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                                                                    Exhibit 10.5


                           NEWCASTLE INVESTMENT CORP.
                          NONQUALIFIED STOCK OPTION AND
                              INCENTIVE AWARD PLAN


                              ADOPTED JUNE 4, 1998
                   AMENDED AND RESTATED AS OF JANUARY 1, 2002
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                                TABLE OF CONTENTS

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SECTION 1:

         PURPOSE OF PLAN; DEFINITIONS..............................................................      1
                  1.1      PURPOSE.................................................................      1
                  1.2      DEFINITIONS.............................................................      1

SECTION 2:

         ADMINISTRATION............................................................................      5
                  2.1      ADMINISTRATION..........................................................      5
                  2.2      DUTIES AND POWERS OF COMMITTEE..........................................      5
                  2.3      MAJORITY RULE...........................................................      6
                  2.4      COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD
                           FAITH ACTIONS...........................................................      6

SECTION 3:

         STOCK SUBJECT TO PLAN.....................................................................      7
                  3.1      NUMBER OF AND SOURCE OF SHARES..........................................      7
                  3.2      UNREALIZED AND TANDEM AWARDS............................................      7
                  3.3      ADJUSTMENT OF AWARDS....................................................      8

SECTION 4:

         ELIGIBILITY...............................................................................      8

SECTION 5:

         AWARDS....................................................................................      9
                  5.1      STOCK OPTIONS...........................................................      9
                  5.2      STOCK APPRECIATION RIGHTS...............................................      9
                  5.3      RESTRICTED STOCK........................................................     10
                  5.4      PERFORMANCE AWARDS......................................................     11
                  5.5      MANAGER AWARDS AND TANDEM AWARDS........................................     11
                  5.6      INDEPENDENT DIRECTOR STOCK OPTIONS......................................     13
                  5.7      OTHER AWARDS............................................................     15
</TABLE>


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SECTION 6:

         AWARD AGREEMENTS..........................................................................     15
                  6.1      TERMS OF AWARD AGREEMENTS...............................................     15
                  6.2      REPLACEMENT, SUBSTITUTION, AND RELOADING................................     17
                  6.3      SURRENDER OF OPTIONS....................................................     17

SECTION 7:

         LOANS.....................................................................................     18

SECTION 8:

         AMENDMENT AND TERMINATION.................................................................     19

SECTION 9:

         UNFUNDED STATUS OF PLAN...................................................................     19

SECTION 10:

         GENERAL PROVISIONS........................................................................     19
                  10.1     CERTIFICATE LEGENDS.....................................................     19
                  10.2     TRANSFER RESTRICTIONS...................................................     19
                  10.3     COMPANY ACTIONS;
                           NO RIGHT TO EMPLOYMENT..................................................     20
                  10.4     PAYMENT OF TAXES........................................................     20

SECTION 11:

         EFFECTIVE DATE OF PLAN....................................................................     21

SECTION 12:

         TERM OF PLAN..............................................................................     20
</TABLE>


                                       ii
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                           NEWCASTLE INVESTMENT CORP.
               NONQUALIFIED STOCK OPTION AND INCENTIVE AWARD PLAN

                                    SECTION 1

                          PURPOSE OF PLAN; DEFINITIONS

                  1.1 Purpose. The purpose of the Plan is (a) to reinforce the
long-term commitment to the Company's success of those Independent Directors,
officers, employees, advisors, consultants and other personnel who are or will
be responsible for such success; to facilitate the ownership of the Company's
stock by such individuals, thereby reinforcing the identity of their interests
with those of the Company's stockholders; to assist the Company in attracting
and retaining individuals with experience and ability, (b) to compensate the
Manager for its successful efforts in raising capital for the Company and to
provide performance-based compensation in order to provide incentive to the
Manager to enhance the value of the Company's Stock and (c) to benefit the
Company's stockholders by encouraging high levels of performance by individuals
whose performance is a key element in achieving the Company's continued success.

                  1.2      Definitions.  For purposes of the Plan, the following
terms shall be defined as set forth below:

                           (a)   "Award" or "Awards" means an award described
in Section 5 hereof.

                           (b)   "Award Agreement" means an agreement described
in Section 6 hereof entered into between the Company and a Participant, setting
forth the terms, conditions and any limitations applicable to the Award granted
to the Participant.

                           (c)   "Beneficial Owner" shall have the meaning set
forth in Rule 13d-3 under the Exchange Act.

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


                                       1
<PAGE>
                           (e)   "Change in Control" of the Company shall be
deemed to have occurred if an event set forth in any one of the following
paragraphs (i)-(iii) shall have occurred unless prior to the occurrence of such
event, the Board determines that such event shall not constitute a Change in
Control:

         (i)      any Person is or becomes Beneficial Owner, directly or
                  indirectly, of securities of the Company representing thirty
                  percent (30%) or more of the combined voting power of the then
                  outstanding securities of the Company, excluding (A) any
                  Person who becomes such a Beneficial Owner in connection with
                  a transaction described in clause (x) of paragraph (iii)
                  below, and (B) any Person who becomes such a Beneficial Owner
                  through the issuance of such securities with respect to
                  purchases made directly from the Company; or

         (ii)     the stockholders of the Company approve a merger or
                  consolidation of the Company with any other corporation or the
                  issuance of voting securities of the Company in connection
                  with a merger or consolidation of the Company (or any direct
                  or indirect subsidiary of the Company) pursuant to applicable
                  stock exchange requirements, other than (x) a merger or
                  consolidation which would result in the voting securities of
                  the Company outstanding immediately prior to such merger or
                  consolidation continuing to represent (either by remaining
                  outstanding or by being converted into voting securities of
                  the surviving entity or any parent thereof) more than fifty
                  percent (50%) of the combined voting power of the securities
                  of the Company or such surviving entity or any parent thereof
                  outstanding immediately after such merger or consolidation,
                  or (y) a merger or consolidation effected to implement a
                  recapitalization of the Company (or similar transaction) in
                  which no Person is or becomes the Beneficial Owner, directly
                  or indirectly, of securities of the Company representing
                  thirty percent (30%) or more of the combined voting power of
                  the then outstanding securities of the Company; or

         (iii)    the stockholders of the Company approve a plan of complete
                  liquidation or dissolution of the Company or an agreement for
                  the sale or disposition by the Company of all or substantially
                  all of the assets of the Company.


                                       2
<PAGE>
                           (f) "Closing Date" means June 10, 1998, the closing
date of the offering of shares of common stock of the Company pursuant to the
"Offering," as described in the Offering Memorandum.

                           (g) "Code" means the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute thereto.

                           (h) "Commission" means Securities and Exchange
Commission.

                           (i) "Committee" means a committee established by the
Board to administer the Plan and shall include no less than two (2)
"non-employee directors", as defined in Rule 16b-3, and such other individuals
as the Board shall designate. The composition of the commit tee shall fulfill
any applicable requirements of Rule 16b-3 as promulgated by the Commission under
the Exchange Act, and as such Rule may be amended from time to time, or any
successor definition adopted by the Commission. If at any time the Committee
shall not administer the Plan, then the functions of the Committee specified in
the Plan shall be exercised by the Board.

                           (j) "Company" means Newcastle Investment Corp., a
Maryland corporation.

                           (k) "Effective Date" means the date provided pursuant
to Section 11.

                           (l) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.

                           (m) "Fair Market Value" means, as of any given date,
(A) the closing price of a share of the Company's Stock on the principal
exchange on which shares of the Company's Stock are then trading, if any, on the
trading day previous to such date, or, if stock was not traded on the trading
day previous to such date, then on the next preceding trading day during which a
sale occurred; or (B) if such Stock is not traded on an exchange but is quoted
on NASDAQ or a successor quotation system, (1) the last sales price (if the
Stock is then listed as a National Market Issue under the NASDAQ National Market
System) or (2) the mean between the closing representative bid and asked prices
(in all other cases) for the Stock on the trading day previous to such date


                                       3
<PAGE>
as reported by NASDAQ or such successor quotation system; or (C) if such Stock
is not publicly traded on an exchange and not quoted on NASDAQ or a successor
quotation system, the mean between the closing bid and asked prices for the
Stock, on the day previous to such date, as deter mined in good faith by the
Committee; or (D) if the Stock is not publicly traded, the fair market value
established by the Committee using any reasonable method and acting in good
faith.

                           (n)   "Independent Director" means a director of the
Company who is not an officer or employee of the Company.

                           (o)   "Management Agreement" means that certain
Management and Advisory Agreement, dated as of June 10, 1998, by and among the
Company, the Operating Partnership and the Manager, as the same may hereafter be
amended, modified, supplemented or restated in whole or in part.

                           (p)   "Manager" means Fortress Investment Group LLC,
a Delaware limited liability company, or any affiliate of Fortress Investment
Group LLC who shall succeed as manager under the Management Agreement and, for
purposes of Section 5.5 hereof, shall include employees of the Manager, an
affiliate of the Manager and employees of any such affiliate of the Manager, as
the case may be.

                           (q)   "Manager Awards" means the Awards granted to
the Manager as described in Section 5.5 hereof.

                           (r)   "Nonqualified Stock Option" means any Stock
Option that is not an incentive stock option within the meaning of Section 422
of the Code.

                           (s)   "Offering Memorandum" means that certain
Offering Memorandum of the Company dated June 5, 1998.

                           (t) "Option Effective Date" means the date that is
the earlier to occur of (a) the date that a registration statement is filed by
the Company under the Securities Act of 1933, as amended, registering the sale
of any Stock, is declared effective by the Securities Exchange Commission and
(b) the first anniversary of the Closing Date.


                                       4
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                           (u) "Operating Partnership" means Fortress Partners,
L.P., a Delaware limited partnership.

                           (v) "Participant" means any Independent Director, the
Manager and any director, officer, employee, consultant or advisor to the
Company or to any affiliate or subsidiary of the Company, selected by the
Committee, pursuant to the Committee's authority in Section 2 below, to receive
Awards.

                           (w) "Plan" means this Newcastle Investment Corp.
Nonqualified Stock Option and Incentive Award Plan.

                           (x) "Stock" means the Common Stock, par value $.01
per share, of the Company.

                           (y) "Stock Option" means any option to purchase
shares of Stock or Units (or at the election of the Committee, both) granted
pursuant to the Plan.

                           (z) "Units" means units of limited partnership
interest in the Operating Partnership.

                                    SECTION 2

                                 ADMINISTRATION

                  2.1 Administration. The Plan shall be administered by the
Committee, which shall be appointed by the Board and which shall serve at the
pleasure of the Board.

                  2.2 Duties and Powers of Committee. The Committee shall have
the power and authority to grant Awards to Participants pursuant to the terms of
the Plan, and, in its discretion, to adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as it shall from time to time
deem advisable; to interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any agreements relating thereto); and to otherwise
supervise the administration of the Plan.

                  In particular, the Committee shall have the authority to
determine, in a manner consistent with the terms of the Plan:


                                       5
<PAGE>
                           (a) in addition to the Manager and the Independent
Directors, those officers, employees, directors, managers, consultants or
advisors, if any, who shall be Participants;

                           (b) whether Stock Options will relate to Stock or
Units (which determination may be made at the time of grant or the time of
exercise, at the election of the Committee);

                           (c) subject to section 6, the number of shares of
Stock (or, at the election of the Committee, Units) to be covered by each Stock
Option granted hereunder;

                           (d) the terms and conditions of any Award granted
hereunder, including the waiver or modification of any such terms or conditions,
consistent with the provisions of the Plan (including, but not limited to,
Section 8 of the Plan); and

                           (e) the terms and conditions which shall govern all
the Award Agreements, including the waiver or modification of any such terms or
conditions.

                  2.3 Majority Rule. The Committee shall act by a majority of
its members in attendance at a meeting at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Committee.

                  2.4 Compensation; Professional Assistance; Good Faith Actions.
Members of the Committee may receive such compensation for their services as
members as may be determined by the Board. All expenses and liabilities that
members of the Committee or Board may incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Board, the Company and
any officers and directors of the Company shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or Board in good faith
shall be final and binding upon all Participants, the Company and all other
interested persons. No member of the Committee or Board shall be personally
liable for any action, determination or


                                       6
<PAGE>
interpretation made in good faith with respect to this Plan or any Award, and
all members of the Committee and Board shall be fully protected and indemnified
to the fullest extent permitted by law, by the Company, in respect of any such
action, determination or interpretation.

                                    SECTION 3

                              STOCK SUBJECT TO PLAN

                  3.1 Number of and Source of Shares. The maximum number of
shares of Stock reserved and available for issuance under the Plan shall be that
number of shares the value of which is equal to fifteen percent (15%) of the
aggregate value of the outstanding equity interests in the Company and the
Operating Partnership (including Stock and Units), as determined as of the first
day of the fiscal year during which an Award may be granted (subject to
adjustment as provided herein), but in no event shall such number of shares
exceed 6,000,000. The Stock which may be issued pursuant to an Award under the
Plan may be treasury Stock, authorized but unissued Stock, or Stock acquired,
subsequently or in anticipation of the transaction, in the open market to
satisfy the requirements of the Plan. Awards may consist of any combination of
such Stock, or, at the election of the Company, Units (on a one-for-one basis),
any combination of such Stock and Units, or cash.

                  3.2 Unrealized and Tandem Awards. If any shares or Units
subject to an Award are forfeited, cancelled, exchanged or surrendered or if an
Award otherwise terminates or expires with or without a distribution of shares
to the Participant, the shares of Stock with respect to such Award shall, to the
extent of any such forfeiture, cancellation, exchange, surrender, termination or
expiration, again be available for grants under the Plan. The grant of a Tandem
Award (as defined herein) shall not reduce the number of shares of Stock
reserved and available for issuance under the Plan.

                  3.3 Adjustment of Awards. Upon the occurrence of any event
which affects the shares of Stock or Units in such a way that an adjustment of
outstanding Awards is appropriate in order to prevent the dilution or
enlargement of rights under the Awards (including, without limitation, any
extraordinary dividend or other distribution (whether in cash or in kind),
recapitalization, stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event), the Committee shall make appropriate


                                       7
<PAGE>
equitable adjustments, which may include, without limitation, adjustments to any
or all of the number and kind of shares of Stock or Units (or other securities)
which may thereafter be issued in connection with such outstanding Awards and
adjustments to any exercise price specified in the outstanding Awards and shall
also make appropriate equitable adjustments to the number and kind of shares of
Stock or Units (or other securities) authorized by or to be granted under the
Plan. Such other substitutions or adjustments shall be made respecting Awards
hereunder as may be determined by the Committee, in its sole discretion. In
connection with any event described in this paragraph, the Committee may
provide, in its discretion, for the cancellation of any outstanding Award and
payment in cash or other property in exchange therefor, equal to the difference,
if any, between the fair market value of the Stock, Units or other property
subject to the Award, and the exercise price, if any.

                                    SECTION 4

                                   ELIGIBILITY

                  The Manager, each employee of the Manager who is performing
services for the Company and each Independent Director, officer and employee of
the Company shall be eligible for Awards under the Plan. Additional Participants
under the Plan may be selected from time to time by the Committee, in its sole
discretion, and the Committee shall determine, in its sole discretion, the
number of shares or Units covered by each Award.

                                    SECTION 5

                                     AWARDS

                  Awards may include, but are not limited to, those described in
this Section 5. The Committee may grant Awards singly, in tandem or in
combination with other Awards, as the Committee may in its sole discretion
determine. Subject to the other provisions of this Plan, Awards may also be
granted in combination or in tandem with, in replacement of, or as alternatives
to, grants or rights under this Plan and any other employee (or director)
benefit or compensation plan of the Company.

                  5.1 Stock Options. A Stock Option is a right to purchase a
specified number of shares of Stock or Units, or, at the election of the


                                       8
<PAGE>
Committee, both, at a specified price during such specified time as the
Committee shall determine.

                           (a) Stock Options granted will be Nonqualified Stock
Options.

                           (b) A Stock Option may be exercised, in whole or in
part, by giving written notice of exercise to the Company, specifying the number
of shares of Stock or Units (as applicable) to be purchased.

                           (c) The exercise price of the Stock Option may be
paid in cash or, at the discretion of the Committee, may also be paid by the
tender of Stock or Units already owned by the Participant, or through a
combination of cash and Stock or Units, or through such other means the
Committee determines are consistent with the Plan's purpose and applicable law.
No fractional shares of Stock or Units will be issued or accepted.

                  5.2 Stock Appreciation Rights. A Stock Appreciation Right is a
right to receive, upon surrender of the right, an amount payable in cash and/or
shares of Stock or Units under such terms and conditions as the Committee shall
determine.

                           (a) A Stock Appreciation Right may be granted in
tandem with part or all of (or in addition to, or completely independent of) a
Stock Option or any other Award under this Plan. A Stock Appreciation Right
issued in tandem with a Stock Option may be granted at the time of grant of the
related Stock Option or at any time thereafter during the term of the Stock
Option.

                           (b) The amount payable in cash and/or shares of Stock
or Units with respect to each right shall be equal in value to a percentage
(including up to 100%) of the amount by which the Fair Market Value per share of
Stock on the exercise date exceeds the Fair Market Value per share of Stock on
the date of grant of the Stock Appreciation Right. The applicable percentage
shall be established by the Committee. The Award Agreement may state whether the
amount payable is to be paid wholly in cash, wholly in shares of Stock, wholly
in Units or in any combination of the foregoing; if the Award Agreement does not
so state the manner of payment, the Committee shall determine such manner of
payment at the time of payment. The amount


                                       9
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payable in shares of Stock or Units, if any, is determined with reference to the
Fair Market Value per share of Stock on the date of exercise.

                           (c) Stock Appreciation Rights issued in tandem with
Stock Options shall be exercisable only to the extent that the Stock Options to
which they relate are exercisable. Upon exercise of the tandem Stock
Appreciation Right, and to the extent of such exercise, the Participant's
underlying Stock Option shall automatically terminate. Similarly, upon the
exercise of the tandem Stock Option, and to the extent of such exercise, the
Participant's related Stock Appreciation Right shall automatically terminate.

                  5.3 Restricted Stock. Restricted Stock is Stock that is issued
to a Participant and is subject to such terms, conditions and restrictions as
the Committee deems appropriate, which may include, but are not limited to,
restrictions upon the sale, assignment, transfer or other disposition of the
Restricted Stock and the requirement of forfeiture of the Restricted Stock upon
termination of employment or service under certain specified conditions. The
Committee may provide for the lapse of any such term or condition or waive any
term or condition based on such factors or criteria as the Committee may
determine. Subject to the restrictions stated in this Section 5.3 and in the
applicable Award Agreement, the Participant shall have, with respect to Awards
of Restricted Stock, all of the rights of a stockholder of the Company,
including the right to vote the Restricted Stock and the right to receive any
cash or stock dividends on such Stock.

                  5.4 Performance Awards. Performance Awards may be granted
under this Plan from time to time based on such terms and conditions as the
Committee deems appropriate provided that such Awards shall not be inconsistent
with the terms and purposes of this Plan. Performance Awards are Awards which
are contingent upon the performance of all or a portion of the Company and/or
its subsidiaries and/or which are contingent upon the individual performance of
a Participant. Performance Awards may be in the form of performance units,
performance shares and such other forms of Performance Awards as the Committee
shall determine. The Committee shall determine the performance measurements and
criteria for such Performance Awards.

                  5.5      Manager Awards and Tandem Awards.


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<PAGE>
                           (a) Grant of Compensatory Stock Options. As
consideration for the manager's role in raising capital for the Company, the
Manager shall be granted Stock Options to acquire that number of shares of
Stock, or, at the election of the Committee, Units, equal in number to ten
percent (10%) of the equity securities issued by the Company or the Operating
Partnership, pursuant to the Offering Memorandum (exclusive of any equity
securities issued to the Company, including without limitation, Units issued by
the Operating Partnership).

                           (b) Future Grants. As consideration for its role in
raising capital for the Company through any additional issuance of equity
interests in the Company (including, without limitation, shares of common or
preferred stock or Units or preferred Units issued by the Company or the
Operating Partnership, respectively, other than (i) Units or Stock issued
pursuant to this Plan, (ii) Stock issued in redemption of any outstanding Units
and (iii) equity securities issued to the Company), the Manager shall be
granted, from time to time, such additional Stock Options as may be required to
preserve, at all times, the Manager's 10% equity interest in the Company and the
Operating Partnership, subject to the limit set forth in Section 3.1. The
exercise price with respect to such future Stock Options shall be equal to the
initial offering price of such additional equity interests, if issued by the
Company or the Operating Partnership in exchange for cash, or the fair market
value (as determined by the Committee), of such additional equity interests, if
issued by the Company or the Operating Partnership in exchange for property or
services, in all cases subject to adjustment as necessary to preserve the value
of such Stock Options, as set forth in Section 3.3. Additional terms of such
additional grants of compensatory Stock Options and other Awards to the Manager,
including, without limitation, with respect to the exercisability thereof and
provisions for replacement, substitution and reloading, shall be determined by
the Committee and set forth in the Award Agreement applicable to each such
future grant. Notwithstanding the foregoing, there shall be no further grants
pursuant to this Section 5.5(b) subsequent to the Company becoming a public
company.

                           (c) Terms of Manager Awards. The Stock Options
referred to in clause (a) above shall be fully vested and shall become
exercisable commencing on the Option Effective Date as follows: the Stock
Options shall become exercisable as to 1/30 of the Stock or Units subject to the
Stock Options on the first day of each of the following 30 calendar months
following the Option Effective Date. Such Stock Options shall expire on the
tenth anniversary


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of the Closing Date. Such Stock Options shall have an exercise price of twenty
dollars ($20.00) per share, subject to adjustment as set forth in Section 3.3
hereof. The Award Agreement with respect to such Stock Options shall also set
forth such other terms and conditions with respect to Awards to the Manager as
the Committee may determine, including, without limitation, provisions for
replacement, substitution and reloading of such Stock Options and/or the grant
of Stock Appreciation Rights, Restricted Stock, Performance Awards or other
Awards.

                           (d) The Committee shall (unless the members thereof
determine that such Awards are inappropriate), award Stock Options to such
employees of the Manager as the Manager shall recommend, who act as officers of
or perform other services for the Company, which options may be tandem to the
options that are the subject of outstanding Manager Awards designated by the
Manager--i.e., shares of Stock issuable pursuant to the exercise of the options
that are subject to certain designated Manager Awards would alternatively be
issuable pursuant to the exercise of options that are the subject of the tandem
awards granted to persons who perform services for or on behalf of the Company,
provided that such shares may be issued pursuant to the exercise of either the
designated Manager Awards or the tandem awards but not both (the "Tandem
Awards").

                           (e) As a condition to the grant of Tandem Awards, the
Manager shall be required to agree that so long as such Tandem Awards remain
outstanding, it will not exercise any options under any designated Manager Award
that are related to the options under such outstanding Tandem Awards. If an
option under a Tandem Award is forfeited, expires or is cancelled without being
exercised, the related option under the designated Manager Award shall again
become exercisable in accordance with its terms. Upon the exercise of an option
under a Tandem Award, the related option under the designated Manager Award
shall terminate.

                           (f) The terms and conditions of each such Tandem
Awards (e.g., the per share exercise price, the schedule of vesting and
exercisability, etc.) shall be determined by the Committee in its sole
discretion, provided, that the term of such award may not be greater than the
term of its related Manager Award.

                           (g) Other Awards. The Committee may, from time to
time, grant such Awards to the Manager as the Committee deems advisable in


                                       12
<PAGE>
order to provide additional incentive to the Manager to enhance the value of the
Company's Stock.

                           (h) Change in Control Provisions. Notwithstanding
anything herein or in any Award Agreement to the contrary, all Awards granted to
the Manager and all Tandem Awards granted pursuant to this Plan shall become
immediately and fully vested and exercisable upon a Change in Control.

                  5.6      Independent Director Stock Options.

                           (a) Initial Grant. Each Independent Director shall be
granted a Nonqualified Stock Option, which shall be fully vested as of the date
of the grant, to purchase 2,000 shares of Stock (each, an "Independent Director
Stock Option") upon the later to occur of (i) the date of effectiveness of the
Plan, or (ii) the date of the first Board of Director's meeting attended by such
Independent Director. For those Independent Directors serving as of the date of
effectiveness of the Plan, the option price per share of Stock shall be twenty
dollars ($20.00). For any Independent Director appointed to the Board of
Directors after the date of effectiveness of the Plan, the price shall be
determined in accordance with Section 5.6 (c) (i) below.

                           (b) Annual Grant. On the first business day after the
1998 annual Board of Directors' meeting of the Company, and on the first
business day after each such annual meeting of the Company thereafter during the
term of the Plan, each Independent Director shall be granted an Independent
Director Stock Option to purchase 2,000 shares of Stock.

                           (c) Terms of Grant. The Independent Director Stock
Options granted under the Plan pursuant to subparagraph 5.6 (b) hereof shall be
subject to the following terms and conditions:

                                    (i) The option price per share of Stock
         purchasable under such Independent Director Stock Options shall be 100%
         of the Fair Market Value of the Stock on the date of grant.

                                    (ii) Such options shall be exercisable by
         payment in full of the purchase price in cash, certified or cashier's
         check, or delivery of Stock certificates endorsed in


                                       13
<PAGE>
         blank or accompanied by executed stock powers with signatures
         guaranteed by a national bank or trust company or a member of a
         national securities exchange (x) with respect to 25% of the shares
         subject to such option immediately as of the date of grant; and (y)
         with respect to an additional 25% of such shares on each of the three
         anniversaries of the date of grant. Payment of the purchase price with
         certificates evidencing shares of Stock as provided above shall not
         increase the number of shares available for the grant of Independent
         Director Stock Options under the Plan.

                                    (iii) Each Independent Director Stock Option
         shall cease to be exercisable no later than the date that is ten (10)
         years following the date of grant.

                           (d)      Award Agreements.  Recipients of Independent
Director Stock Options shall enter into an Award Agreement with the Company,
which agreement shall set forth, among other things, the exercise price of the
Independent Director Stock Option, the term of the Independent Director Stock
Option and provisions regarding exercisability of the Independent Director Stock
Option granted thereunder, which provisions shall not be inconsistent with the
terms set forth herein.

                           (e) Change in Control Provisions. Notwithstanding
anything herein or in any Award Agreement to the contrary, all Awards granted to
Independent Directors pursuant to this Plan shall become immediately and fully
vested and exercisable upon a Change in Control.

                  5.7 Other Awards. The Committee may from time to time grant
Stock, other Stock-based and non-Stock-based Awards under the Plan, including
without limitation those Awards pursuant to which shares of Stock are or may in
the future be acquired, Awards denominated in Stock units, securities
convertible into Stock, phantom securities, dividend equivalents and cash. The
Committee shall determine the terms and conditions of such other Stock,
Stock-based and non-Stock- based Awards provided that such Awards shall not be
inconsistent with the terms and purposes of this Plan.

                                    SECTION 6

                                AWARD AGREEMENTS


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                  Each Award under this Plan shall be evidenced by an Award
Agreement setting forth the number of shares of Stock or other securities, Stock
Appreciation Rights, or Units subject to the Award, if any, and such other terms
and conditions applicable to the Award (and not inconsistent with this Plan) as
are determined by the Committee.

                  6.1      Terms of Award Agreements.  Award Agreements
shall include the following terms:

                           (a) Option Term. The term of each Stock Option (as
determined by the Committee); provided that, no Stock Option shall be
exercisable more than ten years after the date such Stock Option is granted.

                           (b) Option Price. The option price per share of Stock
purchasable under a Stock Option (as determined by the Commit tee in its sole
discretion at the time of grant); provided that, the option price shall not be
less than the par value of the Stock.

                           (c) Exercisability. Provisions regarding the
exercisability of Stock Options (which shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at or after grant). The Committee may provide, in its discretion, that
any Stock Option shall be exercisable only in installments, and the Committee
may waive such installment exercise provisions at any time in whole or in part
based on such factors as the Committee may determine, in its sole discretion.

                           (d) Method of Exercise. Provisions describing the
method of exercising Stock Options. Subject to Section 6.1(c) above, Stock
Options may be exercised in whole or in part at any time during the option
period, by giving written notice of exercise to the Company specifying the
number of shares to be purchased, accompanied by payment in full of the purchase
price in cash or its equivalent as determined by the Committee. As determined by
the Committee, in its sole discretion, payment in whole or in part may also be
made in the form of Stock already owned by the Participant. A Participant shall
generally have the rights to dividends and any other rights of a stockholder
with respect to the Stock subject to the option only after the Participant has
given written notice of exercise, has paid in full for such shares, and, if
requested, has given the representation described in Section 10.1.


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                           (e) Termination of Employment or Service: Provisions
describing the treatment of an Award in the event of the retirement, disability,
death or other termination of a Participant's employment or service with the
Company, including but not limited to terms relating to the vesting, time for
exercise, forfeiture and cancellation of an Award in such circumstances.

                           (f) Rights as Stockholder: A provision that a
Participant shall have no rights as a stockholder with respect to any securities
covered by an Award until the date the Participant becomes the holder of record.
Except as provided in Section 3.3 hereof, no adjustment shall be made for
dividends or other rights, unless the Award Agreement specifically requires such
adjustment, in which case, grants of dividend equivalents or similar rights
shall not be considered to be a grant of any other stockholder right.


                           (g) Nontransferability. Except as otherwise agreed to
by the Board or the Committee, Awards shall not be transferable by a Grantee
except by will or the laws of descent and distribution or, if then permitted
under Rule 16b-3, pursuant to a qualified domestic relations order as defined
under the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder, and shall be exercisable during the
lifetime of a Grantee only by such Grantee or his guardian or legal
representative.


                           (h) Other Terms. Such other terms as are necessary
and appropriate to effectuate an Award to the Participant including but not
limited to (1) vesting provisions, (2) deferral elections, (3) any requirements
for continued employment or service with the Company, (4) any other restrictions
or conditions (including performance requirements) on the Award and the method
by which restrictions or conditions lapse, (5) effect on the Award of a Change
in Control, (6) the right of the Company and such other persons as the
Committee shall designate ("Designees") to repurchase from a Participant, and
such Participant's permitted transferees, all shares of Stock issued or issuable
to such Participant in connection with an Award in the event of such
Participant's termination of employment or service, (7) rights of first refusal
granted to the Company and Designees, if any, (8) holdback and other
registration right restrictions in the event of a public registration of any
equity securities of the Company and (9) any other terms and conditions which
the Committee shall deem necessary and desirable.


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                  6.2 Replacement, Substitution, and Reloading. Award Agreements
may also include provisions permitting the replacement or substitution of
outstanding Awards or securities held by the Participant in order to exercise or
realize rights under other Awards, or in exchange for the grant of new Awards
under similar or different terms and for the grant of reload options upon
exercise of outstanding options.

                  6.3 Surrender of Options. The Committee may require the
voluntary surrender of all or a portion of any Stock Option or other Award
granted under the Plan as a condition precedent to a grant of a new Stock Option
or Award. Subject to the provisions of the Plan, such new Stock Option or Award
shall be exercisable at the price, during such period and on such other terms
and conditions as are specified by the Committee at the time the new Stock
Option or Award is granted; provided that, should the Committee so require, the
number of shares subject to such new Stock Option or Award shall not be greater
than the number of shares subject to the surrendered Stock Option or Award.

                                    SECTION 7

                                      LOANS

                  The Company may make loans available to Stock Option holders
in connection with the exercise of outstanding Stock Options granted under the
Plan, as the Committee, in its discretion, may deter mine. Such loans shall (i)
be evidenced by promissory notes entered into by the Stock Option holders in
favor of the Company, (ii) be subject to the terms and conditions set forth in
this Section 7 and such other terms and conditions, not inconsistent with the
Plan, as the Committee shall determine, (iii) bear interest, if any, at such
rate as the Committee shall determine, and (iv) be subject to Board approval
(or to approval by the Committee to the extent the Board may delegate such
authority). In no event may the principal amount of any such loan exceed the sum
of (x) the exercise price less the par value of the shares of Stock covered by
the Stock Option, or portion thereof, exercised by the holder, and (y) any
federal, state, and local income tax attributable to such exercise. The initial
term of the loan, the schedule of payments of principal and interest under the
loan, the extent to which the loan is to be with or without recourse against the
holder with respect to principal or interest and the conditions upon which the
loan will become payable in the event of the holder's termination of employment
shall be determined by the Committee. Unless the Committee


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determines otherwise, when a loan is made, shares of Stock having a Fair Market
Value at least equal to the principal amount of the loan shall be pledged by the
holder to the Company as security for payment of the unpaid balance of the loan,
and such pledge shall be evidenced by a pledge agreement, the terms of which
shall be determined by the Committee, in its discretion; provided that, each
loan shall comply with all applicable laws, regulations and rules of the Board
of Governors of the Federal Reserve System and any other governmental
agency having jurisdiction.

                                    SECTION 8

                            AMENDMENT AND TERMINATION

                   The Board may at any time and from time-to-time alter, amend,
suspend, or terminate the Plan in whole or in part; provided that, no amendment
which requires stockholder approval in order for the Plan to comply with a rule
or regulation deemed applicable by the Committee, shall be effective unless the
same shall be approved by the requisite vote of the stockholders of the Company
entitled to vote thereon. Notwithstanding the foregoing, no amendment shall
affect adversely any of the rights of any Participant, without such
Participant's consent, under any Award or Loan theretofore granted under the
Plan.

                                    SECTION 9

                             UNFUNDED STATUS OF PLAN

                  The Plan is intended to constitute an "unfunded" plan for
incentive compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.


                                   SECTION 10

                               GENERAL PROVISIONS

                  10.1 Certificate Legends. The Committee may require each
person purchasing shares pursuant to a Stock Option to represent to and agree


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with the Company in writing that such person is acquiring the Stock subject
thereto without a view to distribution thereof. The certificates for such Stock
may include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.

                  10.2 Transfer Restrictions. All certificates for shares of
Stock and/or Units delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the Commission, any
stock exchange upon which the Stock is then listed, and any applicable federal
or state securities law, and, in the case of Units, the partnership agreement of
the Operating Partnership, and the Committee may cause a legend or legends to be
placed on any such certificates to make appropriate reference to such
restrictions.

                  10.3 Company Actions; No Right to Employment. Nothing
contained in the Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to stockholder approval if such approval is
required; and such arrangements may be either generally applicable or
applicable only in specific cases. The adoption of the Plan shall not confer
upon any employee, consultant or advisor of the Company any right to continued
employment with the Company, as the case may be, nor shall it interfere in any
way with the right of the Company to terminate the employment or service of any
of its employees, consultants or advisors at any time.

                  10.4 Payment of Taxes. Each Participant shall, no later than
the date as of which the value of an award first becomes includible in the gross
income of the Participant for federal income tax purposes, pay to the Company,
or make arrangements satisfactory to the Committee regarding payment of, any
federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on the making of such payments or arrangements, and the Company
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the Participant.

                                   SECTION 11

                             EFFECTIVE DATE OF PLAN


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                  The Plan became effective (the "Effective Date") on June
4,1998, the date the Company's Board of Directors formally approved the Plan.


                                       20
<PAGE>
                                   SECTION 12

                                  TERM OF PLAN

                  No Award shall be granted pursuant to the Plan on or after the
tenth anniversary of the Effective Date, but Awards theretofore granted may
extend beyond that date.


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