Document:

Exhibit 10.3

________________________________________________________________________________

                       LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                                  CT MP II LLC

                      a Delaware limited liability company

                         Effective as of: March 8, 2000

________________________________________________________________________________

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ARTICLE I                  DEFINED TERMS.......................................1

         1.1.     Definitions..................................................1
         1.2.     General References...........................................6

ARTICLE II                 FORMATION AND DURATION..............................6

         2.1.     Formation....................................................6
         2.2.     Name.........................................................7
         2.3.     Agent and Office.............................................7
         2.4.     Principal Place of Business..................................7
         2.5.     Qualification in Other Jurisdictions.........................7
         2.6.     Term.........................................................7
         2.7.     Intent.......................................................7
         2.8.     Limited Liability............................................7
         2.9.     Transfer of Warrants.........................................7

ARTICLE III                PURPOSE AND POWERS OF THE COMPANY...................8

         3.1.     Purposes and Powers..........................................8
         3.2.     Limitations on Company Powers................................8

ARTICLE IV                 CAPITAL CONTRIBUTIONS...............................8

         4.1.     Initial Contributions........................................8
         4.2.     Additional Capital Contributions.............................9
         4.3.     Failure to Contribute Additional Payments...................10
         4.4.     Loans by Members; Compensation..............................10

ARTICLE V                  MANAGEMENT OF THE COMPANY..........................11

         5.1.     Management of the Company...................................11
         5.2.     Management Committee and Related Matters....................11
         5.3.     Conduct of Management Committee Meetings; Minutes...........12

ARTICLE VI                 DISTRIBUTIONS AND ALLOCATION OF TAX ITEMS..........13

         6.1.     Distributions...............................................13
         6.2.     Allocation of Net Profit and Net Loss.......................13
         6.3.     Withholding.................................................13
         6.4.     Restoration of Funds........................................14

ARTICLE VII                TAX ELECTIONS; TAX MATTERS MEMBER; TAX
                           CAPITAL ACCOUNTS...................................14

         7.1.     Federal Income Tax Elections; Tax Matters Member............14
         7.2.     Tax Matters.................................................14

ARTICLE VIII               OTHER RIGHTS AND OBLIGATIONS OF MEMBERS............15

         8.1.     Resignation of a Member.....................................15
         8.2.     Admission of New Members....................................15
         8.3.     Indemnification by Company..................................15
         8.4.     Indemnification by Members..................................16
         8.5.     Exculpation.................................................16

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                                                                         Page(s)

         8.6.     Reimbursement of Members....................................16
         8.7.     Particular Covenants of Members.............................16

ARTICLE IX                 TRANSFERS OF COMPANY MEMBERSHIP INTERESTS..........17

         9.1.     Condition to Transfer of Any Membership Interest............17
         9.2.     Transfers of Membership Interests...........................18

ARTICLE X                  DISSOLUTION AND LIQUIDATION........................18

         10.1.    Dissolution.................................................18
         10.2.    Winding up Affairs and Distribution of Assets...............19
         10.3.    No Liability................................................19
         10.4.    Limitations on Payments Made in Dissolution.................19
         10.5.    Certificate of Cancellation.................................19

ARTICLE XI                 DEFAULT AND REMEDIES...............................20

         11.1.    Default.....................................................20
         11.2.    Remedies Upon Event of Default..............................21
         11.3.    Dispute Resolution.  .......................................21
         11.4.    Waiver of Partition and Certain Other Rights.  .............21

ARTICLE XII                REPRESENTATIONS AND WARRANTIES OF THE MEMBERS......22

         12.1.    Reciprocal Representations and Warranties...................22

ARTICLE XIII               BOOKS, RECORDS AND REPORTS.........................23

         13.1.    Maintenance of Books........................................23
         13.2.    Records to be Maintained....................................23
         13.3.    Inspection by Members; Confidential Information.............23
         13.4.    Books and Tax Reports.......................................24

ARTICLE XIV                MISCELLANEOUS......................................25

         14.1.    Notices.....................................................25
         14.2.    Certificate Requirements....................................25
         14.3.    Modification................................................26
         14.4.    Waivers and Consents........................................26
         14.5.    Severability................................................26
         14.6.    Further Assurances..........................................26
         14.7.    Governing Law...............................................26
         14.8.    Counterparts................................................26
         14.9.    Limitation on Rights of Others..............................26
         14.10.   Brokers and Finders.........................................26
         14.11.   Construction and Interpretation.............................26
         14.12.   Successors And Assigns......................................26
         14.13.   Survival....................................................27

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                       LIMITED LIABILITY COMPANY AGREEMENT
                                 OF CT MP II LLC

         This LIMITED LIABILITY COMPANY AGREEMENT  ("Agreement") of CT MP II LLC
(the  "Company") is entered into this 8th day of March 2000,  between  Travelers
General Real Estate Mezzanine  Investments II, LLC a Delaware limited  liability
company  ("General REMI II"), and CT-F2-GP,  LLC, a Delaware  limited  liability
company ("CT-F2"), as members of the Company.

         WHEREAS,  General REMI II and certain of its  Affiliates  and CT-F2 and
certain of its Affiliates are parties to that certain  Venture  Agreement  dated
the date hereof (the "Venture Agreement") pursuant to which, among other things,
the parties or their Affiliates will co-sponsor, commit to invest capital in and
manage real estate mezzanine investment opportunity funds;

         WHEREAS,  General  REMI II and CT-F2 wish to form the  Company in which
General REMI II and CT-F2 shall be the only Members and the only investors;

         WHEREAS,  the Company will serve as the general partner of CT Mezzanine
II, LP, a Delaware limited partnership ("Fund II").

         NOW, THEREFORE,  in consideration of the agreements and obligations set
forth  herein,  and for other good and valuable  consideration,  the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the Members hereby agree as follows:

                                    ARTICLE I
                                  DEFINED TERMS

     1.1. Definitions. Unless the  context  otherwise  requires,  the  following
terms  shall have the following meanings:

         "Additional  Capital   Contributions"   means  the  additional  Capital
Contributions  made by the Members  pursuant to, and  determined  in  accordance
with, Section 4.2(a) hereof.

         "Additional  Payment"  has the  meaning  specified  in  Section  4.2(a)
hereof, as adjusted by Section 4.3(a) hereof.

         "Affiliate"  means, with respect to any Person, a Person which directly
or indirectly controls, or is controlled by or is under common control with that
Person,  or is controlled by a principal  executive  officer of that Person.  As
used in this definition,  "control" means possession, direct or indirect, of the
power to direct or cause the  direction  of the  management  and  policies  of a
Person,  whether  through  the  ownership  of voting  interests,  by contract or
otherwise.

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         "Agreement"  means this  Limited  Liability  Company  Agreement  of the
Company.

         "Annual  Operating  Budget" means,  collectively,  with respect to each
Fiscal Year of the Company any annual operating budget,  working capital budget,
marketing  budget and  expenditures  relating to the operation of the Company as
and when approved by the Management Committee. The Annual Operating Budget shall
be prepared in accordance  with GAAP by the Management  Committee and shall show
the estimated receipts, expenditures (operating and capital) and reserves of the
Company for the subject Fiscal Year. "Annual Operating Budget" also includes all
subsequent  amendments and revisions to the foregoing approved by the Management
Committee.

         "Bankruptcy" of a Person means the institution of any proceedings under
any federal or state law for the relief of debtors,  including  the filing by or
against that Person of a voluntary or  involuntary  case under the United States
Bankruptcy Code,  which  proceedings,  if involuntary,  are not dismissed within
sixty (60) days after their filing; an assignment of the property of that Person
for the  benefit  of  creditors;  the  appointment  of a  receiver,  trustee  or
conservator  of any  substantial  portion  of the assets of that  Person,  which
appointment,  if  obtained ex parte,  is not  dismissed  within  sixty (60) days
thereafter;  the seizure by a sheriff,  receiver,  trustee or conservator of any
substantial  portion of the assets of that  Person;  the  failure by that Person
generally  to pay its debts as they  become due  within  the  meaning of Section
303(h)(1) of the United States  Bankruptcy Code, as determined by the Bankruptcy
Court;  or that Person's  admission in writing of its inability to pay its debts
as they become due.

         "Business"  shall have the  meaning  given to such term in the  Venture
Agreement.

         "Business  Day" means a day other than a Saturday,  Sunday or other day
on which  commercial  banks in New York,  New York are authorized or required by
applicable law to close.

         "Calculation Date" means, for purposes of computing Net Cash Flow to be
distributed  with respect to a particular  fiscal quarter,  the last day in that
quarter.

         "Capital  Account"  of a Member with  respect to the Company  means the
capital account of that Member which, except as otherwise provided herein, shall
be determined  from the inception of the Company in  accordance  with GAAP.  The
Initial Capital Account of each Member is set forth on Exhibit "A".

         "Capital Contributions" of a Member means, as of a particular date, the
aggregate  amount of money and the Fair Market Value of any property (other than
money),  net of  encumbrances,  theretofore  contributed  to the Company by that
Member pursuant to this Agreement,  which shall consist of the Member's  Initial
Capital Contribution, Additional Capital Contributions, Default Payments (in the
case of General  REMI II after the Warrant  Purchase  Notes have been paid) that
are  not  treated  as  loans  under  Section   4.3(b)(ii)  hereof,  and  Warrant
Contributions.

         "Certificate  of Formation"  means the  Certificate of Formation of the
Company filed on behalf of the Company with the office of the Secretary of State
of the State of Delaware pursuant to the Delaware Act (as defined below).

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

         "Company" means CT MP II LLC, the limited  liability company formed and
existing  under and pursuant to the Delaware Act, the  Certificate  of Formation
and this Agreement.

         "Contribution  Date"  means the date which is  specified  in a call for
Additional Capital.

         "CT-F2"  has the  meaning  given to such term in the  Preamble  of this
Agreement.

         "CT Stock" means the class A common stock, $.01 par value per share, of
Capital Trust, Inc., a Maryland corporation.

         "Default" has the meaning specified in Section 11.1(b) hereof.

         "Default Payment" has the meaning specified in Section 4.3(a) hereof.

         "Defaulting  Member"  has the  meaning  specified  in  Section  11.1(b)
hereof.

         "Delaware Act" means the Delaware Limited Liability Company Act, 6 Del.
C.ss. 18-101, et seq.

         "Distribution"  means the  transfer of money or property by the Company
to one  or  more  Members,  in  their  capacity  as  Members,  without  separate
consideration.

         "Effective Date" means March 8, 2000.

         "Event of  Default"  has the  meaning  specified  in  Sections  11.1(c)
hereof.

         "Fair  Market  Value" of an asset  means the price at which  that asset
would be sold  between  a  willing  buyer  and a  willing  seller,  each  having
knowledge of all relevant facts concerning the asset and neither being under any
compulsion  to buy or sell the asset,  as agreed  upon by the  Members or if the
Members  cannot agree within thirty (30) days,  the price shall be determined by
Section 4.1(b) of the Venture Agreement.

         "Fiscal Year" means the calendar year.

         "Fund II Investment Management Agreement" means that certain investment
management  agreement  by and  between  CTIMCO and the  Company,  dated the date
hereof.

         "Fund II" shall have the meaning set forth in the Whereas clauses.

         "Fund II Initial  Closing" shall have the meaning given to such term in
the Venture Agreement.

         "Fund II Management  Agreement" means the management  agreement between
the Company and Fund II.

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         "Fund II  Partnership  Agreement"  shall mean the  agreement of limited
partnership of Fund II.

         "GAAP" means generally  accepted  accounting  principles in effect from
time to time in the United States,  applied on a consistent basis throughout the
term of this Agreement.

         "Indemnitee" has the meaning specified in Section 8.3.

         "Initial   Capital   Contribution"   of  a  Member  means  the  capital
contributions made by that Member pursuant to Section 4.1 hereof.

         "Investments"   shall  have  the  meaning  specified  in  the  Fund  II
Partnership Agreement.

         "Investment  Management Fee" means the fee that the Investment  Manager
is entitled to receive pursuant to the Fund II Investment Management Agreement.

         "Investment  Manager" shall mean CT Investment  Management  Co., LLC, a
Delaware limited liability company.

         "Investment  Period"  means the period,  commencing  on the date of the
Fund II Initial Closing,  during which Fund II may make new Investments pursuant
to the Fund II Partnership Agreement.

         "Key  Individuals"  shall  have the  meaning  given to such term in the
Venture Agreement.

         "Key  Individuals  Requirement"  shall  mean the  Investment  Manager's
covenants under Section 1.4 of the Fund II Investment Management Agreement.

         "Management Committee" means the committee described in Section 5.2.

         "Management  Fee" shall have the meaning given such term in the Fund II
Management Agreement.

         "Member"  means  each of  General  REMI II and CT-F2 and  includes  any
Person  admitted  as a  Substitute  Member  pursuant to the  provisions  of this
Agreement, in such Person's capacity as a member of the Company; "Members" means
two (2) or more of such  Persons when acting in their  capacities  as members of
the Company.  For purposes of the Delaware Act, the Members shall constitute one
(1) class or group of members.

         "Membership  Interest"  means a Member's  total interest as a Member of
the Company,  including that Member's rights to allocations of Net Profits,  Net
Losses, special allocations, Net Cash Flow and other Distributions, its right to
inspect  the books and  records  of the  Company  and its  right,  to the extent
specifically provided in this Agreement or in the Delaware Act and not otherwise
restricted herein, to participate in the business, affairs and management of the
Company and to vote or grant  consent with respect to matters  coming before the
Company.

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         "Net Cash Flow" has the meaning specified in Section 6.1(a) hereof.

         "Net Profits" and "Net Losses" means,  for each fiscal period,  the net
income and net loss, respectively,  of the Company determined in accordance with
GAAP.

         "Nonrecourse Exception Indemnitee" has the meaning specified in Section
8.4 hereof.

         "Notice of  Default"  has the  meaning  specified  in  Section  11.1(b)
hereof.

         "Notices" has the meaning specified in Section 14.1(a) hereof.

         "Percentage  Interest" of a Member means in the case of each of General
REMI II and CT-F2,  50%, as may be subsequently  adjusted as provided in Section
4.3(b)(i).

         "Person" means any entity,  corporation,  company,  association,  joint
venture,  joint stock company,  partnership,  trust,  limited liability company,
limited  liability  partnership,  real estate  investment  trust,  organization,
individual, nation, state, government (including agencies, departments, bureaus,
boards,  divisions  and  instrumentalities   thereof),   trustee,   receiver  or
liquidator.

         "Purchase  Warrants"  means the  warrants  to  purchase  such number of
shares of CT Stock to be sold by the Company to General  REMI II, as  determined
with respect to Fund II, pursuant to the Venture Agreement.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Service Warrants" means the warrants to purchase such number of shares
of CT Stock to be  transferred  by the Company to Limited REMI II, as determined
with respect to Fund II, pursuant to the Venture  Agreement as consideration for
services rendered by Limited REMI II, as provided in the Venture Agreement.

         "Substitute  Member" means a Person who is admitted to the Company as a
Member pursuant to Article IX.

         "Tax Matters  Member"  means the "tax matters  partner"  referred to in
Section 6231(a)(7) of the Code.

         "Transfer"  of all or any portion of a  Membership  Interest  means any
direct  or  indirect  sale,  assignment,  gift,  hypothecation,  pledge or other
disposition,  whether  voluntary,  involuntary or by operation of law, of all or
any portion of a Membership Interest,  including,  without limitation, the right
to receive  Distributions from the Company.  Notwithstanding  that a Transfer of
all or any portion of a Membership  Interest by way of  hypothecation  or pledge
has  occurred,  any  subsequent  transfer,  sale or  other  disposition  of such
Membership  Interest or portion  thereof at foreclosure  shall also constitute a
separate  Transfer  hereunder and shall also be subject to all of the provisions
of this Agreement.

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         "Treasury  Regulations"  means the  income tax  regulations,  including
temporary regulations, promulgated under the Code.

         "Venture  Agreement"  shall have the  meaning  set forth in the Whereas
clauses.

         "Warrants"  means Service  Warrants  and/or Purchase  Warrants,  as the
context may  require.  The parties  agree that the  Warrants  have a Fair Market
Value of $0.32 per share.

         "Warrant  Contribution"  has the meaning  specified  in Section  4.2(c)
hereof.

         "Warrant  Purchase  Agreement"  means the  forward  purchase  agreement
pursuant to which  General  REMI II will  purchase  Purchase  Warrants  from the
Company, which is in the form of Exhibit S to the Venture Agreement.

         "Warrant  Purchase Note" means the Fund II Purchase Warrant  Promissory
Note as defined in the Venture Agreement.

     1.2. General References. References in this Agreement to "Articles,"
"Sections,"  "Exhibits"  and  "Schedules"  shall be to the  Articles,  Sections,
Exhibits  and  Schedules  of  this  Agreement,   unless  otherwise  specifically
provided;  the term "including" means "including without limitation;" any of the
terms defined in this Agreement may, unless the context otherwise  requires,  be
used in the singular or the plural and in any gender depending on the reference;
the words "herein",  "hereof" and "hereunder" and words of similar import,  when
used in this Agreement,  shall refer to this Agreement as a whole and not to any
particular  provision of this  Agreement;  and except as otherwise  specified in
this  Agreement,  all  references  in this  Agreement (a) to any Person shall be
deemed to include  such  Person's  permitted  heirs,  personal  representatives,
successors and assigns; and (b) to any agreement,  any document,  certificate or
any other written  instrument shall be a reference to such agreement,  document,
certificate or instrument together with all exhibits, schedules, attachments and
appendices  thereto,  and in each case as  amended,  restated,  supplemented  or
otherwise  modified from time to time in accordance with the terms thereof;  and
(c) to any law,  statute or regulation  shall be deemed  references to such law,
statute or regulation as the same may be  supplemented,  amended,  consolidated,
superseded or modified from time to time with an effective  date  rendering such
change applicable to the event or transaction in question.

                                   ARTICLE II
                             FORMATION AND DURATION

     2.1. Formation.

         (a) Formation.  Unless expressly  provided otherwise in this Agreement,
the rights,  duties and  liabilities  of the Members of the Company  shall be as
provided in the  Delaware  Act.  The Company  has been  organized  as a Delaware
limited  liability  company  under  the  Delaware  Act  by  the  filing  of  the
Certificate of Formation on February 28, 2000 with the Secretary of State of the
State of Delaware.

         (b)  Information as to Members.  As of the Effective  Date, the name of
each Member shall be as listed in Exhibit "A". The Members  shall be required to
update  Exhibit  "A"

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from time to time as necessary to reflect any change in Members.  Any  amendment
or revision to Exhibit "A" made in accordance  with this Agreement  shall not be
deemed an amendment to this Agreement.

     2.2. Name. The name of the Company is CT MP II LLC.  However,  the business
of the Company may be conducted  under any other name  designated by the Members
from time to time.

     2.3.  Agent and  Office.  The  Company's  registered  agent  and  office in
Delaware shall be United Corporate Services, 15 East North Street, Dover, County
of Kent,  Delaware  19901.  At any  time,  the  Members  may  designate  another
registered agent and/or registered office.

     2.4.  Principal  Place of Business.  The principal place of business of the
Company shall be at the CT offices currently  located at 605 Third Avenue,  26th
Floor,  New York,  New York,  10016,  or at such other  place as the Members may
determine from time to time.

     2.5.  Qualification  in Other  Jurisdictions.  The Members  shall cause the
Company to be qualified or registered (a) as a foreign limited liability company
under the  provisions  of the New York Act,  and shall  cause such  status to be
maintained  for so long as the  Company  owns any real  property,  or  otherwise
transacts  business,  in the State of New York,  and (b)  under the  assumed  or
fictitious  name  statutes  or similar  laws in the State of New York and in any
other  jurisdiction in which the Company transacts  business.  The Company shall
execute,   deliver  and  file  any  certificates   (and  any  amendments  and/or
restatements thereof) necessary for the Company to qualify to do business in the
State of New York or in any other  jurisdiction in which the Company may wish to
conduct  business.

     2.6. Term. The term of the Company commenced on the date the Certificate of
Formation  was filed in the office of the Delaware  Secretary of State and shall
continue until the  cancellation  of the  Certificate of Formation in the manner
required by the Delaware Act.

     2.7.  Intent.  It is the intent of the Members that the Company be operated
in a manner  consistent  with its treatment as a  "partnership"  for Federal and
state income tax purposes. It also is the intent of the Members that the Company
not be operated or treated as a "partnership" for purposes of Section 303 of the
United States  Bankruptcy Code. No Member or member of the Management  Committee
shall  take any action  inconsistent  with that  express  intent.

     2.8. Limited  Liability.  Except as otherwise provided in the Delaware Act,
the debts,  obligations  and  liabilities  of the  Company  (whether  arising in
contract,  tort or  otherwise)  shall  be  solely  the  debts,  obligations  and
liabilities  of the Company,  and no Member  (including  the Tax Matters  Member
acting in such  capacity and any Person who formerly  held such status) shall be
liable  or shall  be  obligated  personally  for any such  debt,  obligation  or
liability of the Company solely by reason of that status. No individual trustee,
officer, director, shareholder,  member, manager, constituent partner, employee,
agent or attorney of any entity Member,  in his, her or its individual  capacity
as such, shall have any personal liability for the performance of any obligation
of that Member under this Agreement.

     2.9. Transfer of Warrants.  At the times and in the amounts required in the
Venture Agreement,  the Company shall sell the Purchase Warrants to General REMI
II pursuant to the

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Warrant Purchase  Agreement in exchange for Warrant Purchase Notes. At the times
and in the amounts required in the Venture  Agreement,  the Company shall assign
the Service Warrants to Limited REMI II as consideration  for services  provided
by it as set forth in the Venture Agreement.

                                  ARTICLE III
                       PURPOSE AND POWERS OF THE COMPANY

     3.1.  Purposes and Powers.

         (a) The sole business and purposes of the Company shall be to:

              (i)   form Fund II as  contemplated by the Venture  Agreement;

              (ii)  enter  into the Fund II  Partnership  Agreement,  acquire an
interest as general  partner of Fund II and serve as the general partner of Fund
II;

              (iii) hold,   sell,   dispose  of,  exchange,  transfer,  vote  or
otherwise  exercise  all  rights,  powers,  privileges  and  other  incidents of
ownership or possession with respect to the interests of the Company in Fund II;
and

              (iv) to enter into,  perform and carry out  contracts of any kind,
including,  without  limitation,  contracts  with any  Member  and/or  Affiliate
thereof  (approved by the other  Member) or any agent of the Company  necessary,
convenient,  desirable or incidental to the accomplishment of the purpose of the
Company; including assigning Service Warrants to Limited REMI II as compensation
for services rendered by it.

         (b) In  order to carry  out the  business  and  purposes  set  forth in
Section  3.1(a)  hereof,  the  Company  shall  have the  power to do  everything
necessary, suitable or proper for the accomplishment of or in furtherance of any
of the purposes set forth  herein,  and to do every other act or acts,  thing or
things,  incidental or  appurtenant  to or arising from or connected with any of
such purposes.  Without  limiting the  generality of the foregoing,  the Company
shall have the power to sell Company assets to Members in exchange for cash or a
promissory  note in  payment  of such  assets,  including  to sell the  Purchase
Warrants to General REMI II pursuant to the  Purchase  Agreement in exchange for
Warrant Purchase Notes.

     3.2.  Limitations  on Company  Powers.  Notwithstanding  Section  3.1,  the
Company shall not do business in any  jurisdiction the laws of which do not give
full faith and credit to the  limitations  on liability  afforded to the Members
under the Delaware Act or this Agreement.

                                   ARTICLE IV
                             CAPITAL CONTRIBUTIONS

     4.1. Initial Contributions. As at the Effective  Date, each of General REMI
II and CT-F2 are contributing  $50 to the  capital of the  Company.

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     4.2. Additional Capital Contributions.

         (a)  Additional  Payments.  No  Member  shall be  required  to make any
further payments in cash to the Company during the term of this Agreement unless
and until the Management Committee has approved such further payments; provided,
however,  that each Member  shall cause its  representatives  on the  Management
Committee  to approve  such  further  payments  as are  necessary  to permit the
Company to pay any further  capital that it is required to contribute to Fund II
in cash pursuant to the Fund II  Partnership  Agreement or to permit the Company
to pay Salomon Smith Barney,  Inc.'s placement agent fees and expenses  pursuant
to the Placement  Agent Agreement and any  organizational  costs with respect to
the  formation  and  marketing  of Fund II required  by the Fund II  Partnership
Agreement  ("Additional  Payments").  Any  Additional  Payment  and any  Default
Payment that is not treated as a loan under Section 4.3(b)(ii) hereof by General
REMI II shall first be applied to repay the  Warrant  Purchase  Notes.  Once the
Warrant  Purchase Notes are repaid,  any  Additional  Payment by General REMI II
shall constitute an Additional Capital  Contribution.  Any Additional Payment by
CT-F2 shall constitute an Additional Capital Contribution.

         (b) Call Procedures; Payment of Call. Whenever the Management Committee
has determined that the Members will be required to make Additional  Payments to
the Company as provided in this Section  4.2,  each Member shall be obligated to
contribute  its share of the requested  Additional  Payment in cash in an amount
equal to (a) that Member's  Percentage  Interest multiplied by (b) the aggregate
dollar amount of the requested  Additional  Payment.  To satisfy any call for an
Additional  Payment, a Member shall cause to be paid to the Company, on the date
specified  by the  Management  Committee  which date shall be the  "Contribution
Date," in immediately  available funds in the full amount of such Member's share
of the requested Additional Payment.

         (c) Contribution of Warrants.  CT-F2 shall contribute to the capital of
the Company the Service  Warrants and the Purchase  Warrants in such amounts and
at such times as required by the Venture  Agreement (a "Warrant  Contribution").
The parties agree that the Fair Market Value of each Warrant contributed is, and
the amount of the capital  contribution  shall be  considered  to be,  $0.32 per
share.

         (d)  Credit  to  Capital   Accounts.   Upon  any   Additional   Capital
Contribution or Warrant Contribution,  the aggregate amount contributed shall be
credited  to the  Capital  Accounts  of  the  Members  in  proportion  to  their
Percentage Interests at such time.  Notwithstanding the foregoing,  in the event
the  Non-Defaulting  Member makes the Default  Payment,  the Additional  Capital
Contribution of the Non-Defaulting Member with respect to the call that resulted
in the Defaulting  Member's  default and the Default Payment that is not treated
as a loan under Section  4.3(b)(ii) hereof shall, if CT-F2 is the Non-Defaulting
Member,  be credited solely to the Capital Account of CT-F2, and if General REMI
II is the Non-Defaulting  Member, be applied first to repay the Warrant Purchase
Notes and thereafter be credited  solely to the Capital  Account of General REMI
II.

                                       9
<PAGE>

     4.3. Failure to Contribute Additional Payments.

         (a)  Default  Payment.  In the event that a call is issued  pursuant to
Section 4.2 for an  Additional  Payment and any Member does not  contribute  its
required share of such Additional Payment,  then the Non-Defaulting  Member may,
in addition to any other right or remedy available under this Agreement,  at law
or in equity, make an additional payment (a "Default Payment") to the Company in
cash equal to the amount of the Additional  Payment which the Defaulting  Member
has  failed  to  make.  The  Non-Defaulting  Member  shall  give  Notice  to the
Defaulting Member within thirty (30) days after making a Default Payment (or, if
sooner,  by the date the next  Distributions  to the Members are scheduled to be
made by the Company)  designating  its election  under  Section  4.3(b).  If the
Non-Defaulting  Member does not make the Default Payment, the Additional Payment
made by the Non-Defaulting  Member with respect to the call that resulted in the
Defaulting  Member's  default  shall  be  treated  as a  demand  loan  from  the
Non-Defaulting  Member to the  Company  having  the  terms set forth in  Section
4.3(b)(ii),  and shall not  constitute  an Additional  Payment.

         (b) Effect of a Default Payment.  At the election of the Non-Defaulting
Member, its Default Payment shall have one of the following  effects:

              (i) As to each  contribution  of Default  Payment,  the Percentage
Interest of each Member shall be redetermined  to be a fraction  (expressed as a
percentage),  the  numerator  of  which  is the sum of (1) the  Initial  Capital
Contribution of that Member,  plus the Additional  Payments by that Member, plus
(2) 1.5 times the Default  Payments by that Member that are not treated as loans
pursuant to Section  4.3(b)(ii)  hereof, if any, and the denominator of which is
the sum of (3) the Initial Capital  Contributions  of all the Members,  plus the
Additional  Payments of all the Members,  plus (4) 1.5 times the Default Payment
of all  Members  that are not treated as loans  pursuant  to Section  4.3(b)(ii)
hereof.  All amounts  shall be  determined  through the date of the  adjustment.
Notwithstanding  that  Percentage  Interests are  generally  determined to be in
proportion to Initial  Capital  Contributions  and  Additional  Payments,  it is
intended  that the  Non-Defaulting  Member's  Default  Payment is to receive 1.5
times  credit for  purposes of  redetermining  the  Percentage  Interests of the
Members; or

              (ii) The  amount of such  Default  Payment  shall be  treated as a
demand loan from the Non-Defaulting  Member to the Company. Such loan shall bear
interest,  compounded  daily,  at a rate per annum (based on a year of 360 days)
equal to the lower of eighteen  percent  (18%) or the highest rate  permitted by
the usury  laws of the State of New York until such loan shall have been paid in
full.

     4.4. Loans by Members;  Compensation.  No Member shall be required to lend
any funds to the Company,  and no Member shall have any personal  liability  for
the repayment of any Capital  Contribution of any other Member.  No Member shall
receive any interest, salary or drawing with respect to its Additional Payments,
Default Payments,  Capital  Contributions or its Capital Account or for services
rendered  on behalf of the  Company or  otherwise  in its  capacity as a Member,
except as otherwise  provided in this  Agreement.

                                       10
<PAGE>

                                   ARTICLE V
                           MANAGEMENT OF THE COMPANY

     5.1. Management of the Company.  The business and affairs of the Company
shall be managed by the Management Committee, except to the extent management is
delegated  to  the  Investment  Manager  pursuant  to  the  Fund  II  Investment
Management  Agreement.

     5.2.  Management  Committee and Related  Matters.

         (a) Management  Committee.  Except to the extent expressly delegated to
the Investment Manager pursuant to Section 5.1 hereof and the Fund II Investment
Management  Agreement or as otherwise provided in this Section 5.2, the Members,
acting through a management committee (the "Management  Committee")  established
by the Members  pursuant to this Section  5.2,  shall have all of the rights and
powers granted to the Members  pursuant to the Delaware Act and this  Agreement,
and shall have all authority, rights and powers in the management of the Company
to do any and all acts and things  necessary,  proper,  appropriate,  advisable,
incidental or convenient to  effectuate  the purposes of this  Agreement.  Where
reference is made in this Agreement to the consent, approval or agreement of the
Members,  such consent,  approval or agreement may be granted or withheld by the
Members in their sole and absolute  discretion  acting through their  respective
representatives on the Management Committee.  No Member shall have the authority
to bind the Company  except  with the written  approval of all Members or by the
action of the Management Committee.

         (b) Members of Management  Committee.  The Management  Committee  shall
consist of four (4) members.  General REMI II, and any Person  succeeding to the
entire Membership Interest of General REMI II hereunder, shall designate two (2)
representatives to serve on the Management Committee,  and CT-F2, and any Person
succeeding to the entire Membership Interest of CT-F2 hereunder, shall designate
two (2)  representatives to serve on the Management  Committee.  For purposes of
Article V, any reference to General REMI II shall include any Person  succeeding
to its entire Membership Interest, and CT-F2 shall include any Person succeeding
to its entire Membership Interest.  The initial  representatives of General REMI
II on the  Management  Committee  shall be Ms.  Susan W.  Lewis and Mr.  Michael
Watson. The initial  representatives of CT-F2 on the Management  Committee shall
be Mr. John R. Klopp and Mr. Craig M. Hatkoff.  CT-F2 and General REMI II may by
ten  (10)  days  prior  written  Notice  to the  other  Member  designate  a new
representative to replace an existing  representative  designated by it, but the
failure of any Member to appoint a  representative  shall not limit the right of
the Management Committee to carry on the business of the Company.

         (c) Actions By Management Committee.

              (i) The Management  Committee shall act only by the agreement of a
majority of its members,  including at least one  representative  designated  by
each  of  General  REMI  II  and  CT-F2.   Notwithstanding  the  foregoing,  the
enforcement  of any rights  that the  Company  may have  against  any Member (or
Affiliate  of a  Member)  shall  be  determined  solely  by the  members  of the
Management  Committee designated by the other Member. In the event of a deadlock
on the  Management  Committee  between  General  REMI II's  representatives  and
CT-F2's  representatives,  all such representatives shall attempt to resolve the
deadlock in good faith.

                                       11
<PAGE>

In the event of any such deadlock, any disputes,  other than with respect to the
determination of Fair Market Value of an asset shall be resolved pursuant to the
provisions of Section 11.3 hereof.

              (ii)  As  soon  as  practicable  after  the  Effective  Date,  the
Management  Committee  will  prepare  an Annual  Operating  Budget for the first
Fiscal Year of the  Company.

         (d) Meetings of the  Management  Committee.  The  Management  Committee
shall meet from time to time at meetings  called by any member of the Management
Committee  for the purpose of discussing or voting on any action as to which the
Management  Committee is  authorized to act, but shall in any case meet at least
monthly.  Such meetings may be held at the principal office of the Company or at
such other place or places as the  Management  Committee may designate from time
to time.  Notices of such meeting  shall be given not less than five (5) days in
advance of the meeting to all  members of the  Management  Committee;  provided,
however, that in the case of an emergency, such meeting may be called on two (2)
Business  Days'  notice.  Any member of the  Management  Committee may grant any
other member a proxy to act in his or her place at any meeting of the Management
Committee.  Subject to Section 5.2(c)(i),  the presence,  either in person or by
proxy,  of at  least a  majority  of the  members  of the  Management  Committee
including at least one representative of each of General REMI II and CT-F2 shall
constitute a quorum.  Meetings of the Management Committee may be held in person
or by telephone conference call. In addition, any action which may be taken at a
meeting of the Management  Committee may be taken without a meeting if a consent
in  writing,  setting  forth the  action so taken,  is signed by  members of the
Management Committee sufficient to cause such action to be taken at a meeting of
the Management  Committee at which all members of the  Management  Committee are
present.  Such written  consents shall be retained in the Company's minute book.

         (e) Delegation of Powers by Members.  The  compensation and benefits of
officers,  agents and employees appointed by the Management  Committee to act on
behalf of the Company shall be fixed by the Management Committee. The Management
Committee  may  from  time to time  also  appoint  one or more  officers  of the
Company,  such as a President,  one or more  Vice-Presidents,  a Secretary and a
Treasurer,  who shall have such powers and duties, and shall serve for such term
and compensation,  as the Management Committee may determine.  Such officers may
but need not be officers or employees of a Member.

     5.3. Conduct of Management  Committee Meetings;  Minutes. A majority of the
members of the Management  Committee shall nominate a Chair of each meeting, who
shall conduct the business of that meeting,  and a Secretary of the meeting, who
shall keep the minutes and faithfully  record all actions taken at that meeting.
The  position  of  Chair of the  first  meeting  shall  be held by a  Management
Committee  representative  appointed  by  General  REMI  II,  and  shall  rotate
thereafter at each successive meeting from a representative appointed by General
REMI II to a representative  appointed by CT-F2 and vice versa. All such minutes
shall be signed by such Chair and  Secretary and shall be retained in the minute
book of the Company.

                                       12
<PAGE>

                                   ARTICLE VI
                   DISTRIBUTIONS AND ALLOCATION OF TAX ITEMS

     6.1. Distributions.

         (a) Net Cash Flow.  Not later  than ten (10) days after the  applicable
Calculation Date, the Members shall, unless they otherwise agree,  determine the
amount of cash  which in their  judgment  is in excess of amounts  necessary  or
appropriate for operating expenses (including,  without limitation,  payments of
the Investment  Management Fee to the Investment Manager pursuant to the Fund II
Investment  Management  Agreement),  contingency reserves and other needs of the
Company.  Such excess (the "Net Cash Flow") shall, as soon as possible following
the applicable  Calculation  Date, but in no event later than three (3) Business
Days following the determination of Net Cash Flow, be distributed to the Members
in accordance with this Section  6.1(a).  The Net Cash Flow of the Company shall
not  be  reduced  by  depreciation,   amortization,  cost  recovery  deductions,
depletion,  similar allowances or other noncash items, but shall be increased by
any release or reduction of reserves previously  established (other than for the
payment of expenses reserved against). The Net Cash Flow of the Company shall be
calculated effective as of the applicable Calculation Date with respect to which
the Net  Cash  Flow is  being  distributed,  regardless  of the  actual  date of
distribution.  Distributions of Net Cash Flow shall be made in accordance with a
Member's respective Percentage Interest.  Notwithstanding anything herein to the
contrary,  no Distributions (other than Distributions  pursuant to Section 10.2)
may be made by the Company after a Notice of Default has been given  pursuant to
Section 11.1 hereof until the Default to which the Notice of Default relates has
been cured as set forth in Section 11.1(c) hereof or the period to cure expires,
or as otherwise agreed by the Management  Committee.

         (b) Withdrawal of Capital; Limitation on Distributions. No Member shall
be entitled to withdraw any part of its Capital  Contributions to, or to receive
any  Distributions  from, the Company except as provided in Sections  6.1(a) and
10.2.  No Member shall be entitled to demand or receive  interest on its Capital
Contributions or, except as set forth in Article X hereof, any property from the
Company other than cash.

     6.2.  Allocation  of Net Profit and Net Loss.  Net  Profits  and Net Losses
shall be allocated in accordance with each Member's  Percentage  Interest.

     6.3. Withholding. Should the Company be required, pursuant to the Code, the
laws of any state or any other  provision  of law, to  withhold  any amount from
amounts  otherwise  distributable  to any  Member  or on  the  basis  of  income
allocable to any Member,  the Company  shall  withhold  those  amounts,  and any
amounts so  withheld  shall be deemed to have been  distributed  to that  Member
under this Agreement.  If any sums are withheld pursuant to this provision,  the
Company  shall remit the sums so withheld to, and file the required  forms with,
the Internal  Revenue  Service,  the appropriate  authority of any such state or
other   applicable   government   agency.   In  the   event   of   any   claimed
over-withholding,  a Member  shall be limited to an action  against the Internal
Revenue Service, the appropriate authority of any such state or other applicable
government  agency for refund,  and each Member hereby waives any claim or right
of action against the Company on account of such  withholding.  Furthermore,  if
the amounts  required to be withheld  exceed the amounts  which would  otherwise
have been

                                       13
<PAGE>

distributed  to a Member,  the Member shall  contribute  any  deficiency  to the
Company within ten (10) Business Days after notice from the Investment  Manager.
If the  deficiency is not  contributed  within that time,  such failure shall be
considered  a demand loan from the Company to that  Member,  with  interest at a
rate equal to the lesser of fifteen  percent (15%) or the highest rate permitted
by law,  which interest shall be treated as an item of Company income and accrue
until discharged by the Member by repayment. Such demand loan shall be repaid in
full within ten (10) Business Days after demand (and for this purpose any Member
other than the Member on whose account such loan was made may unilaterally  make
such demand for and on behalf of the Company),  and  otherwise  shall be repaid,
without prejudice to any other remedies at law or in equity that the Company may
have,  out  of   Distributions  to  which  the  debtor  Member  would  otherwise
subsequently be entitled under this Agreement.

     6.4.  Restoration of Funds.  Except as otherwise provided by law, no Member
shall be required to restore to the Company any funds properly distributed to it
pursuant to Section 6.1. or 10.2 If any Member receives  Distributions  from the
Company contrary to the provisions of this Agreement, that Member shall promptly
return the same to the Company.

                                  ARTICLE VII
            TAX ELECTIONS; TAX MATTERS MEMBER; TAX CAPITAL ACCOUNTS

     7.1.  Federal  Income Tax Elections;  Tax Matters  Member.

         (a) Tax Elections. The Members shall determine all elections to be made
by the Company for tax  purposes.

         (b) Tax Matters  Member.  General REMI II is hereby  designated the Tax
Matters  Member.  The Tax  Matters  Member  will  take  no  action  (other  than
ministerial  action without the prior  approval of the Members.  The Tax Matters
Member  will not be required  to take any action or incur any  expenses  for the
prosecution of any  administrative  or judicial  remedies in its capacity as Tax
Matters Member unless the Members agree on a method of sharing expenses incurred
in  connection  with  the  prosecution  of  such  remedies.

     7.2.  Tax  Matters.

         (a) The  Company  shall  maintain a capital  account for each Member in
accordance   with  the   rules  set  forth  in   Treasury   Regulation   Section
1.704-1(b)(2)(iv).  In the  event an asset of the  Company  other  than  cash is
distributed in kind to a Member, such capital accounts shall be adjusted for the
hypothetical "book" gain or loss that would have been realized by the Company if
the distributed asset had been sold for its Fair Market Value in a cash sale (in
order  to  reflect  unrealized  gain  or  loss).

         (b) For tax capital account maintenance  purposes,  except as otherwise
required by Section 704(c) of the Code,

              (i) If the Company is dissolved  pursuant to Section 10.1 during a
Fiscal Year, gross income and/or  deductions of the Company for such Fiscal Year
and each Fiscal Year  thereafter  shall be first allocated to the Members in the
amount  necessary to cause the tax capital account of each Member to be equal to
its Capital  Account.

                                       14
<PAGE>

              (ii) If the Company is required to recognize  any interest  income
pursuant to Section 483 or Sections  1271 through 1288 of the Code in connection
with any  transaction  with a Member or any loss with respect to the transfer of
the  Purchase  Warrants  to a Member,  such  interest  income  or loss  shall be
specially allocated to such Member for tax purposes.

              (iii) Any  deduction  allowed to the Company  with  respect to the
Service  Warrants shall be specifically  allocated to CT-F2.

              (iv) Net  income or loss as  determined  for  purposes  of Section
704(b) of the Code,  as  adjusted  by the amount,  if any,  specially  allocated
pursuant to clause (i),  (ii) or (iii) above,  shall be allocated in  accordance
with Section 6.2.

         (c) For income tax purposes,  income, gain, loss and deduction shall be
allocated in accordance with the corresponding item under Section 7.2(b), except
as otherwise  required by Section 704(c) of the Code.

                                  ARTICLE VIII
                    OTHER RIGHTS AND OBLIGATIONS OF MEMBERS

     8.1.  Resignation  of a Member.  No Member may  withdraw or resign from the
Company without the written  consent of the Members,  which consent may be given
or withheld in their  absolute  discretion.  In the event of any  withdrawal  or
resignation  in violation of this Section 8.1, such  withdrawal  or  resignation
shall be void ab  initio,  and the  withdrawing  or  resigning  Member  shall be
subject to any and all remedies  available  to the Company or the Members  under
this Agreement,  at law or in equity in respect of such default, and the Company
shall  have the  right to offset  the  damages  against  any  amounts  otherwise
distributable  to the  withdrawing or resigning  Member.

     8.2.  Admission of New Members.  Other than Members that may be admitted to
the Company  pursuant to Section  9.2(b),  no new or  additional  Members may be
admitted  to the  Company  without  the  written  consent of the  Members.

     8.3.  Indemnification  by Company.  To the maximum extent permitted by law,
the Company  shall  defend,  indemnify  and hold  harmless  each Members and its
respective partners,  shareholders and members, and their respective  directors,
officers,  employees and  shareholders  (each such Person being an "Indemnitee")
from and against any and all  liabilities,  losses,  claims,  judgments,  fines,
settlements  and damages  incurred by the Indemnitee or by the Company,  arising
out of any claim based upon any acts performed or omitted to be performed by the
Indemnitee in connection with the organization, management, business or property
of the Company  (including  in any  Member's  capacity  as Tax Matters  Member),
including  costs,  expenses and attorneys'  fees (which may be paid as incurred)
expended in the  settlement or defense of any such claims,  except to the extent
that the claim giving rise to such indemnification rights: (a) arises out of any
gross  negligence  (which for  purposes of this  Agreement  shall mean an act or
failure to act with reckless  disregard of the  consequences  thereof),  willful
misconduct,  breach of fiduciary duty or a material  breach of this Agreement by
the Indemnitee; or (b) is governed by Section 8.4. Except as required by Section
8.4, all  judgments  against the Company

                                       15
<PAGE>

and/or an Indemnitee  wherein an Indemnitee  is entitled to  indemnification  or
other  amount  payable to an  Indemnitee  pursuant to this  Section 8.3 shall be
satisfied only from the assets of the Company.

     8.4.  Indemnification  by Members.  To the maximum extent permitted by law,
each Member shall defend,  indemnify and hold harmless the Company and the other
Members and each of their respective directors,  officers,  employees,  partners
and shareholders (each such Person being a "Nonrecourse  Exception  Indemnitee")
from and against any and all  liabilities,  losses,  claims,  judgments,  fines,
settlements and damages,  and any costs and expenses (including  attorneys' fees
and disbursements) incurred in connection therewith, suffered or incurred by any
Nonrecourse Exception Indemnitee or arising out of any claim that the Company or
any  Nonrecourse   Exception  Indemnitee  is  liable  under  any  exceptions  or
"carve-outs" to any nonrecourse provisions in any loan documents entered into by
the  Company to the  extent  (a) such  liability  is  attributable  to any gross
negligence,  willful misconduct,  breach of fiduciary duty or material breach of
this  Agreement  by  the   indemnifying   Member  or  any  of  its   Affiliates,
shareholders,  members,  partners,  officers,  directors,  employees  or agents,
whether on behalf of the Company or otherwise,  in violation of the requirements
of any such loan documents  (unless the Management  Committee  agrees to violate
such loan  document  requirement)  and (b) such  liability  exceeds any economic
benefit received by the Nonrecourse  Exception  Indemnitee as a direct result of
the breach, act or omission giving rise to the claim.

     8.5. Exculpation. Except to the extent required by law, neither the Members
nor any of their respective directors, officers, employees or shareholders shall
be liable or  responsible  to the  Company or the other  Members  for any act or
failure to act, or any loss, liability, damage, settlement cost or other expense
incurred  by reason of any act or failure to act, of any such  Person,  provided
such Person acted in good faith and in a manner reasonably believed to be in, or
not opposed to, the  interests of the  Company,  except to the extent such loss,
liability,  damage,  settlement  cost or other  expense  resulted from the gross
negligence,  willful misconduct,  breach of fiduciary duty or material breach of
this Agreement by such Person. The termination of any action, suit or proceeding
by judgment, order or settlement shall not, of itself, create a presumption that
a Person did not act in good faith and in a manner reasonably believed to be in,
or not opposed to, the best interests of the Company.  Furthermore, no Affiliate
of a Member shall be entitled to exculpation  hereunder in respect of any act or
omission  committed or omitted in its capacity as an  independent  contractor to
the Company,  but, rather,  the terms of the contract between such Affiliate and
the Company shall control with respect to  exculpation.

     8.6.  Reimbursement  of Members.  Each of the  Members,  including  the Tax
Matters Member acting in such capacity,  shall be entitled to reimbursement from
the  Company  for  out-of-pocket  expenses  reasonably,  properly  and  directly
incurred by such Member on behalf of the Company and provided for in an approved
Annual  Operating  Budget;   provided,   however,  that  no  Member  shall  seek
reimbursement  from the Company for any "overhead" or general and administrative
expenses  incurred  by  that  Member.

     8.7. Particular Covenants of Members.

         (a) Defend Against Creditors. Each Member shall defend at its sole cost
and expense any claim made against its Membership  Interest (including its right
to Distributions

                                       16
<PAGE>

from the Company)  resulting from the personal  indebtedness of that  Member or
the claims of its  individual  creditors.

         (b) Notice of  Claims.  Each  Member  shall  promptly  notify the other
Members as to any claims asserted or threatened against its Membership  Interest
(including its right to Distributions from the Company).

                                   ARTICLE IX
                   TRANSFERS OF COMPANY MEMBERSHIP INTERESTS

     9.1.  Condition  to Transfer  of Any  Membership Interest. Without limiting
any  other provisions of this ARTICLE IX, no Transfer of a  Membership  Interest
may be made  unless all  of the  following  requirements are satisfied,  and any
purported  Transfer of  a  Membership  Interest failing  to  meet  the following
requirements shall be void ab initio:

         (a) Required  Documents.  The  transferee  executes and delivers to the
Company an  instrument  pursuant  to which it agrees to be bound by the terms of
this  Agreement,  and such  additional  instruments  and  documents  as shall be
reasonably  required  by the  Members  (including  opinions  of  counsel  to any
transferor  satisfactory to the Members with respect to the matters set forth in
Section 9.1(b)).

         (b) Restrictions.  Such Transfer would not:

              (i)  Securities  Laws.  Result in the violation of the  Securities
Act, or any regulation issued pursuant  thereto,  or any state securities law or
regulation or any other  applicable  federal or state laws or order of any court
having jurisdiction over the Company;

              (ii) Events of Default.  Be a violation  of or an event of default
under, or give rise to a right to accelerate any indebtedness  described in, any
note,  mortgage,  loan agreement or similar  instrument or document to which the
Company is a party,  unless the  violation  or event of default is waived by the
parties thereto;

              (iii) Regulatory Requirements.  Cause the Company or any Member to
be subject to any additional regulatory  requirements;

              (iv) Tax  Status.  Cause a  substantial  risk,  in the  opinion of
counsel  to  the  Company,   that  the   classification  of  the  Company  as  a
"partnership"  for  Federal and state  income tax  purposes  could be  adversely
affected;

              (v)  Prohibited  Transaction.  Result in or  create a  "prohibited
transaction"  or cause the Company or a Member or an Affiliate of a Member to be
or become a "party in  interest",  as defined in  Section  3(14) of ERISA,  or a
"disqualified  person",  as defined in Section  4975 of the Code with respect to
any plan,  as defined in Section 3(3) of ERISA and/or  Section 4975 of the Code,
or result in or cause the Company or any Member or any  Affiliate of a Member to
be  liable  for tax under  Chapter  42 of the Code or  otherwise  cause any such
Person to incur tax liabilities;

                                       17
<PAGE>

              (vi) Not Legally Competent.  Be a Transfer to an individual who is
not  legally  competent  or who  has  not  achieved  his or her  majority  under
applicable law (excluding  trusts for the benefit of minors);  or

              (vii) Transfer to a Foreign Person.  Be a Transfer to a Person who
constitutes a "foreign  person" under Section 1445 of the Code.

         (c) Costs. The transferor or transferee pays to the Company any and all
costs  incurred  and to be  incurred  by the  Company  in  connection  with  the
Transfer,  to the extent such costs would not have been  incurred by the Company
if the  Transfer had not been  proposed or made.

     9.2.  Transfers of  Membership Interests.

         (a) Transfers Restricted.  No Member may Transfer all or any portion of
its  Membership  Interest,  except  as set  forth  in  Section  9.2(b),  and any
purported  Transfer of its Membership  Interest failing to meet the requirements
of Sections 9.1 and 9.2(b) shall be void ab initio.

         (b) Transfers of Membership Interest to Affiliates. Subject only to the
provisions of Section 9.1, a Member, with Notice to (but without consent of) the
other  Member,  may  Transfer  all  (but not less  than  all) of its  Membership
Interest at any time as follows:

              (i) CT-F2 may Transfer its Membership Interest to any wholly owned
entity of CT; and

              (ii)  Limited  REMI I may  Transfer  its  Membership  Interest  to
Citigroup Inc. or to any of its direct or indirect wholly owned entities,  or to
Travelers  Property Casualty Corp. or any of its direct or indirect wholly owned
entities.

In accepting any such assignment, any such assignee shall automatically become a
Substitute Member with all of the rights and powers granted to the assigning
Member herein but no such Transfer shall release the transferring Member of any
of its obligations hereunder, unless such release is approved in writing by the
other Member.

                                   ARTICLE X
                          DISSOLUTION AND LIQUIDATION

     10.1.  Dissolution.  The Company shall be dissolved upon the first to occur
of the following:

         (a)  Bankruptcy  of  the  Company.   The  Bankruptcy  of  the  Company;

         (b) Agreement to Dissolve.  The decision of the Members to dissolve the
Company   pursuant  to  Section  11.2  or  for  any  reason;

         (c)   Election  of   Non-Defaulting   Member.   The   election  of  the
Non-Defaulting  Member pursuant to Section 11.2(f); or

                                       18
<PAGE>

         (d) Judicial Dissolution. The entry of a decree of judicial dissolution
under Section 18-802 of the Delaware Act with respect to the Company or Fund II.

     10.2. Winding up Affairs and Distribution of Assets.

         (a) Liquidation. Upon the dissolution of the Company, the Members shall
choose a liquidating Member ("Liquidating  Member"),  and the Liquidating Member
shall  proceed to wind up the affairs of the Company,  liquidate  the  remaining
property and assets of the Company and wind up and terminate the business of the
Company. Any such Liquidating Member shall cause a full accounting of the assets
and  liabilities  of the  Company  to be taken and shall  cause the assets to be
liquidated and the business to be wound up as promptly as possible.

         (b) Payments of Proceeds Upon Liquidation.  The proceeds of liquidation
of the Company shall be applied in the following  order of priority:  (i) first,
to the expenses of such  liquidation;  (ii) second, to the debts and liabilities
of the Company owing to third parties (including payments owed to the Investment
Manager pursuant to the Fund II Investment Management  Agreement),  in the order
of priority  provided by law; (iii) third, a reasonable  reserve shall be set up
to provide for any  contingent or unforeseen  liabilities  or obligations of the
Company  owing to third  parties  and at the  expiration  of such  period as the
Members may deem  advisable,  the balance  remaining  in such  reserve  shall be
distributed as provided herein; (iv) fourth, to the debts and liabilities of the
Company owing to the Members or their Affiliates,  including any  reimbursements
payable  under this  Agreement;  (v) fifth,  the Warrant  Purchase Note shall be
distributed  to General  REMI II; and (vi) sixth,  to the Members in  accordance
with  their   respective   Capital  Accounts  (after  taking  into  account  all
allocations and prior distributions).  Assets distributed in kind shall be taken
into account at their Fair Market Value.

     10.3.  No  Liability.  Notwithstanding  anything  to the  contrary  in this
Agreement,  no Member shall have any obligation to make any  contribution to the
capital of the Company on account of any negative balance on its Capital Account
or tax capital  account,  whether at liquidation or otherwise,  and the negative
balance of that  Member's  Capital  Account or tax capital  account shall not be
considered a debt owned by that Member to the Company or to any other person for
any purpose  whatsoever.

     10.4.  Limitations  on Payments  Made in  Dissolution.  Except as otherwise
specifically  provided in this Agreement,  each Member shall be entitled to look
only to the  assets of the  Company  for the  return of that  Member's  positive
Capital Account balance and shall have no recourse for its Capital Contributions
and/or share of Net Profits (upon  dissolution  or otherwise)  against any other
Member.

     10.5. Certificate of Cancellation. Upon completion of the winding up of the
Company's   affairs,   the  Liquidating  Member  shall  file  a  Certificate  of
Cancellation with the Delaware Secretary of State.

                                       19
<PAGE>

                                   ARTICLE XI
                              DEFAULT AND REMEDIES

     11.1. Default.

         (a) Default.  The occurrence of any of the following shall constitute a
default  ("Default")  hereunder by the affected Member:

              (i)  A  Member  assigns  or  otherwise  Transfers  its  Membership
Interest  other than as set forth in Article IX;

              (ii) The voluntary dissolution of the Member;

              (iii) The  Bankruptcy  of the  Member;

              (iv) A Member  materially breaches any of its obligations
hereunder;

              (v) A Member commits an act of fraud  involving the Company (which
materially  damages the Company) or  intentionally  misappropriates  significant
funds  of the  Company;

              (vi) The Investment Manager commits an act of fraud involving Fund
II  (which  materially   damages  Fund  II)  or  intentionally   misappropriates
significant  funds of Fund II;

              (vii) A Member's  Affiliate  that is a limited  partner in Fund II
materially  breaches  any of its  obligations  under  the  Fund  II  Partnership
Agreement,  including  any  failure  by such  Affiliate  to comply  with the CIG
Parties  Commitment or the CT Parties  Commitment  (as such terms are defined in
the Venture  Agreement),  as the case may be, pursuant to the Venture Agreement;
or

              (viii)  A  Member  or  the  members  of the  Management  Committee
designated  by such  Member  causes the  Company  to  default  in an  obligation
required to be performed by the Company pursuant to the Venture Agreement or the
Fund II Investment  Management  Agreement.

         (b) Notice of Default.  If a Default  occurs with  respect to a Member,
the other Member (the "Non-Defaulting Member") shall have the right to give that
Member (the "Defaulting Member") Notice of that Default (a "Notice of Default").
The Notice of Default shall set forth the nature of the Default with  reasonable
specificity.

         (c)  Period to Cure.  A Member  who  shall  have  received  a Notice of
Default  with  respect to a Default  under any of clauses  (i),  (iv),  (vii) or
(viii) of Section  11.1(a) shall have a period of thirty (30) days after receipt
of such Notice of Default to cure such  Default  and the Notice of Default  with
respect  thereto shall not be effective  unless such Default is not cured within
such thirty (30) day period.  In such case, the Defaulting  Member shall lose no
rights hereunder with respect to a Default that has been so cured.  However,  if
such Default was not cured  within  thirty (30) days of receipt of the Notice of
Default,  then the Default shall  constitute

                                       20
<PAGE>

an "Event of Default",  and Limited REMI I or CT-F2,  as the case may be, shall
have the rights set forth in Section 11.2.

     11.2. Remedies Upon Event of Default.  Subject to Section 11.1(c), upon the
occurrence  of an Event of Default by a Defaulting  Member,  then in addition to
the remedies set forth in Section 4.3(b) hereof, the  Non-Defaulting  Member may
elect to do any one or more of the following by Notice to the Defaulting Member.

         (a)   Terminate   the   Defaulting    Member's   right   to   designate
representatives  to  serve  on  the  Management  Committee,  participate  in any
decision with respect to the Company's Business and to consent to or approve any
matter  which,  but for the  Event of  Default,  would  require  the  Defaulting
Member's   consent  or   approval;

         (b) Cause the Company to withhold any Distributions  payable on account
of the Defaulting  Member's  Membership  Interest and apply such  Distributions,
instead, to the damages suffered by the Non-Defaulting Member as a result of the
Event of Default;

         (c) Cause Fund II to withhold any  distributions  payable on account of
the Defaulting Member's  Affiliate's limited partnership interest in Fund II and
apply such distributions, instead, to the damages suffered by the Non-Defaulting
Member as a result of the Event of  Default;

         (d) Cause the Company to pay the  Non-Defaulting  Member all Management
Fees  not yet  accrued  and  owing,  subject  to  year  end  adjustment  for any
overpayment or underpayments;

         (e) If CT-F2 is the Defaulting  Member, or if its Affiliate that is the
limited  partner in Fund II is in  default  as set forth in  Section  11.1(a)(v)
hereof,  then  General  REMI II shall  have the right to  terminate  the Fund II
Investment Management  Agreement;

         (f) Cause the Company to dissolve pursuant to Section 10.1 hereof;  and

         (g)  Pursue,  and/or  cause the  Company  to pursue,  any other  remedy
provided  in this  Agreement,  at law or in equity.

     11.3.  Dispute  Resolution.  Should any dispute arise under this Agreement,
other than with respect to Fair Market  Value,  then the parties  shall  resolve
such dispute pursuant to Section 4.2 of the Venture  Agreement.

     11.4.  Waiver of Partition and Certain  Other  Rights.  Each of the Members
irrevocably  waives  any  right or power  that it might  have:  (a) to cause the
Company or any of its assets to be partitioned; (b) to compel any sale of all or
any portion of the assets of the Company under any applicable  law; (c) to cause
the  appointment  of a  receiver  for all or any  portion  of the  assets of the
Company;  or (d) to file a complaint,  or to institute  proceedings at law or in
equity,  to cause the  dissolution or liquidation of the Company,  other than in
accordance  with this  Agreement.  Each of the Members has been induced to enter
into this  Agreement  in reliance  upon the waivers of this  Section  11.4,  and
without those waivers no Member would have entered into this Agreement.

                                       21
<PAGE>

                                  ARTICLE XII
                 REPRESENTATIONS AND WARRANTIES OF THE MEMBERS

     12.1.  Reciprocal  Representations  and  Warranties.   Each  Member  hereby
represents  and  warrants  to the  Company  and  each  other  Member  that:

         (a) Organization; Authority; Due Authorization.

              (i)  Organization  and Good  Standing.  It is a limited  liability
company  duly  organized,  validly  existing  and in  good  standing  under  the
applicable  laws of its  jurisdiction  of formation;  has all requisite power to
own,  lease and operate its assets,  properties and business and to carry on its
business as now conducted; and is duly qualified or licensed to do business as a
foreign limited liability company and is in good standing in every  jurisdiction
in which the nature of its business or the location of its  properties  requires
such qualification or licensing, except for such jurisdictions where the failure
to so qualify or be licensed  would not have a material  adverse effect upon its
ability to perform  fully its  obligations  under  this  Agreement  or any other
related agreement.

              (ii)  Authority  to Execute  and  Perform  Agreements.  It has all
requisite limited  liability company power and authority to enter into,  execute
and deliver this Agreement,  and all other related  agreements to be executed by
it and to perform  fully its  obligations  hereunder and  thereunder.

              (iii) Due Authorization;  Enforceability. It has taken all limited
liability  company  actions  necessary to authorize it to enter into and perform
fully its obligations  under this Agreement and all other related  agreements to
be executed by it and to consummate  the  transactions  contemplated  herein and
therein.  This  Agreement has been duly and validly  executed by each Member and
constitutes the legal, valid and binding obligation of each Member,  enforceable
in  accordance  with its terms,  except as the same may be limited by applicable
bankruptcy,  insolvency,  reorganization,  moratorium or similar applicable laws
affecting  creditors'  rights  generally  or  by  general  equitable  principles
affecting the  enforcement  of contracts.

              (iv) United  States  Person.  It  is  a "United   States"   person
(as   defined   in   Section   7701  of  the  Code).

              (v) Ownership.  General REMI II is a wholly owned indirect  entity
of Citigroup Inc. and Travelers  Property  Casualty Corp., and CT-F2 is a wholly
owned direct entity of CT.

         (b) No Violation.  Neither its execution or delivery of this  Agreement
nor the  consummation of the transactions  contemplated  herein will (i) violate
any  provision  of  its  organizational   documents  limited  liability  company
agreement;  or (ii) violate in any material respect any applicable law or order.

         (c)   Regulatory   and   Other   Approvals.   No   consent,   approval,
authorization,  notice, filing,  exemption or other requirement must be obtained
by it from any authority or Person or must otherwise be satisfied by it in order
that the consummation of the transactions

                                       22
<PAGE>

contemplated in this Agreement or any related documents will not violate in any
material respect any applicable law or order or any material  contract to which
it is a party.

         (d) Securities Matters. It (i) is acquiring its Membership Interest for
itself  for  investment  purposes  only,  and not with a view to any  resale  or
distribution of such Membership Interest,  (ii) has been advised and understands
that such Membership  Interest has not been and will not be registered under the
Securities Act, or any applicable state securities laws and,  therefore,  cannot
be resold unless such Membership Interest is registered under the Securities Act
and all applicable state securities laws, or unless exemptions from registration
are   available,   and  (iii)  has,   either   alone  or  with  its   "purchaser
representatives,"  as that term is defined in Rule 501(h)  under the  Securities
Act, such knowledge and experience in financial and business  matters that it is
capable of evaluating the merits and risks of its investment in the Company.  It
further  acknowledges  that the Company has made available to such Member,  at a
reasonable  time  prior  to its  acquisition  of its  Membership  Interest,  the
opportunity  to ask  questions  and  receive  answers  concerning  the terms and
conditions of such  acquisition and to obtain any additional  information  which
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to verify the accuracy of the information  furnished by the Company
in connection  with such  acquisition.

                                  ARTICLE XIII
                           BOOKS, RECORDS AND REPORTS

     13.1.  Maintenance  of Books.  The Company shall keep complete and accurate
books and records of accounts  maintained in accordance  with GAAP.  Tax records
shall be maintained in accordance  with the accrual  method of  accounting.  The
books of account for the Company shall be maintained at the principal  office of
the Company.

     13.2.  Records to be  Maintained.  The Company shall maintain the following
records:

         (a) A current list of the full name, set forth in  alphabetical  order,
and last known mailing address  together with the Capital  Contribution  and the
share of profit and losses of each Member or  information  from which such share
can be readily  derived;

         (b) A copy of the  Certificate of Formation and all amendments  thereto
or restatements thereof, together with executed copies of any powers of attorney
pursuant to which such  Certificate of Formation have been executed;

         (c)  A  copy  of  this  Agreement,   any  amendments   hereto  and  any
restatements  hereof; and

         (d) A copy of the Company's Federal, state and local income tax returns
or informational returns and reports, if any, for the past ten (10) years.

     13.3. Inspection by Members; Confidential Information. (a) Any Member shall
have the right to inspect  and copy at such  Member's  expense,  any  documents,
including financial  statements  maintained by the Company and other information
regarding the affairs of the Company, as is reasonable.

                                       23
<PAGE>

         (b) The Members  acknowledge  that from time to time,  they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is  confidential,  the release of which may be damaging to the Company
or  Persons  with  which it does  business.  Each  Member  shall  hold in strict
confidence any  information  it receives  which is subject to a  confidentiality
agreement binding on the Company or any of its employees, whether as a principal
or as an agent,  and may not disclose such  information to any Person other than
another Member except for disclosures (i) compelled by law (but such Member must
notify the other  Member  promptly of any request for that  information,  before
disclosing it if practicable), (ii) to advisers or representatives of the Member
or  Persons  to which that  Member's  Membership  Interest  may be  assigned  as
permitted by this Agreement,  but only if the recipients have agreed to be bound
by the provisions of this Section 13.3(b), (iii) of information that Member also
has received from a source independent of the Company that the Member reasonably
believes  obtained  that  information   without  breach  of  any  obligation  of
confidentiality,  (iv) in  accordance  with the  terms  of such  confidentiality
agreements  or (v) upon the consent of each Member but only if such  employee is
informed that such information is to be held in strict  confidence.  The Members
acknowledge  that breach of the  provisions  of this  Section  13.3(b) may cause
irreparable  injury to the Company for which  monetary  damages are  inadequate,
difficult  to  compute,  or  both.  Accordingly,  the  Members  agree  that  the
provisions  of this  Section  13.3(b) may be  enforced by specific  performance.

     13.4. Books and Tax Reports.  The books of account shall be closed promptly
after the end of each Fiscal Year.  Within ninety (90) days after the conclusion
of each Fiscal Year,  each Member shall be provided with a Form K-1 and/or other
information  statement with respect to its distributive share of income,  gains,
deductions,  losses  and  credits  for  income tax  reporting  purposes  for the
previous Fiscal Year, together with any other information concerning the Company
necessary for the preparation of a Member's income tax return(s),  all under the
supervision  and as  determined  by the Tax  Matters  Member  in its  reasonable
discretion. With the sole exception of mathematical errors in computation, these
tax statements and the information  contained therein shall be deemed conclusive
and binding upon such Member. Each Member agrees that it shall not (i) treat, on
its income tax  returns,  any item of income,  gain,  loss,  deduction or credit
relating  to its  interest  in the  Company  in a manner  inconsistent  with the
treatment  of such item by the  Members  as  reflected  on the Form K-1 or other
information  statement  furnished  by the  Company  to  such  Member  for use in
preparing  its income tax returns or (ii) file any claim for refund  relating to
any such item based on, or which would result in, such  inconsistent  treatment.
Notwithstanding anything herein to the contrary, General REMI II shall cause the
Company's  income tax returns for each Fiscal  Year  through and  including  the
Fiscal  Year in which the  aggregate  amounts  committed  by the CIG Parties (as
defined in the Venture  Agreement)  and the  aggregate  Private  Banking  Client
Commitments  (within  the meaning of, and  pursuant  to, the Venture  Agreement)
equal or exceed  $250,000,000.  Such returns  will be prepared and  furnished to
CT-F2 for its review and comment at least  fifteen (15) Business Days before the
due date of the tax return.  If CT-F2 does not furnish  comments to General REMI
II within fifteen (15) Business  Days,  General REMI II may cause the Company to
file such tax returns.

                                       24
<PAGE>

                                  ARTICLE XIV
                                 MISCELLANEOUS

     14.1.  Notices.

         (a) Form and  Addresses.  All notices,  consents,  approvals,  waivers,
elections  and other  communications  (collectively,  "Notices")  required to be
given pursuant to this Agreement shall be given in writing and,

         If to Limited REMI I:         Travelers General Real Estate Mezzanine
         --------------------
                                       Investments II LLC
                                       205 Columbus Blvd., 9PB
                                       Hartford, CT  06183-2030
                                       Attn:    Duane Nelson, Esq.
                                       Real Estate Investment Number: 12833

         With Copies to:               Citigroup Investments Inc.
                                       388 Greenwich Street, 36th Floor
                                       New York, New York 10013
                                       Attn:    Mr. Michael Watson
                                       Real Estate Investment Number: 12833

                                       Loeb & Loeb LLP
                                       1000 Wilshire Boulevard, Suite 1800
                                       Los Angeles, California 90017
                                       Attn:    Andrew S. Clare, Esq.

         If to CT:                     Capital Trust. Inc.
                                       605 Third Avenue, 26th Floor
                                       New York, New York 10016
                                       Attn: John R. Klopp

         With a Copy to:               Battle Fowler LLP
                                       75 East 55th Street
                                       New York, New York 10022
                                       Attn:  Thomas E. Kruger, Esq.

         (b)  Delivery.  All  notices  and  other  communications   required  or
permitted  by this  Agreement  shall  be  deemed  to have  been  duly  given  if
personally  delivered to the intended recipient at the proper address determined
pursuant to this Section  14.1 or sent to such  recipient at such address by air
courier,  by  overnight  courier,  or by hand and will be deemed  given,  unless
earlier  received:  (a) if sent by courier  when  recorded on the records of the
courier as received by the receiving party; and (b) if delivered by hand, on the
date of receipt.

     14.2.  Certificate  Requirements.  From time to time the Members shall sign
and  acknowledge  all such writings as are required to amend the  Certificate of
Formation,  for the

                                       25
<PAGE>

carrying  out of the  terms  of this  Agreement,  or,  upon dissolution of the
Company, to cancel such certificate.

     14.3. Modification. No change or modification of this Agreement shall be of
any force unless such change or  modification  is in writing and has been signed
by all of the Members.

     14.4. Waivers and Consents.  No waiver of any breach of any of the terms of
this Agreement shall be effective unless such waiver is in writing and signed by
the Member against whom such waiver is claimed. No waiver of any breach shall be
deemed to be a waiver of any other or subsequent breach. Any consent of a Member
required hereunder must be in writing and signed by such Member to be effective.
No consent  given by a Member in any one  instance  shall be deemed to waive the
requirement  for such Member's  consent in any other or future  instance.

     14.5. Severability.  If any provision of this Agreement shall be held to be
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the remaining  provisions shall not in any way be affected or impaired  thereby.

     14.6.   Further   Assurances.   Each  Member  shall   execute  such  deeds,
assignments,  endorsements,  evidences  of Transfer  and other  instruments  and
documents and shall give such further assurances as shall be consistent with the
provisions of this Agreement and necessary to perform its obligations hereunder.

     14.7.  Governing Law. This Agreement  shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its conflict
of laws principles.

     14.8.  Counterparts.  This  Agreement  may be  executed  in any  number  of
counterparts,  each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

     14.9.  Limitation on Rights of Others.  No Person other than a Member shall
have any legal or equitable  right,  remedy or claim under or in respect of this
Agreement;  no  third  party  (i.e.,  Person  other  than a  Member)  shall be a
beneficiary  of any  provision of this  Agreement.

     14.10.  Brokers and  Finders.  Except as set forth in the  Placement  Agent
Agreement and in the CT-F2-GP Capital Formation  Agreements and the General REMI
II Capital Formation Agreement (each as defined in the Venture Agreement), there
are no  brokers,  finders  or  placement  agents,  and (ii)  each  Member  shall
indemnify  and hold all of the other  Members and the Company  harmless from and
against any  commission,  fee or other  payment due any broker,  finder or other
Person in  connection  with such  Member's  decision  to invest in the  Company.

     14.11.  Construction  and  Interpretation.  This  Agreement  shall  not  be
construed more strictly  against one party than against another by reason of the
fact that it may have been  prepared by counsel for one of the  parties.

     14.12.  Successors And Assigns.  This  Agreement  shall be binding upon and
inure  to the  benefit  of the  Members  and  their  respective  successors  and
permitted  assigns.  This  Agreement

                                       26
<PAGE>

and the rights and  obligations set forth herein are for the sole benefit of the
parties hereto and their  respective  Affiliates.  Nothing  contained  herein is
intended  to confer  upon any other  Person  any rights or  remedies  hereunder.

     14.13.  Survival.  Sections  8.3 through  8.7,  and  Articles X through XIV
hereof shall survive termination of this Agreement.

                                       27
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above stated.

                                    MEMBERS:

                                    TRAVELERS GENERAL REAL
                                    ESTATE MEZZANINE INVESTMENTS
                                    II, LLC

                                    By: /s/  Michael Watson
                                        ----------------------------------
                                        Michael Watson
                                        Vice President

                                    CT-F2-GP, LLC

                                    By:  Capital Trust, Inc.,
                                         its sole member

                                        By: /s/  John R. Klopp
                                            ----------------------------------
                                            John R. Klopp
                                            Chief Executive Officer

                                       28
<PAGE>

                                   EXHIBIT "A"

                        Names and Initial Capital Account

                Member Name                         Initial Capital
                                                        Account

     Travelers General Real Estate Mezzanine             $50
     Investments II, LLC

     CT-F2-GP, LLC                                       $50

                                       29Exhibit 10.4

The warrants represented by this certificate and the securities issuable upon
exercise thereof have not been registered under the Securities Act of 1933 or
the securities laws of any state. Neither such warrants nor such securities may
be sold, pledged, hypothecated or otherwise transferred without such
registration, except upon delivery to the Company of such evidence as may be
satisfactory to counsel for the Company to the effect that any such transfer
shall not be in violation of the Securities Act of 1933 or applicable state
securities laws or any rule or regulation promulgated thereunder.

                               CAPITAL TRUST, INC.

                  Fund I Class A Common Stock Warrant Agreement

         FOR VALUE RECEIVED, Capital Trust, Inc., a Maryland corporation (the
"Company"), hereby grants, pursuant hereto (this "Warrant"), to Travelers
Limited Real Estate Mezzanine Investments I, LLC, a Delaware limited liability
company, or its permitted assigns, the right to purchase from the Company, at
any time or from time to time commencing on March 8, 2001 and prior to 5:00
p.m., Eastern Time, on March 8, 2005, up to four million, two hundred and fifty
thousand (4,250,000) (subject to adjustment as provided herein) fully paid and
non-assessable shares of class A common stock, par value $.01 per share, of the
Company for five dollars ($5.00) per share (subject to adjustment as provided
herein) for an aggregate purchase price (assuming full exercise) of twenty-one
million, two hundred and fifty thousand dollars ($21,250,000) (not subject to
adjustment).

         Hereinafter, (i) said class A common stock, par value $.01 per share,
of the Company, is referred to as the "Common Stock," (ii) the shares of the
Common Stock purchasable hereunder or under any other Warrant (as hereinafter
defined) are referred to as the "Warrant Shares," (iii) the aggregate purchase
price payable for the Warrant Shares purchasable hereunder is referred to as the
"Aggregate Exercise Price," (iv) the price payable for each of the Warrant
Shares is referred to as the "Per-Share Exercise Price," (v) this Warrant, and
all warrants hereafter issued in exchange for, in substitution for or upon
transfer of this Warrant are referred to as the "Warrants" and (vi) the holder
of this Warrant is referred to as the "Holder." Definitions of other capitalized
terms used herein are set forth in Section 15 hereof.

         The Aggregate Exercise Price is not subject to adjustment.

929955.1

<PAGE>

         1.   Exercise of Warrant.

              (a) Cash Exercise. This Warrant may be exercised in whole at any
     time, or in part from time to time, commencing on March 8, 2001 and prior
     to 5:00 p.m., Eastern Time, on March 8, 2005 or March 8, 2008 if the period
     during which this Warrant may be exercised is extended pursuant to Section
     4 (the "Exercise Period") by the Holder by the surrender of this Warrant
     (with the subscription form at the end hereof duly executed) to the Company
     at the address set forth in Section 11 hereof, together with proper payment
     of the Aggregate Exercise Price, or the proportionate part thereof if this
     Warrant is exercised in part, with payment for the Warrant Shares made by
     wire transfer of immediately available funds or certified or official bank
     check payable to the order of the Company. If this Warrant is exercised in
     part, it must be exercised for a number of whole shares of Common Stock.

              (b) Cashless Exercise. At any time during the Exercise Period, the
     Holder may, at its option, exchange this Warrant, in whole or in part (a
     "Warrant Exchange"), into the number of Warrant Shares determined in
     accordance with this subsection, by surrendering this Warrant to the
     Company at the address set forth in Section 11 hereof, accompanied by a
     notice stating such Holder's intent to effect such exchange ("Notice of
     Exchange"), the number of Warrant Shares corresponding to the portion of
     the Warrant to be exchanged and the date on which the Holder requests that
     such Warrant Exchange occur (the "Exchange Date"). In connection with any
     Warrant Exchange, this Warrant shall represent the right to subscribe for
     and acquire the number of Warrant Shares (rounded to the next highest
     integer) equal to (i) the number of Warrant Shares specified by the Holder
     in its Notice of Exchange (the "Total Number") less (ii) the number of
     Warrant Shares equal to the quotient obtained by dividing (A) the product
     of the Total Number and the Per-Share Exercise Price then in effect by (B)
     the current market price (determined as provided in subsection (e) of
     Section 3) per share of Common Stock on the Exchange Date.

              (c) After any partial exercise or exchange, the Holder will be
     entitled to receive a new Warrant covering the Warrant Shares as to which
     this Warrant has not been exercised or exchanged and setting forth the
     proportionate part of the Aggregate Exercise Price applicable to such
     Warrant Shares.

              (d) As soon as practicable, but within ten (10) days following the
     surrender of this Warrant and the receipt of payment of the Aggregate
     Exercise Price, or the proportionate part thereof, as the case may be,
     pursuant to subsection (a) or subsection (b), the Company, within seven (7)
     days,

                   (i) will issue a certificate or certificates in the name of
         the Holder for the largest number of whole shares of Common Stock to
         which the

929955.1
                                        2

<PAGE>

         Holder shall be entitled by the exercise (full or partial, in
         accordance with the subscription form) or exchange of this Warrant;

                   (ii) will, if this Warrant is exercised in whole, in lieu of
         any fractional share of Common Stock to which the Holder shall be
         otherwise entitled, pay to the Holder cash in an amount equal to the
         fair value of such fractional share (determined in such reasonable
         manner as the Board of Directors shall determine), and

                   (iii) will deliver the other securities and properties
         receivable upon the exercise or exchange of this Warrant, or the
         proportionate part thereof if this Warrant is exercised or exchanged in
         part, pursuant to the provisions of this Warrant.

         2.   Reservation of Warrant Shares; Listing. The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued shares of Common Stock, for the purpose of effecting the
exercise of Warrants, the full number of shares of Common Stock then issuable
upon the exercise of all outstanding Warrants. Throughout the period of time
during which this Warrant may be exercised, the Company shall use its
commercially reasonable efforts to keep the Warrant Shares authorized for
listing on the New York Stock Exchange or on any other successor national
securities exchange or other relevant market on which the Common Stock is
listed, admitted to trading or traded.

         3.   Protection Against Dilution. The Per-Share Exercise Price and the
number of Warrant Shares purchasable upon the exercise of the Warrants shall be
subject to adjustment from time to time as set forth in this Section 3. Whenever
the Per-Share Exercise Price is adjusted by operation of this Section 3, the
number of Warrant Shares to be delivered upon exercise of the Warrants shall be
adjusted as provided in subsection (n) hereof.

              (a) In case the Company shall, while any of the Warrants are
     outstanding, (i) pay a dividend or make any other distribution with respect
     to shares of Common Stock in shares of Common Stock, (ii) subdivide
     outstanding shares of Common Stock, (iii) combine outstanding shares of
     Common Stock into a smaller number of shares or (iv) issue by
     reclassification of its Common Stock any shares of stock of the Company
     (other than the reclassifications covered by subsection (d)), the Per-Share
     Exercise Price shall be adjusted to be equal to a fraction, the numerator
     of which shall be the Aggregate Exercise Price and the denominator of which
     shall be the number of shares of Common Stock or other stock of the Company
     that the Holder would have owned immediately following such action had such
     Warrant been exercised immediately prior thereto or, in the case of a
     dividend, distribution, subdivision, combination or reclassification with
     respect to which a record date has been established, prior to such record
     date. An adjustment made pursuant to this subsection shall be

929955.1
                                        3

<PAGE>

     made immediately prior to the opening of business on the day following (x)
     the date of the payment of the dividend or distribution (retroactive to the
     record date) or (y) the effective date in the case of a subdivision,
     combination or reclassification (retroactive to the record date, if any).
     If the Board of Directors shall declare any dividend or distribution or
     resolve to take any action referred to in this subsection, it shall provide
     written notice thereof to the Holder not less than 10 days prior to the
     record date fixed for determining the stockholders entitled to participate
     therein.

              (b) In case the Company shall, while any of the Warrants are
     outstanding, issue rights or warrants to purchase, or securities
     convertible into or exchangeable for, Common Stock ("Rights") to any
     holders of its outstanding shares of Common Stock entitling them (for a
     period expiring within 45 days after the record date mentioned below) to
     subscribe for, purchase, convert or exchange shares of Common Stock at a
     price per share less than the current market price per share of Common
     Stock (as determined pursuant to subsection (e) below) on the record date
     mentioned below, provided the purchase price is less than the Per-Share
     Exercise Price theretofore in effect, the Per-Share Exercise Price shall be
     adjusted so that the same shall equal the amount determined by multiplying
     the Per-Share Exercise Price theretofore in effect by a fraction the
     numerator of which shall be the number of shares of Common Stock
     outstanding on the date of issuance of such Rights plus the number of
     shares which the aggregate offering price would purchase at such current
     market price, and the denominator of which shall be the number of shares of
     Common Stock outstanding on the date of issuance of such Rights plus the
     number of additional shares of Common Stock offered for subscription or
     purchase. "Aggregate offering price," as used in the preceding sentence,
     shall mean the amount received or receivable by the Company in
     consideration of the issuance or sale of Rights plus any additional
     consideration payable to the Company upon exercise thereof, in each case
     with reference to the total number of shares of Common Stock offered for
     subscription or purchase. Such adjustment shall be made immediately prior
     to the opening of business on the day following the date of issuance of
     Rights, retroactive to the record date for the determination of
     stockholders entitled to receive Rights.

              (c) In case the Company shall, by dividend or otherwise,
     distribute to any holders of its outstanding shares of Common Stock
     evidences of its indebtedness, shares of any class or series of its stock,
     assets, securities convertible into or exchangeable for any of its stock or
     rights or warrants to subscribe for or purchase any of its securities
     (excluding any Rights referred to in subsection (b), any dividend or other
     distribution paid exclusively in cash and any dividend or other
     distribution referred to in subsection (a) of this Section 3), the
     Per-Share Exercise Price shall be reduced so that the same shall equal the
     price determined by multiplying the Per-Share Exercise Price theretofore in
     effect by a fraction the numerator of which shall be the current market
     price (determined as provided in subsection (e)) per share of Common Stock
     on the record date referred to below less the fair market value (as
     determined in

929955.1
                                        4

<PAGE>

     good faith by the Board of Directors, whose determination shall be
     conclusive unless the Holder shall, within five (5) days of receipt of the
     Adjustment Certificate (as defined below) setting forth the adjustment
     made, request that the determination be made pursuant to the Appraisal
     Procedures), on the record date referred to below, of the portion of the
     evidences of indebtedness, shares of stock, assets, convertible or
     exchangeable securities, rights or warrants (including fractions) so
     distributed with respect to each share of Common Stock and the denominator
     of which shall be such current market price per share of Common Stock. Such
     adjustment shall be made immediately prior to the opening of business on
     the day following the date on which any such distribution is made,
     retroactive to the record date for the determination of stockholders
     entitled to receive such distribution. In the event that no such dividend
     or other distribution is so paid or made, the Per-Share Exercise Price
     shall again be adjusted to be the Per-Share Exercise Price which would then
     be in effect if such dividend or other distribution had not occurred. If
     the Board of Directors determines the fair market value of any distribution
     for purposes of this subsection (c) by reference to the actual or
     when-issued trading market for any securities comprising such distribution,
     it must in doing so consider the prices in such market over the same period
     used in computing the current market price per share of Common Stock
     (determined as provided in subsection (e)).

              (d) In the case of any capital reorganization of the Company or
     reclassification of the Common Stock, or any consolidation or merger to
     which the Company is a party other than a merger or consolidation in which
     the Company is the continuing corporation, or in the case of any sale or
     conveyance to another entity of the property of the Company as an entirety
     or substantially as an entirety, or in the case of any statutory exchange
     of securities with another corporation (including any exchange effected in
     connection with a merger of a third corporation into the Company), the
     Holder shall have the right thereafter to receive on the exercise of this
     Warrant the kind and amount of securities, cash or other property which the
     Holder would have owned or have been entitled to receive immediately after
     such reorganization, reclassification, consolidation, merger, statutory
     exchange, sale or conveyance had this Warrant been exercised immediately
     prior to the effective date of such reorganization, reclassification
     consolidation, merger, statutory exchange, sale or conveyance and in any
     such case, if necessary, appropriate adjustment shall be made in the
     application of the provisions set forth in this Section 3 with respect to
     the rights and interests thereafter of the Holder to the end that the
     provisions set forth in this Section 3 shall thereafter correspondingly be
     made applicable, as nearly as may reasonably be, in relation to any shares
     of stock or other securities or property thereafter deliverable on the
     exercise of the Warrant. Notice of any such reorganization,
     reclassification, consolidation, merger, exchange, sale or conveyance shall
     be mailed to the Holder not less than 30 days prior to such event. The
     above provisions of this subsection (d) shall similarly apply to successive
     reorganizations, reclassifications, consolidations, mergers, statutory
     exchanges, sales or conveyances. The Company shall require the issuer of
     any shares of stock or other

929955.1
                                        5

<PAGE>

     securities or property thereafter deliverable on the exercise of the
     Warrant to be responsible for all of the agreements and obligations of the
     Company hereunder.

              (e) For the purpose of any computation under subsection (b) of
     Section 1, or subsection (b) or (c) of this section, the current market
     price per share of Common Stock on any date in question shall be deemed to
     be the average of the daily Closing Prices for the five (5) Trading Day
     period ending on the earlier of the day in question and, if applicable, the
     last Trading Day before the "ex" date with respect to the issuance or
     distribution requiring such computation; provided, however, that if more
     than one event occurs that would require an adjustment pursuant to
     subsections (a) through (d), inclusive, the Board of Directors shall in
     good faith make such adjustments to the Closing Prices during such five (5)
     Trading Day period as it reasonably deems appropriate to effectuate the
     intent of the adjustment provisions in this Section 3, in which case any
     such determination by the Board of Directors shall be conclusive unless the
     Holder shall within five (5) days of receipt of the Adjustment Certificate
     setting forth the adjustment made, request that the determination be made
     pursuant to the Appraisal Procedures. For purposes of this paragraph, the
     term "ex" date means the first date on which the shares of Common Stock
     trade regular way, without the right to receive such issuance or
     distribution, on the New York Stock Exchange or on such successor
     securities exchange as the shares of Common Stock may be listed on or in
     the relevant market from which the Closing Prices were obtained.

              (f) No adjustment in the Per-Share Exercise Price shall be
     required unless such adjustment would require an increase or decrease of at
     least 1% in the Per-Share Exercise Price; provided, however, that any
     adjustments which by reason of this subsection (g) are not required to be
     made shall be carried forward and taken into account in determining whether
     any subsequent adjustment shall be required.

              (g) If any action would require adjustment of the Per-Share
     Exercise Price pursuant to more than one of the provisions described above,
     only one adjustment shall be made and such adjustment shall be the amount
     of adjustment that has the highest absolute value to the Holder.

              (h) Except as stated above, the Per-Share Exercise Price will not
     be adjusted for the issuance of shares of Common Stock or any securities
     convertible into, or exchangeable for, shares of Common Stock, or carrying
     the right to purchase any of the foregoing.

              (i) In case the Company shall, by dividend or otherwise, declare
     or make a distribution on the shares of Common Stock referred to in Section
     3(c), the Holder, upon the exercise thereof subsequent to the close of
     business on the date fixed for the determination of stockholders entitled
     to receive such distribution and prior to the effectiveness of the
     Per-Share Exercise Price adjustment in respect of such

929955.1
                                        6

<PAGE>

     distribution, shall also be entitled to receive, for each share of Common
     Stock for which the Warrant is exercised, the portion of the evidences of
     indebtedness, shares of stock, assets, securities convertible into or
     exchangeable for any of its stock, or rights or warrants to subscribe for
     or purchase any of its securities (including fractions) so distributed with
     respect to each share of Common Stock; provided, however, that, at the
     election of the Company with respect to all Holders so exercising, the
     Company may, in lieu of distributing to such Holder any portion of such
     distribution not consisting of cash or securities of the Company, pay such
     Holder an amount in cash equal to the fair market value thereof (as
     determined in good faith by the Board of Directors, whose determination
     shall be conclusive unless the Holder shall, within five (5) days of
     receipt of the Adjustment Certificate setting forth the adjustment made,
     request that the determination be made pursuant to the Appraisal
     Procedures). If any exercise of a Warrant described in the immediately
     preceding sentence occurs prior to the payment date for a distribution to
     holders of shares of Common Stock which the Holder of a Warrant so
     exercised is entitled to receive in accordance with the immediately
     preceding sentence, the Company may elect to distribute to such Holder a
     due bill for the evidences of indebtedness, shares of stock, assets,
     securities convertible into or exchangeable for any of its stock, or rights
     or warrants to subscribe for or purchase any of its securities to which
     such Holder is so entitled, provided, that such due bill (a) meets any
     applicable requirements of the principal national securities exchange or
     other market on which the shares of Common Stock are then traded and (b)
     requires payment or delivery of such evidences of indebtedness, shares of
     stock, assets, securities convertible into or exchangeable for any of its
     stock, or rights or warrants to subscribe for or purchase any of its
     securities no later than the date of payment or delivery thereof to holders
     of Common Stock receiving such distribution.

              (j) Whenever the Per-Share Exercise Price is adjusted as provided
     in this Section 3 and upon any modification of the rights of the Holder in
     accordance with this Section 3, the Company shall promptly prepare a
     certificate signed by the chief financial officer or the treasurer setting
     forth the adjusted Per-Share Exercise Price and showing in reasonable
     detail the facts requiring such adjustment or modification and the manner
     of computing the same ("Adjustment Certificate") and cause copies of such
     certificate to be mailed to the Holder.

              (k) If the Board of Directors shall authorize and the Company
     shall declare any dividend or other distribution with respect to the Common
     Stock other than a distribution exclusively in cash, the Company shall mail
     notice thereof to the Holder not less than ten (10) days prior to the
     record date fixed for determining stockholders entitled to participate in
     such dividend or other distribution.

              (l) If, as a result of an adjustment made pursuant to this Section
     3, the Holder of any Warrant thereafter surrendered for exercise shall
     become entitled to receive shares of two or more classes of stock or other
     securities, the Board of

929955.1
                                        7

<PAGE>

     Directors shall in good faith determine the allocation of the adjusted
     Per-Share Exercise Price between or among such classes of stock or other
     securities (whose determination shall be conclusive unless the Holder
     shall, within five (5) days of receipt of the Adjustment Certificate
     setting forth the adjustment made, request that the determination be made
     pursuant to the Appraisal Procedures).

              (m) Upon the expiration of any rights, options, warrants or
     conversion privileges with respect to the issuance of which an adjustment
     to the Per-Share Exercise Price had been made, if such shall not have been
     exercised, the Per-Share Exercise Price, to the extent this Warrant has
     not then been exercised, shall, upon such expiration, be readjusted and
     shall thereafter be such as they would have been had they been originally
     adjusted (or had the original adjustment not been required, as the case may
     be) on the basis of (A) the Common Stock, if any, actually issued or sold
     upon the exercise of such rights, options, warrants or conversion
     privileges, and (B) such shares of Common Stock, if any, that were issued
     or sold for the consideration actually received by the Company upon such
     exercise plus the consideration, if any, actually received by the Company
     for the issuance, sale or grant of all such rights, options, warrants or
     conversion privileges whether or not exercised; provided, however, that no
     such readjustment shall have the effect of increasing the Per-Share
     Exercise Price by an amount in excess of the amount of the adjustment
     initially made in respect of the issuance, sale or grant of such rights,
     options, warrants or conversion privileges.

              (n) Whenever the Per-Share Exercise Price is adjusted as provided
     pursuant to this Section 3, the number of Warrant Shares purchasable upon
     the exercise of this Warrant shall be adjusted by multiplying such number
     of Warrant Shares immediately prior to such adjustment by a fraction, the
     numerator of which shall be the Per-Share Exercise Price immediately prior
     to such adjustment, and the denominator of which shall be the Per-Share
     Exercise Price immediately thereafter.

              (o) In case any event shall occur as to which the other provisions
     of this Section 3 are not strictly applicable but as to which the failure
     to make any adjustment would not fairly protect the purchase rights
     represented by this Warrant in accordance with the essential intent and
     principles hereof then, in each such case, the Board of Directors shall in
     good faith determine the adjustment, if any, on a basis consistent with the
     essential intent and principles established herein, necessary to preserve
     the purchase rights represented by the Warrants (whose determination shall
     be conclusive, unless the Holder shall, within five (5) days of receipt of
     the Adjustment Certificate setting forth the adjustment made, request that
     the determination be made pursuant to the Appraisal Procedures) and shall
     promptly make the adjustments described therein.

929955.1
                                        8

<PAGE>

        4.   Put Right. If, at any time during the period commencing on March 8,
2004 and expiring on March 8, 2005,

              (a) the average daily per-share Closing Price of the Common Stock
     (the "Average Price") during any period of ninety (90) consecutive Trading
     Days preceding and including the date of measurement (the "Measurement
     Date") is greater than the Per-Share Exercise Price in effect on the
     Measurement Date (the "Measurement Date Exercise Price"), and

              (b) the number of shares of Common Stock held by stockholders
     other than the shares of Common Stock held by CT Management Stockholders
     and the Associated Stockholders as of the close of business on the
     Measurement Date is less than twenty-five million (25,000,000) (as adjusted
     for any stock dividend, stock split, combination or similar
     recapitalization),

then the Initial Holder and/or any Related Holder(s), as the case may be (and
not any other Holder) shall have the right (the "Put Right") to require the
Company to purchase, subject to the following sentence, the Warrant(s), in whole
or in part, held by the Initial Holder and/or the Related Holder. If the Initial
Holder and/or any Related Holder, as the case may be, elect(s) to exercise the
Put Right, then such Holder(s) shall surrender this Warrant to the Company at
the address set forth in Section 11 hereof, accompanied by written notice (the
"Put Notice") to the Company of the election of the Holder(s) to require the
purchase of the Warrant(s) or a part thereof as specified in the Put Notice (any
such part to be expressed in terms of a portion of the number of whole Warrant
Shares corresponding to the portion of the Warrant(s) to be purchased) (the "Put
Portion") and the Company shall, within sixty (60) days after the Put Notice is
given, either as determined in its sole discretion: (x) purchase the Put Portion
at the Put Purchase Price and, if only a part of a Holder's Warrant is purchased
pursuant to an exercise of the Put Right, issue and deliver to such Holder a new
Warrant covering the balance of the shares remaining subject to this Warrant
(i.e., those Warrant Shares not included in the Put Portion) and setting forth
the proportionate part of the Aggregate Exercise Price applicable to such
balance of Warrant Shares; or (y) elect not to purchase the Put Portion and
provide written notice to such Holder that the Exercise Period shall be extended
to continue until March 8, 2008 whereupon this Warrant may continue to be
exercised through such date without any further action by the Company or such
Holder. If the Company elects not to purchase the Put Portion pursuant to clause
(y) of the foregoing sentence, the Company shall issue and deliver to such
Holder a new Warrant reflecting the extended Exercise Period and the Put Right
governed in this Section 4 shall terminate and be of no further force and effect
without any further action by the Company or such Holder. The "Put Purchase
Price" shall be the amount equal to the product obtained by multiplying (x) the
amount by which the Average Price exceeds the Measurement Date Exercise Price
and (y) the number of shares of Common Stock for which the Put Portion is
exercisable as of the date the Put Notice is given. The Company may elect to pay
the Put Purchase Price in cash or in the form of an assignment of the Company's
Interest(s) in the Fund(s) or Fund Control Persons, or

929955.1
                                        9

<PAGE>

in any combination of cash and such an assignment, with an aggregate value equal
to the Put Purchase Price. The fair market value of any Interest(s) in the
Fund(s) or Fund Control Person(s) to be assigned in accordance with the
foregoing shall be determined in accordance with the Appraisal Procedures. The
Company shall, in connection with any assignment(s) of such Interest(s), execute
and deliver written assignment(s) and any additional documents requested by such
exercising Holder to complete, confirm or perfect the assignment of the assigned
Interests.

         5.   Acceleration of Exercise Period. Notwithstanding the provisions of
Section 1, prior to the commencement of the Exercise Period, this Warrant may be
exercised in whole or part immediately upon the date of commencement of a third
party tender offer for more than 33% of the shares of Common Stock outstanding
on the date of commencement of such tender offer.

         6.   Fully Paid Stock; Taxes. The shares of the Common Stock
represented by each and every certificate for Warrant Shares delivered upon the
exercise of this Warrant shall at the time of such delivery, be duly authorized,
validly issued and outstanding, fully paid and nonassessable, and not subject to
preemptive rights or rights of first refusal. The Company shall pay all
documentary, stamp or similar taxes and other similar governmental charges that
may be imposed with respect to the issuance or delivery of any shares of Common
Stock upon exercise of the Warrants (other than income taxes); provided,
however, that if the shares of Common Stock are to be delivered in a name other
than the name of the Holder or any Related Holder, no such delivery shall be
made unless the person requesting the same has paid to the Company the amount of
transfer taxes or charges incident thereto, if any.

         7.   HSR. To the extent required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") following any exercise or exchange of
this Warrant pursuant to subsections (a) or (b) of Section 1 by the Holder and
prior to the issuance and delivery of the certificates for the shares of Common
Stock required thereby, the Company and the Holder shall cooperate in the
preparation of, and file with the United States Federal Trade Commission and the
United States Department of Justice, the notification and report form required
for such and any supplemental or additional information which may be reasonably
requested in connection therewith pursuant to the HSR Act and shall comply in
all material respects with the requirements of the HSR Act. The fees to be paid
in connection with any such filing under the HSR Act shall be paid by the
Holder.

         8.   Transfer; Etc.

              (a) This Warrant may be transferred by execution of the form of
     assignment attached hereto or a substantially equivalent assignment form.
     Until this Warrant is transferred on the books of the Company, the Company
     may treat the registered Holder of this Warrant as he or it appears on the
     Company's books at any time as the Holder for all purposes. The Company
     shall permit any Holder of a

929955.1
                                       10

<PAGE>

     Warrant or his duly authorized attorney, upon written request during
     ordinary business hours, to inspect and copy or make extracts from its
     books showing the registered holders of Warrants.

              (b) This Warrant may not be sold, transferred, assigned or
     hypothecated by the Holder except in compliance with the provisions of the
     Securities Act of 1933 and the applicable state securities "blue sky" laws,
     and is so transferable only upon the books of the Company which it shall
     cause to be maintained for such purpose.

              (c) All Warrants issued upon the transfer or assignment of this
     Warrant or part thereof or upon a partial exercise, exchange or purchase of
     this Warrant will be dated the same date as this Warrant, and all rights of
     the holder thereof shall be identical to those of the Holder.

         9.   Loss, etc., of Warrant. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant, and
of indemnity reasonably satisfactory to the Company, if lost, stolen or
destroyed, and upon surrender and cancellation of this Warrant, if mutilated,
the Company shall execute and deliver to the Holder a new Warrant of like date,
tenor and denomination.

         10.   Warrant Holder Not Stockholder. This Warrant does not confer upon
the Holder any right to vote on or consent to or receive notice as a stockholder
of the Company, as such, in respect of any matters whatsoever, nor any other
rights or liabilities as a stockholder, prior to the exercise hereof; this
Warrant does, however, require certain notices to the Holder as set forth
herein.

         11.   Communication. Any notice or other communication to be given
hereunder shall be given by hand delivery, by overnight carrier, in each case at
the addresses set forth in this section, and shall be deemed to have been given
when received. The Company or the Holder may change its address for receiving
notices by giving written notice of such change to the other.

         If to the Company, to:

         Capital Trust, Inc.
         605 Third Avenue, 26th Floor
         New York, New York 10016
         Attn: Chief Financial Officer

929955.1
                                       11

<PAGE>

         If to the Holder, to:

         Travlers Limited Real Estate
         Mezzanine Investments I, LLC
         205 Columbus Blvd., 9PB
         Hartford, CT  06183-2030
         Attn:  Duane Nelson, Esq.
         Real Estate Investment Number:  12832

         12.   Headings. The headings of this Warrant have been inserted as a
matter of convenience and shall not affect the construction hereof.

         13.   Applicable Law. This Warrant shall be governed by and construed
in accordance with the laws of the State of New York without giving effect to
the principles of conflicts of law thereof.

         14.   Amendment, Waiver, etc. Except as expressly provided herein,
neither this Warrant nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that any provisions hereof may be amended, waived, discharged
or terminated upon the written consent of the Company and the majority in
interest of the Holders.

         15.   Certain Definitions.

         "Appraisal Procedures" has the meaning set forth in the Venture
Agreement.

         "Associated Stockholders" has the meaning set forth in the Venture
Agreement.

         "Board of Directors" means the board of directors of the Company.

         "Closing Price", with respect to any security on any day, means the
last reported sale price, regular way on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the NYSE Composite Tape, or, if such
security is not listed or admitted to trading on the New York Stock Exchange, on
the principal national securities exchange on which such security is listed or
admitted to trading, or, if such security is not listed or admitted to trading
on a national securities exchange, on the NASDAQ Stock Market of the National
Association of Securities Dealers, Inc., or, if such security is not quoted or
admitted to trading on such quotation system, on the principal quotation system
on which such security is listed or admitted to trading or quoted, or, if not
listed or admitted to trading or quoted on any national securities exchange or
quotation system, the average of the closing bid and asked prices of such
security in the over-the-counter market on the day in question as reported by
the National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or, if not so available in such manner, as furnished by any
New York Stock Exchange member firm selected from

929955.1
                                       12

<PAGE>

time to time by the Board of Directors (or any committee duly authorized by the
Board of Directors) for that purpose or, if not so available in such manner, as
otherwise determined in good faith by the Board of Directors (or any committee
duly authorized by the Board of Directors).

         "CT Management Stockholders" has the meaning set forth in the Venture
Agreement.

         "Fund" has the meaning set forth in the Venture Agreement.

         "Fund Control Person" has the meaning set forth in the Venture
Agreement.

         "Initial Holder" means Travelers Limited Real Estate Mezzanine
Investments I, LLC, a Delaware limited liability company.

         "Interest" means (i) rights to distributions from the Fund(s),
including but not limited to, the "carried interest" or "promote," and (ii)
rights to management fees.

         "Related Holder(s)" means any Holder who is Citigroup Inc. or any of
its direct or indirect wholly owned entities or Travelers Property Casualty
Corp. or any of its direct or indirect wholly owned entities.

         "Trading Day" means a day on which any securities are traded on the
national securities exchange or quotation system used to determine the Closing
Price.

         "Venture Agreement" means that certain venture agreement, dated as of
the date hereof, by and between the Company, CT-F1, LLC, a Delaware limited
liability company, CT-F2-GP, LLC, a Delaware limited liability company,
CT-F2-LP, LLC, a Delaware limited liability company, CT Investment Management
Co., LLC, a Delaware limited liability company, Travelers Limited Real Estate
Mezzanine Investments I, LLC, a Delaware limited liability company, Travelers
General Real Estate Mezzanine Investments II, LLC, a Delaware limited liability
company and Travelers Limited Real Estate Mezzanine Investments II, LLC, a
Delaware limited liability company.

929955.1
                                       13

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be
executed this 8th day of March, 2000.

                                          CAPITAL TRUST, INC.

                                          By:  /s/  John R. Klopp
                                               -------------------------------
                                              John R. Klopp
                                              Chief Executive Officer

929955.1

<PAGE>

SUBSCRIPTION

         The undersigned, ___________________, pursuant to the provisions of the
foregoing Warrant, hereby agrees to subscribe for and purchase ________________
____ shares of the Common Stock, par value $.01 per share, of Capital Trust,
Inc. covered by said Warrant, and makes payment therefor in full at the price
per share provided by said Warrant.

Dated:_______________                         Signature:________________________

                                              Address:__________________________

ASSIGNMENT

         FOR VALUE RECEIVED _______________ hereby sells, assigns and transfers
unto ____________________ the foregoing Warrant and all rights evidenced
thereby, and does irrevocably constitute and appoint _____________________,
attorney, to transfer said Warrant on the books of Capital Trust, Inc.

Dated:_______________                         Signature:________________________

                                              Address:__________________________

PARTIAL ASSIGNMENT

         FOR VALUE RECEIVED _______________ hereby assigns and transfers unto
____________________ the right to purchase _______ shares of Common Stock, par
value $.01 per share, of Capital Trust, Inc. covered by the foregoing Warrant,
and a proportionate part of said Warrant and the rights evidenced thereby, and
does irrevocably constitute and appoint ____________________, attorney, to
transfer such part of said Warrant on the books of Capital Trust, Inc.

Dated:_______________                         Signature:________________________

                                              Address:__________________________

929955.1

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