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                                           EXHIBIT 10.2

                   AMERICAN REAL ESTATE INVESTMENT CORPORATION

                       1994 NON-EMPLOYEE STOCK OPTION PLAN

                        ADOPTED EFFECTIVE AUGUST 31, 1994

1.       PURPOSE.

         (a) The purpose of the 1994 Non-Employee Stock Option Plan (the
"Plan") is to provide a means by which each director or consultant to
American Real Estate Investment Corporation, a Maryland corporation (the
"Company"), who is not otherwise an employee of the Company or of any
Affiliate of the Company (each such person being hereafter referred to as a
"Non-Employee") will be given an opportunity to purchase stock of the Company.

         (b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are
defined in Sections 424(e) and (f), respectively, of the Internal Revenue
Code of 1986, as amended (the "Code") and any partnership of which the
Company is a general or managing partner.

         (c) The Company, by means of the Plan, seeks to retain the services
of persons now serving as Non-Employee Directors of the Company, to secure
and retain the services of persons capable of serving in such capacity and as
consultants to the Company, and to provide incentives for such persons to
exert maximum efforts for the success of the Company.

         (d) The Company intends that the options issued under the Plan not
be incentive stock options as that term is used in Section 422 of the Code.

2.       ADMINISTRATION.

         (a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to
a committee, as provided in subparagraph 2(c).

         (b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan.

                   (1) To construe and interpret the Plan and options granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any option agreement, in
a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

                  (2) To amend the Plan as provided in paragraph 10.


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                  (3) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests
of the Company.

         (c) The Board may delegate administration of the Plan to a committee
composed of not fewer than three (3) members of the Board (the "Committee").
If administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan.

3.       SHARES SUBJECT TO THE PLAN.

         (a) Subject to the provisions of paragraph 9 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate one-hundred-fifty thousand
(150,000) shares of the Company's Common Stock. If any option granted under
the Plan shall for any reason expire or otherwise terminate without having
been exercised in full, the stock not purchased under such option shall
revert to and again become available for issuance pursuant to exercises of
options granted under the Plan.

         (b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.

4.       ELIGIBILITY.

         Options shall be granted only to Non-Employee Directors of the
Company or consultants to the Company.

5.       OPTION PROVISIONS.

         Each option shall contain the following terms and conditions:

         (a) No option shall be exercisable after the expiration of ten (10)
years from the date it was granted.

         (b) The exercise price of each option shall not be less than one
hundred percent (100%) of the fair market value on the Grant Date of the
stock subject to such option.

         (c) The purchase price of stock acquired pursuant to an option shall
be paid, to the extent permitted by applicable statutes and regulations,
either (1) in cash at the time the option is exercised, or (2) by delivery to
the Company of shares of the Company's Common Stock that have been held for
the requisite period necessary to avoid a charge to the Company's reported
earnings and valued at the fair market value on the date of exercise, or (3)
by a combination of such methods of payment.


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         (d) An option shall not be transferable except by will or by the
laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the option is granted only by such person or
by his or her guardian or legal representative.

         (e) An option shall be exercisable at such time or times as may be
determined by the Board at the time of grant, provided, however, with respect
to options granted to Directors, any unexercised portion of an option granted
under the Plan shall terminate thirty (30) days after the date the Director
is no longer a Director of the Company.

         (f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 5(d), as a condition of exercising
any such option: (1) to give written assurances satisfactory to the Company
as to the optionee's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory
to the Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone or together with
the purchaser representative, the merits and risks of exercising the option;
and (2) to give written assurances satisfactory to the Company stating that
such person is acquiring the stock subject to the option for such person's
own account and not with any present intention of selling or otherwise
distributing the stock. These requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (i) the issuance of the shares
upon the exercise of the option has been registered under a then-currently
effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), or (ii), as to any particular requirements, a
determination is made by counsel for the Company that such requirements need
not be met in the circumstances under the then-applicable securities laws.

         (g) Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares issuable upon exercise of such
option are then registered under the Securities Act or, if such shares are
not then so registered, the Company has determined that such exercise and
issuance would be exempt from the registration requirements of the Securities
Act.

6.       COVENANTS OF THE COMPANY.

         (a) During the terms of the options granted under the Plan, the
Company shall keep available at all times the number of shares of stock
required to satisfy such options.

         (b) The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be required
to issue and sell shares of stock upon exercise of the options granted under
the Plan; provided, however, that this undertaking shall not require the
Company to register under the Securities Act either the Plan, any option
granted under the Plan, or any stock issued or issuable pursuant to any such
option. If, after reasonable efforts, the Company is unable to obtain from
any such regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of stock under the
Plan, the Company shall be relieved from any liability for failure to issue
and sell stock upon exercise of such options.


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7.       USE OF PROCEEDS FROM STOCK.

         Proceeds from the sale of stock pursuant to options granted under
the Plan shall constitute general funds of the Company.

8.       MISCELLANEOUS.

         (a) Neither an optionee nor any person to whom an option is
transferred under subparagraph 5(d) shall be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any shares subject to
such option unless and until such person has satisfied all requirements for
exercise of the option pursuant to its terms.

         (b) Nothing in the Plan or in any instrument executed pursuant
thereto shall confer upon any Non-Employee any right to continue in the
service of the Company or any Affiliate or shall affect any right of the
Company, its Board or stockholders or any Affiliate to terminate the service
of any Non-Employee with or without cause.

         (c) No Non-Employee individually or as a member of a group, and no
beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any option reserved for the purposes of the
Plan except as to such shares of Common Stock, if any, as shall have been
reserved for him pursuant to an option granted to him.

         (d) In connection with each option made pursuant to the Plan, it
shall be a condition precedent to the Company's obligation to issue or
transfer shares to a Non-Employee, or an affiliate of such Non-Employee, or
to evidence the removal of any restrictions on transfer, that such
Non-Employee make arrangements satisfactory to the Company to insure that the
amount of any federal or other withholding tax required to be withheld with
respect to such sale or transfer, or such removal or lapse, is made available
to the Company for timely payment of such tax.

9.       ADJUSTMENTS UPON CHANGES IN STOCK.

         (a) If any change is made in the stock subject to the Plan, or
subject to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or otherwise), the Plan and
outstanding options will be appropriately adjusted in the class(es) and
maximum number of shares subject to the Plan and the class(es) and number of
shares and price per share of stock subject to outstanding options.


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         (b) In the event of: (1) a dissolution or liquidation of the
Company; (2) a merger or consolidation in which the Company is not the
surviving corporation; (3) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or (4) any other capital reorganization in which more than fifty
percent (50%) of the shares of the Company entitled to vote are exchanged,
then, at the sole discretion of the Board and to the extent permitted by
applicable law; (i) any surviving corporation shall assume any options
outstanding under the Plan or shall substitute similar options for those
outstanding under the Plan, or (ii) the time during which such options may be
exercised shall be accelerated and the options terminated if not exercised
prior to such event, or (iii) such options shall continue in full force and
effect.

10.      AMENDMENT OF THE PLAN.

         (a) The Board at any time, and from time to time, may amend the
Plan; provided, however, that the Board shall not amend the plan more than
once every six months, with respect to the provisions of the Plan which
relate to the amount, price and timing of grants, other than to comport with
changes in the Code, the Employee Retirement Income Security Act, or the
rules thereunder. Except as provided in paragraph 9 relating to adjustments
upon changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:

                  (1) Increase the number of shares reserved for options
under the Plan;

                  (2) Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires
stockholder approval in order for the Plan to comply with the requirements of
Rule 16b-3 promulgated under the Exchange Act); or

                  (3) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to comply with the
requirements of Rule 16b-3 promulgated under the Exchange Act,

         (b) Rights and obligations under any option granted before any
amendment of the Plan shall not be altered or impaired by such amendment of
the Plan unless (i) the Company requests the consent of the person to whom
the option was granted and (ii) such person consents in writing.

11.      TERMINATION OR SUSPENSION OF THE PLAN.

         (a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on August 31, 2004. No options
may be granted under the Plan while the Plan is suspended or after it is
terminated.

         (b) Rights and obligations under any option granted while the Plan
is in effect shall not be altered or impaired by suspension or termination of
the Plan, except with the consent of the person to whom the option was
granted.


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12.      EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.

         (a) The Plan shall become effective upon adoption by the Board of
Directors, subject to the condition subsequent that the Plan is approved by
the stockholders of the Company.

         (b) No option granted under the Plan shall be exercised or
exercisable unless and until the condition of subparagraph 12(a) above has
been met.


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