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                                                                    Exhibit 10.1

                        MANAGEMENT AND ADVISORY AGREEMENT

            THIS MANAGEMENT AND ADVISORY AGREEMENT, is made as of June 6, 2002
(the "Agreement") by and among NEWCASTLE INVESTMENT CORP., a Maryland
corporation (the "Company"), and FORTRESS INVESTMENT GROUP LLC, a Delaware
limited liability company (together with its permitted assignees, the
"Manager").

                              W I T N E S S E T H :

            WHEREAS, the Company desires to avail itself of the experience,
sources of information, advice, assistance and certain facilities of or
available to the Manager and to have the Manager undertake the duties and
responsibilities hereinafter set forth, on behalf of the Company, as provided in
this Agreement; and

            WHEREAS, the Manager is willing to undertake to render such services
on the terms and conditions hereinafter set forth.

            NOW THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto agree as follows:

      SECTION 1. DEFINITIONS. The following terms have the meanings assigned
them:

                  (a) "Agreement" means this Management and Advisory Agreement,
as amended from time to time.

                  (b) "Board of Directors" means the Board of Directors of the
Company.

                  (c) "Code" means the Internal Revenue Code of 1986, as
amended.

                  (d) "Common Share" means a share of capital stock of the
Company now or hereafter authorized as common voting stock of the Company.

                  (e) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
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                  (f) "Funds from Operations" is as defined by the National
Association of Real Estate Investment Trusts and means net income (computed in
accordance with GAAP) excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation and amortization on real estate assets, and
after adjustments for unconsolidated partnerships and joint ventures.

                  (g) "Governing Instruments" means, with regard to any entity,
the articles of incorporation and bylaws in the case of a corporation,
certificate of limited partnership (if applicable) and the partnership agreement
in the case of a general or limited partnership or the articles of formation and
the operating agreement in the case of a limited liability company.

                  (h) "Independent Directors" means the members of the Board of
Directors who are not officers or employees of the Manager.

                  (i) "Investments" means the investments of the Company.

                  (j) "Junior Share" means a share of capital stock of the
Company now or hereafter authorized or reclassified that has dividend rights, or
rights upon liquidation, winding up and dissolution, that are inferior or junior
to the REIT Shares.

                  (k) "Preferred Share" means a share of capital stock of the
Company now or hereafter authorized or reclassified that has dividend rights, or
rights upon liquidation, winding up and dissolution, that are superior or prior
to the REIT Shares.

                  (l) "Prospectus" means the prospectus of the Company relating
to the Company's initial public offering of common stock.

                  (m) "Real Estate Securities" and "credit sensitive real
estate-related securities" have the respective meanings ascribed to such terms
in the Prospectus.

                  (n) "REIT Share" means a share of the Company's Common Shares,
par value $.01 per share. Where relevant in this Agreement, "REIT Shares"
includes shares of the Company's Common Shares, par value $.01 per share, issued
upon conversion of Preferred Shares or Junior Shares.



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                  (o) "Subsidiary" means any subsidiary of the Company and any
partnership, the general partner of which is the Company or any subsidiary of
the Company and any limited liability company, the managing member of which is
the Company or any subsidiary of the Company.

      SECTION 2. APPOINTMENT AND DUTIES OF THE MANAGER.

                  (a) The Company hereby appoints the Manager to manage the
assets of the Company subject to the further terms and conditions set forth in
this Agreement and the Manager hereby agrees to use its commercially reasonable
efforts to perform each of the duties set forth herein. The appointment of the
Manager shall be exclusive to the Manager except to the extent that the Manager
otherwise agrees, in its sole and absolute discretion, and except to the extent
that the Manager elects, pursuant to the terms of this Agreement, to cause the
duties of the Manager hereunder to be provided by third parties.

                  (b) The Manager, in its capacity as manager of the assets and
the day-to-day operations of the Company, at all times will be subject to the
supervision of the Company's Board of Directors and will have only such
functions and authority as the Company may delegate to it including, without
limitation, the functions and authority identified herein and delegated to the
Manager hereby. The Manager will be responsible for the day-to-day operations of
the Company and will perform (or cause to be performed) such services and
activities relating to the assets and operations of the Company as may be
appropriate, including, without limitation:

                              (i) serving as the Company's consultant with
      respect to the periodic review of the investment criteria and parameters
      for Investments, borrowings and operations, any modifications to which
      shall be approved by a majority of the independent members of the Board
      of Directors (such policy guidelines as are in effect on the date hereof,
      as the same may be modified with such approval, the "Guidelines") and
      other policies for approval by the Board of Directors;

                              (ii) investigation, analysis and selection of
      investment opportunities;

                              (iii) with respect to prospective investments by
      the Company and dispositions of Investments, conducting negotiations with
      real estate brokers, sellers and purchasers


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      and their respective agents and representatives, investment bankers and
      owners of privately and publicly held real estate companies;

                              (iv) engaging and supervising, on behalf of the
      Company and at the Company's expense, independent contractors which
      provide real estate brokerage, investment banking and leasing services,
      mortgage brokerage, securities brokerage and other financial services and
      such other services as may be required relating to the Investments;

                              (v) negotiating on behalf of the Company for the
      sale, exchange or other disposition of any Investments;

                              (vi) coordinating and managing operations of any
      joint venture or co-investment interests held by the Company and
      conducting all matters with the joint venture or co-investment partners;

                              (vii) coordinating and supervising, on behalf of
      the Company and at the Company's expense, all property managers, leasing
      agents and developers for the administration, leasing, management and/or
      development of any of the Investments;

                              (viii) providing executive and administrative
      personnel, office space and office services required in rendering
      services to the Company;

                              (ix) 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 may
      be agreed upon by the Manager and the Board of Directors, including,
      without limitation, the collection of revenues and the payment of the
      Company's debts and obligations and maintenance of appropriate computer
      services to perform such administrative functions;

                              (x) communicating on behalf of the Company with
      the holders of any equity or debt securities of the Company as required to
      satisfy the reporting and other requirements


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      of any governmental bodies or agencies or trading markets and to maintain
      effective relations with such holders;

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

                              (xii) evaluating and recommending to the Board of
      Directors modifications to the hedging strategies in effect on the date
      hereof and engaging in hedging activities on behalf of the Company,
      consistent with such strategies, as so modified from time to time, with
      the Company's status as a real estate investment trust, and with the
      Guidelines;

                              (xiii) counseling the Company regarding the
      maintenance of its status as a real estate investment trust and monitoring
      compliance with the various real estate investment trust qualification
      tests and other rules set out in the Code and Treasury Regulations
      thereunder;

                              (xiv) counseling the Company regarding the
      maintenance of its exemption from the Investment Company Act and
      monitoring compliance with the requirements for maintaining an exemption
      from that Act;

                              (xv) assisting the Company in developing
      criteria for 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 loans, real
      estate, real estate securities and other real estate-related assets;

                              (xvi) representing and making recommendations to
      the Company in connection with the purchase and finance, and commitment to
      purchase and finance, of mortgage loans (including on a portfolio basis),
      real estate, real estate securities and other real estate-related assets,
      and in connection with the sale and commitment to sell such assets;


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                              (xvii) monitoring the operating performance of
      the Investments and providing periodic reports with respect thereto to the
      Board of Directors, including comparative information with respect to such
      operating and performance and budgeted or projected operating results;

                              (xviii) investing and re-investing any moneys and
      securities of the Company (including investing in short-term Investments
      pending investment in Investments, payment of fees, costs and expenses, or
      payments of dividends or distributions to stockholders and partners of the
      Company) and advising the Company as to its capital structure and capital
      raising;

                              (xix) causing the Company to retain qualified
      accountants and legal counsel, as applicable, to assist in developing
      appropriate accounting procedures, compliance procedures and testing
      systems with respect to financial reporting obligations and compliance
      with the provisions of the Code applicable to real estate investment
      trusts and to conduct quarterly compliance reviews with respect thereto;

                              (xx) causing the Company to qualify to do business
      in all applicable jurisdictions and to obtain and maintain all
      appropriate licenses;

                              (xxi) assisting the Company in complying with
      all 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 and documents required under the Exchange
      Act;

                              (xxii) taking all necessary actions to enable the
      Company to make required tax filings and reports, including soliciting
      stockholders for required information to the extent provided by the
      provisions of the Code applicable to real estate investment trusts;

                              (xxiii) handling and resolving all claims,
      disputes or controversies (including all litigation, arbitration,


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      settlement or other proceedings or negotiations) in which the Company may
      be involved or to which the Company may be subject arising out of the
      Company's day-to-day operations, subject to such limitations or parameters
      as may be imposed from time to time by the Board of Directors;

                              (xxiv) using commercially reasonable efforts to
      cause expenses incurred by or on behalf of the Company to be reasonable or
      customary and within any budgeted parameters or expense guidelines set by
      the Board of Directors from time to time;

                              (xxv) 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 Manager shall deem appropriate under the particular
      circumstances; and

                              (xxvi) using commercially reasonable efforts to
      cause the Company to comply with all applicable laws.

Without limiting the foregoing, the Manager will perform portfolio management
services (the "Portfolio Management Services") on behalf of the Company with
respect to the Investments. Such services will include, but not be limited to,
consulting with the Company on the purchase and sale of, and other investment
opportunities in connection with, the Company's portfolio of assets; the
collection of information and the submission of reports pertaining to the
Company's assets, interest rates and general economic conditions; periodic
review and evaluation of the performance of the Company's portfolio of assets;
acting as liaison between the Company and banking, mortgage banking, investment
banking and other parties with respect to the purchase, financing and
disposition of assets; and other customary functions related to portfolio
management. Additionally, the Manager will perform monitoring services (the
"Monitoring Services") on behalf of the Company with respect to any loan
servicing activities provided by third parties. Such Monitoring Services will
include, but not be limited to, negotiating servicing agreements; acting as a
liaison between the servicers of the assets and the Company; review of
servicers' delinquency, foreclosure and other reports on assets; supervising
claims filed under any insurance policies; and enforcing the obligation of any
servicer to repurchase assets.

                  (c) The Manager may enter into agreements with other parties,
including its affiliates, for the purpose of engaging one or more property


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and/or asset managers for and on behalf, and at the sole cost and expense, of
the Company to provide property management, asset management, leasing,
development and/or similar services to the Company (including, without
limitation, Portfolio Management Services and Monitoring Services) with respect
to the Investments, pursuant to property management agreement(s) and/or asset
management agreement(s) with terms which are then customary for agreements
regarding the management of assets similar in type, quality and value to the
assets of the Company; provided, that (i) any such agreements entered into with
affiliates of the Manager shall be (A) on terms no more favorable to such
affiliate then would be obtained from a third party on an arms'-length basis and
(B) to the extent the same do not fall within the provisions of the Guidelines,
approved by a majority of the independent members of the Board of Directors,
(ii) with respect to Portfolio Management Services, (A) any such agreements
shall be subject to the Company's prior written approval and (B) the Manager
shall remain liable for the performance of such Portfolio Management Services,
and (iii) with respect to Monitoring Services, any such agreements shall be
subject to the Company's prior written approval.

                  (d) The Manager may retain, for and on behalf, and at the sole
cost and expense, of the Company, such services of accountants, legal counsel,
appraisers, insurers, brokers, transfer agents, registrars, developers,
investment banks, financial advisors, banks and other lenders and others as the
Manager deems necessary or advisable in connection with the management and
operations of the Company. Notwithstanding anything contained herein to the
contrary, the Manager shall have the right to cause any such services to be
rendered by its employees or affiliates. The Company shall pay or reimburse the
Manager or its affiliates performing such services for the cost thereof;
provided, that such costs and reimbursements are no greater than those which
would be payable to outside professionals or consultants engaged to perform such
services pursuant to agreements negotiated on an arm's-length basis; and
provided, further, that such costs shall not be reimbursed in excess of $500,000
per annum.

                  (e) As frequently as the Manager may deem necessary or
advisable, or at the direction of the Board of Directors, the Manager shall, at
the sole cost and expense of the Company, prepare, or cause to be prepared, with
respect to any Investment (i) an appraisal prepared by an independent real
estate appraiser, (ii) reports and information on the Company's operations and
asset performance and (iii) other information reasonably requested by the
Company.

                  (f) The Manager shall prepare, or cause to be prepared, at the
sole cost and expense of the Company, all reports, financial or otherwise, with


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respect to the Company reasonably required by the Board of Directors in order
for the Company to comply with its Governing Instruments or any other materials
required to be filed with any governmental body or agency, and shall prepare, or
cause to be prepared, all materials and data necessary to complete such reports
and other materials including, without limitation, an annual audit of the
Company's books of account by a nationally recognized independent accounting
firm.

                  (g) The Manager shall prepare regular reports for the Board of
Directors to enable the Board of Directors to review the Company's acquisitions,
portfolio composition and characteristics, credit quality, performance and
compliance with the Guidelines and policies approved by the Board of Directors.

                  (h) Notwithstanding anything contained in this Agreement to
the contrary, except to the extent that the payment of additional moneys is
proven by the Company to have been required as a direct result of the Manager's
acts or omissions which result in the right of the Company to terminate this
Agreement pursuant to Section 15 of this Agreement, the Manager shall not be
required to expend money ("Excess Funds") in excess of that contained in any
applicable Company Account (as herein defined) or otherwise made available by
the Company to be expended by the Manager hereunder. Failure of the Manager to
expend Excess Funds out-of-pocket shall not give rise or be a contributing
factor to the right of the Company under Section 13(a) of this Agreement to
terminate this Agreement due to the Manager's unsatisfactory performance.

                  (i) In performing its duties under this Section 2, the Manager
shall be entitled to rely reasonably on qualified experts hired by the Manager.

      SECTION 3. DEVOTION OF TIME; ADDITIONAL ACTIVITIES.

                  (a) The Manager will provide a dedicated management team,
including a President, a Chief Financial Officer and a Chief Operating Officer
of the Company, to provide the management services to be provided by the Manager
to the Company hereunder, the members of which team shall have as their primary
responsibility the management of the Company and shall devote such of their time
to the management of the Company as the Board of Directors reasonably deems
necessary and appropriate, commensurate with the level of activity of the
Company from time to time.


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                  (b) The Manager hereby agrees that neither the Manager nor any
entity controlled by or under common control with the Manager shall raise or
sponsor any new investment fund, company or vehicle whose investment policies,
guidelines or plan targets as its primary investment category investment in
credit sensitive real estate-related securities; it being understood that no
such fund, company or vehicle shall be prohibited from investing in credit
sensitive real estate-related securities. The Company shall have the benefit of
Manager's best judgement and effort in rendering services and, in furtherance of
the foregoing, the Manager shall not undertake activities which, in its
judgement, will substantially adversely affect the performance of its
obligations under this Agreement.

                  (c) Except to the extent set forth in clauses (a) and (b)
above, nothing herein shall prevent the Manager or any of its affiliates or any
of the officers and employees of any of the foregoing from engaging in other
businesses or from rendering services of any kind to any other person or entity,
including investment in, or advisory service to others investing in, any type of
real estate or real estate-related investment, including investments which meet
the principal investment objectives of the Company.

                  (d) Managers, members, partners, officers, employees and
agents of the Manager or affiliates of the Manager may serve as directors,
officers, employees, agents, nominees or signatories for the Company or any
Subsidiary, to the extent permitted by their Governing Instruments, as from time
to time amended, or by any resolutions duly adopted by the Board of Directors
pursuant to the Company's Governing Instruments. When executing documents or
otherwise acting in such capacities for the Company, such persons shall use
their respective titles in the Company.

      SECTION 4. AGENCY. The Manager shall act as agent of the Company in
making, acquiring, financing and disposing of Investments, disbursing and
collecting the Company's funds, paying the debts and fulfilling the obligations
of the Company, supervising the performance of professionals engaged by or on
behalf of the Company and handling, prosecuting and settling any claims of or
against the Company, the Board of Directors, holders of the Company's securities
or the Company's representatives or properties.


      SECTION 5. BANK ACCOUNTS. At the direction of the Board of Directors, the
Manager may establish and maintain one or more bank accounts in the name of the
Company or any Subsidiary (any such account, a "Company Account"), and may


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collect and deposit funds into any such Company Account or Company Accounts, and
disburse funds from any such Company Account or Company Accounts, under such
terms and conditions as the Board of Directors may approve; and the Manager
shall from time to time render appropriate accountings of such collections and
payments to the Board of Directors and, upon request, to the auditors of the
Company or any Subsidiary.

      SECTION 6. RECORDS; CONFIDENTIALITY. The Manager shall maintain
appropriate books of accounts and records relating to services performed under
this Agreement, and such books of account and records shall be accessible for
inspection by representatives of the Company or any Subsidiary at any time
during normal business hours upon one (1) business day's advance written notice.
The Manager shall keep confidential any and all information obtained in
connection with the services rendered under this Agreement and shall not
disclose any such information to nonaffiliated third parties except with the
prior written consent of the Board of Directors.

      SECTION 7. OBLIGATIONS OF MANAGER; RESTRICTIONS.

                  (a) The Manager shall require each seller or transferor of
investment assets to the Company to make such representations and warranties
regarding such assets as may, in the judgment of the Manager, be necessary and
appropriate. In addition, the Manager shall take such other action as it deems
necessary or appropriate with regard to the protection of the Investments.

                  (b) The Manager shall refrain from any action that, in its
sole judgment made in good faith, (i) is not in compliance with the Guidelines
or (ii) would adversely affect the status of the Company as a real estate
investment trust under the Code or that, in its sole judgment made in good
faith, would violate any law, rule or regulation of any governmental body or
agency having jurisdiction over the Company or any Subsidiary or that would
otherwise not be permitted by such entity's Governing Instruments. If the
Manager is ordered to take any such action by the Board of Directors, the
Manager shall promptly notify the Board of Directors of the Manager's judgment
that such action would adversely affect such status or violate any such law,
rule or regulation or the Governing Instruments. Notwithstanding the foregoing,
the Manager, its directors, officers, stockholders and employees shall not be
liable to the Company or any Subsidiary, the Board of Directors, or the
Company's or any Subsidiary's stockholders or partners for any act or omission
by the Manager, its directors, officers, stockholders or employees except as
provided in Section 11 of this Agreement.


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                  (c) The Manager shall not (i) consummate any transaction which
would involve the acquisition by the Company of property in which the Manager or
any affiliate thereof has an ownership interest or the sale by the Company of
property to the Manager or any affiliate thereof, or (ii) under circumstances
where the Manager is subject to an actual or potential conflict of interest
because it manages both the Company and another Person (not an Affiliate of the
Company) with which the Company has a contractual relationship, take any action
constituting the granting to such Person of a waiver, forebearance or other
relief, or the enforcement against such Person of remedies, under or with
respect to the applicable contract, unless such transaction or action, as the
case may be and in each case, is approved by a majority of the Independent
Directors.

                  (d) The Company shall not invest in joint ventures with the
Manager or any affiliate thereof, unless (i) such Investment is made in
accordance with the Guidelines and (ii) such Investment is approved in advance
by a majority of the Independent Directors.

                  (e) The Board of Directors periodically reviews the Guidelines
and the Company's portfolio of Investments. If a majority of the Independent
Directors determine in their periodic review of transactions that a particular
transaction does not comply with the Guidelines, then a majority of the
Independent Directors will consider what corrective action, if any, can be
taken. If the transaction involved the acquisition of an asset from the Manager
or an affiliate of the Manager that was not approved in advance by a majority of
the Independent Directors, then the Manager may be required to repurchase the
asset at the purchase price (plus closing costs) to the Company.

                  (f) The Manager shall at all times during the term of this
Agreement (including the Initial Term and any renewal term) maintain a tangible
net worth equal to or greater than $1,000,000. Additionally, during such period
the Manager shall maintain "errors and omissions" insurance coverage and other
insurance coverage which is customarily carried by property and asset and
investment managers performing functions similar to those of the Manager under
this Agreement with respect to assets similar to the assets of the Company, in
an amount which is comparable to that customarily maintained by other managers
or servicers of similar assets.

      SECTION 8. COMPENSATION.


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                  (a) During the term of this Agreement, as the same may be
extended from time to time, the Manager will receive an annual management fee
(the "Management Fee") equal to 1.50% of the Company's "Gross Equity." The
Management Fee shall be calculated and paid monthly in arrears based upon the
weighted daily average of the Gross Equity of the Company for such month. The
term "Gross Equity" for any period means (A) the sum of (i) the "Total Equity,"
plus (ii) the value of contributions made by partners other than the Company,
from time to time, to the capital of any Subsidiary (reduced proportionately in
the case of a Subsidiary to the extent that the Company owns, directly or
indirectly, less than 100% of the equity interests in such Subsidiary), less (B)
any capital dividends or capital distributions made by the Company to its
stockholders or, without duplication, by any Subsidiary to its stockholders,
partners or other equity holders. As used herein, the term "Total Equity" shall
mean (i) the equity transferred from Newcastle Investment Holdings Corp. at the
inception of the Company, plus (ii) the amount of accumulated depreciation on
the real estate assets transferred (as directly or indirectly held assets) to
the Company (items (i) and (ii) thus representing the gross equity transferred
to the Company at inception), plus (iii) the total net proceeds to the Company
from any common equity capital heretofore or hereafter raised by the Company or
any Subsidiary of the Company (exclusive, with respect to any Subsidiary, of
capital of such Subsidiary consisting of a capital contribution or other form of
capital investment made by the Company or another Subsidiary of the Company).

                  (b) The Manager shall compute each installment of the
Management Fee within 15 days after the end of the calendar month with respect
to which such installment is payable. A copy of the computations made by the
Manager to calculate such installment shall thereafter, for informational
purposes only and subject in any event to Section 13(a) of this Agreement,
promptly be delivered to the Board of Directors and, upon such delivery, payment
of such installment of the Management Fee shown therein shall be due and payable
no later than the earlier to occur of (i) the date which is 20 days after the
end of the calendar month with respect to which such installment is payable and
(ii) the date which is two (2) business days after the date of delivery to the
Board of Directors of such computations.

                  (c) The Management Fee is subject to adjustment pursuant to
and in accordance with the provisions of Section 13(a) of this Agreement.

                  (d) The Board of Directors may, by written notice to the
Manager delivered ten (10) days prior to the date on which any payment of the
Incentive Compensation is payable, request that the Manager accept all or a
portion of such payment in the form of issued shares of common stock in
Newcastle Invest-




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ment Corp., which notice shall specify the amount of the payment of the
Incentive Compensation, the amount thereof which the Company intends to pay in
cash, if any, and the amount thereof which the Company intends to pay in the
form of such shares of common stock of Newcastle Investment Corp. in the number
of such shares as determined by the Board of Directors. Within five (5) days
following receipt of said notice, the Manager shall notify the Company in
writing, such election to be made by the Manager in its sole discretion, whether
it will accept such portion of such payment in the form of such shares and in
such number of such shares.

                  (e) In addition to the Management Fee otherwise payable
hereunder, the Company shall pay the Manager annual incentive compensation on a
cumulative, but not compounding, basis, in an amount equal to the product of (A)
25% of the dollar amount by which (1)(a) the Funds from Operations (before such
payment) of the Company, per REIT Share (based on the weighted average number of
REIT Shares outstanding), plus (b) gains (or losses) from debt restructuring and
gains (or losses) from sales of property per REIT Share (based on the weighted
average number of REIT Shares outstanding), exceed (2) an amount equal to (a)
the weighted average of the book value per REIT Share of the net assets
transferred to the Company on or prior to July 12, 2002 by Newcastle Investment
Holdings Corp. and the prices per REIT Share at any subsequent offerings by the
Company (adjusted for any prior capital dividends or capital distributions)
multiplied by (b) a simple interest rate of ten percent (10%) per annum
multiplied by (B) the weighted average number of REIT Shares outstanding during
such period. The obligation of the Company to pay the Incentive Compensation
shall survive the expiration or earlier termination of this Agreement, subject
to Section 16(b).

      SECTION 9. EXPENSES OF THE COMPANY. The Company shall pay all of its
expenses and shall reimburse the Manager for documented expenses of the Manager
incurred on its behalf (collectively, the "Expenses"). Expenses include all
costs and expenses which are expressly designated elsewhere in this Agreement as
the Company's, together with the following:

                  (a) expenses in connection with the issuance and transaction
costs incident to the acquisitions, disposition and financing of Investments;

                  (b) travel and other out-of-pocket expenses incurred by
managers, officers, employees and agents of the Manager in connection with the
purchase, financing, refinancing, sale or other disposition of an Investment;



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                  (c) costs of legal, accounting, tax, auditing, administrative
and other similar services rendered for the Company by providers retained by the
Manager or, if provided by the Manager's employees, in amounts which are no
greater than those which would be payable to outside professionals or
consultants engaged to perform such services pursuant to agreements negotiated
on an arm's-length basis;

                  (d) the compensation and expenses of the Independent Directors
and the cost of liability insurance to indemnify the Company's directors and
officers;

                  (e) compensation and expenses of the Company's custodian and
transfer agent, if any;

                  (f) costs associated with the establishment and maintenance of
any credit facilities and other indebtedness of the Company (including
commitment fees, legal fees, closing and other costs) or any securities
offerings of the Company;

                  (g) costs associated with any computer software or hardware
that is used solely for the Company;

                  (h) costs and expenses incurred in contracting with third
parties, including affiliates of the Manager, for the servicing and special
servicing of assets of the Company;

                  (i) all other costs and expenses relating to the Company's
business and investment operations, including, without limitation, the costs and
expenses of acquiring, owning, protecting, maintaining, developing and disposing
of Investments, including appraisal, reporting, audit and legal fees;

                  (j) all insurance costs incurred in connection with the
operation of the Company's business except for the costs attributable to the
insurance that the Manager elects to carry for itself and its employees;

                  (k) expenses relating to any office or office facilities
maintained for the Company or Investments separate from the office or offices of
the Manager;


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                  (l) expenses connected with the payments of interest,
dividends or distributions in cash or any other form made or caused to be made
by the Board of Directors to or on account of the holders of securities of the
Company or its Subsidiaries, including, without limitation, in connection with
any dividend reinvestment plan;

                  (m) expenses connected with communications to holders of
securities of the Company or its Subsidiaries and other bookkeeping and clerical
work necessary in maintaining relations with holders of such securities and in
complying with the continuous reporting and other requirements of governmental
bodies or agencies, including, without limitation, all costs of preparing and
filing required reports with the Securities and Exchange Commission, the costs
payable by the Company to any transfer agent and registrar in connection with
the listing and/or trading of the Company's stock on any exchange, the fees
payable by the Company to any such exchange in connection with its listing,
costs of preparing, printing and mailing the Company's annual report to its
shareholders and proxy materials with respect to any meeting of the shareholders
of the Company; and

                  (n) all other expenses actually incurred by the Manager which
are reasonably necessary for the performance by the Manager of its duties and
functions under this Agreement.

      Without regard to the amount of compensation received under this Agreement
by the Manager, the Manager shall bear the following expenses: (i) wages and
salaries of the Manager's officers and employees; (ii) rent attributable to the
space occupied by the Manager; and (iii) all other "overhead" expenses of the
Manager.

      SECTION 10. CALCULATIONS OF EXPENSES. The Manager shall prepare a
statement documenting the Expenses of the Company and the Expenses incurred by
the Manager on behalf of the Company during each calendar month, and shall
deliver such statement to the Company within 20 days after the end of each
calendar month. Expenses incurred by the Manager on behalf of the Company shall
be reimbursed monthly to the Manager on the first business day of the month
immediately following the date of delivery of such statement.

      SECTION 11. LIMITS OF MANAGER RESPONSIBILITY; INDEMNIFICATION. (a) The
Manager assumes no responsibility under this Agreement other than to render the
services called for under this Agreement in good faith and shall not be
responsible for any action of the Board of Directors in following or declining
to follow any advice or recommendations of the Manager, including as set forth
in Section 7(b) of


                                       16
<PAGE>
this Agreement. The Manager, its members, managers, officers and employees will
not be liable to the Company or any Subsidiary, to the Board of Directors, or
the Company's or any Subsidiary's stockholders or partners for any acts or
omissions by the Manager, its members, managers, officers or employees, pursuant
to or in accordance with this Agreement, except by reason of acts constituting
bad faith, willful misconduct, gross negligence or reckless disregard of the
Manager's duties under this Agreement. The Company shall, to the full extent
lawful, reimburse, indemnify and hold the Manager, its members, managers,
officers and employees and each other Person, if any, controlling the Manager
(each, an "Indemnified Party"), harmless of and from any and all expenses,
losses, damages, liabilities, demands, charges and claims of any nature
whatsoever (including attorneys' fees) in respect of or arising from any acts or
omissions of such Indemnified Party made in good faith in the performance of the
Manager's duties under this Agreement and not constituting such Indemnified
Party's bad faith, willful misconduct, gross negligence or reckless disregard of
the Manager's duties under this Agreement.

                  (b) The Manager shall, to the full extent lawful, reimburse,
indemnify and hold the Company, its shareholders, directors, officers and
employees and each other Person, if any, controlling the Company (each, a
"Company Indemnified Party"), harmless of and from any and all expenses, losses,
damages, liabilities, demands, charges and claims of any nature whatsoever
(including attorneys' fees) in respect of or arising from the Manager's bad
faith, willful misconduct, gross negligence or reckless disregard of its duties
under this Agreement.

      SECTION 12. NO JOINT VENTURE. Nothing in this Agreement shall be construed
to make the Company and the Manager partners or joint venturers or impose any
liability as such on either of them.

      SECTION 13. TERM; TERMINATION.

                  (a) Until this Agreement is terminated in accordance with its
terms, this Agreement shall be in effect until the date that is one (1) years
after the date hereof, and thereafter on each anniversary of such date deemed
renewed automatically each year for an additional one-year period unless (i) a
majority consisting of at least two-thirds of the Independent Directors or a
simple majority of the holders of outstanding shares of Common Stock of the
Company, agree that there has been unsatisfactory performance that is materially
detrimental to the Company or (ii) a simple majority of the Independent
Directors agree that the Management Fee payable to the Manager is unfair;
provided, that the Company shall not have the right to terminate this Agreement
under clause (ii) foregoing if the Manager agrees to


                                       17
<PAGE>
continue to provide the services under this Agreement at a fee that the
Independent Directors have determined to be fair. If the Company elects not to
renew this Agreement at the expiration of the original term or any such one-year
extension term as set forth above, the Company shall deliver to the Manager
prior written notice (the "Termination Notice") of the Company's intention not
to renew this Agreement based upon the terms set forth in this Section 13(a) of
this Agreement not less than 60 days prior to the expiration of the then
existing term. If the Company so elects not to renew this Agreement, the Company
shall designate the date (the "Effective Termination Date"), not less than 60
days from the date of the notice, on which the Manager shall cease to provide
services under this Agreement and this Agreement shall terminate on such date;
provided, however, that in the event that such Termination Notice is given in
connection with a determination that the compensation payable to the Manager is
unfair, the Manager shall have the right to renegotiate the Management Fee by
delivering to the Company, no fewer than forty-five (45) days prior to the
prospective Effective Termination Date, written notice (any such notice, a
"Notice of Proposal to Negotiate") of its intention to renegotiate its
compensation under this Agreement. Thereupon, the Company and the Manager shall
endeavor to negotiate in good faith the revised compensation payable to the
Manager under this Agreement. Provided that the Manager and the Company agree to
a revised Management Fee (or other compensation structure) within 45 days
following the receipt of the Notice of Proposal to Negotiate, the Termination
Notice shall be deemed of no force and effect and this Agreement shall continue
in full force and effect on the terms stated in this Agreement, except that the
Management Fee shall be the revised Management Fee (or other compensation
structure) then agreed upon by the parties to this Agreement. The Company and
the Manager agree to execute and deliver an amendment to this Agreement setting
forth such revised Management Fee promptly upon reaching an agreement regarding
same. In the event that the Company and the Manager are unable to agree to a
revised Management Fee during such 30 day period, this Agreement shall
terminate, such termination to be effective on the date which is the later of
(A) ten (10) days following the end of such 30 day period and (B) the Effective
Termination Date originally set forth in the Termination Notice.

                  (b) In the event that this Agreement is terminated in
accordance with the provisions of Section 13(a) of this Agreement, the Company
shall pay to the Manager, on the date on which such termination is effective, a
termination fee (the "Termination Fee") equal to the amount of the Management
Fee earned by the Manager during the period consisting of the twelve (12) full,
consecutive calendar months immediately preceding such termination. The
obligation of the Company to pay the Termination Fee shall survive the
termination of this Agreement.


                                       18
<PAGE>
                  (c) No later than sixty (60) days prior to the anniversary
date of this Agreement of any year during the Term, the Manager may deliver
written notice to the Company informing it of the Manager's intention not to
renew the Term, whereupon the Term of this Agreement shall not be renewed and
extended and this Agreement shall terminate effective on the anniversary of the
Closing Date next following the delivery of such notice.

                  (d) If this Agreement is terminated pursuant to this Section
13, such termination shall be without any further liability or obligation of
either party to the other, except as provided in Section 13(b) and Section 16 of
this Agreement. In addition, Section 11 of this Agreement shall survive
termination of this Agreement.

      SECTION 14. ASSIGNMENT.

                  (a) Except as set forth in Section 14(b) of this Agreement,
this Agreement shall terminate automatically in the event of its assignment, in
whole or in part, by the Manager, unless such assignment is consented to in
writing by the Company with the consent of a majority of the Independent
Directors; provided, however, that no such consent shall be required in the case
of an assignment by the Manager to an entity whose day-to-day business and
operations are managed and supervised by any two (2) or more of the Messrs.
Wesley R. Edens, Robert I. Kauffman, Randal A. Nardone and Erik P. Nygaard
(collectively, the "Principals"), one of whom must be Mr. Edens. Any such
permitted assignment shall bind the assignee under this Agreement in the same
manner as the Manager is bound, and the Manager shall be liable to the Company
for all errors or omissions of the assignee under any such assignment. In
addition, the assignee shall execute and deliver to the Company a counterpart of
this Agreement naming such assignee as Manager. This Agreement shall not be
assigned by the Company without the prior written consent of the Manager, except
in the case of assignment by the Company to another real estate investment trust
or other organization which is a successor (by merger, consolidation or purchase
of assets) to the Company, in which case such successor organization shall be
bound under this Agreement and by the terms of such assignment in the same
manner as the Company is bound under this Agreement.

                  (b) Notwithstanding any provision of this Agreement, the
Manager may subcontract and assign any or all of its responsibilities under
Sections 2(b), 2(c) and 2(d) of this Agreement to any of its affiliates in
accordance with the terms of this Agreement applicable to any such subcontract
or assignment, and the




                                       19
<PAGE>
Company hereby consents to any such assignment and subcontracting. In addition,
provided that the Manager provides prior written notice to the Company for
informational purposes only, nothing contained in this Agreement shall preclude
any pledge, hypothecation or other transfer of any amounts payable to the
Manager under this Agreement.

      SECTION 15. TERMINATION FOR CAUSE.

                  (a) The Company may terminate this Agreement effective upon
sixty (60) days prior written notice of termination from the Company to the
Manager, without payment of any Termination Fee, if any act of fraud,
misappropriation of funds, or embezzlement against the Company or other willful
violation of this Agreement by the Manager in its corporate capacity (as
distinguished from the acts of any employees of the Manager which are taken
without the complicity of any of the Principals) under this Agreement or in the
event of any gross negligence on the part of the Manager in the performance of
its duties under this Agreement.

                  (b) The Manager may terminate this Agreement effective upon
sixty (60) days prior written notice of termination to the Company in the event
that the Company shall default in the performance or observance of any material
term, condition or covenant contained in this Agreement and such default shall
continue for a period of 30 days after written notice thereof specifying such
default and requesting that the same be remedied in such 30 day period.

      SECTION 16. ACTION UPON TERMINATION. (a) From and after the effective date
of termination of this Agreement, pursuant to Sections 13, 14, or 15 of this
Agreement, the Manager shall not be entitled to compensation for further
services under this Agreement, but shall be paid all compensation accruing to
the date of termination and, if terminated pursuant to Section 13 or Section
15(b), the applicable Termination Fee. Upon such termination, the Manager shall
forthwith:

                  (i) after deducting any accrued compensation and reimbursement
for its expenses to which it is then entitled, pay over to the Company or a
Subsidiary all money collected and held for the account of the Company or a
Subsidiary pursuant to this Agreement;

                  (ii) deliver to the Board of Directors a full accounting,
including a statement showing all payments collected by it and a statement of
all money held by it, covering the period following the date of the last
accounting furnished to the Board of Directors with respect to the Company or a
Subsidiary; and


                                       20
<PAGE>
                  (iii) deliver to the Board of Directors all property and
documents of the Company or any Subsidiary then in the custody of the Manager.

            (b) In the event that this Agreement is terminated, the Company
shall have the option, to be exercised by written notice to the Manager within
ten (10) days following such termination, to purchase from the Manager the right
of the Manager to receive the Incentive Compensation. In exchange therefor the
Company will be obligated to pay the Manager a cash purchase price (the "Cash
Price") equal to the amount of the Incentive Compensation that would be paid to
the Manager if all of the Company's assets were sold for cash at their then
current fair market value (taking into account, among other things, expected
future performance of the underlying investments, the "Fair Market Value"). In
the event that the Company does not elect to exercise such option to purchase
the Incentive Compensation, the Manager shall have the right to require the
Company to do so at the Cash Price by delivering to the Company written notice
within twenty (20) days following such termination. The Fair Market Value shall
be determined by independent appraisal to be conducted by a nationally
recognized appraisal firm mutually agreed upon by the Company and the Manager.
If the Company and the Manager are unable to agree upon an appraisal firm, then
each of the Company and the Manager shall choose an independent appraisal firm
to conduct an appraisal. In such event, (i) if the appraisals prepared by the
two appraisers so selected are the same or differ by an amount that does not
exceed 20% of the higher of the two appraisals, the Fair Market Value will be
deemed to be the average of such appraisals, and (ii) if the two appraisals
differ by more than 20% of the higher of the two appraisals, the two appraisers
together shall select a third nationally recognized appraisal firm to conduct an
appraisal. If the two appraisers are unable to agree as to the identity of such
third appraiser, either of the Manager and the Company may request that the
American Arbitration Association ("AAA") select the third appraiser, which shall
then be selected by the AAA. The Fair Market Value will then be deemed to be the
amount determined by such third appraiser, but in no event less than the lower
or more than the higher of the first two appraisals made under this Section
16(b).

      SECTION 17. RELEASE OF MONEY OR OTHER PROPERTY UPON WRITTEN REQUEST. The
Manager agrees that any money or other property of the Company or Subsidiary
held by the Manager under this Agreement shall be held by the Manager as
custodian for the Company or Subsidiary, and the Manager's records shall be
appropriately marked clearly to reflect the ownership of such money or other
property by the Company or such Subsidiary. Upon the receipt by the Manager of a
written request signed by a duly authorized officer of the Company requesting
the Manager to release to the Company or any Subsidiary any money or other
property


                                       21
<PAGE>
then held by the Manager for the account of the Company or any Subsidiary under
this Agreement, the Manager shall release such money or other property to the
Company or any Subsidiary within a reasonable period of time, but in no event
later than sixty (60) days following such request. The Manager shall not be
liable to the Company, any Subsidiary, the Independent Directors, or the
Company's or a Subsidiary's stockholders or partners for any acts performed or
omissions to act by the Company or any Subsidiary in connection with the money
or other property released to the Company or any Subsidiary in accordance with
the first sentence of this Section 17. The Company and any Subsidiary shall
indemnify the Manager and its members, managers, officers and employees against
any and all expenses, losses, damages, liabilities, demands, charges and claims
of any nature whatsoever, which arise in connection with the Manager's release
of such money or other property to the Company or any Subsidiary in accordance
with the terms of this Section 17. Indemnification pursuant to this provision
shall be in addition to any right of the Manager to indemnification under
Section 11 of this Agreement.

       SECTION 18. NOTICES. Unless expressly provided otherwise in this
Agreement, all notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given, made and received when delivered against receipt or upon actual
receipt of (i) personal delivery, (ii) delivery by reputable overnight courier,
(iii) delivery by facsimile transmission against answerback, (iv) delivery by
registered or certified mail, postage prepaid, return receipt requested,
addressed as set forth below:

                  (a)   If to the Company:

                              Newcastle Investment Corp.
                              c/o Fortress Investment Group LLC
                              1251 Avenue of the Americas
                              16th Floor
                              New York, New York  10020
                              Attention: Mr. Randal A. Nardone

                  (b)   If to the Manager:

                              Fortress Investment Group, LLC
                              1251 Avenue of the Americas
                              16th Floor
                              New York, New York  10020
                              Attention: Mr. Randal A. Nardone


                                       22
<PAGE>
      Either party may alter the address to which communications or copies are
to be sent by giving notice of such change of address in conformity with the
provisions of this Section 18 for the giving of notice.

      SECTION 19. BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and permitted
assigns as provided in this Agreement.

      SECTION 20. ENTIRE AGREEMENT. This Agreement contains the entire agreement
and understanding among the parties hereto with respect to the subject matter of
this Agreement, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter of this Agreement.
The express terms of this Agreement control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms of this
Agreement. This Agreement may not be modified or amended other than by an
agreement in writing.

      SECTION 21. CONTROLLING LAW. This Agreement and all questions relating to
its validity, interpretation, performance and enforcement shall be governed by
and construed, interpreted and enforced in accordance with the laws of the State
of New York, notwithstanding any New York or other conflict-of-law provisions to
the contrary.

      SECTION 22. INDULGENCES, NOT WAIVERS. Neither the failure nor any delay on
the part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it
is in writing and is signed by the party asserted to have granted such waiver.

      SECTION 23. TITLES NOT TO AFFECT INTERPRETATION. The titles of paragraphs
and subparagraphs contained in this Agreement are for convenience only, and they
neither form a part of this Agreement nor are they to be used in the
construction or interpretation of this Agreement.


                                       23
<PAGE>
      SECTION 24. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts of this Agreement, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.

      SECTION 25. PROVISIONS SEPARABLE. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.

      SECTION 26. GENDER. Words used herein regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.


                                       24
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.


                                 COMPANY:

                                 NEWCASTLE INVESTMENT CORP.,
                                 a Maryland corporation


                                 By:  /s/ Randal A. Nardone
                                      --------------------------------
                                      Name:  Randal A. Nardone
                                      Its:   Secretary


                                 MANAGER:

                                 FORTRESS INVESTMENT GROUP
                                 LLC, a Delaware limited liability company


                                 By:  /s/ Randal A. Nardone
                                      --------------------------------
                                      Name:  Randal A. Nardone
                                      Its:   Chief Operating Officer
                                              and Secretary