Document:

Exhibit 10.7

                               GUARANTY OF PAYMENT

         This  GUARANTY OF PAYMENT  (this  "Guaranty of  Payment"),  dated as of
March  8,  2000,  made  by  The  Travelers   Insurance  Company,  a  Connecticut
corporation  ("TIC") in favor of Capital  Trust,  Inc.,  a Maryland  corporation
("CT"),  and its wholly  owned  subsidiaries,  CT-F1,  LLC,  a Delaware  limited
liability company ("CT-F1"), CT-F2-GP, LLC, a Delaware limited liability company
("CT-F2-GP"), CT-F2-LP, LLC, a Delaware limited liability company ("CT- F2-LP"),
and CT Investment  Management  Co., LLC, a Delaware  limited  liability  company
("CTIMCO" and collectively with CT-F1,  CT-F2-GP,  CT-F2-LP and CTIMCO,  the "CT
Parties").  Terms not otherwise  defined herein shall have the meanings assigned
to such terms in the Venture Agreement, as defined below.

                             PRELIMINARY STATEMENTS

         WHEREAS,  Travelers Limited Real Estate Mezzanine Investments I, LLC, a
Delaware limited liability  company  ("Limited REMI I"),  Travelers General Real
Estate  Mezzanine  Investments  II, LLC, a Delaware  limited  liability  company
("General REMI II"), and Travelers Limited Real Estate Mezzanine Investments II,
LLC, a Delaware limited  liability  company  ("Limited REMI II" and collectively
with  Limited  REMI I and  General  REMI II, the "CIG  Parties"),  CT and the CT
Parties  intend to enter into that certain  venture  agreement,  dated as of the
date hereof,  pursuant to which,  among other things,  the parties  thereto will
co-sponsor,  commit  to invest  capital  in and  manage  real  estate  mezzanine
opportunity funds (the "Venture Agreement").

         WHEREAS,  as a  condition  to the  Parties  entering  into the  Venture
Agreement, TIC has agreed to execute and deliver this Guaranty of Payment.

         NOW, THEREFORE, in consideration of the promises and in order to induce
CT and the CT Parties to enter into the Venture Agreement,  TIC hereby agrees as
follows:

         SECTION 1.  Unconditional Guarantee; Enforcement.

                  (a) TIC hereby  unconditionally and irrevocably guarantees for
         the benefit of CT and the CT Parties the full and prompt  payment  when
         and  as   due  of  the   CIG   Parties'   funding,   contribution   and
         indemnification  obligations under the Venture Agreement subject to any
         defense, right of set-off or counterclaim,  other than on account of or
         resulting from the  Bankruptcy of any of the CIG Parties,  that the CIG
         Parties  may  have or  assert,  which  defense,  right  of  set-off  or
         counterclaim  shall be  available  to TIC  hereunder to the same extent
         that it would be available  to the  applicable  CIG Party  ("Guaranteed
         Obligations").

                  (b)  It  shall  not  be a  condition  to  the  obligation  of
          TIC hereunder  to  guarantee  and ensure the  performance, observance
          or payment of any of the Guaranteed Obligations

926916.4

<PAGE>

         that CT and the CT Parties  shall  have  first  made any  request of or
         demand upon or given any notice to the CIG Parties,  or have instituted
         any action or proceeding against the CIG Parties in respect thereof. CT
         and the CT Parties may proceed to enforce the Guaranteed Obligations of
         TIC hereunder  without first pursuing or exhausting any right or remedy
         that they may have against the CIG Parties.

         SECTION 2. Obligations Absolute. TIC guarantees,  undertakes and agrees
with and for the benefit of CT and the CT Parties to ensure the  performance  of
all the  Guaranteed  Obligations  strictly in  accordance  with the terms of the
Venture  Agreement.  The  obligations  of TIC under this Guaranty of Payment are
independent of the Guaranteed Obligations,  and a separate action or actions may
be brought  and  prosecuted  against  TIC to enforce  this  Guaranty of Payment,
irrespective of whether any action is brought against the CIG Parties or whether
the CIG Parties are joined in any such  action(s).  The obligations of TIC under
this Guaranty of Payment shall be absolute and unconditional irrespective of:

                  (a)      any Bankruptcy of any CIG Parties;

                  (b) any change in the time,  manner or place of payment of, or
         in any other term of, all or any of the Guaranteed Obligations,  or any
         other  amendment  or waiver of or any  consent  to  departure  from the
         Venture  Agreement or any other  agreement  entered into in  connection
         therewith or as contemplated thereby;

               (c)  any  taking,  exchange,  release  or  non-perfection  of any
          collateral,  or any  taking,  release  or  amendment  or  waiver of or
          consent to departure  from any other  guaranty,  for all or any of the
          Guaranteed Obligations;

                  (d) any  manner of  application  of  collateral,  or  proceeds
         thereof, to all or any of the Guaranteed Obligations,  or any manner of
         sale  or  other  disposition  of any  collateral  for all or any of the
         Guaranteed Obligations or any other assets of the CIG Parties or any of
         their subsidiaries; or

               (e) any change,  restructuring  or  termination  of the corporate
          structure   or   existence   of  the  CIG  Parties  or  any  of  their
          subsidiaries.

This Guaranty of Payment shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed  Obligations is
rescinded  or must  otherwise  be  returned  by CT and the CT  Parties  upon the
insolvency, bankruptcy or reorganization of the CIG Parties or otherwise, all as
though such payment had not been made.

         SECTION 3. Waiver. TIC hereby waives promptness,  diligence,  notice of
acceptance  and  any  other  notice  with  respect  to  any  of  the  Guaranteed
Obligations and this Guaranty of Payment and any requirement  that CT and the CT
Parties protect, secure, perfect or insure any security

926916.4
                                       -2-

<PAGE>

interest or lien or any collateral  subject thereto or exhaust any right or take
any action against the CIG Parties or any other Person or any collateral.

         SECTION 4. Subrogation.  TIC hereby  irrevocably  confirms that it will
subordinate  to the claims  and  rights of CT and the CT  Parties  any claims or
other  rights it may have  against  the CIG  Parties or any of their  respective
properties  that  arise  solely  from the  existence,  payment,  performance  or
enforcement of any  obligation  under this Guaranty of Payment or the Guaranteed
Obligations,  including  (without  limitation):  (a) any  right of  subrogation,
reimbursement,  exoneration, contribution or indemnification or (b) any right to
participate  in any  claim or remedy of CT and the CT  Parties  against  the CIG
Parties,  whether or not such claim,  remedy or right  arises in equity or under
contract,  statute or common law,  including  (without  limitation) the right to
take or receive from the CIG Parties,  directly or indirectly,  in cash or other
property or by set- off or in any other  manner,  payment or security on account
of such claim,  remedy or right.  The provisions of this  paragraph  shall apply
solely to claims  made under the  Guaranty of Payment and shall not apply to any
other  rights  or  claims  TIC may have  now or in the  future  against  the CIG
Parties. TIC acknowledges that it will receive direct and indirect benefits from
the Venture  Agreement and that the  confirmation set forth in this paragraph is
knowingly made in contemplation of such benefits.

         SECTION 5.  Consent to  Jurisdiction.  Subject to Section 6, TIC hereby
irrevocably  submits  to the  non-exclusive  jurisdiction  of the  courts of the
County of New York,  State of New York and of any Federal  court  located in the
County of New York, State of New York (and any appellate court from any thereof)
in any action or  proceeding  arising  out of or  relating  to this  Guaranty of
Payment or the transactions  contemplated  hereby. TIC hereby irrevocably waives
any objection that it may have to the laying of venue of any such proceeding and
any claim that any such proceeding has been brought in an inconvenient forum.

         SECTION 6. Dispute Resolution.  Any dispute arising under this Guaranty
of Payment shall be subject to and settled pursuant to the procedures in Section
4.2 of the Venture Agreement.

         SECTION 7.  Representations and Warranties.  TIC represents and
warrants as follows:

               (a)  Organization  and Good  Standing.  It is a corporation  duly
          organized,  validly existing and in good standing under the applicable
          laws of its jurisdiction of incorporation;  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 in good  standing in
          every jurisdiction in which the nature of its business or the location
          of  its  properties  requires  such  qualification,  except  for  such
          jurisdictions  where  the  failure  to so  qualify  would  not  have a
          material  adverse  effect  upon  its  ability  to  perform  fully  its
          obligations under this Guaranty of Payment.

926916.4
                                       -3-

<PAGE>

               (b)  Authority  to Execute  and  Perform  Agreements.  It has all
          requisite  corporate  power and  authority to enter into,  execute and
          deliver this Guaranty of Payment and to perform fully its  obligations
          hereunder.

               (c) Due Authorization; Enforceability. It has taken all corporate
          actions  necessary to authorize it to enter into and perform fully its
          obligations  under this  Guaranty  of Payment  and to  consummate  the
          transactions  contemplated  herein.  This Guaranty of Payment has been
          duly and validly  executed by it and constitutes the legal,  valid and
          binding  obligation of it,  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.

               (d) No  Violation.  Neither  its  execution  or  delivery of this
          Guaranty  of  Payment  nor  the   consummation  of  the   transactions
          contemplated herein will: (a) violate any provision of its certificate
          of  incorporation  or by-laws;  or (b) violate in any material respect
          any applicable law or order.

               (e)  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
          contemplated  in this  Guaranty  of  Payment  will not  violate in any
          material respect any applicable law or order or any material  contract
          to which it is a party.

               (f)  Litigation.  It  is  not  (i)  subject  to  any  outstanding
          injunction, judgment, order, decree, ruling, or charge, and (ii) there
          is no material claim, action,  proceeding or investigation pending or,
          to its  knowledge,  threatened  against or  relating  to it before any
          court or  quasi-judicial  or  administrative  agency  of any  federal,
          state,  local or foreign  jurisdiction or before any arbitrator  which
          challenges the ability or legality of such party' s entering into this
          Guaranty of Payment.

         SECTION 8. Amendments,  Etc. No amendment or waiver of any provision of
this Guaranty of Payment, and no consent to any departure by TIC herefrom, shall
be  effective  unless the same  shall be in writing  and signed by CT and the CT
Parties, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

         SECTION 9. Addresses for Notices.  All notices and other communications
provided for  hereunder  shall (a) be in writing,  (b) be delivered  pursuant to
Section 8.2 of the Venture  Agreement and (c) be effective as and when described
in such  section  and,  in the case of TIC,  shall be  addressed  to the mailing
address as shown on the signature  page hereto,  with copies as indicated  below
its address, or at such other address designated by TIC to CT and the CT Parties
in writing.

926916.4
                                       -4-

<PAGE>

         SECTION 10. No Waiver;  Remedies.  No failure on the part of CT and the
CT Parties to exercise,  and no delay in exercising,  any right  hereunder shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
right hereunder  preclude any other or further  exercise thereof or the exercise
of any  other  right.  The  remedies  herein  provided  are  cumulative  and not
exclusive of any remedies provided by law.

         SECTION 11. Binding  Agreement.  The obligations of TIC hereunder shall
(a)  remain  in full  force and  effect  until  the  performance  in full of the
Guaranteed Obligations, (b) be binding upon TIC, its successors and assigns, and
(c) inure to the  benefit of, and be  enforceable  by, CT and the CT Parties and
their successors, transferees and assigns.

         SECTION 12. No Third Party  Beneficiaries.  This Guaranty of Payment is
not  intended  to confer  upon any person  other than CT and the CT Parties  any
rights or remedies hereunder.

         SECTION 13.  Governing  Law. This Guaranty of Payment shall be governed
by, and construed in accordance with, the internal laws of the State of New York
(including Section 5- 1401 of the New York General Obligations Law).

         SECTION 14.  Waiver of Jury Trial.  TIC hereby  irrevocably  waives all
right to trial by jury in any action,  proceeding or counterclaim (whether based
on contract,  tort or otherwise)  arising out of or relating to this Guaranty of
Payment or the actions of TIC in the  negotiation,  performance  or  enforcement
thereof.

         SECTION  15.  Execution  in  Counterparts.   Delivery  of  an  executed
counterpart of a signature page to this Guaranty of Payment by telecopier  shall
be effective as delivery of a manually executed  counterpart of this Guaranty of
Payment.

                            [Signature Page Follows]

926916.4
                                       -5-

<PAGE>

         IN WITNESS WHEREOF, the undersigned has caused this Guaranty of Payment
to be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.

                                             TRAVELERS INSURANCE COMPANY

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

                                             With copies to:

                                             Loeb & Loeb LLP
                                             1000 Wilshire Boulevard, Suite 1900
                                             Los Angeles, California 90017
                                             Attn: Andrew S. Clare, Esq.

926916.4Exhibit 10.8

--------------------------------------------------------------------------------

                     FUND I INVESTMENT MANAGEMENT AGREEMENT

                            Dated as of March 8, 2000

--------------------------------------------------------------------------------

914393.10

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

ARTICLE I

    RETENTION; SERVICES AND POWERS
    OF INVESTMENT MANAGER.....................................................1
             1.1      Retention of Investment Manager.........................1
             1.2      Services to be Performed by Investment Manager..........2
             1.4      Miscellaneous.  ........................................3

ARTICLE II

    COMPENSATION OF THE INVESTMENT MANAGER; FEES AND EXPENSES
     .........................................................................4
             2.1      Investment Manager Compensation.........................4
             2.2      Investment Manager Expenses.  ..........................4
             2.3      Fund Expenses.  ........................................4

ARTICLE III

    EXCULPATION AND INDEMNIFICATION...........................................5
             3.1      Exculpation and Indemnification.........................5

ARTICLE IV

    MISCELLANEOUS.............................................................7
             4.1      Duration and Termination................................7
             4.2      Status of Investment Manager as Independent Contractor..7
             4.3      Notices.................................................7
             4.4      Governing Law...........................................8
             4.5      Severability............................................8
             4.6      Entire Agreement........................................9
             4.7      Binding on Successors...................................9
             4.8      Headings................................................9
             4.9      Waiver..................................................9
             4.10     Amendment...............................................9

914393.10
                                       -i-

<PAGE>

                     FUND I INVESTMENT MANAGEMENT AGREEMENT

         This  FUND I  INVESTMENT  MANAGEMENT  AGREEMENT  (the  "Agreement")  is
entered into as of March 8, 2000, by and between CT Investment  Management  Co.,
LLC, a Delaware  limited  liability  company in its  capacity as the  investment
manager of the Fund as provided in this  Agreement (the  "Investment  Manager"),
and CT  Mezzanine  Partners I, LLC, a Delaware  limited  liability  company (the
"Fund").  All definitions not expressly provided herein shall be those set forth
in the form of Limited  Liability  Company  Agreement of the Fund between CT-F1,
LLC, a Delaware limited  liability  company ("CT-F1") and Travelers Limited Real
Estate  Mezzanine  Investments  I, LLC, a  Delaware  limited  liability  company
("Limited REMI I") (the "Fund  Operating  Agreement") and as may be amended from
time to time and the Venture Agreement (as defined below).

                              PRELIMINARY STATEMENT

                  A.        The Fund desires to retain the Investment Manager to
provide certain investment management services in connection with the day-to-day
management of the Fund.

                  B.        Capital Trust, Inc., a Maryland  corporation ("CT"),
CT-F1,  CT-F2-GP,  LLC,  a  Delaware  limited  liability  company  ("CT-F2-GP"),
CT-F2-LP,  LLC,  a  Delaware  limited  liability  company  ("CT-F2-LP")  and the
Investment  Manager  (collectively,  the  "CT  Parties")  and  Limited  REMI  I,
Travelers General Real Estate Mezzanine  Investments II, LLC, a Delaware limited
liability  company  ("General  REMI II"),  and  Travelers  Limited  Real  Estate
Mezzanine  Investments II, LLC, a Delaware limited  liability  company ("Limited
REMI II") (collectively,  the "CIG Parties") are parties to a Venture Agreement,
dated as of the date hereof (the "Venture Agreement").

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
agreements  herein  contained,  the  Investment  Manager  and the Fund  agree as
follows:

                                    ARTICLE I

                         RETENTION; SERVICES AND POWERS
                              OF INVESTMENT MANAGER

         1.1  Retention  of  Investment  Manager.  The Fund hereby  appoints the
Investment  Manager  (subject to the  following  provisions  of this  Agreement)
exclusively  to act as the  investment  manager of the Fund and to  provide  the
services to the Fund described in Section 1.2 of this Agreement.

914393.10
                                        1

<PAGE>

         1.2  Services to be  Performed by  Investment  Manager.  Subject to the
provisions of the Fund  Operating  Agreement,  the  Investment  Manager shall be
responsible for the day-to-day  management of the Fund.  Services to be rendered
by the Investment Manager to the Fund shall include the following:

                  (a)  The  Investment  Manager  shall  identify,  evaluate  and
present Investment  opportunities (including any financing plans associated with
such  Investments)  to the Members of Fund I. If the Members of Fund I determine
to make such  Investments  presented by the Investment  Manager,  the Investment
Manager shall have the authority to, (i) make such  Investments on behalf of the
Fund, (ii) monitor  Investments on a day-to-day basis,  including  arranging for
the accounting,  budgeting, safekeeping and administration of Investments, (iii)
arrange debt financing for the Fund and Investments on the terms approved by the
Members of the Fund,  (iv) advise the Fund with a view to optimizing the returns
from  Investments;  and (vi)  execute  all  decisions  of the  Members of Fund I
regarding the disposition and refinancing of Investments.

                  (b) The  Investment  Manager shall develop and  administer the
Fund's  financial  and  accounting  reporting  functions,  treasury  and cash or
management functions and internal control and audit functions.

                  (c) The  Investment  Manager  shall  identify,  recommend  and
oversee necessary third-party  independent  contractors and, upon the consent of
Limited REMI I, select or discharge the Fund's accountants and legal counsel.

                  (d) The  Investment  Manager  shall  submit to each Member the
following reports:

                           (i)      An unaudited  monthly activity report on the
                                    Fund's  operations  which  shall  include an
                                    income   statement,   a  balance   sheet,  a
                                    commentary  report on both a  monthly  basis
                                    and a  year-to-date  basis and a list of all
                                    Fund  assets  and the status  thereof.  Such
                                    report  shall be  delivered  to the  Members
                                    within 10  business  days after the last day
                                    of each month.

                           (ii)     An unaudited  quarterly report of the Fund's
                                    operations  which  will  include  an  income
                                    statement,  a balance  sheet, a statement of
                                    cash  flows,  and  statement  of the  Fund's
                                    equity.  The report will  present the income
                                    statement  and  statement  of cash  flows on
                                    both a  quarterly  basis and a  year-to-date
                                    basis.  The report also will compare  actual
                                    operations to those  projected in the Fund's
                                    Annual  Operating   Budget,  to  the  extent
                                    adopted  by the  Members  of the  Fund.  The
                                    report  will  be  delivered  to the  Members
                                    within 30  business  days after the last day
                                    of each quarter.

914393.10
                                        2

<PAGE>

                           (iii) An annual audited financial statement certified
                           to be in  accordance  with GAAP within 60 days of the
                           fiscal year end.

                  (e) The Investment Manager shall obtain, at the expense of the
Fund,  director and  officer/manager  liability  insurance,  and other customary
liability  insurance and liability  insurance customary for businesses like that
of the Fund. The liability insurance coverages set forth above shall provide for
full tail  coverage (on an  occurrence  basis during the term of the Fund) for a
minimum of three years following the date of the dissolution of the Fund.

         1.3 Key Personnel.  The Investment  Manager shall cause each of John R.
Klopp  and  Craig M.  Hatkoff  (the  "Key  Individuals")  to  commit to devote a
substantial  portion of their professional time and energy to the performance of
the Investment  Manager's  duties under this Agreement;  it being understood and
agreed that so long as Mr.  Klopp is an employee of CT and  continues to provide
services to the  Investment  Manager in  accordance  with this  Section 1.3, Mr.
Hatkoff may devote up to 50% of his professional  time to activities not related
to the Fund. The Investment  Manager shall cause at least one additional  Senior
Manager of the Investment Manager to devote a substantial  portion of his or her
professional  time and energy to the  performance  of the  Investment  Manager's
duties under this Agreement; provided, however, that the identity of such Senior
Manager is reasonably  acceptable to the Fund. The Fund and Limited REMI I agree
that either of Steven Plavin or Edward Shugrue would be acceptable as the Senior
Manager.  In the  event  of  (i)  Mr.  Klopp's  death  or  Disability  (but  not
termination  of his  employment  for any other  reason)  during the term of this
Agreement, and (ii) Mr. Hatkoff and Mr. Plavin each devote a substantial portion
of his  professional  time  and  energy  to the  performance  of the  Investment
Manager's duties under this Agreement, then the death or Disability of Mr. Klopp
shall not be deemed a breach by the  Investment  Manager of this Section 1.3. If
Mr. Hatkoff either dies,  becomes Disabled or his employment with the Investment
Manager is terminated during the term of this Agreement and Mr. Klopp and either
Mr.  Plavin,  Mr.  Shugrue  or  another  Senior  Manager  (which  is  reasonably
acceptable  to  Limited  REMI  I)  each  devote  a  substantial  portion  of his
professional  time and energy to the  performance  of the  Investment  Manager's
duties under this Agreement,  then the death or disability of Mr. Hatkoff or the
termination  of Mr.  Hatkoff's  employment  shall not be deemed a breach of this
Section 1.3.

         1.4 Miscellaneous. To the extent that the performance of the duties set
forth in this Agreement places any affirmative  regulatory  obligations upon the
Investment Manager,  the Investment Manager shall not be deemed to have accepted
such duties  unless and until it complies with any and all  applicable  laws and
regulations. The Investment Manager, in its performance of its duties hereunder,
shall act in  conformity  with the  instructions  and  directions of the General
Partner and/or the Fund shall comply with and conform to the requirements of all
applicable federal and state laws, regulations and rulings.

914393.10
                                        3

<PAGE>

                                   ARTICLE II

            COMPENSATION OF THE INVESTMENT MANAGER; FEES AND EXPENSES

         2.1 Investment Manager  Compensation.  As compensation for its services
in  acting  as  Investment  Manager  of the  Fund,  the  Fund  shall  pay to the
Investment Manager a investment management fee (the "Investment Management Fee")
equal to 0.75% per annum of the Fund's aggregate Invested Capital (as defined in
the  Venture  Agreement).  The  Investment  Management  Fee shall  accrue and be
payable monthly in arrears. Within 90 days of the end of each calendar year, the
Members of the Fund and the  Investment  Manager  shall  jointly  calculate  and
determine the aggregate Investment Management Fee that accrued to the Investment
Manager for such year based on the formula  provided  above.  As provided in the
Venture  Agreement,  to the  extent  the  amount of  Investment  Management  Fee
payments actually  received by the Investment  Manager during such year exceeded
the calculated amount, such excess shall be applied to the Investment Management
Fee payments to be made to the Investment  Manager in the next quarter(s)  until
recouped;  provided,  however,  that if upon  termination  of this Agreement any
portion of such excess amount remains unpaid,  the Investment  Manager shall pay
the Fund such remaining  excess amount in full as promptly as practicable  after
such  termination.  As  provided  in the  Venture  Agreement,  to the extent the
calculated  amount  exceeds the amount of  Investment  Management  Fee  payments
actually received by the Investment  Manager,  the Fund shall pay the Investment
Manager the difference between such amounts as promptly as practicable after the
calculation of such excess amount.

         2.2 Investment Manager Expenses.  The Investment Manager shall bear the
following ordinary  day-to-day  expenses incidental to the administration of the
Fund (i) all costs and  expenses  of  providing  to the Fund and the  Investment
Manager the office space,  facilities,  utility service,  supplies and necessary
administrative  and  clerical  functions  connected  with  the  Fund's,  and the
Investment Manager's, operations; and (ii) compensation of all employees who are
engaged in the operation or management of the Fund's or the Investment Manager's
business (collectively, "Administrative Expenses").

         2.3 Fund  Expenses.  Except as provided in Section 2.2 above,  the Fund
shall  bear and be  charged  with all other  costs and  expenses  of the  Fund's
activities and operations,  including all activities and operations prior to the
date of this  Agreement  as set forth on  Schedule  2.3 hereto,  and  including,
without  limitation,  to the  extent  directly  related  to  the  Fund  and  its
Investments:  (i) all costs and expenses  incurred in  developing,  negotiating,
structuring,  acquiring or financing any proposed Investment, whether or not the
Fund actually invests therein including,  without limitation,  any travel, legal
and accounting  expenses and other fees and out-of-pocket costs related thereto,
and the costs of rendering  financial  assistance  to or arranging for financing
for  any  assets  or  businesses   constituting  any  such  proposed  Investment
(provided,  however,  that  either  such  proposed  Investment  is  specifically
approved by Limited  REMI I or the  expenses  incurred in  connection  with such
proposed  Investment  are  approved  by  Limited  REMI I);  (ii) all  costs  and
expenses,  if  any,  incurred  in  monitoring  Investments,   including  without
limitation any travel, legal

914393.10
                                        4

<PAGE>

and accounting  expenses and other fees and out-of-pocket costs related thereto;
(iii) all costs and  expenses,  if any,  incurred in  disposing  of or otherwise
dealing with Investments,  including,  without limitation, any travel, legal and
accounting expenses and other fees and out-of-pocket costs related thereto,  and
the costs of rendering  financial  assistance  to or arranging for financing for
any assets or businesses constituting Investments;  (iv) taxes of the Fund, fees
of auditors, counsel and other advisors of the Fund, insurance costs of the Fund
and costs related to litigation  and threatened  litigation  involving the Fund;
(v) expenses associated with third party accountants, attorneys and tax advisors
with respect to the Fund and its activities,  including assisting the Investment
Manager in the preparation and auditing of financial  reports and statements and
other similar  matters,  and costs associated with the distribution of financial
and other reports and capital call notices to the Members,  and costs associated
with Fund meetings (it being understood that this clause (v) does not permit the
Investment  Manager to outsource  its  accounting  department);  (vi)  brokerage
commissions and other  investment costs incurred by or on behalf of the Fund and
paid to third  parties  unaffiliated  with the  Investment  Manager,  and to the
extent approved by Limited REMI I, brokerage  commissions  and other  investment
costs  incurred  by and on  behalf  of the Fund and  paid to  affiliates  of the
Investment  Manager,  (vii) all costs and expenses associated with obtaining and
maintaining  insurance  as  provided  in  Section  1.2(e),  including,   without
limitation,  customary  liability insurance to insure the Investment Manager and
other parties whom the Fund has agreed to indemnify  against liability under the
Fund  Operating   Agreement;   (viii)  fees  incurred  in  connection  with  the
maintenance  of bank and  custodian  accounts;  (ix) all  expenses  incurred  in
connection  with the  registration  of the Fund's  securities  under  applicable
securities  laws or  regulations;  and (x) all expenses of the Fund that are not
recurring  normal  operating  expenses  (all such  expenses,  collectively,  the
"Operating  Expenses").  To the extent any  Operating  Expenses  are paid by the
Investment Manager, such Operating Expenses shall be reimbursed by the Fund.

                                   ARTICLE III

                         EXCULPATION AND INDEMNIFICATION

         3.1 Exculpation and Indemnification. (a) Neither the Investment Manager
nor  any  of  its  partners,   affiliates,   directors,   officers,   employees,
shareholders,  members and other agents (each, an "Indemnified Party"), shall be
liable  to the Fund or to the  Members  for  monetary  damages  for any  losses,
claims,  damages or  liabilities  ("Damages")  arising from any act performed or
omitted by such parties  arising out of or in connection with the performance by
Investment  Manager of its services under this Agreement or the Fund's  business
or  affairs,   except  to  the  extent  that  any  such  Damages  are  primarily
attributable to the gross  negligence or willful  misconduct of such Indemnified
Party.

         (b) (1) The Fund shall,  to the fullest extent  permitted by applicable
         law,  indemnify,  defend  and hold  harmless  the  Indemnified  Parties
         against any Damages to which the  Indemnified  Party may become subject
         in connection  with any matter arising out of or in connection with the
         performance by Investment Manager of its services under this

914393.10
                                        5

<PAGE>

         Agreement or the Fund's  business or affairs,  except,  with respect to
         any Indemnified Party to the extent that any such Damages are primarily
         attributable  to the gross  negligence  or willful  misconduct  of such
         Indemnified  Party.  If the Indemnified  Party becomes  involved in any
         capacity in any action,  proceeding or investigation in connection with
         any matter  arising out of or in  connection  with the  performance  by
         Investment  Manager of its services  under this Agreement or the Fund's
         business or affairs, the Fund shall reimburse the Indemnified Party for
         its  reasonable  legal and other  expenses  (including  the cost of any
         investigation  and  preparation)  as they are  incurred  in  connection
         therewith, provided, however, that the Indemnified Party shall promptly
         repay to the Fund the amount of any such reimbursed expenses paid to it
         if it shall ultimately be finally determined that the Indemnified Party
         was not entitled to be indemnified by the Fund in connection  with such
         action,  proceeding or investigation.  If for any reason (other than by
         reason of the exclusions  from  indemnification  hereinabove set forth)
         the foregoing  indemnification is unavailable to the Indemnified Party,
         or insufficient to hold it harmless,  then the Fund shall contribute to
         the amount paid or payable by the Indemnified Party as a result of such
         loss,  claim,  damage,  liability or expense in such  proportion  as is
         appropriate  to reflect the relative  benefits  received by the Fund on
         the one hand and the  Indemnified  Party on the other  hand or, if such
         allocation is not permitted by applicable  law, to reflect not only the
         relative  benefits  referred  to  above  but also  any  other  relevant
         equitable considerations.

                  (2) The  provisions of this Section 3.1(b) shall survive for a
         period  of  three  years  from  the date of  dissolution  of the  Fund;
         provided  however,  that  if at the end of such  period  there  are any
         actions,  proceedings or investigations  then pending,  the Indemnified
         Party shall  notify the Members  (which  notice  shall  include a brief
         description of each such action,  proceeding or  investigation  and the
         liabilities asserted therein) and the provisions of this Section 3.1(b)
         shall  survive  with  respect  to  each  such  action,   proceeding  or
         investigation  set  forth  in  such  notice  (or  any  related  action,
         proceeding or investigation based upon the same or similar claim) until
         the date that such  action,  proceeding  or  investigation  is  finally
         resolved; and provided, further, that the obligations of the Fund under
         this  Section  3.1(b)  shall be  satisfied  solely out of Fund  assets,
         subject  to the  right  of the  liquidator  of the  Fund  to  establish
         reserves,  pursuant  to the Fund  Operating  Agreement  for  contingent
         obligations under this Section 3.1(b).

                  (c) No Member of the Fund  shall  have any  obligation  to the
Fund or any other  Member of the Fund to bring or join in any  action in defense
of an Indemnified Party pursuant to Section 3.1 (a) or (b). Nothing contained in
this  Section  3.1  shall be  construed  as any  waiver of  insurance  claims or
recoveries by the Fund or an Indemnified Party.

                  (d) The  remedies of an  Indemnified  Party under this Article
III shall be non-  exclusive and,  without  duplication,  each such  Indemnified
Party may pursue any other remedy provided in law or equity.

914393.10
                                        6

<PAGE>

                  (e) The  provisions  of this  Article  III shall  inure to the
benefit of the  Indemnified  Parties,  and any  successors,  assigns,  heirs and
personal representatives of such Indemnified Parties.

                                   ARTICLE IV

                                  MISCELLANEOUS

         4.1  Duration  and  Termination.  If  Limited  REMI I has the right and
elects to purchase CT-F1's  membership  interest in the Fund pursuant to Section
9.3 of the  Fund  Operating  Agreement,  then  this  Agreement  shall  terminate
immediately upon the completion of such purchase. If either Member has the right
and elects to Unwind the Fund pursuant to Section  10.2(c) of the Fund Operating
Agreement and Section 2.12 of the Venture  Agreement,  then this Agreement shall
terminate upon the  completion of the Unwind as provided in Section  11.2(a)(ii)
of the Fund Operating  Agreement and Section 2.12 of the Venture  Agreement.  If
the Investment Manager commits an act of fraud involving the Fund (which results
in material  damages to the Fund) or intentionally  misappropriates  significant
funds of the Fund, which results in an Event of Default under the Fund Operating
Agreement,  then this  Agreement  may be  terminated  by the Fund by delivery of
written notice of termination from Limited REMI I to the Investment  Manager. If
pursuant to the Limited  Liability  Company  Agreement of CT MP II LLC,  General
REMI II has caused CT MP II LLC to terminate the Fund II  Investment  Management
Agreement between CT MP II LLC and the Investment  Manager,  then Limited REMI I
shall  have  the  right to elect to  Unwind  the Fund and this  Agreement  shall
terminate upon the completion of such Unwind.

         The  obligation  of the Fund to pay all accrued  and unpaid  Management
Fees to the Investment  Manager shall survive any termination of this Agreement.
Articles III and IV shall also survive any termination of this Agreement.

         Any  dispute  which  arises  under  this  Agreement  shall be  resolved
pursuant to Section 4.2 of the Venture Agreement.

         4.2  Status  of  Investment  Manager  as  Independent  Contractor.  The
Investment  Manager shall for all purposes herein be deemed to be an independent
contractor and shall,  unless otherwise  expressly provided herein or authorized
by the Fund from time to time,  have no authority  to act for or  represent  the
Fund in any way or otherwise be deemed an agent of the Fund.

         4.3 Notices.  Any notices  required  hereunder  shall be in writing and
shall be deemed  given  when  delivered  in person or by courier or when sent by
first-class  registered  or  certified  mail or by  national  prepaid  overnight
delivery  service to the parties at such addresses as either party may from time
to time specify by notice.

914393.10
                                        7

<PAGE>

         If to the Fund at:

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

         with a copy to:

                  Loeb & Loeb LLP
                  1000 Wilshire Boulevard, Suite 1900
                  Los Angeles, California 90017
                  Attn: Andrew S. Clare, Esq.

         If to the Investment Manager at:

                  CT Investment Management, LLC
                  c/o Capital Trust, Inc.
                  605 Third Avenue
                  26th Floor
                  New York, NY 10158
                  Attn:  John R. Klopp

         with a copy to:

                  Battle Fowler LLP
                  75 East 55th Street
                  New York, NY 10022
                  Attn:  Thomas E. Kruger, Esq.

         4.4  Governing  Law.  This  Agreement  shall  be  governed,  construed,
administered  and  regulated in all respects  under the laws of the State of New
York to the extent such laws are not  preempted or superseded by the laws of the
United States.

         4.5  Severability.  If any one or more  of the  covenants,  agreements,
provisions  or  terms of this  Agreement  shall  be held to be  contrary  to any
express  provision  of law or  contrary  to policy of  express  law,  though not
expressly  prohibited,  or to be against public policy,  or shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants,  agreements,  provisions
or terms of this

914393.10
                                        8

<PAGE>

Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.

         4.6 Entire Agreement.  This Agreement  constitutes the entire agreement
among the  parties  hereto  with  respect  to the  subject  matter  hereof,  and
supersedes any prior  agreement or  understanding  among the parties hereto with
respect to the subject matter hereof.

         4.7 Binding on  Successors.  This  Agreement  shall be binding upon the
Fund,  the  General  Partner,   the  Investment  Manager  and  their  respective
successors and assigns.  However,  no assignment of this Agreement shall be made
without the prior written consent of the Fund.

         4.8  Headings.  The headings  used in this  Agreement  are inserted for
reference  purposes  only and  shall not be deemed to limit or affect in any way
the meaning or interpretation of any of the terms or provisions herein.

         4.9 Waiver.  Any failure of any party to comply with any  obligation or
agreement  herein may be waived in writing by the other party but such waiver or
failure to insist upon strict compliance with such obligation or agreement shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.

         4.10   Amendment.   This  Agreement  may  be  amended,   modified,   or
supplemented only by written agreement of the parties hereto.

914393.10
                                        9

<PAGE>

         IN WITNESS  WHEREOF,  this Agreement is hereby  executed as of the date
first hereinabove written.

CT INVESTMENT MANAGEMENT CO.,             CT MEZZANINE PARTNERS I, LLC
LLC

By: Capital Trust, Inc., its sole member  By: Travelers Limited Real Estate
                                              Mezzanine Investments, LLC,
      By: /s/  John R. Klopp                  a Member
          -----------------------------
               John R. Klopp
               Chief Executive Officer        By:  /s/  Michael Watson
                                                  ----------------------------
                                                  Michael Watson
                                                  Vice President

                                          By: CT-F1, LLC, a Member

                                              By: Capital Trust, Inc., its
                                                    sole member

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

914393.10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}]]