Document:

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                                                                    EXHIBIT 10.Z

                    This REVENUE SHARING AGREEMENT (this "AGREEMENT") is made
               and entered into as of the date of the Acquisition (as defined
               below) between and among Tack Acquisition Company, a Delaware
               corporation (the "ACQUISITION COMPANY"), Folksamerica Reinsurance
               Company, a New York reinsurance company ("FOLKSAMERICA"), and
               JOHN D. GILLESPIE, an individual resident of the State of
               Connecticut (the "INVESTMENT MANAGER").

          WHEREAS the Acquisition Company and the Investment Manager desire to
enter into an agreement under which (i) the Acquisition Company and the
Investment Manager shall share the revenue of Prospector Partners, L.L.C.
("PROSPECTOR PARTNERS"), and Prospector Associates, L.L.C. ("PROSPECTOR
ASSOCIATES"), and (ii) the Acquisition Company shall pay the expenses of
Prospector Partners during the Agreement Term (as defined below); and

          WHEREAS Folksamerica and the Investment Manager desire to enter into
an agreement under which Folksamerica shall receive a founder's revenue share
(the "FOUNDER'S REVENUE SHARE") in respect of revenue of certain businesses of
the Investment Manager as provided herein.

          NOW, THEREFORE, in consideration of the mutual covenants contained
herein and intending to be legally bound hereby, the parties hereto hereby agree
as follows:

          SECTION 1. TERM. The Acquisition Company's responsibility for the
expenses of Prospector Partners and the sharing of the revenue of Prospector
Partners and Prospector Associates by the Acquisition Company under the terms of
Sections 2, 3, 4 and 5 hereof shall commence on January 1, 2001 (the
"COMMENCEMENT DATE"), and shall remain in effect until any written notice of
termination of the separate agreement between the Acquisition Company and John
D. Gillespie (the "SEPARATE AGREEMENT"), dated as of the date of the Acquisition
Company's acquisition (the "ACQUISITION") of CGU Corporation, a Delaware
corporation, shall be given as required under Section 2 thereof; provided,
however, that the provisions of Sections 2, 3, 4 and 5 of this Agreement shall
not take effect unless and until the Separate Agreement shall take effect. With
respect to the provisions of Sections 2, 3, 4 and 5 of this Agreement, the
period of time between the Commencement Date and the termination of such
provisions pursuant to the terms of this Agreement is herein referred to as the
"AGREEMENT TERM".

          SECTION 2. SHARING OF REVENUE. (a) The Investment Manager shall (i)
pay or cause to be paid to the Acquisition Company out of any amounts allocable
to him from the gross revenue of Prospector Partners and Prospector Associates
in respect of each calendar year, no later than 30 days after the issuance of
audited financial statements for Prospector Partners Fund, L.P., Prospector
Partners Small Cap Fund, L.P., and Prospector Offshore Fund (Bermuda), Ltd., and
any other fund that the Investment Manager shall be actively involved in the
investment management during the Agreement Term (hereinafter any such funds
shall collectively be referred to as the "FUNDS" and individually referred to as
a "FUND"), in respect of such year, or, at

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                                                                               2

his discretion, (ii) cause to be allocated, as of the last day of such year, to
any capital account of the Acquisition Company in any of the Funds out of
amounts otherwise allocable to any of the Investment Manager's capital accounts
in any of the Funds in respect of such year, or (iii) shall pay, cause to be
paid and/or cause to be so allocated, in aggregate, 50% of the Net Revenue (as
defined below) in respect of such year to the extent such amount shall not have
been previously paid or so allocated. Notwithstanding any provision herein to
the contrary, the Investment Manager may pay or cause to be paid to the
Acquisition Company, at any time in any calendar year during the Agreement Term,
the Acquisition Company's share, or any portion of its share, of the Net Revenue
for such year on an estimated basis. If the total amount paid to the Acquisition
Company under this paragraph (a) in respect of any year shall exceed the
Acquisition Company's share of Net Revenue for such year as finally determined,
the Acquisition Company shall return such excess to the Investment Manager
within 30 days of such final determination. "NET REVENUE" shall be calculated
annually on a calendar year basis and shall mean the sum of (i) the aggregate
gross revenue earned by Prospector Associates and Prospector Partners during any
such year in respect of the Funds, less 24% of any such gross revenue in excess
of $500,000 (which 24% represents the aggregate shares of such gross revenue of
the founding investors of the Funds), and (ii) gross revenue earned by
Prospector Partners during such year in respect of accounts managed by
Prospector Partners during the Agreement Term that are not accounts of any Fund
(hereinafter any such accounts shall be referred to collectively as the
"SEPARATE ACCOUNTS" and individually as a "SEPARATE ACCOUNT"). Notwithstanding
anything in the foregoing provisions of this paragraph to the contrary, the
aforementioned definition of Net Revenue shall not include, (a) with respect to
each share of convertible preferred stock in White Mountains Insurance Group,
Ltd., a Bermuda company ("WHITE MOUNTAINS"), offered in connection with the
Acquisition and subscribed to by any Fund or Separate Account prior to the
Acquisition, the excess of $319 over the per share value at the time of
subscription, as determined pursuant to the agreement under which such shares
shall have been subscribed to, (b)(i) any amounts or interests earned or accrued
prior to the Commencement Date, including amounts or interests earned but not
yet paid in respect of Prospector Offshore Fund (Bermuda), Ltd., and any
investment earnings in respect thereof, and (ii) the Investment Manager's pro
rata share of investment earnings in respect of amounts earned or accrued, but
not yet paid, subsequent to the Commencement Date in respect of Prospector
Offshore Fund (Bermuda), Ltd., and (c) any amounts or interests earned in
respect of any capital account in any of the Funds, or any Separate Account,
owned by the Investment Manager, any member of Prospector Associates or
Prospector Partners and any of the Investment Manager's, or any such member's,
immediate family members or related entities.

          (b)  Additionally, during the Agreement Term, the Investment Manager
shall pay or cause to be paid to the Acquisition Company 25% of his allocable
share of the amount that the aggregate cumulative distributions paid to the
Connecticut Fund Business Entities (as hereinafter defined) shall exceed $3
million during the Agreement Term. Such 25% shall be calculated and paid
annually on a calendar year basis no later than 30 days after the issuance of
audited financial statements for such entities in respect of each calendar year
during the Agreement Term. The "CONNECTICUT FUND BUSINESS" shall mean the
business activities of the Connecticut Fund Business Entities (as hereinafter
defined) in respect of investments under the Connecticut Insurance Reinvestment
Act No. 97-292. The "CONNECTICUT FUND BUSINESS ENTITIES" shall include: (i)

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                                                                               3

Insurance Capital Partners, LLC; (ii) Olmstead Capital Partners, LLC; (iii)
Prospector Capital Management, LLC; (iv) Prospector Partners CT Fund Investment
Management, LLC; and (v) Prospector Capital Management II, LLC.

          SECTION 3. EXPENSES. In consideration of the Investment Manager
agreeing to the terms of Section 2 hereof, during the Agreement Term the
Acquisition Company shall be responsible for, and shall pay or cause to be paid
on a timely basis, all expenses of Prospector Partners including, but not
limited to, (a) employee compensation (including salaries, incentive bonuses and
employee benefits), other than the Investment Manager's compensation, (b) rents,
(c) any costs associated with relocating the business office, including
leasehold improvements, purchases of office equipment, and furniture,
furnishings and fixtures and (d) any expenses incurred in connection with the
operations of Prospector Partners. The Acquisition Company and the Investment
Manager understand that Prospector Partners expects to hire one or more
additional employees with superior talent and credentials in investment
management activities, and such other support employees as the Investment
Manager deems advisable, and that the salary and any incentive bonus of any such
employee, including any share of Net Revenue of any such employee hired to
conduct investment management activities, shall be included as part of the
expenses the Acquisition Company agrees to pay hereunder.

          SECTION 4. ADDITIONAL INVESTMENTS BY THE ACQUISITION COMPANY. (a)
The Acquisition Company, or any wholly-owned affiliate or affiliates of the
Acquisition Company or White Mountains, shall make capital contributions to
any Fund or Separate Account to replace any capital committed to such Fund or
Separate Account as of the date of the public announcement by either the
Acquisition Company or the Investment Manager, or by White Mountains, of the
services to be performed by the Investment Manager pursuant to the Separate
Agreement that shall be withdrawn from such Fund or Separate Account prior to
the second anniversary of the date of such public announcement, in each case
as a result of the Investment Manager committing to provide such services.
Any withdrawal of such committed capital made after the first anniversary and
prior to the second anniversary of such date shall be considered to have been
made as a result of the Investment Manager committing to provide such
services if the individual or entity making such withdrawal shall confirm in
writing that such withdrawal shall have been a result of such commitment.

          (b)  If, during the Agreement Term, the Acquisition Company or any of
its affiliates shall desire to place any amount not under the investment
management of Prospector Partners on the Commencement Date under the investment
management of Prospector Partners, such amount shall not be invested in any of
the Funds (other than as an allocation of the Acquisition Company's share of Net
Revenue as provided in paragraph (a) of Section 2 hereof or as a replacement of
withdrawn capital as provided in the foregoing paragraph of this Section 4) but
a Separate Account shall be created by Prospector Partners for each such amount
under the same terms and conditions of the 1% fee paying Separate Accounts
existing on the Commencement Date.

          SECTION 5. PAYMENT UPON TERMINATION. Following the conclusion of the
Agreement Term, the Acquisition Company (i) shall be entitled to any payment or
allocation pursuant to and under the terms of paragraph (a) of Section 2 hereof
that shall not yet have been paid or allocated but that the Acquisition Company
shall have been entitled to if the Agreement

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                                                                               4

Term had continued until the end of the year in which such termination shall
have occurred, and (ii) shall pay or cause to be paid on a timely basis all
expenses of Prospector Partners that shall have accrued prior to the conclusion
of the Agreement Term but that shall not yet have been paid.

          SECTION 6. TERMINATION; SURVIVAL. The provisions of Sections 2, 3, 4
and 5 of this Agreement shall terminate upon the giving of written notice of
termination of the Separate Agreement by either party thereto, as required under
Section 2 thereof. The provisions of Section 7 of this Agreement shall terminate
upon the mutual written consent of Folksamerica and the Investment Manager.
Notwithstanding the foregoing, Sections 5 and 8 of this Agreement shall survive
the termination of any provisions of this Agreement.

          SECTION 7. PAYMENT OF FOUNDER'S REVENUE SHARE. (a) The Investment
Manager shall pay the Founder's Revenue Share (if any) in respect of each
calendar year to Folksamerica, no later than 30 days after the issuance of
audited financial statements for Prospector Partners Fund, L.P., Prospector
Partners Small Cap Fund, L.P., and Prospector Offshore Fund (Bermuda), Ltd.
(hereinafter such funds shall collectively be referred to as the "ORIGINAL
FUNDS"). The Founder's Revenue Share in respect of any calendar year shall be
the amount (if any) equal to the Founder's Revenue Share Percentage (as defined
below) multiplied by the excess (if any) of (i) the sum of the gross revenues of
Prospector Partners and of Prospector Associates in respect of such year to the
extent such revenues are allocable to one or more of the Original Funds (and not
allocable to a separately managed account or other investment management
activity) over (ii) Five hundred thousand (500,000).

          (b)  The "FOUNDER'S REVENUE SHARE PERCENTAGE" shall initially be six
percent (6%). If Folksamerica withdraws all or any part of its original
$10,000,000.00 investment in the Funds (including a withdrawal of all or any
part of earnings and/or appreciation in respect of such original investment),
the Founder's Revenue Share Percentage or a segregated portion thereof, as
determined below, shall be reduced by the amount equal to one-third of the
Founder's Revenue Share Percentage or the segregated portion thereof, as the
case may be, at the time of such withdrawal per year for each year beginning
with the calendar year of withdrawal until the Founder's Revenue Share
Percentage or segregated portion thereof, as the case may be, shall be reduced
to zero. For purposes of the preceding sentence, in the event Folksamerica
withdraws less than all of its original $10,000,000.00 investment in the Funds
(including a withdrawal of less than all the earnings and/or appreciation in
respect of such original investment) only that portion of the Founder's Revenue
Share Percentage that bears the same ratio to the entire Founder's Revenue Share
Percentage as the amount of the withdrawal bears to the total investment of
Folksamerica at the time of such withdrawal (including earnings and appreciation
thereon) shall be subject to reduction as provided by the foregoing provisions
of this paragraph (b), and the Founder's Revenue Share Percentage shall be
divided and segregated for purposes of identifying the portion thereof subject
to reduction. The Founder's Revenue Share Percentage shall be reduced from time
to time to take into account any reduction in the Founder's Revenue Share
Percentage and/or any segregated portion thereof pursuant to the provisions of
this paragraph.

          SECTION 8. MISCELLANEOUS. (a) This Agreement shall inure to the
benefit of (i) the Investment Manager and his executors, administrators, heirs,
personal representatives and

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                                                                               5

permitted assigns, (ii) the Acquisition Company and its successors and permitted
assigns and (iii) Folksamerica and its successors and permitted assigns;
provided, however, that except as provided herein, the Investment Manager shall
not be entitled to assign or delegate any of his rights or obligations in
respect of Sections 2, 4 and 5 hereunder without the prior written consent of
the Acquisition Company or his rights or obligations in respect of Section 7
hereunder without the prior written consent of Folksamerica; and each of the
Acquisition Company and Folksamerica shall be permitted to assign its
interests and obligations under this agreement to any wholly-owned affiliate
of the Acquisition Company or White Mountains at any time with the prior
written consent of the Investment Manager, such consent not to be
unreasonably withheld.

          (b) This Agreement shall be deemed to be made in, and in all respects
shall be interpreted, construed and governed by and in accordance with, the laws
of the State of New York, without regard to the conflicts of law principles of
such State. No provision of this Agreement or any related document shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having
or being deemed to have structured or drafted such provision.

          (c) This Agreement constitutes the entire agreement between and among
the Acquisition Company, Folksamerica and the Investment Manager with respect to
the responsibility for the expenses of Prospector Partners, the sharing of
revenue of Prospector Partners and Prospector Associates by the Acquisition
Company and the Investment Manager, and the payment of the Founder's Revenue
Share and, effective as of the Commencement Date, supersedes all prior
agreements, if any, whether written or oral, between and among the Acquisition
Company, Folksamerica and the Investment Manager with respect to such matters.

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.

                                         TACK ACQUISITION COMPANY,

                                         by
                                            ------------------------------------
                                           Name:
                                           Title:

                                         FOLKSAMERICA REINSURANCE COMPANY,

                                         by
                                            ------------------------------------
                                         Name:
                                         Title:
                                         ---------------------------------------
                                                 John D. Gillespie

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                                                                               6

                                         Prospector Partners, L.L.C., as to the
                                         provisions of Sections 2, 3, 4 and 7
                                         hereof:

                                         PROSPECTOR PARTNERS, L.L.C.,

                                         by
                                            ------------------------------------
                                           Name: John D. Gillespie
                                           Title: Managing Member

                                         Prospector Associates, L.L.C., as to
                                         the provisions of paragraph (a) of
                                         Section 2 and Section 7 hereof:

                                         PROSPECTOR ASSOCIATES, L.L.C.,

                                         by
                                           -------------------------------------
                                           Name: John D. Gillespie
                                           Title: Managing Member

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                                                                               7

                                         Each Connecticut Fund Business Entity
                                         as to the provisions of paragraph (b)
                                         of Section 2 hereof:

                                         INSURANCE CAPITAL PARTNERS, LLC,

                                         by
                                           -------------------------------------
                                           Name: John D. Gillespie
                                           Title: Managing Member

                                         OLMSTEAD CAPITAL PARTNERS, LLC,

                                         by
                                           -------------------------------------
                                           Name: John D. Gillespie
                                           Title:  Managing Member

                                         PROSPECTOR CAPITAL MANAGEMENT, LLC,

                                         by
                                           -------------------------------------
                                           Name: John D. Gillespie
                                           Title: Managing Member

                                         PROSPECTOR PARTNERS CT FUND INVESTMENT
                                         MANAGEMENT, LLC,

                                         by
                                           -------------------------------------
                                           Name: John D. Gillespie
                                           Title: Managing Member

                                         PROSPECTOR CAPITAL MANAGEMENT II, LLC

                                         by
                                           -------------------------------------
                                           Name: John D. Gillespie
                                           Title: Managing Member<Page>

                                                                    Exhibit 10.1

                    AMERICAN REAL ESTATE FINANCE CORPORATION

                 ----------------------------------------------

                          INVESTMENT ADVISORY AGREEMENT

                 ----------------------------------------------

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                                TABLE OF CONTENTS
<Table>
<Caption>
                                                                    PAGE
                                                                    ----
<S>      <C>                                                          <C>
1        DEFINITIONS                                                  1

2        GENERAL                                                      2

3        DUTIES AND OBLIGATIONS OF THE ADVISOR WITH RESPECT TO
         INVESTMENT OF ASSETS OF THE COMPANY                          2

4        PORTFOLIO TRANSACTIONS AND BROKERAGE                         5

5        COMPENSATION OF THE ADVISOR                                  5

6        LIMITATION OF LIABILITY; INDEMNITY                           6

7        DURATION AND TERMINATION                                     7

8        ACTION UPON TERMINATION                                      8

9        ASSIGNMENT                                                   8

10       NOTICES                                                      8

11       GOVERNING LAW                                                8

12       AMENDMENTS                                                   8

13       SEVERABILITY                                                 8

14       ENTIRE AGREEMENT                                             9

15       COUNTERPARTS                                                 9
</Table>

                                       i
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                          INVESTMENT ADVISORY AGREEMENT

         AGREEMENT, dated [__________], between American Real Estate Finance
Corporation (the "COMPANY"), a Maryland corporation, and [________________] (the
"ADVISOR"), a Delaware limited liability company.

         WHEREAS, the Company intends to invest in a diversified portfolio of
multifamily, commercial and residential mortgage loans, mortgage backed
securities and other real estate related assets in U.S. and non-U.S. markets
("REIT INVESTMENTS") and expects to qualify for the tax benefits accorded by
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
"CODE"); and

         WHEREAS, the Company desires to retain the Advisor to acquire, sell and
otherwise manage the investments of the Company and to perform certain
supervisory services for the Company in the manner and on the terms set forth
herein;

         NOW THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed by and between the parties hereto as
follows:

1.       DEFINITIONS

         Capitalized terms used but not defined herein shall have the following
respective meanings:

         (a)      "ARTICLES OF INCORPORATION" means the Articles of
Incorporation of the Company.

         (b)      "AFFILIATE" means, when used with reference to a specified
person, (i) any person that directly or indirectly controls or is controlled by
or is under common control with the specified person, (ii) any person that is an
officer of, partner in or trustee of, or serves in a similar capacity with
respect to, the specified person or of which the specified person is an officer,
partner or trustee, or with respect to which the specified person serves in a
similar capacity, and (iii) any person that, directly or indirectly, is the
beneficial owner of 5% or more of any class of equity securities of the
specified person or of which the specified person is directly or indirectly the
owner of 5% or more of any class of equity securities; provided, however, that
neither the Company nor any of its controlled Affiliates will be treated as an
Affiliate of the Advisor or any of its Affiliates.

         (c)      "AGREEMENT" means this Investment Advisory Agreement, as
amended from time to time.

         (d)      "BOARD OF DIRECTORS" means the Board of Directors of the
Company.

         (e)      "BY-LAWS" means the By-Laws of the Company as adopted by the
Board of Directors in accordance with the Maryland General Corporation Law.

         (f)      "CLOSING DATE" means the date of closing of the Merger.

         (g)      "COMMON STOCK" means the shares of common stock, par
value $.01, of the Company.

         (h)      "INDEPENDENT DIRECTORS" shall mean those directors of the
Company who (a) do not own greater than a de minimis interest in the Advisor or
any of its Affiliates, (b) are not officers or employees of or otherwise
affiliated with the Company or the Advisor, and (c) within the last two years,
have not (i) directly or indirectly been employed by the Advisor or any of its
Affiliates, (ii) been an officer or director of the Advisor or any of its
Affiliates, (iii) performed services for the Advisor or any of its

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Affiliates, or (iv) had any material business or professional relationship
with the Advisor or any of its Affiliates.

         (i)      "INITIAL DATE" means ____________, 2002.

         (j)      "MANAGEMENT FEES" means the base management fee and incentive
compensation as set forth in Section 5 hereof.

         (k)      "MERGER" means the merger of American Strategic Income
Portfolio Inc., American Strategic Income Portfolio Inc. - II, American
Strategic Income Portfolio Inc. - III, and American Select Portfolio Inc. with
and into the Company.

         (l)      "MORTGAGE BACKED SECURITIES" means debt obligations (bonds)
that are secured by Mortgage Loans or mortgage certificates.

         (m)      "MORTGAGE LOANS" means multifamily, residential and commercial
term loans secured by real property.

         (n)      "REIT PROVISIONS OF THE CODE" means Sections 856 through 860
of the Code.

         (o)      "STOCKHOLDER" means a holder of the capital stock of the
Company.

2.       GENERAL

         The Advisor agrees, as more fully set forth herein, to act as
investment adviser to the Company with respect to the investment of the
Company's assets and to supervise and arrange the purchase of Mortgage Loans,
Mortgage Backed Securities and other investments for the Company. The Advisor
shall manage the business affairs of the Company in conformity with the policies
that are approved and monitored by the Board of Directors. The Advisor shall
prepare regular reports for the Board of Directors that will review the
Company's acquisitions of assets, portfolio composition and characteristics,
credit quality, hedging strategies, performance and compliance with the policies
approved by the Board of Directors. The Advisor shall allocate among the Company
and its other clients investment and disposition opportunities in accordance
with policies and procedures the Advisor considers fair and equitable,
including, without limitation, such considerations as investment objectives,
restrictions and time horizons, availability of cash and the amount of existing
holdings.

3.       DUTIES AND OBLIGATIONS OF THE ADVISOR WITH RESPECT TO INVESTMENT OF
         ASSETS OF THE COMPANY

         (a)      Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Directors, the Advisor will
be responsible for the day-to-day operations of the Company and will perform (or
cause to be performed through affiliates of the Advisor or through third
parties) such services and activities relating to the assets and operations of
the Company as the Advisor deems appropriate, including:

                  (i)      providing a complete program of investing and
reinvesting the capital and assets of the Company in pursuit of its investment
objectives and in accordance with policies adopted by the Board of Directors
from time to time;

                  (ii)     serving as the Company's consultant with respect to
formulation of investment criteria and preparation of policy guidelines by the
Board of Directors;

                                       2
<Page>

                  (iii)    assisting the Company in developing criteria for
mortgage asset purchase commitments that are specifically tailored to the
Company's investment objectives and making available to the Company its
knowledge and experience with respect to mortgage assets and other real estate
related assets;

                  (iv)     counseling the Company in connection with policy
decisions made by the Board of Directors;

                  (v)      evaluating and recommending hedging strategies to the
Board of Directors in accordance with hedging guidelines and policies adopted by
the Board of Directors, and engaging in hedging activities on behalf of the
Company, consistent with the Company's status as a REIT;

                  (vi)     advising the Company on borrowing and leverage
strategies and guidelines;

                  (vii)    maintenance of the Company's exemption from
regulation as an investment company;

                  (viii)   representing the Company in connection with the
purchase and commitment to purchase or sell mortgage assets, including the
accumulation of Mortgage Loans for securitization and the incurrence of debt;

                  (ix)     furnishing reports and statistical and economic
research to the Company regarding the Company's activities and the services
performed for the Company by the Advisor;

                  (x)      monitoring and providing to the Board of Directors on
an ongoing basis price information and other data, obtained from certain
nationally recognized dealers that maintain markets in mortgage assets
identified by the Board of Directors from time to time, and providing data and
advice to the Board of Directors in connection with the identification of such
dealers;

                  (xi)     administering the day-to-day operations of the
Company and performing and supervising the performance of such other
administrative functions necessary in the management of the Company as
reasonably directed by the Board of Directors;

                  (xii)    contracting, in the name and on behalf of the
Company, as necessary, with third parties for master servicing and special
servicing of assets acquired by the Company;

                  (xiii)   communicating on behalf of the Company with the
holders of the equity and debt securities of the Company as required to satisfy
the reporting and other requirements of any governmental bodies or agencies and
to maintain effective relations with such holders;

                  (xiv)    causing the Company to qualify to do business in all
applicable jurisdictions;

                  (xv)     causing the Company to retain qualified accountants
and legal counsel to assist in developing appropriate accounting procedures,
compliance procedures and testing systems and to conduct quarterly compliance
reviews;

                  (xvi)    assisting the Company in complying with all federal
and state legal and regulatory requirements applicable to the Company in respect
of its business activities, including preparing or causing to be prepared all
financial statements required under applicable regulations and contractual
undertakings and all reports to shareholders, annual and quarterly reports,
proxy statements

                                       3
<Page>

and other reports and documents, if any, required under the Securities and
Exchange Act of 1934, as amended (the "EXCHANGE ACT");

                  (xvii)   assisting the Company in making required tax filings
and reports and maintaining its status as a REIT, including soliciting
Stockholders for required information to the extent provided in the REIT
Provisions of the Code;

                  (xviii)  supervising investor relations, public relations and
relations with the investment community;

                  (xix)    supervising the maintenance of the Company's
accounts, books and records;

                  (xx)     performing such other services as may be required
from time to time for management and other activities relating to the assets of
the Company as the Board of Directors shall reasonably request or the Advisor
shall deem appropriate under the particular circumstances; and

                  (xxi)    using reasonable efforts to cause the Company to
comply with applicable laws.

         (b)      In the performance of its duties under this Agreement, the
Advisor shall at all times use reasonable efforts to cause the Company to
conform to and act in accordance with any requirements imposed by (i) the status
of the Company as a REIT as defined in the REIT Provisions of the Code; (ii) the
Company's status as an entity exempt from regulation under the Investment
Company Act of 1940; (iii) any other applicable provision of law, rule or
regulation; (iv) the provisions of the Articles of Incorporation and By-Laws of
the Company, as such documents are amended from time to time; (v) the investment
objectives and policies of the Company established by the Board of Directors;
and (vi) any policies and determinations of the Board of Directors.

         (c)      The Advisor will bear all costs and expenses of its officers
and employees and any overhead incurred in connection with its duties hereunder,
the cost of office space and equipment required for performance of its duties
and shall bear the costs of any salaries or directors fees of any officers or
directors of the Company who are Affiliated persons of the Advisor (provided
that such salaries and/or fees are approved by the Advisor); provided that the
Advisor shall not be expected to bear the following expenses: issuance and
transaction costs incident to the acquisition, disposition and financing of
investments, legal, accounting and auditing fees and expenses, the compensation
and expenses of the Company's Independent Directors, the costs of printing and
mailing proxies and reports to Stockholders, costs incurred by employees of the
Advisor for due diligence and travel on behalf of the Company, costs associated
with any computer software or hardware that is used exclusively for the Company,
costs to obtain liability insurance to indemnify the Company's directors and
officers, the Advisor and its employees and directors, litigation or other
extraordinary or non-recurring expenses incurred on behalf of the Company and
the compensation and expenses of the Company's custodian and transfer agent, if
any. The Company will also be required to pay all expenses incurred in
connection with due diligence, the accumulation of Mortgage Loans or other real
estate related assets, the master and special servicing of Mortgage Loans, the
issuance and administration of Mortgage Backed Securities from pools of Mortgage
Loans or otherwise, the raising of capital, incurrence of debt, the acquisition
of assets, interest expenses, taxes and license fees, non-cash costs,
litigation, the base and incentive management fee and extraordinary or
non-recurring expenses.

         (d)      The Advisor shall not be entitled to receive any compensation
for services rendered to the Company pursuant to this Agreement except for the
compensation contemplated under this Agreement; provided, however, that nothing
in this Section 3(d) shall preclude the Advisor or any affiliate from receiving
any compensation for other services rendered to the Company at the request or
approval of the

                                       4
<Page>

Board of Directors or from receiving soft dollar products and services in
connection with transactions effected on behalf of the Company, provided such
products and services benefit the Company.

         (e)      Nothing in this Agreement shall prevent the Advisor or any
equity owner, officer, manager, employee or other Affiliate thereof from acting
as investment adviser for any other person, firm or corporation (including any
other REIT), or from engaging in any other lawful activity, and shall not in any
way limit or restrict the Advisor or any of its equity owners, managers,
officers, employees or agents from buying, selling or trading any securities for
its or their own accounts or for the accounts of others for whom it or they may
be acting; provided, however that the Advisor will not undertake activities
which, in its judgment, will substantially and adversely affect the performance
of its obligations under this Agreement.

         (f)      The Advisor shall maintain appropriate books of accounts and
records relating to services performed hereunder, and such books of accounts and
records shall be accessible for inspection by representatives of the Company or
any of its subsidiaries at any time during normal business hours. The Advisor
shall keep confidential any and all information obtained in connection with the
services rendered hereunder and shall not disclose any such information to
non-affiliated third parties other than parties providing services to the
Company except with the prior written consent of the Board of Directors or as
may be required by law or order of a court or other tribunal having requisite
jurisdiction.

4.       PORTFOLIO TRANSACTIONS AND BROKERAGE

         The Advisor is authorized, for the purchase and sale of the Company's
assets, to employ such brokers or dealers as may, in the reasonable judgment of
the Advisor, implement the policy of the Company to obtain the best net results
taking into account such factors as price, including dealer spread, the size,
type and difficulty of the transaction involved, the firm's general execution
and operational facilities and the firm's risk in positioning the securities
involved. Consistent with this policy, the Advisor is authorized to direct the
execution of the Company's portfolio transactions to brokers and dealers
furnishing statistical information or research deemed by the Advisor to be
useful or valuable to the performance of its investment advisory functions for
the Company.

5.       COMPENSATION OF THE ADVISOR

         (a)      Commencing with the first fiscal quarter in which the Closing
Date occurs, the Company agrees to pay to the Advisor and the Advisor agrees to
accept as full compensation for all services rendered by the Advisor as such,
(i) a quarterly base management fee calculated as a percentage of the total
assets of the Company on the last business day of each fiscal quarter
(determined in accordance with the U.S. generally accepted accounting principles
("GAAP")) and equal to .25% per annum (expressed as a quarterly percentage) for
investment grade assets (as herein defined) and 1% per annum (expressed as a
quarterly percentage) for the first $1 billion of other assets and .75% per
annum (expressed as a quarterly percentage) of other assets over $1 billion, and
(ii) incentive compensation for each fiscal quarter in an amount equal to the
product of (I) the weighted average number of shares of common stock outstanding
during such quarter, and (II) 20% of the dollar amount by which (1) Earnings of
the Company (before the incentive fee) per share of common stock (based on the
weighted average number of shares of common stock outstanding), exceeds (2) an
amount equal to the product of (a) the Weighted Average Price Per Share (as
herein defined) and (b) an amount equal to the greater of 10% per annum
(expressed as a quarterly rate) or the ten year U. S. Treasury Rate plus three
and one-half percent per annum (expressed as a quarterly percentage). As used
herein, (w) "EARNINGS OF THE COMPANY" means earnings computed in accordance with
GAAP excluding gains (or losses) from debt restructuring and asset sales, plus
depreciation and amortization on real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures, (x) "WEIGHTED AVERAGE PRICE PER
SHARE" shall equal the quotient determined by

                                       5
<Page>

dividing (i) the sum of (a) the product of (1)$[_____] [the initial net asset
value per share of the common stock of the Company issued in the Merger] and (2)
the number of shares of common stock in the Company issued in the Merger, and
(b) the product of (1) the weighted average initial public offering price per
share of common stock issued by the Company in its BONA FIDE underwritten public
offerings and (2) the number of shares of common stock issued by the Company in
such public offerings by (ii) the sum of the number of shares of common stock in
clauses (a)(2) and (b)(2) above, (y) "TEN YEAR U.S. TREASURY RATE" means the
arithmetic average of the daily closing yields to maturity for actively traded
current coupon U.S. Treasury fixed interest rate securities (adjusted to
constant maturities of ten years) published by the Federal Reserve Board in
respect of such fiscal quarter, or if such rate is not published by the Federal
Reserve Board, any Federal Reserve Bank or agency or department of the federal
government selected by the Company, and (z) "INVESTMENT GRADE ASSETS" means (a)
assets that have a credit rating of BBB- or higher from Standard & Poor's
Corporation or Baa or higher from Moody's Investors Service, Inc. or have
received an equivalent rating from a nationally recognized rating agency and (b)
residential mortgage-backed securities, as determined in the reasonable judgment
of the Advisor to be, of equivalent credit quality, whether or not rated. For
any period less than a quarter during which this Agreement is in effect, the
base management fee shall be prorated according to the proportion which such
period bears to a full quarter and the incentive fee shall be calculated so as
to take appropriate account of the portion of the quarter to which it relates.

         (b)      The Management Fees earned under Section 5(a) will be payable
in arrears. The Advisor shall compute the compensation payable under Section
5(a) of this Agreement within 15 days after the end of each fiscal quarter. A
copy of the computations made by the Advisor to calculate its compensation shall
thereafter promptly be delivered to the Board of Directors and, upon such
delivery, payment of the compensation earned under Section 5(a) of this
Agreement shown therein shall be due and payable not later than 30 days after
the end of such fiscal quarter.

6.       LIMITATION OF LIABILITY; INDEMNITY

         (a)      The Company hereby agrees to indemnify the Advisor and each of
the Advisor's equity owners, officers, managers, employees, agents, associates
and controlling persons and the equity owners, officers, managers, employees and
agents thereof (including any individual who serves at the Advisor's request as
director, officer, partner, member, manager, trustee or the like of another
entity) (the Advisor and each such person being an "INDEMNITEE") against any
liabilities and expenses, including amounts paid in satisfaction of judgments,
in compromise or as fines and penalties, and counsel fees reasonably incurred by
such indemnitee in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court or
administrative or investigative body in which such indemnitee may be or may have
been involved as a party or otherwise or with which such indemnitee may be or
may have been threatened, by reason of service in any capacity set forth above
in this Section 6, and the Company further agrees that each such indemnitee
shall not have any liability to the Company or its Stockholders for any error of
judgment or mistake of law or for any loss arising out of any investment or for
any act or omission in performing its obligations under this Agreement;
provided, however, that no indemnitee shall be relieved of liability pursuant to
the foregoing or be indemnified hereunder against any liability to the Company
or its Stockholders or any expense of such indemnitee or held harmless for
liabilities hereunder arising by reason of (i) willful misfeasance, (ii) bad
faith, (iii) gross negligence, (iv) reckless disregard of the duties involved in
the conduct of its position or (v) any material breach of the terms of this
Agreement, provided that such breach does not arise solely from the Advisor's
good faith reliance upon the advice of outside professionals as to a matter
which the Advisor reasonably believes to be within that person's professional or
expert competence.

         (b)      The Company shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Company

                                       6
<Page>

receives a written affirmation of the indemnitee's good faith belief that the
standard of conduct necessary for indemnification has been met and a written
undertaking to reimburse the Company if it is subsequently determined that the
indemnitee is not entitled to such indemnification.

         The rights accruing to any indemnitee under these provisions shall not
exclude any other right to which he may be lawfully entitled.

7.       DURATION AND TERMINATION

         This Agreement shall commence on the date hereof for an initial term
expiring on the second anniversary of the Closing Date. Thereafter, successive
extensions, each for a period not to exceed two years, may be made by agreement
between the Company and the Advisor, with the approval of a majority of the
Independent Directors until this Agreement is terminated or assigned under the
provisions of this Section 7 or Section 9, as the case may be, of this
Agreement.

         The Company may terminate, or decline to renew the term of, this
Agreement with or without cause at any time upon 60 days written notice by a
majority vote of the Independent Directors. Upon termination of this Agreement
by the Company (other than in the case of termination by the Company for cause
(as described below)) or if this Agreement is not renewed (other than in the
case in which the Company at least 60 days prior to expiration of the Agreement
or any extension thereof (the "Expiration Date") gives written notice to the
Advisor that it is offering to extend the terms of this Agreement for an
additional two year period on the terms outlined herein and the Advisor fails to
accept such offer of renewal prior to the Expiration Date (an "ADVISOR
NON-RENEWAL")), the Company is obligated to pay the Advisor a termination fee.
The termination fee shall be an amount equal to five percent of, for the first
two years following the Initial Date, and two percent of, thereafter, the net
equity of the Company, calculated as of the fiscal year-end immediately prior to
the termination or non-renewal, as the case may be, in accordance with GAAP.

         At the option of the Company, this Agreement, or any extension hereof,
shall be and become terminated with cause upon 60 days' prior written notice of
termination approved by the Board of Directors, including at least a majority of
the Independent Directors, without payment of any termination fee, if any of the
following events occur: (i) the Advisor commits a material breach of any
provision of this Agreement (including any material breach of the provisions of
Section 3(a) and (b) herein), and after written notice of such violation, shall
not cure such violation within 30 days; or (ii) there is entered an order for
relief or similar decree or order with respect to the Advisor by a court having
competent jurisdiction in an involuntary case under the federal bankruptcy laws
as now or hereafter constituted or under any applicable federal or state
bankruptcy, insolvency or other similar laws; or (iii) the Advisor (A) ceases,
or admits in writing its inability to pay its debts as they become due and
payable, or makes a general assignment for the benefit of, or enters into any
composition or arrangement with, creditors; (B) applies for, or consents (by
admission of material allegations of a petition or otherwise) to the appointment
of a receiver, trustee, assignee, custodian, liquidator or sequestrator (or
other similar official) of the Advisor or of any substantial part of its
properties or assets, or authorizes such an application or consent, or
proceedings seeking such appointment are commenced without such authorization,
consent or application against the Advisor and continue undismissed for 30 days;
(C) authorizes or files a voluntary petition in bankruptcy, or applies for or
consents (by admission of material allegations of a petition or otherwise) to
the application of any bankruptcy, reorganization, arrangement, readjustment of
debt, insolvency, dissolution, liquidation or other similar law of any
jurisdiction, or authorizes such application or consent, or proceedings to such
end are instituted against application or consent, or proceedings to such end
are instituted against the Advisor without such authorization, application or
consent and are approved as properly instituted and remain undismissed for 30
days or result in adjudication of bankruptcy or insolvency; or (D) permits or
suffers all or any substantial part of its properties or assets to be
sequestered or attached by court order and the order remains undismissed for 30
days.

                                       7
<Page>

         The Advisor agrees that if any of the events specified above occur, it
will give prompt written notice thereof to the Board of Directors after the
occurrence of such event.

         Upon written request from the Company, the Advisor shall prepare,
execute and deliver to a successor manager any and all documents and other
instruments, place in such successor manager's possession all files and do or
cause to be done all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, to the successor manager at the
Advisor's sole expense; provided, however, that the Advisor shall be entitled to
retain copies of all such documents and other instruments as may be required by
federal or state law. The Advisor agrees to cooperate with Company and such
successor manager in effecting the termination of Advisor's responsibilities and
rights hereunder.

8.       ACTION UPON TERMINATION

         From and after the effective date of termination of this Agreement
pursuant to Section 7 hereof, the Advisor shall not be entitled to compensation
for further services hereunder, but shall be paid all compensation accruing to
the date of termination and, if such termination is not for cause or this
Agreement is not renewed pursuant to the terms outlined herein unless as a
result of an Advisor Non-Renewal, the termination fee determined pursuant to
Section 7. The Advisor shall forthwith upon such termination deliver to the
Board of Directors all funds and property, documents, corporate records, reports
and software of the Company or any subsidiary of the Company then in the custody
of Advisor; provided, however, that the Advisor shall be entitled to retain
copies of all such documents and other instruments as may be required by federal
or state law.

9.       ASSIGNMENT

         This Agreement may not be assigned without the consent of all the
parties to this Agreement.

10.      NOTICES

         Any notice under this Agreement shall be in writing to the other party
at such address as the other party may designate from time to time for the
receipt of such notice and shall be deemed to be received on the earlier of the
date actually received or on the fourth day after the postmark if such notice is
mailed first class postage prepaid.

11.      GOVERNING LAW

         This Agreement shall be construed in accordance with the laws of the
State of Maryland for contracts to be performed entirely therein without
reference to choice of law principles thereof.

12.      AMENDMENTS

         This Agreement shall not be amended, changed or modified in whole or in
part except by an instrument in writing signed by all parties hereto, or their
respective successors or assigns. Any amendment approved by the Company shall
require approval by its Board of Directors (acting by an affirmative vote of at
least two-thirds of the Directors, including at least a majority of the
Independent Directors then holding office).

13.      SEVERABILITY

         The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity of any other provision, and all other provisions
shall remain in full force and effect.

                                       8
<Page>

14.      ENTIRE AGREEMENT

         This instrument contains the entire agreement between the parties as to
the rights granted and the obligations assumed in this instrument.

15.      COUNTERPARTS

         This Agreement may be signed by the parties in counterparts which
together shall constitute one and the same agreement among the parties.

                                       9
<Page>

         IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers, all as of the date
and the year first above written.

                            AMERICAN REAL ESTATE FINANCE CORPORATION

                            By:
                                ------------------------------------------------
                                 Name:
                                 Title:

                            [----------------------------]

                            By:
                                ------------------------------------------------
                                 Name:
                                 Title:

                                       10

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