address indicated below:




To
      Employer:





General
      Counsel


American
      Real Estate Partners, LP


445
      Hamilton Avenue, Suite 1210


White
      Plains, New York 10601










General
      Counsel


Icahn
      Capital Management, LP


767
      Fifth
      Avenue


New
      York,
      New York 10153





Notices
      to Executive shall be given at the location set forth in Employer’s records, or
      to such other address or to the attention of such other person as the recipient
      party may have specified by prior written notice to the sending
      party.




(b)  Severability .
      Any
      provision of this Agreement which is deemed invalid, illegal or unenforceable
      in
      any jurisdiction shall, as to that jurisdiction and subject to this paragraph
      be
      ineffective to the extent of such invalidity, illegality or unenforceability,
      without affecting in any way the remaining provisions hereof in such
      jurisdiction or rendering that or any other provisions of this Agreement
      invalid, illegal, or unenforceable in any other jurisdiction. If any covenant
      should be deemed invalid, illegal or unenforceable because its scope is
      considered excessive, such covenant shall be modified so that the scope of
      the
      covenant is reduced only to the minimum extent necessary to render the modified
      covenant valid, legal and enforceable.




(c)  Entire
      Agreement .
      This
      document, together with its attached exhibits, constitutes the final, complete,
      and exclusive embodiment of the entire agreement and understanding between
      the
      parties related to the subject matter hereof and supersedes and preempts any
      prior or contemporaneous understandings, agreements, or representations by
      or
      between the parties, written or oral.




(d)  Counterparts .
      This
      Agreement may be executed on separate counterparts, any one of which need not
      contain signatures of more than one party, but all of which taken together
      will
      constitute one and the same agreement.




(e)  Amendments .
      No
      amendments or other modifications to this Agreement may be made except by a
      writing signed by both parties. Nothing in this Agreement, express or implied,
      is intended to confer upon any third person any rights or remedies under or
      by
      reason of this Agreement.




(f)  Governing
      Law .
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York applicable to agreements made and/or to be performed in that
      State, without regard to any choice of law provisions thereof. Except as
      provided under Section 11(k) hereto, all disputes arising out of or related
      to
      this Agreement shall be submitted to the state and federal courts of New York,
      and each party irrevocably consents to such personal jurisdiction and waives
      all
      objections thereto, but does so only for the purposes of this
      Agreement.




(g)  Survivorship .
      The
      provisions of this Agreement necessary to carry out the intention of the parties
      as expressed herein (including, without limitation, the Restrictive Covenants
      provided in Section 7 hereof and Exhibit B hereto) shall survive the termination
      or expiration of this Agreement.









(h)  Waiver .
      The
      waiver by either party of the other party’s prompt and complete performance, or
      breach or violation, of any provision of this Agreement shall not operate or
      be
      construed as a waiver of any subsequent breach or violation, and the failure
      by
      any party hereto to exercise any right or remedy which it may possess hereunder
      shall not operate or be construed as a bar to the exercise of such right or
      remedy by such party upon the occurrence of any subsequent breach or violation.
      No waiver shall be deemed to have occurred unless set forth in a writing
      executed by or on behalf of the waiving party. No such written waiver shall
      be
      deemed a continuing waiver unless specifically stated therein, and each such
      waiver shall operate only as to the specific term or condition waived and shall
      not constitute a waiver of such term or condition for the future or as to any
      act other than that specifically waived.




(i)  Captions .
      The
      captions of this Agreement are for convenience and reference only and in no
      way
      define, describe, extend or limit the scope or intent of this Agreement or
      the
      intent of any provision hereof.




(j)  Construction .
      The
      parties acknowledge that this Agreement is the result of arm’s-length
      negotiations between sophisticated parties, each afforded representation by
      legal counsel. Each and every provision of this Agreement shall be construed
      as
      though both parties participated equally in the drafting of the same, and any
      rule of construction that a document shall be construed against the drafting
      party shall not be applicable to this Agreement.




(k)  Arbitration .  Except
      as necessary for Employer, its Subsidiaries, Affiliates, and their respective
      successors or assigns or Executive to specifically enforce or enjoin a breach
      of
      this Agreement (to the extent such remedies are otherwise available, including
      as provided and limited in Section 11(l) hereof), the parties agree that any
      and
      all disputes that may arise in connection with, arising out of or relating
      to
      this Agreement, or any dispute that relates in any way, in whole or in part,
      to
      Executive’s services on behalf of Employer or any Affiliate, the termination of
      such services or any other dispute by and between the parties or their
      Subsidiaries, Affiliates, and their respective successors or assigns, shall
      be
      submitted to binding arbitration in New York, New York, before
      JAMS, pursuant to the JAMS Employment Arbitration Rules & Procedures (the
“Rules”), including the internal appeal process provided for in Rule 32 of the
      Rules, and before a single arbitrator to be mutually agreed upon by the parties.
      If JAMS is not in business or is no longer providing arbitration services,
      then
      the American Arbitration Association shall be substituted for JAMS for the
      purposes of arbitration under this section, and its Commercial Arbitration
      Rules
      (and not National Rules for the Resolution of Employment Disputes) shall be
      used. The parties further agree that each party shall pay its own costs,
      arbitration expenses and attorneys’ fees, unless the arbitrator (or appeal
      panel) determines it is just and proper under the circumstances to award costs,
      arbitration expenses and/or attorneys’ fees to either party and provided
      further, that if either party prevails on a statutory claim, which affords
      the
      prevailing party an award of costs and attorneys’ fees, then the arbitrator may
      award reasonable costs and attorneys’ fees to the prevailing party, consistent
      with applicable law. The arbitrator shall issue a written decision and award
      supported by essential findings of fact and conclusions of law. The arbitrator
      shall have no jurisdiction or authority to issue any award contrary to or
      inconsistent with this Agreement or applicable law. Judgment in a court of
      competent jurisdiction may be had on the decision and award of the arbitrator
      (or the appeal panel). For this purpose, the parties agree to submit to the
      jurisdiction of the state courts located in the Borough of Manhattan, New York
      and the U.S. District Courts for the Southern District of New York. Subject
      to Section 11(l) hereof, this arbitration obligation extends to any and all
      claims that may arise by and between the parties or their Subsidiaries,
      Affiliates and their respective successors or assigns, and expressly extends
      to,
      without limitation, claims or causes of action for wrongful termination,
      impairment of ability to compete in the open labor market, breach of an express
      or implied contract, breach of the covenant of good faith and fair dealing,
      breach of fiduciary duty, fraud, misrepresentation, defamation, slander,
      infliction of emotional distress, disability, loss of future earnings, and
      claims under the United States Constitution, and applicable state and federal
      fair employment laws, federal and state equal employment opportunity laws,
      and
      federal and state labor statutes and regulations, including, but not limited
      to,
      the Civil Rights Act of 1964, as amended, the Fair Labor Standards Act, as
      amended, the Americans With Disabilities Act of 1990, as amended, the
      Rehabilitation Act of 1973, as amended, the Employee Retirement Income Security
      Act of 1974, as amended, the Age Discrimination in Employment Act of 1967,
      as
      amended, and any other state or federal law.









(l)  Third
      Party Beneficiaries .
      Except
      as expressly provided herein, nothing in this Agreement shall confer any rights
      or remedies upon any Person other than the parties hereto. In any provision
      of
      this Agreement that provides rights or remedies to, or permits the assignment
      of
      rights to, Affiliates or Subsidiaries of Employer, the terms “Affiliates” and
“Subsidiaries” shall be construed to exclude any Fund and any entities
      controlled by any Fund. In the discretion of the MC, any right or remedy which
      a
      Fund or an entity controlled by a Fund would otherwise have (but for the
      immediately preceding sentence) may be asserted or pursued by Employer or
      another Affiliate of Employer on behalf of such Fund or its controlled entity;
      further, in the discretion of the MC, any obligation (including, without
      limitation, any obligation to arbitrate) which a Fund or an entity controlled
      by
      a Fund might otherwise have under this Agreement may be exclusively undertaken
      by Employer or another Affiliate of Employer on behalf of such Fund or its
      controlled entity.




[signature
      page to follow]







**IN
      WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND THEREBY,**the
      parties hereto have executed and delivered this Agreement as of the year and
      date first above written.




AMERICAN
                REAL
                ESTATE PARTNERS, L.P.By:
              AMERICAN
                  PROPERTY INVESTORS,INC.,Its
                  General PartnerBy:
              /s/ Andrew Skobe
 ICAHN
                      CAPITAL
                      MANAGEMENT LPBy:
                    /s/ Edward MattnerName: Edward Mattner
                      Title:
 /s/ Carl C. IcahnCARl C. ICAHN



















*Signature
      Page for*




*AREP/New
      Icahn Capital Management LP/Carl C. Icahn Employment Agreement*







Exhibit
      A




Annual
      Bonus Incentive




As
      provided for in the Employment Agreement, for each calendar year (or portion
      thereof) during the Term, Executive shall be eligible to receive the AREP Bonus
      Incentive and the Hedge Fund Bonus Incentive (together, the “Annual Bonus
      Incentive” or “Bonus”). The Bonus for such calendar year shall be in an amount
      equal to the AREP Bonus Incentive, if any, plus the Hedge Fund Bonus Incentive,
      if any, calculated as set forth herein.




1.  AREP
      Bonus Incentive .
      The
      AREP Bonus Incentive for any completed calendar year shall be equal to the
      product derived under subclauses (III) or (IV), if applicable, calculated by
      (I)
      determining the amount of Covered Net Income, if any, for such calendar year,
      (II) determining the Covered Net Income Growth Rate, if any, for such
      calendar year, (III) multiplying the amount of Covered Net Income in excess
      of $400,000,000, if any, by the Payout Percent corresponding to the Covered
      Net
      Income Growth Rate and (IV), in the event there are Covered Net Losses carried
      forward from prior calendar years ended during the Term (the “Net Loss Carry
      Forward”), multiplying the product derived in (III) by the Loss Adjustment
      Percent.




For
      purposes of the foregoing calculations, the following terms shall have the
      following meanings:




(a)  “Covered
      Net Income” or “Covered Net Losses” shall mean AREP’s net income or losses for
      the applicable calendar year (or portion thereof) excluding all income and
      losses that arise out of or result from the operations of the Hedge Fund
      Business (as defined below) but including any income or losses (i) attributable
      to any amounts invested by AREP and its controlled Affiliates in the funds
      or
      the Hedge Fund Business or (ii) attributable to any incentive allocations and/or
      management fees reinvested or not withdrawn by AREP and its controlled
      Affiliates (but excluding any income or loss on any amounts which
      represent a management fee and/or incentive allocation payable to AREP or its
      controlled Affiliates). Covered Net Income or Covered Net Losses shall be
      determined on the basis of “net income” or “net loss” for AREP on a consolidated
      basis and determined in accordance with United States generally accepted
      accounting principles and as reported in AREP’s audited financial statements
      (the “Financial Statements”), but (u) excluding any amounts accrued with respect
      to the Bonus provided for under this Agreement (and related employer payroll
      taxes for the applicable period), (v) excluding any amounts payable or accrued
      or expenses or deductions incurred or accrued in connection with the acquisition
      by AREP of the Hedge Fund Business, (w) excluding any gain from the sale of
      AREP’s casino business under the terms of the transaction for such sale that has
      been entered into and disclosed as of the date hereof (as such documentation
      may
      be amended in accordance with its terms), (x) for determining any gain or loss
      realized from the sale of any asset acquired by AREP and/or its controlled
      Affiliates from the Executive and his Affiliates (other than AREP and its
      controlled Affiliates) after the Effective Date measured on a cost basis equal
      to the price paid by AREP or its controlled Affiliates for the acquisition
      of
      such asset, as such cost basis may be adjusted; (y) excluding all results
      relating to or arising from the Hedge Fund Business (except as provided for
      in
      sub-clauses (i) and (ii) in the preceding sentence) and (z) subject to such
      adjustment as the Audit Committee of the Board (the “Audit Committee”) may
      determine, in its good faith judgment, to account for any acquisitions,
      dispositions, discontinued operations or any other extraordinary, infrequent,
      non-recurring or comparable occurrences or matters (including, for example,
      any
      adjustments based solely on changes in accounting method), and such
      determination of the Audit Committee shall be final and conclusive, absent
      manifest error. “Hedge Fund Business” shall mean the operations of any
      controlled Affiliate or Subsidiary of AREP that engages, in whole or in part,
      in
      any business deriving its revenues or income from providing investment
      management services.









(b)  “Covered
      Net Income Growth Rate” for a calendar year shall be the positive percentage (if
      any) obtained by dividing (i) the excess (if any) of Covered Net Income for
      such
      year over $400,000,000 by (ii) $400,000,000; provided that
      with respect to 2007 (x) Covered Net Income shall be determined with respect
      to
      operations on and after the Effective Date, and (y) the amount of $400,000,000
      as used in subclauses (i) and (ii) herein shall be reduced on a pro rata basis
      to account for the number of days between the Effective Date and December 31,
      2007.




(c)  “Payout
      Percent corresponding to the Covered Net Income Growth Rate” is set forth in
      Column II to Annex I attached hereto. In cases where the Covered Net Income
      Growth Rate exceeds five percent (5%) and does not directly correspond to a
      Payout Percent set forth on Annex I, the appropriate Payout Percent shall be
      interpolated on a straight line basis from the closest entry in Column II
      on Annex I and rounded to the nearest 1/100 th of a
      percent.




(d)  “Loss
      Adjustment Percent” for a calendar year shall be a percentage obtained by
      dividing (x) the greater of (i) zero and (ii) the sum of the Net Loss
      Carry Forward, if any, and the current year Covered Net Income, if any, by
      (y) the Covered Net Income, if any, for the calendar year for which the AREP
      Bonus Incentive is being determined.




2.  Hedge
      Fund Bonus Incentive .
      The
      Hedge Fund Bonus Incentive for any completed calendar year (or portion thereof)
      shall be equal to the product derived by multiplying the Fund Profit for such
      calendar year (or portion thereof) by the Payout Percent.




(a)  “Fund
      Profit” shall be the aggregate net profits (if any) in respect of all of the
      fee-paying assets of the Funds under management as determined in accordance
      with
      the partnership agreement and other governing documents of the Funds (but in
      any
      case (i) including net realized and unrealized gains and losses, net of all
      applicable fees and expenses of the Funds and (ii) excluding from the
      calculation of net profits and losses any management fees or incentive
      allocations charged to the investors in the Funds in connection therewith)
      for
      each fiscal year of the Funds (or portion thereof) during the Term; provided that any
      such aggregate net profits shall be reduced to reflect previously incurred
      aggregate net losses (if any and determined in a manner consistent with net
      profits) (commencing as of the Effective Date) on all fee-paying assets of
      the
      Funds that have not already been offset against aggregate net profits (other
      than those losses incurred by investors on fee-paying assets who have redeemed
      their investments, to the extent that such losses will not reduce net profits
      of
      the Funds for purposes of determining incentive allocations).




(b)  “Payout
      Percent” corresponding to the Fund Return (as defined below) is set forth in
      Column IV to Annex I attached hereto. In cases where the Fund Return exceeds
      ten
      percent (10%) and does not directly correspond to a Payout Percent set forth
      on
      Annex I, the appropriate Payout Percent shall be interpolated on a straight
      line
      basis from the closest entry in Column IV on Annex I and rounded to the nearest
      1/100 th of a
      percent.




For
      purposes of determining the Payout Percent, the following terms have the
      following meanings:




(a)  “Assets
      Under Management” shall be the sum of all assets under management in respect of
      all of the fee-paying assets of the Funds as of the first day of the year (or
      for calendar year 2007, the Effective Date) and as of the end of each calendar
      month thereafter during the relevant year divided by (13) (or in respect of
      2007, divided by six (6); and for any other period during the Term of less
      than
      one (1) year, such sum shall be divided by the number of dates on which the
      Assets Under Management are measured during such period). For purposes of the
      foregoing, (i) Assets Under Management as of each month end (other than the
      first day of the year) shall be adjusted solely for subscriptions and
      redemptions with respect to fee paying assets, but shall not be adjusted during
      the year for net profits and losses and (ii) Assets Under Management as of
      the
      first day of the year shall include such net profits and losses that carry
      over
      from the immediately preceding year.




(b)  “Fund
      Return” shall be a percentage equal to the quotient determined by dividing Fund
      Profit for the year (or shorter period) by Assets Under Management; provided  that with
      respect to 2007, the foregoing percentage shall be adjusted to express an
      annualized amount









3.  Mandatory
      Deferral .
      Fifty
      percent (50%) of the Annual Bonus Incentive payable to Executive with respect
      to
      any calendar year (or partial calendar year) hereunder (other than any Bonus
      (or
      portion thereof) payable to the Executive (or his estate) in the event of his
      termination of employment or death under Section 5 of the Employment Agreement)
      shall be deferred and treated as though invested in the Funds as of the Vesting
      Commencement Date (as defined below)(such deferred portion, the “Deferral
      Amount(s)”). Any Deferral Amount shall be deferred in a manner that complies
      with Section 409A of the Code. Deferral Amounts deemed invested in the
      Funds shall be deemed allocated pro rata across all the Funds (based on their
      respective Assets Under Management as of the applicable Vesting Commencement
      Date (as defined below) and shall be treated as though subject to a 2% annual
      management fee but shall not be treated as though charged a performance
      incentive fee. Executive’s right to receive any amounts or payments in respect
      of the Deferral Amount shall be subject to and limited by the terms and
      provisions of this Agreement. Executive shall have no rights to receive any
      amounts or payments in respect of any Deferral Amount unless, and then only
      to
      the extent that, Executive is vested therein in accordance with the terms of
      this Agreement (such amounts so vested, the “Vested Amount”). During the Term,
      Executive’s rights in any Deferral Amount shall vest at the rate of one-third
      (1/3) per annum on each anniversary of the last day of the calendar year with
      respect to which the bonus has been determined (the “Vesting Commencement Date),
      and be payable within sixty (60) days of vesting. In addition, all deemed
      returns, earnings and profits (as referred to herein) on Deferral Amounts shall
      vest at the same time as the Deferral Amount in respect of which such returns,
      earnings and profits are derived. The amount of any such deemed relating
      earnings and profits shall be calculated by Employer (whose determination shall
      be final and binding on all parties). Vesting of the Deferral Amount shall
      accelerate and be one hundred percent (100%) vested and payable in a lump sum
      payment within sixty (60) days upon the occurrence of any one of the following
      events during the Term:




(a)  the
      employment of Executive is terminated by Employer without Cause or by the
      Executive for Good Reason; or




(b)  the
      employment of Executive is terminated on account of death or
      Disability.




Except
      as
      provided in the final sentence of the paragraph immediately prior hereto
      (including clauses (a) and (b) above), Executive will only vest in Deferral
      Amounts during such periods as he continues to be an employee under this
      Agreement during the Term; provided that upon his completion of service through
      the end of the Term (12/31/12), all then unvested Deferral Amounts shall
      accelerate and be one hundred percent (100%) vested and payable in a lump sum
      payment within sixty (60) days of such date. Except for and to the extent of
      the
      one hundred percent (100% ) vesting that would occur upon the occurrence of
      the
      events set forth in (a) and (b) immediately above, or in the immediately
      preceding sentence, all unvested amounts will be forfeited in all respects
      by
      Employee on any other cessation of his employment hereunder.







Exhibit
      B




Restrictive
      Covenants




Covenant
      Not to Compete .
      Executive acknowledges that (i) Executive will be a key employee of
      Employer, (ii) Executive will receive payments pursuant to Section 3 of this
      Agreement, (iii) Executive has and will continue to have knowledge, information
      and other know-how regarding Employer’s business as a key employee thereof, and
      (iv) Executive has and will continue to develop relationships and contacts
      with
      Employer’s clients and investors as a key employee of Employer, and that all of
      these factors would permit him to compete with Employer. Executive further
      acknowledges that the covenants set forth in this Exhibit B constitute a
      material inducement to Employer to employ Executive pursuant to this Agreement
      and that Employer would not have agreed to employ Executive unless Executive
      had
      agreed to the covenants set forth in this Exhibit B. Accordingly, Executive
      therefore covenants and agrees as follows:




Nature
      of Competition .
      During
      the Non-Compete Period, Executive shall not, without the Employer’s prior
      written consent, directly or indirectly, for his own account, or in any capacity
      on behalf of any other third Person, whether as an officer, director, employee,
      partner, joint venturer, consultant, investor or otherwise, engage, or assist
      others to engage, in whole or in part, in any business deriving more than 25%
      of
      its revenues or income from providing investment management services (a
“ Competing
      Business ”); provided , however ,
      that
      ownership of stock of a business shall not be deemed a violation of this Exhibit
      B if and for so long as (i) the stock of such business is publicly traded;
      (ii)
      such ownership does not exceed 5% of the aggregate outstanding equity interest
      of such business and (iii) Executive does not otherwise participate in the
      management, operations or affairs of such business. Notwithstanding the
      foregoing, nothing in this Agreement shall be construed to prohibit Executive
      from rendering services to, acquiring an economic interest in or otherwise
      providing assistance to the Funds, the Employer or any of their controlled
      Affiliates or any pooled investment vehicle which is advised or sub-advised
      by
      the Partnerships or any of their respective controlled Affiliates, or providing
      investment management services (whether personally or as an employee or partner
      of a business formed for this purpose) solely on his own behalf or on behalf
      of
      one or more of his family members, including trusts of which his family members
      are the principal beneficiaries and Persons established solely for the benefit
      of, and wholly owned by, his family members. Furthermore, Executive may notify
      the Employer of any proposed activity for the purpose of soliciting a conclusion
      as to whether such activity would violate this Exhibit B. The Employer agrees
      that it shall approve or disapprove Executive’s proposal within 30 days of such
      notice. If the Employer approves such activity for purposes of this Exhibit
      B,
      then such activity, as disclosed in Executive’s request for approval, will not
      constitute a violation of this Exhibit B.




Non-solicitation .
      During
      the Non-Compete Period, Executive shall not, directly or indirectly, whether
      through his own efforts, or through the efforts, or in any way assisting or
      employing the assistance, of any other Person (including through any consultant
      or any Person employed by or associated with any entity with whom he may be
      employed or associated), do any of the following: (i) solicit or otherwise
      attempt to establish a Competing Business with any Person that was an investor
      in the Funds, or prospective investor in the Funds to whom any Contributor
      or
      any Partnership has made a proposal within the prior six months or (ii) solicit
      for employment, hire or otherwise engage in any capacity in any Competing
      Business any investment professional or executive who is or has within the
      previous one year been an employee or partner of any Contributor or any
      Partnership or any of their respective controlled Affiliates, or solicit any
      such Person to terminate his or her employment by such Contributor, Partnership
      or controlled Affiliate.









Confidential
      Information .
      During
      the Term and at all times thereafter, Executive shall hold in a fiduciary
      capacity for the sole benefit of Employer, its controlled Affiliates and the
      Funds, all secret or confidential information, knowledge or data (collectively,
      "Confidential Information"), including without limitation trade secrets,
      investments, contemplated investments, business opportunities, Fund or
      investment performance, valuation models and methodologies, relating to the
      business of the Funds, Employer, and their respective controlled Affiliates,
      and
      their respective businesses including, without limitation, the identity of
      any
      investors and the fact that such person is an investor in the Funds: (i)
      obtained by Executive during Executive’s employment hereunder and (ii) not
      otherwise in the public domain. Executive shall not, without prior written
      consent of Employer (which may be granted or withheld in its sole and absolute
      discretion), use, or communicate or divulge any Confidential Information, or
      any
      related knowledge or data to anyone other than Employer or its controlled
      Affiliates or those designated by Employer or its controlled Affiliates, except
      to the extent compelled pursuant to the order of a court or other body having
      jurisdiction over such matter or based upon the advice of his counsel that
      such
      disclosure is legally required; provided, however, that Executive will assist
      Employer or its controlled Affiliates, at Employer or such Affiliates’ expense,
      in obtaining a protective order, other appropriate remedy or other reliable
      assurance that confidential treatment will be accorded such information so
      disclosed pursuant to the terms of this Agreement.




All
      processes, technologies, investments, contemplated investments, business
      opportunities, valuation models and methodologies, and inventions (collectively,
      “Inventions”), including without limitation new contributions, improvements,
      ideas, business plans, discoveries, trademarks and trade names, conceived,
      developed, invented, made or found by Executive, alone or with others, during
      the Term, whether or not patentable and whether or not on Employer’s, or its
      respective controlled Affiliates’ time or with the use of their facilities or
      materials, shall be the property of Employer or such controlled Affiliates,
      as
      applicable, and shall be promptly and fully disclosed by Executive to Employer
      or such controlled Affiliates, as applicable. Executive shall perform all
      necessary acts (including, without limitation, executing and delivering any
      confirmatory assignments, documents, or instruments requested by Employer or
      its
      controlled Affiliates) to vest title to any such Invention in Employer or its
      respective controlled Affiliate, as applicable, to enable such party, at its
      expense, to secure and maintain domestic and/or foreign patents or any other
      rights for such Inventions.




Without
      limiting anything contained above, Executive agrees and acknowledges that all
      personal and not otherwise public information about Employer, the Funds and
      their respective Affiliates, including, without limitation, their respective
      investments, investors, transactions, historical performance, or otherwise
      regarding or concerning Employer or its controlled Affiliates, shall constitute
      Confidential Information for purposes of this Agreement. In no event shall
      Executive during or after his employment hereunder, disparage Employer or its
      controlled Affiliates or any of their respective officers, directors or
      employees.




The
      provisions of this Exhibit B shall not be deemed to limit any of the rights
      available to the respective parties under the any other agreements to which
      they
      may be parties and those which arise under applicable law.









**Annex
      I**


**AREP
                  Bonus Incentive**
              **Hedge
                  Fund Bonus Incentive****I**
              **II**
              **III**
              **IV**Covered
                  Net Income Growth Rate
              Payout
                  Percent
              Fund
                  Return
              Payout
                  PercentBelow
                  5%
              8%
              Below
                  10%
              0.30%5%
              8%
              10%
              0.30%10%
              11%
              15%
              0.50%15%
              14%
              20%
              0.70%20%
              17%
              25%
              0.90%25%
              20%
              30%
              1.10%Above
                  25%
              20%
              Above
                  30%
              1.10%








**Annex
      II**




**Annual
      Bonus Incentive - Examples**









**AREP
      Bonus Incentive**




**Example
      1: Profit Scenario (with Interpolation)**





Employment
                Term Year
            Covered
                Net Income (CNI)
            Covered
                Net Income Growth Rate
            Payout
                Percent (PP)
            Payout
                Amount
              (PP
                x CNI > $400 mm)Year
                1
            $100
            n/a
            n/a
            0Year
                2
            $400
            n/a
            n/a
            0Year
                3
            $500
            25%
            20%
            $20Year
                4
            $450
            12.5%
            12.5%1
            $6.25Year
                5
            $600
            50%
            20%
            $40





**Example
      2: Cumulative Losses followed By Profit**


Employment
                  Term Year
              Covered
                  Net Income
              Covered
                  Net Income Growth Rate
              Payout
                  Percent
              Payout
                  Amount
                (PP
                  x CNI > $400 mm x Loss Adjustment Percent (LAP)Year
                  1
              $500
              25%
              20%
              $20Year
                  2
              ($300)
              n/a
              n/a
              0Year
                  3
              ($300)
              n/a
              n/a
              0Year
                  4
              $500
              25%
              20%
              02Year
                  5
              $700
              75%
              20%
              51.433
 1 In cases
              where the Covered Net Income Growth Rate exceeds 5% and does not directly
              correspond to a Payout Percent set forth on Annex I, the appropriate
              Payout
              Percent shall be interpolated on a straight line basis from the closest
              entry in
              Column II on Annex I and rounded to the nearest 1/100 th of a
              percent. In the case of Growth Rates equal to 5% or greater, each 1%
              increment
              in Growth Rate translates into an additional 0.60% in Payout Rate.
              Thus, the
              Payout Percent for year 4 is interpolated as follows: a 12.5% Growth
              Rate is
              2.5% greater than 10% which corresponds to an 11% Payout Rate; 2.5
              x .60 = 1.5,
              which, when added to 11%, results in a Payout Percent equal to 12.5%.
  2 The
              Loss Adjustment Percent is 0, calculated as follows: the cumulative
              loss carry
              forward is equal to $600, and current year income is $500. Thus, (500
              - 600)/500
              = 0 [because 0 in the numerator is greater than -100]. The remaining
              $100
              cumulative loss (in excess of current year income) is carried forward
              to year 5
              ( see footnote
              3).
  3 The
              Loss Adjustment Percent is 85.714% (6/7), calculated as follows: the
              cumulative
              loss carry forward is equal to $100, and current year income is $700.
              Thus, (700
              -100)/700 = 6/7. This amount, expressed as a percentage, is multiplied
              against
              the product of the Payout Percent multiplied by current year net income
              in
              excess of $400 million, or (20% x $300 x 85.714%) = $51.43.
 **Hedge
              Fund Bonus Incentive**
  **Example
              3**
  Employment
                        Term Year
                    Assets
                        Under Management
                    Fund
                        Return
                    Payout
                        Percent
                    Payout
                        AmountYear
                        1
                    $5
                        billion
                    10%
                    0.3%
                    $1.5
                        millionYear
                        2
                    $6
                        billion
                    20%
                    0.7%
                    $8.4
                        millionYear
                        3
                    $7
                        billion
                    25%
                    0.9%
                    $15.75
                        millionYear
                        4
                    $9
                        billion
                    25%
                    0.9%
                    $20.25
                        millionYear
                        5
                    $11
                        billion
                    13%
                    0.42%4
                    $6.006
                        million
  4 In cases
                where Fund Return exceeds 10% and does not directly correspond to
                a Payout
                Percent set forth on Annex I, the appropriate Payout Percent shall
                be
                interpolated on a straight line basis from the closest entry in Column IV
                on Annex I and rounded to the nearest 1/100 th of a
                percent. In the case of Fund Returns equal to 10% or greater, each
                1% increment
                in Fund Return translates into an additional 0.04% in Payout Rate.
                Thus, in Year
                5, the Payout Percent is interpolated as follows: a 13% Fund Return
                is 3%
                greater than 10% which corresponds to an 0.30% Payout Rate; 3 x 0.04%
                = 0.12%,
                which, when added to 0.30%, results in a Payout Percent equal to
                0.42%.