EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
July 15, 1997, by and between Capital Trust, a business trust organized under
the laws of the State of California and established under a Declaration of Trust
dated September 15, 1966, as amended from time to time (such trust and any
successors thereto being hereinafter referred to as "Capital Trust"), and Donald
Meyer ("Executive").

                                    RECITALS

         WHEREAS, Capital Trust desires to employ Executive as Managing Director
and Chief Investment Officer of Capital Trust; and

         WHEREAS, Executive desires to be employed by Capital Trust at the
salary and benefits provided for herein; and

         WHEREAS, Executive acknowledges and understands that during the course
of his employment, Executive will develop certain strategic business
relationships and become familiar with certain confidential information of
Capital Trust which are exceptionally valuable to Capital Trust and vital to the
success of Capital Trust's business; and

         WHEREAS, Capital Trust and Executive desire to protect such business
relationships and such confidential information from use to the detriment of
Capital Trust or disclosure to third parties.

         NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto acknowledge
and agree as follows:

                                      TERMS

                                    PART ONE

                          NATURE AND TERM OF EMPLOYMENT

         1.01 Employment. Capital Trust hereby agrees to employ Executive, and
Executive hereby accepts such employment, as Managing Director and Chief
Investment Officer of Capital Trust.

         1.02 Term of Employment. The term of Executive's employment hereunder
shall be for a period of two years beginning on the date of this Agreement (the
"Original Term").

         1.03 Term Extension. Immediately as of the expiration of the Original
Term and each Renewal Period, this Agreement will automatically renew and extend
for successive one year periods (the "Renewal Periods"), unless Capital Trust or
Executive shall have delivered to the other written notice of non-renewal at
least one hundred twenty (120) days prior to the expiration of the Original Term
or the applicable Renewal Period, in which case the Original Term or the
applicable Renewal Period shall expire effective as of the last day of the
Original Term or the applicable Renewal Period, as the case may be. The period
during which Executive shall be employed by Capital Trust hereunder shall be
referred to herein as the "Employment Period."

         1.04 At Will Employment. Notwithstanding anything to the contrary
contained in this Agreement, Executive's employment by Capital trust shall be
"at will", and both the Original Term and the Renewal Periods are subject to
termination at any time for any or no reason by either Capital Trust or
Executive upon written notice to the other party.

         1.05 Duties. The duties of Executive shall be as determined by the
Board of Trustees of Capital Trust (the "Board") consistent with Executive's
title and position with the Company, and Executive shall report to, and shall be
subject to the direction and control of, the Vice Chairman of the Board and/or
Chief Executive Officer of Capital Trust and/or such other officers of Capital
Trust as the Board shall determine. Executive agrees to devote his full business
time, attention and energies to the diligent performance of his duties hereunder
and will not, during the Employment Period, engage in, accept employment from or
provide services to any other person, firm, corporation, governmental agency or
other entity.

                                    PART TWO

                            COMPENSATION AND BENEFITS

         2.01 Salary. During the Employment Period, Executive shall receive a
base salary at the rate of $300,000 per annum (the "Base Salary"), payable in
regular installments in accordance with Capital Trust's general payroll
practices for salaried employees. During the Employment Period, the Base Salary
may be increased as of each anniversary of the date of this Agreement in the
Board's sole discretion.

         2.02 Bonus. In addition to his Base Salary, Executive may receive
during the Employment Period, as determined annually at the discretion of the
Board, an annual incentive cash bonus based upon Executive's performance and the
profitability of Capital Trust during such period. Notwithstanding anything to
the contrary in this Section 2.02, Executive shall be entitled to receive a
minimum annual bonus of $150,000 in cash (the "Minimum Annual Bonus"), payable
on or about January 1, 1998, and January 1, 1999; provided further, however,
that it is agreed that (i) subject to Part Three of this Agreement, Executive
shall not have earned and shall not be entitled to receive any portion of the
Minimum Annual Bonus if for any or no reason he is not employed by Capital Trust
on such dates, and (ii) such minimum bonuses shall not apply to any periods
subsequent to January 1, 1999.

         2.03 Benefits. During the Term of this Agreement, Capital Trust agrees
to provide to Executive such benefits as are provided to other employees of
Capital Trust from time to time, including but not limited to, any health,
disability, life, deferred compensation, profit-sharing, pension, vacation,
reimbursement of reasonable out-of-pocket business expenses or other employee
benefit policies, programs or plans (other than with respect to severance) which
Capital Trust provides to its employees, all at levels determined by the Board
and commensurate with Executive's position.

         2.04 Share Plan. Executive shall participate in Capital Trust's 1997
Long-Term Incentive Share Plan, and any successor plan thereto ("Share Plan") at
a level determined by the Board and commensurate with his position.



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         2.05 Withholding. Any amounts payable to Executive hereunder shall be
paid to Executive subject to all applicable taxes required to be withheld by the
Company pursuant to federal, state or local law. Executive or his beneficiary,
if applicable, shall be solely responsible for all taxes imposed on Executive or
his beneficiary by reason of his receipt of any amount of compensation or
benefits payable to Executive hereunder.

                                   PART THREE

                               SEVERANCE PAYMENTS

         3.01 General. Either Capital Trust or Executive may terminate
Executive's employment during the Employment Period for any or no reason by
delivery to the other party of a written notice (the "Termination Notice")
indicating the date Executive's employment is terminated (the "Termination
Date").

         3.02     Involuntary Termination without Cause.

         (a) If Capital Trust terminates Executive's employment prior to the
expiration of the Original Term for any reason other than Cause, or if Employee
terminates his employment prior to the expiration of the Original Term for Good
Reason:

         (i) Capital Trust shall pay to Executive Executive's Base Salary
accrued up to the Termination Date; and

         (ii) upon execution and delivery by Executive of the form of Release
attached hereto as Exhibit A, and the expiration of the seven day revocation
period provided in said Release without revocation of said Release by Executive,
Capital Trust shall pay to Executive, a severance payment equal to (A) the Base
Salary payable to Executive over the remainder of the Original Term had
Executive not been so terminated (the "Base Severance") and (B) the Minimum
Annual Bonus in respect of the first and second year of the Original Term if and
to the extent not previously paid to Executive (the "Bonus Severance"). The Base
Severance shall be payable over a period of time equal to the remainder of the
Original Term had Executive not been so terminated beginning on the Termination
Date and in regular installments in accordance with Capital Trust's general
payroll practices for salaried employees. The portion, if any, of the Bonus
Severance payable in respect of the first year of the Original Term shall be
payable no later than January 10, 1998. The portion, if any, of the Bonus
Severance payable in respect of the second year of the Original Term shall be
payable no later than January 10, 1999. As used in this Agreement, "Good Reason"
shall mean a willful and material breach of this Agreement by Capital Trust;

         (b) Notwithstanding anything to the contrary in the Share Plan or in
any option agreement thereunder, if Capital Trust terminates Executive's
employment at any time during the Employment Period, including, without
limitation, during any Renewal Period, or refuses to renew this Agreement after
the expiration of the Original Term or any Renewal Term, in each case for any
reason other than Cause, or if Employee terminates his employment at any time
during the Employment Period, including, without limitation, during any Renewal
Period, or refuses to renew this Agreement after the expiration of the Original
Term or any Renewal Term, in each case for Good Reason: (A) all of the initial
75,000 options granted to Executive under the Share Plan 


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<PAGE>

which are not vested at the time of termination will automatically vest and
become immediately exercisable for the total number of shares purchasable
thereunder; and (B) such options will expire on the earlier of (aa) the
expiration date of such options under the Share Plan and (bb) one year from the
Termination Date.

         (c) Except as set forth in this Section 3.02, Executive shall not be
entitled to receive any other severance, benefits or compensation of any kind
whatsoever.

         3.03 Voluntary Termination. If Executive terminates his employment
voluntarily without Good Reason, Executive shall be entitled to receive only his
Base Salary accrued through the Termination Date as set forth in the Termination
Notice, and Executive shall not be entitled to receive any Base Severance, Bonus
Severance or other severance benefits or compensation of any kind whatsoever.
Except as set forth in this Section 3.03, Executive shall not be entitled to
receive any other severance, benefits or compensation of any kind whatsoever.

         3.04 Involuntary Termination for Cause. If Capital Trust terminates
Executive's employment prior to the expiration of the Original Term for Cause,
Executive shall be entitled to receive only his Base Salary accrued through the
Termination Date as set forth in the Termination Notice, and Executive shall not
be entitled to receive any Base Severance, Bonus Severance or other severance
benefits or compensation of any kind whatsoever. As used in this Section 3.04,
"Cause" shall mean: (a) fraud, embezzlement or conviction of a felony; (b)
misappropriation of any money, proprietary information or other assets or
properties of Capital Trust or any affiliate of Capital other than (i) an
isolated, insubstantial and unintentional misappropriation which is promptly
remedied by Executive after receipt of notice thereof by Capital Trust, or (ii)
any good faith dispute regarding reimbursement of expenses or other similar good
faith dispute; (c) willful and material breach by Executive of the terms of this
Agreement; and (d) any other verifiable misconduct of Executive materially and
adversely affecting the reputation of Capital Trust. Except as set forth in this
Section 3.04, Executive shall not be entitled to receive any other severance,
benefits or compensation of any kind whatsoever.

         3.05 Sole Remedy. The rights and remedies provided for in this Part
Three in connection with the termination of Executive's employment, voluntarily
or involuntarily, for any or no reason, shall be the only remedy, legal or
equitable, available to Executive in connection with such termination (but not
for claims or causes of action not directly related to such termination, even if
arising at the time of termination), and such rights and remedies shall
constitute liquidated damages.

                                    PART FOUR

                  CONFIDENTIAL INFORMATION AND NON-SOLICITATION

         4.01 Definition of Confidential Information. For the purposes of this
Agreement, the term "Confidential Information" shall mean all information and
all documents and other tangible items which record information which is
non-public, confidential or proprietary in nature with respect to Capital Trust
or its customers, clients or investors and shall include, but shall not be
limited to: (a) all information, which at the time or times concerned is
protectible as a trade secret under applicable law; (b) business and investment
plans and strategies; (c) marketing plans and strategies; and (d) proprietary
software and business records. Capital Trust and Executive acknowledge and agree
that the Confidential Information is extremely valuable to Capital Trust 


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<PAGE>
and the information referred to in subparagraphs (b) through (d) inclusive
of this Section 4.01 is especially sensitive and valuable.

         4.02 Non-Disclosure of Confidential Information. Executive will not
during, or for a period of two (2) years after termination of Executive's
employment for any or no reason, in any form or manner, directly or indirectly,
divulge, disclose or communicate to any person, entity, firm, corporation or any
other third party, or utilize for the Employee's personal benefit of for the
benefit of any person, entity, firm or corporation (other than Capital Trust),
any Confidential Information.

         4.03 Delivery Upon Termination. Upon termination of Executive's
employment with Capital Trust for any or no reason, Executive will promptly
deliver to Capital Trust all correspondence, manuals, letters, notes, notebooks,
reports, programs, plans, proposals, financial documents, or any other documents
or media concerning Capital Trust and/or which contains Confidential
Information.

         4.04 Restriction Against Employing Capital Trust Employees. Executive
will not, for a period of (1) one year after termination of Executive's
employment with Capital Trust for any or no reason, directly or indirectly,
whether individually, as a director, stockholder, partner, member, owner,
employee or agent of any business, or in any other capacity, solicit for
employment or engagement, any person who is employed or otherwise engaged by
Capital Trust on, or within 180 days prior to, such termination of Executive.

         4.05 Continuing Obligation. The obligations, duties and liabilities of
Executive pursuant to Part Four of this Agreement are continuing, absolute and
unconditional and shall remain in full force and effect as provided therein
despite any termination of Executive's employment with Capital Trust for any or
no reason, including, but not limited to, the expiration of the Employment
Period.

         4.06 Executive Acknowledgment/Injunctive Relief. Executive acknowledges
and agrees that the covenants set forth in Part Four hereof are reasonable and
necessary for the protection of Capital Trust's business interests, that such
covenants will not result in undue economic hardship to Executive, that
irreparable injury will result to Capital Trust if Executive breaches any of the
terms of said covenants, and that in the event of Executive's actual or
threatened breach of any such covenants, Capital Trust will have no adequate
remedy at law. Executive accordingly agrees that in the event of any actual or
threatened breach by him of any of said covenants, Capital Trust shall be
entitled to immediate injunctive and other equitable relief, without bond and
without the necessity of showing, any actual monetary damages. If, in any action
by Capital Trust against Executive to enforce the provisions of this Part Four,
there shall be a final judicial finding that Executive has committed a material
breach of this Part Four, Executive shall reimburse Capital Trust for its
reasonable costs and expenses in such action (including court costs and
reasonable attorney's fees). If, in any action by Capital Trust against
Executive to enforce the provisions of this Part Four, there shall be a final
judicial finding that Executive has not committed a material breach of this Part
Four, Capital Trust shall reimburse Executive for his reasonable costs and
expenses in defending such action (including court costs and reasonable
attorney's fees). If in any such action there is no judicial finding on the
issue of a material breach by Executive of this Part Four, neither party shall
be obligated to reimburse the other for costs and expenses relating to the
action. Nothing herein shall be construed as prohibiting Capital Trust from
pursuing any other remedies available to it for such breach or threatened
breach, including the recovery of any damages which it is able to prove.



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<PAGE>

                                    PART FIVE

                                  MISCELLANEOUS

         5.01 Assignment. Executive and Capital Trust acknowledge and agree that
the covenants, terms and provisions contained in this Agreement constitute a
personal employment contract and the rights of the parties thereunder cannot be
transferred, sold, assigned, pledged or hypothecated, excepting that the rights
and obligations of Capital Trust under this Agreement may be assigned or
transferred by operation of law pursuant to a merger, consolidation, share
exchange, sale of substantially all of Capital Trust's assets, or other
reorganization described in Section 368 of the Code, or through liquidation,
dissolution or otherwise, whether or not Capital Trust is the continuing entity,
provided that the assignee or transferee is the successor to all or
substantially all of the assets of Capital Trust and, in the event of any such
transaction, such assignee or transferee assumes the liabilities, obligations
and duties of Capital Trust, if any, as contained in this Agreement, either
contractually or as a matter of law.

         5.02 Capacity. Executive hereby represents and warrants that, in
entering into this Agreement, he is not in violation of any contract or
agreement, whether written or oral, with any other person, firm, partnership,
corporation, or other entity to which he is a party or by which he is bound and
will not violate or interfere with the rights of any other person, firm,
partnership, corporation or other entity. In the event that such a violation or
interference does occur, or is alleged to occur, notwithstanding the
representation and warranty made hereunder, Executive shall indemnify Capital
Trust from and against any and all manner of expenses and liabilities incurred
by Capital Trust or any affiliated company of Capital Trust in connection with
such violation or interference or alleged violation or interference.

         5.03 Severability. If any phrase, clause or provision of this Agreement
is declared invalid or unenforceable by a court of competent jurisdiction, such
phrase, clause or provision shall be deemed severed from this Agreement, but
will not affect any other provisions of this Agreement, which shall otherwise
remain in full force and effect. If any restriction or limitation in this
Agreement is deemed to be unreasonable, onerous and unduly restrictive by a
court of competent jurisdiction, it shall not be stricken in its entirety and
held totally void and unenforceable, but shall remain effective to the maximum
extent permissible within reasonable bounds.

         5.04 Notices. Any notice, request or other communication required to be
given pursuant to the provisions hereof shall be in writing and shall be deemed
to have been given when delivered in person or five (5) days after being
deposited in the United States mail, certified or registered, postage pre-paid,
return receipt requested and addressed to the party at its or his last known
addresses. The address of any party may be changed by notice in writing to the
other parties duly served in accordance herewith.

         5.05 Waiver. The waiver by Capital Trust or Executive of any breach of
any term or condition of this Agreement shall not be deemed to constitute the
waiver of any other breach of the same or any other term or condition hereof.

 

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<PAGE>

        5.06 Governing Law. This Agreement and the enforcement thereof shall be
governed and controlled in all respects by the laws of the State of New York
(applicable to agreements to be performed wholly within such state).


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first hereinabove written.

                                  CAPITAL TRUST


                      By:/s/ John Klopp
                         --------------------------------------
                         John Klopp, Vice Chairman of the Board
                           and Chief Executive Officer


                                            EXECUTIVE:


                                            /s/ Donald Meyer




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