Document:

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                                                                    Exhibit 10.1

                              AMENDED AND RESTATED
                        MANAGEMENT AND ADVISORY AGREEMENT

      THIS AMENDED AND RESTATED MANAGEMENT AND ADVISORY AGREEMENT, is made
as of March 4, 2003 (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 and the Manager entered into that certain Management
and Advisory Agreement, dated as of June 6, 2002 (the "Original Management
Agreement"); and

      WHEREAS, the Company and the Manager desire to amend and restate the
Original Management Agreement in its entirety 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:

      I. The Original Management Agreement is hereby modified so that all of the
terms and conditions of the aforesaid Original Management Agreement shall be
restated in their entirety as set forth herein.

      II. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and assigns, and shall be deemed
to be effective as of the date hereof.

      III. Any reference in any other document executed in connection with the
Original Management Agreement or this Agreement to the Original Management
Agreement shall be deemed to refer to this Agreement.

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

            (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.

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            (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.

            (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

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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 con sultant 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, con ducting negotiations with real estate
      brokers, sellers and purchasers 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

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      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 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;

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            (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;

            (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;

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            (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 com plying 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, 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.

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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
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 arm's-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

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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
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

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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.

            (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,

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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
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 Co-
pany 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

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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.

            (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

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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.

            (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 Manage-
ment 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 or preferred 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).

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            (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
Investment 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

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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;

            (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;

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            (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;

            (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.

                                       16
<PAGE>
      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 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

                                       17
<PAGE>
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 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

                                       18
<PAGE>
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.

            (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

                                       19
<PAGE>
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 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

                                       20
<PAGE>
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

                  (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

                                       21
<PAGE>
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 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

                                       22
<PAGE>
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

      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.

                                       23
<PAGE>
      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.

      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

                                       25<PAGE>
                                                                    Exhibit 4.5

                               APACHE CORPORATION

                             2000 STOCK OPTION PLAN

                     (AS AMENDED AND RESTATED MARCH 5, 2003)

<PAGE>

                               APACHE CORPORATION
                             2000 STOCK OPTION PLAN
                     (AS AMENDED AND RESTATED MARCH 5, 2003)

                                    SECTION 1

                                  INTRODUCTION

1.1  Establishment. Apache Corporation, a Delaware corporation (hereinafter
referred to, together with its Affiliated Corporations (as defined in Section
2.1 hereof) as the "Company" except where the context otherwise requires),
hereby establishes the Apache Corporation 2000 Stock Option Plan (the "Plan")
for Eligible Employees (as defined in Section 2.1 hereof). The Plan permits the
grant of stock options to Eligible Employees selected by the Committee (as
defined in Section 2.1 hereof).

1.2  Purposes. The purposes of the Plan are to provide the Eligible Employees
designated by the Committee for participation in the Plan with added incentives
to continue in the long-term service of the Company and to create in such
employees a more direct interest in the future success of the operations of the
Company by relating incentive compensation to increases in stockholder value, so
that the income of those employees is more closely aligned with the interests of
the Company's stockholders. The Plan is also designed to attract outstanding
individuals and to retain and motivate Eligible Employees by providing an
opportunity for investment in the Company.

1.3  Effective Date.  The Effective Date of the Plan (the "Effective Date") is
February 10, 2000.

                                    SECTION 2

                                   DEFINITIONS

2.1      Definitions.  The following terms shall have the meanings set forth
below:

         (a) "Administrative Agent" means any designee or agent that may be
appointed by the Committee pursuant to Section 3.1(b) hereof.

         (b) "Affiliated Corporation" means any corporation or other entity
(including but not limited to a partnership) which is affiliated with Apache
Corporation through stock ownership or otherwise and is treated as a common

                                       1

<PAGE>

employer under the provisions of Sections 414(b) and (c) or any successor
section(s) of the Internal Revenue Code.

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

         (d) "Committee" means the Stock Option Plan Committee of the Board,
which is empowered hereunder to take actions in the administration of the Plan.
The Committee shall be constituted at all times as to permit the Plan to comply
with Rule 16b-3 or any successor rule(s) promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act").

         (e) "Deferred Delivery Plan" means the Company's Deferred Delivery
Plan, effective as of February 10, 2000, as it may be amended from time to time,
or any successor plan.

         (f) "Depositary Shares" means the Depositary shares representing the
Company's preferred stock convertible into Stock.

         (g) "Eligible Employees" means full-time employees (including, without
limitation, officers and directors who are also employees), and certain
part-time employees, of the Company or any division thereof.

         (h) "Expiration Date" means the date on which the Option Period (as
defined in subsection 7.2(c) hereof) ends.

         (i) "Fair Market Value" means the per share closing price of the Stock
or Depositary Shares, as applicable, as reported on the New York Stock Exchange,
Inc. Composite Transactions Reporting System for a particular date. If on such
date there are no transactions in the Stock or Depositary Shares, as applicable,
the Fair Market Value shall be determined as of the immediately preceding date
on which there were transactions in the Stock or Depositary Shares, as
applicable.

         (j) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
it may be amended from time to time.

         (k) "Option" means a right to purchase shares of Stock at a stated
price for a specified period of time. All Options granted under the Plan shall
be Options which are not "incentive stock options" as described in Section 422
or any successor section(s) of the Internal Revenue Code.

                                       2

<PAGE>

         (l) "Option Price" means the price at which shares of Stock subject to
an Option may be purchased, determined in accordance with subsection 7.2(b)
hereof.

         (m) "Participant" means an Eligible Employee designated by the
Committee from time to time during the term of the Plan to receive one or more
Options under the Plan.

         (n) "Reload Option" has the meaning set forth in subsection 7.4 hereof.

         (o) "Stock" means the U.S. $1.25 par value Common Stock of the Company.

         (p) "Stock Units" means investment units under the Deferred Delivery
Plan, each of which is deemed to be equivalent to one share of Stock.

2.2  Headings; Gender and Number. The headings contained in the Plan are for
reference purposes only and shall not affect in any way the meaning or
interpretation of the Plan. Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definition of
any term herein in the singular shall also include the plural.

                                    SECTION 3

                               PLAN ADMINISTRATION

3.1  Administration by the Committee.

         (a) The Plan shall be administered by the Committee. In accordance with
the provisions of the Plan, the Committee shall, in its sole discretion, select
the Participants from among the Eligible Employees, determine the Options to be
granted pursuant to the Plan, the number of shares of Stock to be issued
thereunder, the time at which such Options are to be granted, fix the Option
Price, and establish such other terms and requirements as the Committee may deem
necessary or desirable and consistent with the terms of the Plan. The Committee
shall determine the form or forms of the agreements with Participants which
shall evidence the particular provisions, terms, conditions, rights and duties
of the Company and the Participants with respect to Options granted pursuant to
the Plan, which provisions need not be identical except as may be provided
herein.

                                       3

<PAGE>

         (b) The Committee may from time to time adopt such rules and
regulations for carrying out the purposes of the Plan as it may deem proper and
in the best interests of the Company. The Committee may appoint an
Administrative Agent, who need not be a member of the Committee or an employee
of the Company, to assist the Committee in administration of the Plan and to
whom it may delegate such powers as the Committee deems appropriate, except that
the Committee shall determine any dispute. The Committee may correct any defect,
supply any omission or reconcile any inconsistency in the Plan, or in any
agreement entered into hereunder, in the manner and to the extent it shall deem
expedient and it shall be the sole and final judge of such expediency. No member
of the Committee shall be liable for any action or determination made in good
faith. The determination, interpretations and other actions of the Committee
pursuant to the provisions of the Plan shall be binding and conclusive for all
purposes and on all persons.

                                    SECTION 4

                            STOCK SUBJECT TO THE PLAN

4.1  Number of Shares. Subject to Sections 7.1 and 7.4 hereof and to adjustment
pursuant to Section 4.3 hereof, three million (3,000,000) shares of Stock are
authorized for issuance under the Plan in accordance with the provisions of the
Plan and subject to such restrictions or other provisions as the Committee may
from time to time deem necessary. This authorization may be increased from time
to time by approval of the Board and the stockholders of the Company if, on the
advice of counsel for the Company, such stockholder approval is required. Shares
of Stock which may be issued upon exercise of Options shall be applied to reduce
the maximum number of shares of Stock remaining available for use under the
Plan. The Company shall at all times during the term of the Plan and while any
Options are outstanding retain as authorized and unissued Stock, or as Stock in
the Company's treasury, at least the number of shares from time to time required
under the provisions of the Plan, or otherwise assure itself of its ability to
perform its obligations hereunder.

4.2  Other Shares of Stock. Any shares of Stock that are subject to an Option
which expires, is forfeited, is cancelled, or for any reason is terminated
unexercised, and any shares of Stock that for any other reason are not issued to
a Participant or are forfeited shall automatically become available for use
under the Plan.

                                       4

<PAGE>

4.3  Adjustments for Stock Split, Stock Dividend, etc. If the Company shall at
any time increase or decrease the number of its outstanding shares of Stock or
change in any way the rights and privileges of such shares by means of the
payment of a Stock dividend or any other distribution upon such shares payable
in Stock, or through a Stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock then in relation to the
Stock that is affected by one or more of the above events, the numbers, rights
and privileges of the following shall be, in each case, equitably and
proportionally adjusted to take into account the occurrence of any of the above
events, (i) the shares of Stock as to which Options may be granted under the
Plan; (ii) the shares of Stock then included in each outstanding Option granted
hereunder; and (iii) the Option Price for each outstanding Option granted
hereunder.

4.4  Dividend Payable in Stock of Another Corporation, Etc. If the Company shall
at any time pay or make any dividend or other distribution upon the Stock
payable in securities or other property (except money or Stock), a proportionate
part of such securities or other property shall be set aside and delivered to
any Participant then holding an Option for the particular type of Stock for
which the dividend or other distribution was made, upon exercise thereof. Prior
to the time that any such securities or other property are delivered to a
Participant in accordance with the foregoing, the Company shall be the owner of
such securities or other property and shall have the right to vote the
securities, receive any dividends payable on such securities, and in all other
respects shall be treated as the owner. If securities or other property which
have been set aside by the Company in accordance with this Section are not
delivered to a Participant because an Option is not exercised, then such
securities or other property shall remain the property of the Company and shall
be dealt with by the Company as it shall determine in its sole discretion.

4.5  Other Changes in Stock. In the event there shall be any change, other than
as specified in Sections 4.3 and 4.4 hereof, in the number or kind of
outstanding shares of Stock or of any stock or other securities into which the
Stock shall be changed or for which it shall have been exchanged, and if the
Committee shall in its discretion determine that such change equitably requires
an adjustment in the number or kind of shares subject to outstanding Options or
which have been reserved for issuance pursuant to the Plan but are not then
subject to an Option, then such adjustments shall be made by the Committee and
shall be effective for all purposes of the Plan and on each outstanding Option
that involves the particular type of stock for which a change was effected.

                                       5

<PAGE>

4.6  Rights to Subscribe. If the Company shall at any time grant to the holders
of its Stock rights to subscribe pro rata for additional shares thereof or for
any other securities of the Company or of any other corporation, there shall be
reserved with respect to the shares then under Option to any Participant of the
particular class of Stock involved the Stock or other securities which the
Participant would have been entitled to subscribe for if immediately prior to
such grant the Participant had exercised his entire Option. If, upon exercise of
any such Option, the Participant subscribes for the additional shares or other
securities, the aggregate Option Price shall be increased by the amount of the
price that is payable by the Participant for such additional shares or other
securities.

4.7  General Adjustment Rules. No adjustment or substitution provided for in
this Section 4 shall require the Company to sell a fractional share of Stock
under any Option, or otherwise issue a fractional share of Stock, and the
total substitution or adjustment with respect to each Option shall be limited by
deleting any fractional share. In the case of any such substitution or
adjustment, the aggregate Option Price for the shares of Stock then subject to
the Option shall remain unchanged but the Option Price per share under each such
Option shall be equitably adjusted by the Committee to reflect the greater or
lesser number of shares of Stock or other securities into which the Stock
subject to the Option may have been changed.

4.8  Determination by the Committee, Etc. Adjustments under this Section 4 shall
be made by the Committee, whose determinations with regard thereto shall be
final and binding upon all parties.

                                    SECTION 5

                          REORGANIZATION OR LIQUIDATION

In the event that the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, or if all or substantially all
of the assets or more than 20 percent of the outstanding voting stock of the
Company is acquired by any other corporation, business entity or person, or in
case of a reorganization (other than a reorganization under the United States
Bankruptcy Code) or liquidation of the Company, and if the provisions of Section
8 hereof do not apply, the Committee, or the board of directors of any
corporation assuming the obligations of the Company, shall, as to the Plan and
outstanding Options either (i) make appropriate provision for the adoption and
continuation of the Plan by the acquiring or successor corporation and for the
protection of any

                                       6

<PAGE>

such outstanding Options by the substitution on an equitable basis of
appropriate stock of the Company or of the merged, consolidated or otherwise
reorganized corporation which will be issuable with respect to the Stock,
provided that no additional benefits shall be conferred upon the Participants
holding such Options as a result of such substitution, and the excess of the
aggregate Fair Market Value of the shares subject to the Options immediately
after such substitution over the aggregate Option Price thereof is not more than
the excess of the aggregate Fair Market Value of the shares subject to such
Options immediately before such substitution over the aggregate Option Price
thereof, or (ii) upon written notice to the Participants, provide that all
unexercised Options shall be exercised within a specified number of days of the
date of such notice or such Options will be terminated. In the latter event, the
Committee shall accelerate the vesting dates of outstanding Options so that all
Options become fully vested and exercisable prior to any such event.

                                    SECTION 6

                                  PARTICIPATION

Participants in the Plan shall be those Eligible Employees who, in the judgment
of the Committee, are performing, or during the term of their incentive
arrangement will perform, vital services in the management, operation and
development of the Company or an Affiliated Corporation, and significantly
contribute, or are expected to significantly contribute, to the achievement of
the Company's long-term corporate economic objectives. Participants may be
granted from time to time one or more Options; provided, however, that the grant
of each such Option shall be separately approved by the Committee, and receipt
of one such Option shall not result in automatic receipt of any other Option.
Upon determination by the Committee that an Option is to be granted to a
Participant, written notice shall be given to such person, specifying the terms,
conditions, rights and duties related thereto. Each Participant shall, if
required by the Committee, enter into an agreement with the Company, in such
form as the Committee shall determine and which is consistent with the
provisions of the Plan, specifying such terms, conditions, rights and duties.
Options shall be deemed to be granted as of the date specified in the grant
resolution of the Committee, which date shall be the date of any related
agreement with the Participant. In the event of any inconsistency between the
provisions of the Plan and any such agreement entered into hereunder, the
provisions of the Plan shall govern.

                                       7

<PAGE>

                                    SECTION 7

                                  STOCK OPTIONS

7.1  Grant of Stock Options. Coincident with or following designation for
participation in the Plan, an Eligible Employee may be granted one or more
Options. Grants of Options under the Plan shall be made by the Committee. In no
event shall the exercise of one Option affect the right to exercise any other
Option or affect the number of shares of Stock for which any other Option may be
exercised, except as provided in subsection 7.2(j) hereof. During the duration
of the Plan, no Eligible Employee may be granted Options which in the aggregate
cover in excess of 25 percent of the total shares of Stock authorized under the
Plan.

7.2  Stock Option Agreements. Each Option granted under the Plan shall be
evidenced by a written stock option agreement which shall be entered into by the
Company and the Participant to whom the Option is granted (the "Stock Option
Agreement"), and which shall contain the following terms and conditions, as well
as such other terms and conditions, not inconsistent therewith, as the Committee
may consider appropriate in each case:

         (a) Number of Shares. Each Stock Option Agreement shall state that it
covers a specified number of shares of Stock, as determined by the Committee.

         (b) Price. The price at which each share of Stock covered by an Option
may be purchased shall be determined in each case by the Committee and set forth
in the Stock Option Agreement, but in no event shall the price be less than the
Fair Market Value of the Stock on the date the Option is granted.

         (c) Duration of Options; Employment Required For Exercise. Each Stock
Option Agreement shall state the period of time, determined by the Committee,
within which the Option may be exercised by the Participant (the "Option
Period"). The Option Period must end, in all cases, not more than ten years from
the date an Option is granted. Except as otherwise provided in Sections 5 and 8
and subsections 7.2(d)(iv) and 7.4(a) hereof, each Option granted under the Plan
shall become exercisable in increments such that 25 percent of the Option
becomes exercisable on each of the four subsequent one-year anniversaries of the
date the Option is granted, provided that each such additional 25-percent
increment shall become exercisable only if the Participant has been continuously
employed by the Company from the date the Option is granted through the date on
which each such additional 25-percent increment becomes exercisable.

                                       8

<PAGE>

         (d) Termination of Employment, Death, Disability, Etc. Each Stock
Option Agreement shall provide as follows with respect to the exercise of the
Option upon termination of the employment or the death of the Participant:

                  (i) If the employment of the Participant by the Company is
terminated within the Option Period for cause, as determined by the Company, the
Option shall thereafter be void for all purposes. As used in this subsection
7.2(d), "cause" shall mean a gross violation, as determined by the Company, of
the Company's established policies and procedures, provided that the effect of
this subsection 7.2(d) shall be limited to determining the consequences of a
termination and that nothing in this subsection 7.2(d) shall restrict or
otherwise interfere with the Company's discretion with respect to the
termination of any employee.

                  (ii) If the Participant retires from employment by the Company
on or after attaining age 60, the Option may be exercised by the Participant
within 36 months following his or her retirement (provided that such exercise
must occur within the Option Period), but not thereafter. In the event of the
Participant's death during such 36-month period, each Option may be exercised by
those entitled to do so in the manner referred to in (iv) below. In any such
case, the Option may be exercised only as to the shares as to which the Option
had become exercisable on or before the date of the Participant's retirement.

                  (iii) If the Participant becomes disabled (as determined
pursuant to the Company's Long-Term Disability Plan or any successor plan),
during the Option Period while still employed, or within the three-month period
referred to in subsection 7.2(d)(v) below, or within the 36-month period
referred to in subsection 7.2(d)(ii) above, the Option may be exercised by the
Participant or by his or her guardian or legal representative, within twelve
months following the Participant's disability, or within the 36-month period
referred to in subsection 7.2(d)(ii) above if applicable and if longer (provided
that such exercise must occur within the Option Period), but not thereafter. In
the event of the Participant's death during such twelve-month period, each
Option may be exercised by those entitled to do so in the manner referred to in
subsection 7.2(d)(iv) below. In any such case, the Option may be exercised only
as to the shares of Stock as to which the Option had become exercisable on or
before the date of the Participant's disability.

                  (iv) In the event of the Participant's death while still
employed by the Company, each Option of the deceased Participant may be
exercised by those entitled to do so under the Participant's will or under the
laws of descent and

                                       9

<PAGE>

distribution within twelve months following the Participant's death (provided
that in any event such exercise must occur within the Option Period), but not
thereafter, as to all shares of Stock which are subject to such Option,
including each 25-percent increment of the Option, if any, which has not yet
become exercisable at the time of the Participant's death. In the event of the
Participant's death within the 36-month period referred to in subsection
7.2(d)(ii) above or within the twelve-month period referred to in subsection
7.2(d)(iii) above, each Option of the deceased Participant that is exercisable
at the time of death may be exercised by those entitled to do so under the
Participant's will or under the laws of descent and distribution within twelve
months following the Participant's death or within the 36-month period referred
to in subsection 7.2(d)(ii) above, if applicable and if longer (provided that in
any event such exercise must occur within the Option Period). The provisions of
this paragraph (iv) of subsection 7.2(d) shall be applicable to each Stock
Option Agreement as if set forth therein word for word. Each Stock Option
Agreement executed by the Company prior to the adoption of this provision shall
be deemed amended to include the provisions of this paragraph and all Options
granted pursuant to such Stock Option Agreements shall be exercisable as
provided herein.

                  (v) If the employment of the Participant by the Company is
terminated (which for this purpose means that the Participant is no longer
employed by the Company or by an Affiliated Corporation) within the Option
Period for any reason other than cause, the Participant's retirement on or after
attaining age 60, or the Participant's disability or death, the Option may be
exercised by the Participant within three months following the date of such
termination (provided that such exercise must occur within the Option Period),
but not thereafter. In any such case, the Option may be exercised only as to the
shares as to which the Option had become exercisable on or before the date of
termination of the Participant's employment.

         (e) Transferability. Each Stock Option Agreement shall provide that the
Option granted therein is not transferable by the Participant except by will or
pursuant to the laws of descent and distribution, and that such Option is
exercisable during the Participant's lifetime only by him or her, or in the
event of the Participant's disability or incapacity, by his or her guardian or
legal representative.

         (f) Agreement to Continue in Employment. Each Stock Option Agreement
shall contain the Participant's agreement to remain in the employment of the
Company, at the pleasure of the Company, for a continuous period of at least one
year after the date of such Stock Option Agreement, at the salary rate in

                                       10

<PAGE>

effect on the date of such agreement or at such changed rate as may be fixed,
from time to time, by the Company.

         (g) Exercise, Payments, Etc.

                  (i) Each Stock Option Agreement shall provide that the method
for exercising the Option granted therein shall be by delivery to the Office of
the Secretary of the Company or to the Administrative Agent of written notice
specifying the number of shares of Stock with respect to which such Option is
exercised and payment to the Company of the aggregate Option Price. Such notice
shall be in a form satisfactory to the Committee and shall specify the
particular Options (or portions thereof) which are being exercised and the
number of shares of Stock with respect to which the Options are being exercised.
The exercise of the Option shall be deemed effective on the date such notice is
received by the Office of the Secretary or by the Administrative Agent and
payment is made to the Company of the aggregate Option Price (the "Exercise
Date"); however, if payment of the aggregate Option Price is made pursuant to a
sale of shares of Stock as contemplated by subsection 7.2(g)(iii)(F) below, the
Exercise Date shall be deemed to be the date of such sale. If requested by the
Company, such notice shall contain the Participant's representation that he or
she is purchasing the Stock for investment purposes only and his or her
agreement not to sell any Stock so purchased in any manner that is in violation
of the Securities Act of 1933, as amended, or any applicable state law, and such
restriction, or notice thereof, shall be placed on the certificates representing
the Stock so purchased. The purchase of such Stock shall take place upon
delivery of such notice to the Office of the Secretary of the Company or to the
Administrative Agent, at which time the aggregate Option Price shall be paid in
full to the Company by any of the methods or any combination of the methods set
forth in subsection 7.2(g)(iii) below.

                  (ii) Except as referenced below in connection with the
Deferred Delivery Plan, the shares of Stock to which the Participant is entitled
as a result of the exercise of the Option shall be issued by the Company and (A)
delivered by electronic means to an account designated by the Participant, or
(B) delivered to the Participant in the form of a properly executed certificate
or certificates representing such shares of Stock. If shares of Stock and/or
Depositary Shares are used to pay all or part of the aggregate Option Price, the
Company shall issue and deliver to the Participant the additional shares of
Stock, in excess of the aggregate Option Price or portion thereof paid using
shares of Stock or Depositary Shares, to which the Participant is entitled as a
result of the Option exercise. If the Participant exercising an Option (x) is
eligible for participation in the Deferred Delivery Plan, (y) pays the aggregate
Option Price pursuant to

                                       11

<PAGE>

subsection 7.2(g)(iii)(A), (B), (C), (D) or (E) below, and (z) has made an
irrevocable election at least six months prior to the Exercise Date as required
under the Deferred Delivery Plan, the income resulting from the Option exercise
shall be deferred into the Participant's Deferred Delivery Plan account and no
additional shares of Stock shall be delivered to the Participant.

                  (iii) the aggregate Option Price shall be paid by any of the
following methods or any combination of the following methods:

                        (A) in cash, including the wire transfer of funds in
U.S.  dollars to one of the Company's bank accounts located in the United
States, with such bank account to be designated from time to time by the
Company;

                        (B) by personal, certified or cashier's check payable
in U.S.  dollars to the order of the Company;

                        (C) by delivery to the Company or the Administrative
Agent of certificates representing a number of shares of Stock then owned by the
Participant, the aggregate Fair Market Value of which (as of the Exercise Date)
is not greater than the aggregate Option Price of the Option being exercised,
properly endorsed for transfer to the Company, provided that the shares of Stock
used for this purpose must have been owned by the Participant for a period of at
least six months;

                        (D) by certification or attestation to the Company or
the Administrative Agent of the Participant's ownership (as of the Exercise
Date) of a number of shares of Stock and/or Depositary Shares, the aggregate
Fair Market Value of which (as of the Exercise Date) is not greater than the
aggregate Option Price of the Option being exercised, provided that the shares
of Stock and/or Depositary Shares used for this purpose have been owned by the
Participant for a period of at least six months;

                        (E) if the income resulting from the Option exercise is
to be deferred into the Participant's Deferred Delivery Plan account, by
certification or attestation to the Company or the Administrative Agent of the
Participant's ownership (as of the Exercise Date) of a number of vested Stock
Units held in the Participant's Deferred Delivery Plan account, the equivalent
aggregate Fair Market Value of which (as of the Exercise Date) is not greater
than the aggregate Option Price of the Option being exercised, provided that the
Stock Units used for this purpose were vested as of the Exercise Date; or

                                       12

<PAGE>

                        (F) by delivery to the Company or the Administrative
Agent of a properly executed notice of exercise together with irrevocable
instructions to a broker to promptly deliver to the Company, by wire transfer or
check as noted in subsection 7.2(g)(iii)(A) and (B) above, the amount of the
proceeds of the sale of all or a portion of the Stock or of a loan from the
broker to the Participant necessary to pay the aggregate Option Price.

                  (iv) For purposes of the Plan, the income resulting from an
Option exercise shall be based on the Fair Market Value of the Stock for the
Exercise Date; however, if payment of the aggregate Option Price is made
pursuant to a sale of shares of Stock as contemplated by subsection
7.2(g)(iii)(F) hereof, the Fair Market Value shall be deemed to be the per share
sale price and the Exercise Date shall be deemed to be the date of such sale.

         (h) Date of Grant. An Option shall be considered as having been granted
on the date specified in the grant resolution of the Committee.

         (i) Tax Withholding. Each Stock Option Agreement shall provide that,
upon exercise of the Option, the Participant shall make appropriate arrangements
with the Company to provide for the amount of tax withholding required by
Sections 3102 and 3402 or any successor section(s) of the Internal Revenue Code
and applicable state and local income and other tax laws, including payment of
such taxes in cash, by check, or as provided in Section 13.2 hereof.

         (j) Adjustment of Options. Subject to the provisions of Sections 4, 5,
7, 8 and 12 hereof, the Committee may make any adjustment in the number of
shares of Stock covered by, or the terms of an outstanding Option and a
subsequent granting of an Option, by amendment or by substitution for an
outstanding Option; however, except as provided in Sections 4, 5, 8 and 12
hereof, the Committee may not adjust the Option Price of any outstanding Option.
Such amendment or substitution may result in terms and conditions (including the
number of shares of Stock covered, vesting schedule or Option Period) that
differ from the terms and conditions of the original Option. The Committee may
not, however, adversely affect the rights of any Participant to previously
granted Options without the consent of such Participant. If such action is
effected by amendment, the effective date of such amendment will be the date of
grant of the original Option.

7.3  Stockholder Privileges. No Participant shall have any rights as a
stockholder with respect to any shares of Stock covered by an Option until the
Participant becomes the holder of record of such Stock. Except as provided in
Section 4 hereof, no adjustments shall be made for dividends or other

                                       13

<PAGE>

distributions or other rights as to which there is a record date preceding the
date on which such Participant becomes the holder of record of such Stock.

7.4  Reload Provisions.

         (a) The Committee shall have the authority, but not an obligation, to
include as a part of any Stock Option Agreement provisions under which the
Participant shall be granted a further option (a "Reload Option") when the
Participant exercises all or part of the Option represented by such Stock Option
Agreement and pays all or part of the aggregate Option Price and/or required or
excess tax withholding pursuant to subsections 7.2(g)(iii)(C), (D) or (E) and/or
subsections 13.2(a), (b) or (c) and/or subsections 13.3(a) or (b) hereof. Any
Option including such reload provisions shall become exercisable in increments
such that 25 percent of the Option becomes exercisable on the dates six months,
12 months, 18 months and 24 months following the date the Option is granted,
provided that each such additional 25-percent increment shall become exercisable
only if the Participant has been continuously employed by the Company from the
date the Option is granted through the date on which such additional 25-percent
increment becomes exercisable.

         (b) Any shares of Stock issued to a Participant as a result of an
Option exercise which resulted in the grant of a Reload Option, may not be sold
or otherwise disposed of until the term of the original Option has expired or
the Participant is no longer employed by the Company or by an Affiliated
Corporation. Any Stock Units acquired by a Participant as a result of the
deferral of income (pursuant to subsection 7.2(g)(ii) hereof) in connection with
an Option exercise which resulted in the grant of a Reload Option, may not be
sold or otherwise disposed of until the shares of Stock relating to such Stock
Units are distributed under the terms of the Deferred Delivery Plan.

         (c) A Reload Option shall be granted, without further action of the
Committee or the Participant, if one or more of the payment provisions
referenced in subsection 7.4(a) above are used and if all of the following are
satisfied as of the date of exercise of the underlying Option:

                  (i) the Participant has not previously been granted a Reload
Option or there has been a period of more than six months since the
Participant was last granted a Reload Option;

                  (ii) no shares of Stock have been sold or otherwise disposed
of in breach of the provisions of subsection 7.4(b) above;

                                       14

<PAGE>

                  (iii) the Fair Market Value of the shares of Stock covered by
the original Option being exercised is at least ten percent greater than the
Option Price for such shares; and

                  (iv) there is a period of more than six months remaining in
the term of the original Option.

         (d) Each Reload Option:

                  (i) shall cover that certain number of shares of Stock equal
to the shares or equivalent shares of Stock actually or constructively delivered
to the Company as referenced in subsection 7.4(a) above;

                  (ii) shall be deemed to be granted as of the date on which the
original Option is exercised and shall have an Option Price of 100 percent of
Fair Market Value on such date;

                  (iii) shall become exercisable six months after the date of
grant and shall have the same Expiration Date as the original Option; and

                  (iv) except as set forth in subsections 7.4(d)(i), (ii) and
(iii) above, shall have the same terms and conditions as those of the original
Option.

                                    SECTION 8

                                CHANGE OF CONTROL

8.1  In General. In the event of the occurrence of a change of control of the
Company, as defined in Section 8.3 hereof, all outstanding Options shall become
automatically vested, without further action by the Committee or the Board, so
as to make all such Options fully vested and exercisable as of the date of such
change of control.

8.2 Limitation on Payments. If the provisions of this Section 8 would result in
the receipt by any Participant of a payment within the meaning of Section 280G
or any successor section(s) of the Internal Revenue Code, and the regulations
promulgated thereunder, and if the receipt of such payment by any Participant
would, in the opinion of independent tax counsel of recognized standing selected
by the Company, result in the payment by such Participant of any excise tax
provided for in Sections 280G and 4999 or any successor section(s) of the
Internal Revenue Code, then the amount of such payment shall be reduced to the
extent required, in the opinion of independent tax counsel, to prevent the

                                       15

<PAGE>

imposition of such excise tax; provided, however, that the Committee, in its
sole discretion, may authorize the payment of all or any portion of the amount
of such reduction to the Participant.

8.3  Definition. For purposes of the Plan, a "change of control" shall mean any
of the events specified in the Company's Income Continuance Plan or any
successor plan which constitute a change of control within the meaning of such
plan.

                                    SECTION 9

                        RIGHTS OF EMPLOYEES, PARTICIPANTS

9.1  Employment. Nothing contained in the Plan or in any Option granted under
the Plan shall confer upon any Participant any right with respect to the
continuation of his or her employment by the Company or any Affiliated
Corporation, or interfere in any way with the right of the Company or any
Affiliated Corporation, subject to the terms of any separate employment
agreement to the contrary, at any time to terminate such employment or to
increase or decrease the level of the Participant's compensation from the level
in existence at the time of the grant of an Option. Whether an authorized leave
of absence, or absence in military or government service, shall constitute a
termination of employment shall be determined by the Committee at the time.

9.2  Nontransferability. No right or interest of any Participant in an Option
granted pursuant to the Plan shall be assignable or transferable during the
lifetime of the Participant, either voluntarily or involuntarily, or subjected
to any lien, directly or indirectly, by operation of law, or otherwise,
including execution, levy, garnishment, attachment, pledge or bankruptcy. In the
event of a Participant's death, a Participant's rights and interests in Options
shall, to the extent provided in Section 7 hereof, be transferable by
testamentary will or the laws of descent and distribution, and payment of any
amounts due under the Plan shall be made to, and exercise of any Options may be
made by, the Participant's legal representatives, heirs or legatees. If, in the
opinion of the Committee, a person entitled to payments or to exercise rights
with respect to the Plan is disabled from caring for his or her affairs because
of mental condition, physical condition or age, payment due such person may be
made to, and such rights shall be exercised by, such person's guardian,
conservator or other legal personal representative upon furnishing the Committee
with evidence of such status satisfactory to the Committee.

                                       16

<PAGE>

                                   SECTION 10

                              GENERAL RESTRICTIONS

10.1  Investment Representations. The Company may require a Participant, as a
condition of exercising an Option, to give written assurances in substance and
form satisfactory to the Company and its counsel to the effect that such person
is acquiring the Stock subject to the Option for his own account for investment
and not with any present intention of selling or otherwise distributing the
same, and to such other effects as the Company deems necessary or appropriate in
order to comply with federal and applicable state securities laws.

10.2  Compliance with Securities Laws. Each Option shall be subject to the
requirement that, if at any time counsel to the Company shall determine that the
listing, registration or qualification of the shares of Stock subject to such
Option upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is necessary as a
condition of, or in connection with, the issuance or purchase of shares of Stock
thereunder, such Option may not be accepted or exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained on conditions acceptable to the Committee. Nothing
herein shall be deemed to require the Company to apply for or to obtain such
listing, registration, qualification, consent or approval.

                                   SECTION 11

                             OTHER EMPLOYEE BENEFITS

The amount of any income deemed to be received by a Participant as a result of
an Option exercise shall not constitute "earnings" or "compensation" with
respect to which any other employee benefits of such Participant are determined
including, without limitation, benefits under any pension, profit sharing, life
insurance or salary continuation plan.

                                       17

<PAGE>

                                   SECTION 12

                  PLAN AMENDMENT, MODIFICATION AND TERMINATION

The Board may at any time terminate, and from time to time may amend or modify
the Plan provided, however, that no amendment or modification may become
effective without approval of the amendment or modification by the Company's
stockholders if stockholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements unless the Company, on the
advice of counsel, determines that stockholder approval is otherwise necessary
or desirable.

No amendment, modification or termination of the Plan shall in any manner
adversely affect any Option theretofore granted under the Plan, without the
consent of the Participant holding such Option.

The Committee shall have the authority to adopt such modifications, procedures
and subplans as may be necessary or desirable to comply with the provisions of
the laws (including, but not limited to, tax laws and regulations) of countries
other than the United States in which the Company may operate, so as to assure
the viability of the benefits of the Plan to Participants employed in such
countries.

                                   SECTION 13

                                   WITHHOLDING

13.1  Withholding Requirement. The Company's obligations to deliver shares of
Stock upon the exercise of an Option, or to defer income resulting from an
Option exercise into the Deferred Delivery Plan, shall be subject to the
Participant's satisfaction of all applicable federal, state and local income and
other tax withholding requirements.

13.2  Satisfaction of Required Withholding. At the time the Committee grants an
Option, it may, in its sole discretion, grant the Participant an election to
pay all such amounts of required tax withholding, or any part thereof:

         (a) by the delivery to the Company or the Administrative Agent of a
number of shares of Stock then owned by the Participant, the aggregate Fair
Market Value of which (as of the Exercise Date) is not greater than the amount
required

                                       18

<PAGE>

to be withheld, provided that such shares have been held by the Participant for
a period of at least six months;

         (b) by certification or attestation to the Company or the
Administrative Agent of the Participant's ownership (as of the Exercise Date) of
a number of shares of Stock and/or Depositary Shares, the aggregate Fair Market
Value of which (as of the Exercise Date) is not greater than the amount required
to be withheld, provided that such shares of Stock and/or Depositary Shares have
been owned by the Participant for a period of at least six months;

         (c) if the income resulting from the Option exercise is to be deferred
into the Participant's Deferred Delivery Plan account, by certification or
attestation to the Company or the Administrative Agent of the Participant's
ownership (as of the Exercise Date) of a number of vested Stock Units held in
the Participant's Deferred Delivery Plan account, the equivalent aggregate Fair
Market Value of which (as of the Exercise Date) is not greater than the amount
required to be withheld, provided that such Stock Units were vested as of the
Exercise Date; or

         (d) by the Company or the Administrative Agent withholding from the
shares of Stock otherwise issuable to the Participant upon exercise of the
Option, a number of shares of Stock, the aggregate Fair Market Value of which
(as of the Exercise Date) is not greater than the amount required to be
withheld. Any such elections by Participants to have shares of Stock withheld
for this purpose will be subject to the following restrictions:

         (i) all elections shall be made on or prior to the Exercise Date; and

         (ii) all elections shall be irrevocable.

13.3  Excess Withholding. At the time the Committee grants an Option, it may, in
its sole discretion, grant the Participant an election to pay additional or
excess amounts of tax withholding, beyond the required amounts and up to the
Participant's marginal tax rate:

         (a) by delivery to the Company or the Administrative Agent of a number
of Shares of Stock then owned by the Participant, the aggregate Fair Market
Value of which (as of the Exercise Date) is not greater than such excess
withholding amount, provided that such shares of Stock have been owned by the
Participant for a period of at least six months; or

                                       19

<PAGE>

         (b) by certification or attestation to the Company or the
Administrative Agent of the Participant's ownership (as of the Exercise Date) of
a number of shares of Stock and/or Depositary Shares, the aggregate Fair Market
Value of which (as of the Exercise Date) is not greater than such excess
withholding amount, provided that such shares of Stock and/or Depositary Shares
have been owned by the Participant for a period of at least six months.

13.4  Section 16 Requirements. If the Participant is an officer or director of
the Company within the meaning of Section 16 or any successor section(s) of the
1934 Act ("Section 16"), the Participant must satisfy the requirements of such
Section 16 and any applicable rules and regulations thereunder with respect to
the use of shares of Stock, Depositary Shares and/or Stock Units to satisfy such
tax withholding obligation.

                                   SECTION 14

                               REQUIREMENTS OF LAW

14.1  Requirements of Law. The issuance of Stock and the payment of cash
pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.

14.2  Federal Securities Laws Requirements. If a Participant is an officer or
director of the Company within the meaning of Section 16, Options granted
hereunder shall be subject to all conditions required under Rule 16b-3, or any
successor rule(s) promulgated under the 1934 Act, to qualify the Option for any
exception from the provisions of Section 16 available under such Rule. Such
conditions are hereby incorporated herein by reference and shall be set forth in
the Stock Option Agreement with the Participant which describes the Option.

14.3  Governing Law. The Plan and all Stock Option Agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Texas.

                                       20

<PAGE>

                                   SECTION 15

                              DURATION OF THE PLAN

The Plan shall terminate at such time as may be determined by the Board, and no
Option shall be granted after such termination. If not sooner terminated under
the preceding sentence, the Plan shall fully cease and expire at midnight on
February 10, 2005. Any Options outstanding at the time of the Plan termination
shall continue to be exercisable in accordance with the Stock Option Agreement
pertaining to each such Option.

Dated:   March 5, 2003

                                           APACHE CORPORATION

ATTEST:

/s/ CHERI L. PEPER                         By: /s/ JEFFREY M. BENDER
-----------------------------                  -----------------------------
Cheri L. Peper                                 Jeffrey M. Bender
Corporate Secretary                            Vice President, Human Resources

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