CAPITAL TRUST INC
EX. 10.4 - 2004 LONG-TERM INCENTIVE PLAN
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>ex10-4.txt
<DESCRIPTION>EX. 10.4 - 2004 LONG-TERM INCENTIVE PLAN
<TEXT>


                                                                    Exhibit 10.4


                               CAPITAL TRUST, INC.

                          2004 LONG-TERM INCENTIVE PLAN

1.    Establishment, Purpose, and Types of Awards

      Capital Trust, Inc., a Maryland corporation (the "Company") hereby
establishes an incentive compensation plan to be known as the "Capital Trust,
Inc. 2004 Long-Term Incentive Plan" (hereinafter referred to as the "Plan"), for
the purpose of attracting, retaining and motivating select employees, officers,
directors, advisors, and consultants for the Company and its Affiliates and to
provide incentives and awards for superior performance.

      The Plan permits the granting of the following types of awards ("Awards"),
according to the Sections of the Plan listed here:

        Section 6          Options
        Section 7          Share Appreciation Rights
        Section 8          Restricted and Unrestricted Share Awards
        Section 9          Deferred Share Units
        Section 10         Performance Awards

      The Plan is not intended to affect and shall not affect any stock options,
equity-based compensation, or other benefits that the Company or its Affiliates
may have provided, or may separately provide in the future pursuant to any
agreement, plan, or program that is independent of this Plan.

2.    Defined Terms

      Terms in the Plan that begin with an initial capital letter have the
defined meaning set forth in Appendix A, unless defined elsewhere in this Plan
or the context of their use clearly indicates a different meaning.

3.    Shares Subject to the Plan

      Subject to the provisions of Section 13 of the Plan, the maximum number of
Shares that the Company may issue is 1,000,000 Shares for all Awards. For all
Awards, these Shares may be authorized but unissued Shares, or Shares that the
Company has reacquired or otherwise holds in treasury.

      Shares that are subject to an Award that for any reason expires, is
forfeited, is cancelled, or becomes unexercisable, and Shares that are for any
other reason not paid or delivered under the Plan shall again, except to the
extent prohibited by Applicable Law, be available for subsequent Awards under
the Plan. In addition, the Committee may make future Awards with respect to
Shares that the Company retains from otherwise delivering pursuant to an Award
either (i) as payment of the exercise price of an Award, or (ii) in order to
satisfy the withholding or employment taxes due upon the grant, exercise,
vesting, or distribution of an Award.


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Notwithstanding the foregoing, but subject to adjustments pursuant to Section 13
below, the number of Shares that are available for ISO Awards shall be
determined, to the extent required under applicable tax laws, by reducing the
number of Shares designated in the preceding paragraph by the number of Shares
granted pursuant to ISO Awards (whether or not Shares are issued pursuant to
such Awards); provided that any Shares that are either purchased under the Plan
and forfeited back to the Plan, or surrendered in payment of the Exercise Price
for an Award shall be available for issuance pursuant to ISO Awards.

4.    Administration

      (a) General. The Committee shall administer the Plan in accordance with
its terms, provided that the Board may act in lieu of the Committee on any
matter. The Committee shall hold meetings at such times and places as it may
determine and make such rules and regulations for the conduct of its business as
it deems advisable. In the absence of a duly appointed Committee or if the Board
otherwise chooses to act in lieu of a Committee, the Board shall function as the
Committee for all purposes of the Plan.

      (b) Committee Composition. The Board shall appoint the members of the
Committee. If and to the extent permitted by Applicable Law, the Committee may
authorize one or more Reporting Persons (or other officers) to make Awards to
Eligible Persons who are not Reporting Persons (or other officers whom the
Committee has specifically authorized to make Awards). The Board may at any time
appoint additional members to the Committee, remove and replace members of the
Committee with or without Cause, and fill vacancies on the Committee however
caused.

      (c) Powers of the Committee. Subject to the provisions of the Plan, the
Committee shall have the authority, in its sole discretion:

           (i)   to determine Eligible Persons to whom Awards shall be granted
      from time to time and the number of Shares, units, or SARs to be covered
      by each Award;

           (ii)  to determine, from time to time, the Fair Market Value of
      Shares;

           (iii) to determine, and to set forth in Award Agreements, the terms
      and conditions of all Awards, including any applicable exercise or
      purchase price, the installments and conditions under which an Award shall
      become vested (which may be based on performance), terminated, expired,
      cancelled, renewed, or replaced, and the circumstances for vesting
      acceleration or waiver of forfeiture restrictions, and other restrictions
      and limitations;

           (iv)  to approve the forms of Award Agreements and all other
      documents, notices and certificates in connection therewith which need not
      be identical either as to type of Award or among Participants;

           (v)   to construe and interpret the terms of the Plan and any Award
      Agreement, to determine the meaning of their terms, and to prescribe,
      amend, and rescind rules and procedures relating to the Plan and its
      administration; and


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           (vi)  in order to fulfill the purposes of the Plan and without
      amending the Plan, modify, cancel, or waive the Company's rights with
      respect to any Awards, to adjust or to modify Award Agreements for changes
      in Applicable Law, and to recognize differences in foreign law, tax
      policies, or customs; and

           (vii) to make all other interpretations and to take all other actions
      that the Committee may consider necessary or advisable to administer the
      Plan or to effectuate its purposes.

      Subject to Applicable Law and the restrictions set forth in the Plan, the
Committee may delegate administrative functions to individuals who are Reporting
Persons, officers, or Employees of the Company or its Affiliates.

      (d) Deference to Committee Determinations. The Committee shall have the
discretion to interpret or construe ambiguous, unclear, or implied (but omitted)
terms in any fashion it deems to be appropriate in its sole discretion, and to
make any findings of fact needed in the administration of the Plan or Award
Agreements. The Committee's prior exercise of its discretionary authority shall
not obligate it to exercise its authority in a like fashion thereafter. The
Committee's interpretation and construction of any provision of the Plan, or of
any Award or Award Agreement, shall be final, binding, and conclusive. The
validity of any such interpretation, construction, decision or finding of fact
shall not be given de novo review if challenged in court, by arbitration, or in
any other forum, and shall be upheld unless clearly arbitrary or capricious.

      (e) No Liability; Indemnification. Neither the Board nor any Committee
member, nor any Person acting at the direction of the Board or the Committee,
shall be liable for any act, omission, interpretation, construction or
determination made in good faith with respect to the Plan, any Award or any
Award Agreement. The Company and its Affiliates shall pay or reimburse any
member of the Committee, as well as any Director, Employee, or Consultant who
takes action in connection with the Plan, for all expenses incurred with respect
to the Plan, and to the full extent allowable under Applicable Law shall
indemnify each and every one of them for any claims, liabilities, and costs
(including reasonable attorney's fees) arising out of their good faith
performance of duties under the Plan. The Company and its Affiliates may obtain
liability insurance for this purpose.

5.    Eligibility

      (a) General Rule. The Committee may grant ISOs only to Employees
(including officers who are Employees) of the Company or an Affiliate that is a
"parent corporation" or "subsidiary corporation" within the meaning of Section
424 of the Code, and may grant all other Awards to any Eligible Person. A
Participant who has been granted an Award may be granted an additional Award or
Awards if the Committee shall so determine, if such Person is otherwise an
Eligible Person and if otherwise in accordance with the terms of the Plan.

      (b) Grant of Awards. Subject to the express provisions of the Plan, the
Committee shall determine from the class of Eligible Persons those individuals
to whom Awards under the Plan may be granted, the number of Shares subject to
each Award, the price (if any) to be paid


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for the Shares or the Award and, in the case of Performance Awards, in addition
to the matters addressed in Section 10 below, the specific objectives, goals and
performance criteria that further define the Performance Award. Each Award shall
be evidenced by an Award Agreement signed by the Company and, if required by the
Committee, by the Participant. The Award Agreement shall set forth the material
terms and conditions of the Award established by the Committee.

      (c) Limits on Awards. No Participant may receive Options and SARs that
relate to more than 500,000 Shares per calendar year. The Committee will adjust
these limitations pursuant to Section 13 below.

      (d) Replacement Awards. The Committee may, in its sole discretion and upon
such terms as it deems appropriate, require as a condition of the grant of an
Award to a Participant that the Participant surrender for cancellation some or
all of the Awards or other awards that have previously been granted to the
Participant under this Plan or otherwise. An Award that is conditioned upon such
surrender may or may not be the same type of Award, may cover the same (or a
lesser or greater) number of Shares as such surrendered Award, may have other
terms that are determined without regard to the terms or conditions of such
surrendered Award, and may contain any other terms that the Committee deems
appropriate. In the case of Options, these other terms may not involve an
Exercise Price that is lower than the Exercise Price of the surrendered Option
unless either the new grant will not create any material financial expense for
the Company or the Company's shareholders approve the grant itself or the
program under which it is made pursuant to the Plan.

6.    Option Awards

      (a) Types; Documentation. The Committee may in its discretion grant ISOs
to any Employee and Non-ISOs to any Eligible Person, and shall evidence any such
grants in an Award Agreement that is delivered to the Participant. Each Option
shall be designated in the Award Agreement as an ISO or a Non-ISO. At the sole
discretion of the Committee, any Option may be exercisable, in whole or in part,
immediately upon the grant thereof, or only after the occurrence of a specified
event, or only in installments, which installments may vary. Options granted
under the Plan may contain such terms and provisions not inconsistent with the
Plan that the Committee shall deem advisable in its sole and absolute
discretion.

      (b) ISO $100,000 Limitation. To the extent that the aggregate Fair Market
Value of Shares with respect to which Options designated as ISOs first become
exercisable by a Participant in any calendar year (under this Plan and any other
plan of the Company or any Affiliate) exceeds $100,000, such excess Options
shall be treated as Non-ISOs. For purposes of determining whether the $100,000
limit is exceeded, the Fair Market Value of the Shares subject to an ISO shall
be determined as of the Grant Date. In reducing the number of Options treated as
ISOs to meet the $100,000 limit, the most recently granted Options shall be
reduced first. In the event that Section 422 of the Code is amended to alter the
limitation set forth therein, the limitation of this Section 6(b) shall be
automatically adjusted accordingly.

      (c) Term of Options. Each Award Agreement shall specify a term at the end
of which the Option automatically expires, subject to earlier termination
provisions contained in Section 6(h) hereof; provided, that, the term of any
Option may not exceed ten years from the Grant


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Date. In the case of an ISO granted to an Employee who is a Ten Percent Holder
on the Grant Date, the term of the ISO shall not exceed five years from the
Grant Date.

      (d) Exercise Price. The exercise price of an Option shall be determined by
the Committee in its discretion and shall be set forth in the Award Agreement,
subject to the following special rules:

           (i)   ISOs. If an ISO is granted to an Employee who on the Grant Date
      is a Ten Percent Holder, the per Share exercise price shall not be less
      than 110% of the Fair Market Value per Share on such Grant Date. If an ISO
      is granted to any other Employee, the per Share exercise price shall not
      be less than 100% of the Fair Market Value per Share on the Grant Date.

           (ii)  Non-ISOs. The per Share exercise price for the Shares to be
      issued pursuant to the exercise of a Non-ISO shall not be less than 50% of
      the Fair Market Value per Share on the Grant Date.

           (iii) Named Executive Officers. The per Share exercise price shall
      not be less than 100% of the Fair Market Value per Share on the Grant Date
      of an Option if (A) on such Grant Date, the Participant is subject to the
      limitations set forth in Section 162(m) of the Code, and (B) the grant is
      intended to qualify as performance-based compensation under Section 162(m)
      of the Code.

           (iv)  Repricing. The Committee may at any time unilaterally reduce
      the exercise price for any Option, but only if (I) the reduction will not
      cause material financial expense for the Company or the Company's
      shareholders approve the reduction or the program under which it is made,
      and (II) the Committee promptly provides a written notice to any
      Participant affected by the reduction.

      (e) Exercise of Option. The times, circumstances and conditions under
which an Option shall be exercisable shall be determined by the Committee in its
sole discretion and set forth in the Award Agreement. The Committee shall have
the discretion to determine whether and to what extent the vesting of Options
shall be tolled during any unpaid leave of absence; provided, however, that in
the absence of such determination, vesting of Options shall be tolled during any
such leave approved by the Company.

      (f) Minimum Exercise Requirements. An Option may not be exercised for a
fraction of a Share. The Committee may require in an Award Agreement that an
Option be exercised as to a minimum number of Shares, provided that such
requirement shall not prevent a Participant from purchasing the full number of
Shares as to which the Option is then exercisable.

      (g) Methods of Exercise. Prior to its expiration pursuant to the terms of
the applicable Award Agreement, and subject to the times, circumstances, and
conditions for exercisability contained in the applicable Award Agreement, each
Option may be exercised, in whole or in part (provided that the Company shall
not be required to issue fractional shares), by delivery of written notice of
exercise to the secretary of the Company accompanied by the payment of the full
exercise price of the Shares being purchased. Unless otherwise provided in


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the applicable Award Agreement, the acceptable methods of payment on the Grant
Date of any Option shall include the following:

           (i)   cash or check payable to the Company (in U.S. dollars);

           (ii)  other Shares that (A) are owned by the Participant who is
      purchasing Shares pursuant to an Option, (B) have a Fair Market Value on
      the date of surrender equal to the aggregate exercise price of the Shares
      as to which the Option is being exercised, (C) were not acquired by such
      Participant pursuant to the exercise of an Option, unless such Shares have
      been owned by such Participant for at least six months or such other
      longer period as the Committee may determine, (D) are all, at the time of
      such surrender, free and clear of any and all claims, pledges, liens and
      encumbrances, or any restrictions which would in any manner restrict the
      transfer of such shares to or by the Company (other than such restrictions
      as may have existed prior to an issuance of such Shares by the Company to
      such Participant), and (E) are duly endorsed for transfer to the Company;

           (iii) a cashless exercise program that the Committee may approve,
      from time to time in its discretion, pursuant to which a Participant may
      concurrently provide irrevocable instructions (A) to such Participant's
      broker or dealer to effect the immediate sale of the purchased Shares and
      remit to the Company, out of the sale proceeds available on the settlement
      date, sufficient funds to cover the exercise price of the Option plus all
      applicable taxes required to be withheld by the Company by reason of such
      exercise and (B) to the Company to deliver the certificates for the
      purchased Shares directly to such broker or dealer in order to complete
      the sale;

           (iv)  the Participant's surrender of Restricted Shares, Restricted
      Share Units, Share Appreciation Rights, or Deferred Share Units; provided
      that to the extent payment is made by means of the surrender of any Award
      which is unvested or subject to restrictions, the Shares issued pursuant
      to such surrender shall be subject to the same vesting terms and other
      restrictions that applied to the surrendered Award; or

           (v)   any combination of the foregoing methods of payment.

           The Committee shall have the discretion to exclude from an Award
Agreement any methods of payment set forth above. The Company shall not be
required to deliver Shares pursuant to the exercise of an Option until payment
of the full exercise price therefore is received by the Company.

      (h) Termination of Continuous Service. The Committee may establish and set
forth in the applicable Award Agreement the terms and conditions on which an
Option shall remain exercisable, if at all, following termination of a
Participant's Continuous Service. The Committee may waive or modify these
provisions at any time. To the extent that a Participant is not entitled to
exercise an Option at the date of his or her termination of Continuous Service,
or if the Participant (or other Person entitled to exercise the Option) does not
exercise the Option to the extent so entitled within the time specified in the
Award Agreement or below (as applicable), the Option shall terminate and the
Shares underlying the unexercised portion of the Option shall


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revert to the Plan and become available for future Awards. In no event may any
Option be exercised after the expiration of the Option term as set forth in the
Award Agreement.

      The following provisions shall apply to the extent an Award Agreement does
not specify the terms and conditions upon which an Option shall terminate when
there is a termination of a Participant's Continuous Service:

           (i)   Termination other than Upon Disability or Death or for Cause.
      In the event of termination of a Participant's Continuous Service (other
      than as a result of Participant's death, disability, retirement or
      termination for Cause), the Participant shall have the right to exercise
      an Option at any time within 90 days following such termination to the
      extent the Participant was entitled to exercise such Option at the date of
      such termination.

           (ii)  Disability. In the event of termination of a Participant's
      Continuous Service as a result of his or her "disability" within the
      meaning of Section 22(e)(3) of the Code, the Participant shall have the
      right to exercise an Option at any time within one year following such
      termination to the extent the Participant was entitled to exercise such
      Option at the date of such termination.

           (iii) Retirement. In the event of termination of a Participant's
      Continuous Service as a result of Participant's retirement, the
      Participant shall have the right to exercise the Option at any time within
      six months following such termination to the extent the Participant was
      entitled to exercise such Option at the date of such termination.

           (iv)  Death. In the event of the death of a Participant during the
      period of Continuous Service since the Grant Date of an Option, or within
      90 days following termination of the Participant's Continuous Service, the
      Option may be exercised, at any time within one year following the date of
      the Participant's death, by the Participant's estate or by a Person who
      acquired the right to exercise the Option by bequest or inheritance, but
      only to the extent the right to exercise the Option had vested at the date
      of death or, if earlier, the date the Participant's Continuous Service
      terminated.

           (v)   Cause. If the Committee determines that a Participant's
      Continuous Service terminated due to Cause, the Participant shall
      immediately forfeit the right to exercise any Option, and it shall be
      considered immediately null and void.

      (i) Reverse Vesting. The Plan Administrator in its discretion may allow a
Participant to exercise unvested Options, in which case the Shares then issued
shall be Restricted Share Units having analogous vesting restrictions to the
unvested Options.

      (j) Buyout Provisions. The Committee may at any time offer to buy out an
Option, in exchange for a payment in cash or Shares, based on such terms and
conditions as the Committee shall establish and communicate to the Participant
at the time that such offer is made. In addition, if the Fair Market Value for
Shares subject to an Option is more than 33% below their exercise price for more
than 30 consecutive business days, the Committee may unilaterally terminate and
cancel the Option either (i) by paying the Participant, in cash or Shares, an
amount not less than the Black-Scholes value of the vested portion of the
Option, or (ii) by irrevocably


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committing to grant a new Option, on a designated date more than six months
after such termination and cancellation of such Option (but only if the
Participant's Continuous Service has not terminated prior to such designated
date), on substantially the same terms as the cancelled Option, provided that
the per Share exercise price for the new Option shall equal the per Share Fair
Market Value of a Share on the date the new grant occurs.

7.    Share Appreciate Rights (SARs)

      (a) Grants. The Committee may in its discretion grant Share Appreciation
Rights to any Eligible Person, in any of the following forms:

           (i)   SARs related to Options. The Committee may grant SARs either
      concurrently with the grant of an Option or with respect to an outstanding
      Option, in which case the SAR shall extend to all or a portion of the
      Shares covered by the related Option. An SAR shall entitle the Participant
      who holds the related Option, upon exercise of the SAR and surrender of
      the related Option, or portion thereof, to the extent the SAR and related
      Option each were previously unexercised, to receive payment of an amount
      determined pursuant to Section 7(e) below. Any SAR granted in connection
      with an ISO will contain such terms as may be required to comply with the
      provisions of Section 422 of the Code and the regulations promulgated
      thereunder.

           (ii)  SARs Independent of Options. The Committee may grant SARs which
      are independent of any Option subject to such conditions as the Committee
      may in its discretion determine, which conditions will be set forth in the
      applicable Award Agreement.

           (iii) Limited SARs. The Committee may grant SARs exercisable only
      upon or in respect of a Change in Control or any other specified event,
      and such limited SARs may relate to or operate in tandem or combination
      with or substitution for Options or other SARs, or on a stand-alone basis,
      and may be payable in cash or Shares based on the spread between the
      exercise price of the SAR, and (A) a price based upon or equal to the Fair
      Market Value of the Shares during a specified period, at a specified time
      within a specified period before, after or including the date of such
      event, or (B) a price related to consideration payable to Company's
      shareholders generally in connection with the event.

      (b) Exercise Price. The per Share exercise price of an SAR shall be
determined in the sole discretion of the Committee, shall be set forth in the
applicable Award Agreement, and shall be no less than 50% of the Fair Market
Value of one Share. The exercise price of an SAR related to an Option shall be
the same as the exercise price of the related Option. The exercise price of an
SAR shall be subject to the special rules on pricing contained in paragraphs
(iii) and (iv) of Section 6(d) hereof.

      (c) Exercise of SARs. Unless the Award Agreement otherwise provides, an
SAR related to an Option will be exercisable at such time or times, and to the
extent, that the related Option will be exercisable. An SAR may not have a term
exceeding ten years from its Grant Date. An SAR granted independently of any
other Award will be exercisable pursuant to the terms of the Award Agreement.
Whether an SAR is related to an Option or is granted


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independently, the SAR may only be exercised when the Fair Market Value of the
Shares underlying the SAR exceeds the exercise price of the SAR.

      (d) Effect on Available Shares. To the extent that an SAR is exercised,
only the actual number of delivered Shares (if any) will be charged against the
maximum number of Shares that may be delivered pursuant to Awards under this
Plan. The number of Shares subject to the SAR and the related Option of the
Participant will, however, be reduced by the number of underlying Shares as to
which the exercise relates, unless the Award Agreement otherwise provides.

      (e) Payment. Upon exercise of an SAR related to an Option and the
attendant surrender of an exercisable portion of any related Award, the
Participant will be entitled to receive payment of an amount determined by
multiplying -

           (i)   the excess of the Fair Market Value of a Share on the date of
      exercise of the SAR over the exercise price per Share of the SAR, by

           (ii)  the number of Shares with respect to which the SAR has been
      exercised.

      Notwithstanding the foregoing, an SAR granted independently of an Option
may limit the amount payable to the Participant to a percentage, specified in
the Award Agreement but not exceeding one-hundred percent (100%), of the amount
determined pursuant to the preceding sentence.

      (f) Form and Terms of Payment. Subject to Applicable Law, the Committee
may, in its sole discretion, settle the amount determined under Section 7(e)
above solely in cash, solely in Shares (valued at their Fair Market Value on the
date of exercise of the SAR), or partly in cash and partly in Shares. In any
event, cash shall be paid in lieu of fractional Shares. Absent a contrary
determination by the Committee, all SARs shall be settled in cash as soon as
practicable after exercise. Notwithstanding the foregoing, the Committee may, in
an Award Agreement, determine the maximum amount of cash or Shares or
combination thereof that may be delivered upon exercise of an SAR.

      (g) Termination of Employment or Consulting Relationship. The Committee
shall establish and set forth in the applicable Award Agreement the terms and
conditions on which an SAR shall remain exercisable, if at all, following
termination of a Participant's Continuous Service. The provisions of Section
6(h) above shall apply to the extent an Award Agreement does not specify the
terms and conditions upon which an SAR shall terminate when there is a
termination of a Participant's Continuous Service.

      (h) Repricing and Buy-out. The Committee has the same discretion to
reprice and to buy-out SARs as it has to take such actions with respect to
Options.

8.    Restricted and Unrestricted Share Awards

      (a) Grants. The Committee may in its discretion grant restricted shares
("Restricted Shares") to any Eligible Person and shall evidence such grant in an
Award Agreement that is delivered to the Participant which sets forth the number
of Restricted Shares, the purchase price


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for such Restricted Shares (if any) and the terms upon which the Restricted
Shares may become vested. In addition, the Company may in its discretion grant
the right to receive Shares after certain vesting requirements are met
("Restricted Share Units") to any Eligible Person and shall evidence such grant
in an Award Agreement that is delivered to the Participant which sets forth the
number of Shares (or formula, that may be based on future performance or
conditions, for determining the number of Shares) that the Participant shall be
entitled to receive upon vesting and the terms upon which the Shares subject to
Restricted Share Units may become vested. Unless otherwise provided in the Award
Agreement, the holder of Restricted Shares shall receive any cash and stock
dividends declared and paid on the Restricted Shares. Unless otherwise provided
in the Award Agreement, the holder of Restricted Share Units shall receive (i)
in the case of any cash dividends declared and paid on the Shares, a cash amount
equal to that amount that would otherwise be payable as cash dividends so
declared and paid if the Shares subject to the then outstanding Restricted Share
Units were outstanding and (ii) in the case of any stock dividends declared and
paid on the Shares, a grant of additional Restricted Share Units (which shall be
subject to the same outstanding vesting terms) for the number of Shares equal to
any stock dividends so declared and paid that would otherwise be payable if the
Shares subject to the then outstanding Restricted Share Units were outstanding.
The Committee may condition any Award of Restricted Shares or Restricted Share
Units to a Participant on receiving from the Participant such further assurances
and documents as the Committee may require to enforce the restrictions. In
addition, the Committee may grant Awards hereunder in the form of unrestricted
Shares ("Unrestricted Shares"), which shall vest in full upon the date of grant
or such other date as the Committee may determine or which the Committee may
issue pursuant to any program under which one or more Eligible Persons (selected
by the Committee in its discretion) elect to receive Unrestricted Shares in lieu
of cash bonuses that would otherwise be paid.

      (b) Vesting. The Committee shall set forth in an Award Agreement granting
Restricted Shares or Restricted Share Units, the terms and conditions under
which the Participant's interest in the Restricted Shares or the Shares subject
to Restricted Share Units will become vested. Except as set forth in the
applicable Award Agreement or as the Committee otherwise determines, upon
termination of a Participant's Continuous Service for any other reason, the
Participant shall forfeit his or her unvested Restricted Shares and Restricted
Share Units; provided that if a Participant purchases the Restricted Shares and
forfeits them for any reason, the Company shall return the purchase price to the
Participant only if and to the extent set forth in an Award Agreement.

      (c) Issuance of Restricted Shares Prior to Vesting. The Company shall
issue stock certificates that evidence Restricted Shares pending the lapse of
applicable restrictions, and that bear a legend making appropriate reference to
such restrictions. Except as set forth in the applicable Award Agreement or the
Committee otherwise determines, the Company or a third party that the Company
designates shall hold such Restricted Shares and any dividends not currently
paid to the Participant pursuant to the applicable Award Agreement.

      (d) Issuance of Shares upon Vesting. As soon as practicable after vesting
of a Participant's Restricted Shares (or Shares underlying Restricted Share
Units) and the Participant's satisfaction of applicable tax withholding
requirements, the Company shall release to the Participant, free from the
vesting restrictions, one Share for each vested Restricted Share (or issue one
Share free of the vesting restriction for each vested Restricted Share Unit),
unless


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an Award Agreement provides otherwise. No fractional shares shall be
distributed, and cash shall be paid in lieu thereof.

      (e) Dividends payable on Vesting. If an Award Agreement does not provide
for an earlier payment of dividends, whenever Shares are issued to a Participant
or duly-authorized transferee under Section 8(d) above pursuant to the vesting
of Restricted Shares or the Shares underlying Restricted Share Units, such
Participant or duly-authorized transferee shall also be entitled to receive,
with respect to each Share issued, an amount equal to any cash dividends (plus
simple interest at a rate of five percent per annum, or such other reasonable
rate as the Committee may determine) and a number of Shares equal to any stock
dividends, which were declared and paid to the holders of Shares between the
Grant Date and the date such Share is issued to the extent not currently paid to
the Participant pursuant to the applicable Award Agreement.

      (f) Section 83(b) Elections. If a Participant who has received Restricted
Share Units provides the Committee with written notice of his or her intention
to make an election under Section 83(b) of the Code with respect to the Shares
subject to such Restricted Share Units (the "Section 83(b) Election"), the
Committee may in its discretion convert the Participant's Restricted Share Units
into Restricted Shares, on a one-for-one basis, in full satisfaction of the
Participant's Restricted Share Unit Award.

      (g) Deferral Elections. At any time within the calendar year in which a
Participant who is a member of a "select group of management or highly
compensated employees" (within the meaning of ERISA) receives an Award of either
Restricted Shares or Restricted Share Units, the Committee may permit the
Participant to irrevocably elect, on a form provided by and acceptable to the
Committee, to defer the receipt of all or a percentage of the Shares that would
otherwise be transferred to the Participant upon the vesting of such Award. If
the Participant makes this election, the Shares subject to the election, and any
associated unpaid dividends and interest thereon, shall be credited as Deferred
Share Units (as defined below) to an Account (as defined below) established
pursuant to Section 9 hereof on the date such Shares would otherwise have been
released or issued to the Participant pursuant to Section 8(d) above.
Notwithstanding the foregoing, Shares with respect to which a Participant makes
a Section 83(b) Election shall not be eligible for deferral pursuant to Section
9 below.

9.    Deferred Share Units

      (a) Elections to Defer. The Committee may permit any Eligible Person who
is a Director, Consultant or member of a "select group of management or highly
compensated employees" (within the meaning of the ERISA) to irrevocably elect,
on a form provided by and acceptable to the Committee (the "Election Form"), to
forego the receipt of cash or other compensation (including Restricted Shares
for which a Section 83(b) Election has not been made, Shares subject to
Restricted Share Units and the dividends or the cash amount equal to the amount
of dividends that would otherwise be paid in respect of Restricted Shares or
Shares subject to Restricted Share Units), and in lieu thereof to have the
Company credit to an internal Plan account (the "Account") a number of deferred
share units ("Deferred Share Units") having a Fair Market Value equal to the
Shares and other compensation deferred. These credits will be made at the end of
each calendar month during which compensation is deferred. Each Election


                                       11
<PAGE>


Form shall take effect five business days after its delivery to the Company,
unless during such five business day period the Company sends the Participant a
written notice explaining why the Election Form is invalid. Notwithstanding the
foregoing sentence, Election Forms shall be ineffective with respect to any
compensation that a Participant earns before the date on which the Company
receives the Election Form.

      (b) Vesting. Each Participant shall be 100% vested at all times in any
Shares subject to Deferred Share Units.

      (c) Crediting of Dividends. Unless otherwise provided in the Award
Agreement, whenever cash dividends are declared and paid on the Shares, the
Account shall be credited with additional Deferred Share Units calculated by
dividing (i) the amount obtained by multiplying the number of Shares subject to
the then outstanding Deferred Share Units by the per share dividend amount by
(ii) the Fair Market Value of the Shares on the date of payment of the
dividends. Whenever stock dividends are declared and paid on the Shares, the
Account shall be credited with additional Deferred Shares Units for the number
of Shares equal to any stock dividends declared and paid on the Shares that
would otherwise be payable if the Shares subject to the then outstanding
Deferred Share Units were outstanding.

      (d) Issuances of Shares. The Company shall provide a Participant with one
Share for each Deferred Share Unit in five substantially equal annual
installments that are issued before the last day of each of the five calendar
years that end after the date on which the Participant's Continuous Service
terminates, unless -

           (i)   the Participant has properly elected a different form of
      distribution, on a form approved by the Committee that permits the
      Participant to select any combination of a lump sum and annual
      installments that are completed within ten years following termination of
      the Participant's Continuous Service, and

           (ii)  the Company has received the Participant's distribution
      election form either more than 90 days before a Change in Control, or more
      than one year before the date on which the Participant's Continuous
      Service terminates for any reason other than death, or before the
      Participant's death.

           Fractional shares shall not be issued, and instead shall be paid out
in cash.

      (e) Hardship Withdrawals. In the event a Participant suffers an
unforeseeable hardship within the contemplation of this Section 9(e) , the
Participant may apply to the Company for an immediate distribution of all or a
portion of the Participant's Deferred Share Units. The hardship must result from
a sudden and unexpected illness or accident of the Participant or a dependent of
the Participant, casualty loss of property, or other similar conditions beyond
the control of the Participant. Examples of purposes which are not considered
hardships include post-secondary school expenses or the desire to purchase a
residence. In no event will a distribution be made to the extent the hardship
could be relieved through reimbursement or compensation by insurance or
otherwise, or by liquidation of the Participant's nonessential assets to the
extent such liquidation would not itself cause a severe financial hardship. The
amount of any distribution hereunder shall be limited to the amount necessary to
relieve the Participant's


                                       12
<PAGE>


financial hardship. The Committee shall determine whether a Participant has a
qualifying hardship and the amount which qualifies for distribution, if any. The
Committee may require evidence of the purpose and amount of the need, and may
establish such application or other procedures as it deems appropriate.

      (f) Unsecured Rights to Deferred Compensation. A Participant's right to
Deferred Share Units shall at all times constitute an unsecured promise of the
Company to pay benefits as they come due. The right of the Participant or the
Participant's duly-authorized transferee to receive benefits hereunder shall be
solely an unsecured claim against the general assets of the Company. Neither the
Participant nor the Participant's duly-authorized transferee shall have any
claim against or rights in any specific assets, shares, or other funds of the
Company.

10.   Performance Awards

      (a) Performance Units. The Committee may in its discretion grant
Performance Units to any Eligible Person and shall evidence such grant in an
Award Agreement that is delivered to the Participant which sets forth the terms
and conditions of the Award. A Performance Unit is an Award which is based on
the achievement of specific goals with respect to the Company or any Affiliate
or individual performance of the Participant, or a combination thereof, over a
specified period of time. Subject to subsection (d) hereof , the maximum
Performance Unit compensation that may be paid to any one Participant with
respect to any one Performance Period (hereinafter defined) shall be 250,000
Shares, $5,000,000 in cash, or both.

      (b) Performance Compensation Awards. The Committee may, at the time of
grant of a Performance Unit, designate such Award as a "Performance Compensation
Award" in order that such Award constitutes "qualified performance-based
compensation" under Code Section 162(m), in which event the Committee shall have
the power to grant such Performance Compensation Award upon terms and conditions
that qualify it as "qualified performance-based compensation" within the meaning
of Code Section 162(m). With respect to each such Performance Compensation
Award, the Committee shall establish, in writing within the time required under
Code Section 162(m), a "Performance Period," "Performance Measure(s)", and
"Performance Formula(e)" (each such term being hereinafter defined). Once
established for a Performance Period, the Performance Measure(s) and Performance
Formula(e) shall not be amended or otherwise modified to the extent such
amendment or modification would cause the compensation payable pursuant to the
Award to fail to constitute qualified performance-based compensation under Code
Section 162(m).

          A Participant shall be eligible to receive payment in respect of a
Performance Compensation Award only to the extent that the Performance
Measure(s) for such Award are achieved and the Performance Formula(e) as applied
against such Performance Measure(s) determines that all or some portion of such
Participant's Award has been earned for the Performance Period. As soon as
practicable after the close of each Performance Period, the Committee shall
review and certify in writing whether, and to what extent, the Performance
Measure(s) for the Performance Period have been achieved and, if so, determine
and certify in writing the amount of the Performance Compensation Award to be
paid to the Participant and, in so doing, may use negative discretion to
decrease, but not increase, the amount of the Award otherwise payable to the
Participant based upon such performance. Subject to subsection (d)


                                       13
<PAGE>


hereof, the maximum Performance Compensation Award for any one Participant for
any one Performance Period shall be 250,000 Shares, $5,000,000 in cash, or both.

      (c)  Definitions.

           (i)   "Performance Formula" means, for a Performance Period, one or
      more objective formulas or standards established by the Committee for
      purposes of determining whether or the extent to which an Award has been
      earned based on the level of performance attained or to be attained with
      respect to one or more Performance Measure(s). Performance Formulae may
      vary from Performance Period to Performance Period and from Participant to
      Participant and may be established on a stand-alone basis, in tandem or in
      the alternative.

           (ii)  "Performance Measure" means one or more of the following
      selected by the Committee to measure Company, Affiliate, and/or business
      unit performance for a Performance Period, whether in absolute or relative
      terms, including, without limitation: terms relative to a peer group or
      index; basic, diluted, or adjusted earnings per share; sales or revenue;
      earnings before interest, taxes, and other adjustments (in total or on a
      per share basis); basic or adjusted net income; basic or adjusted funds
      from operations or cash flow; returns on equity, assets, capital, revenue
      or similar measure; level and growth of dividends; the price or increase
      in price of Shares; total shareholder return; distributions received on
      the account of so called carried interests or incentive management fees
      from CT Mezzanine Partners II LP, CT Mezzanine Partners III, Inc., and any
      other private equity fund managed by the Company; total assets; growth in
      assets or new originations of assets; equity market capitalization; assets
      under management; third-party equity capital under management or raised;
      and mergers, acquisitions, sales of assets of Affiliates or business
      units. Each such measure shall be to the extent applicable, determined in
      accordance with generally accepted accounting principles as consistently
      applied by the Company (or such other standard applied by the Committee)
      and, if so determined by the Committee, and in the case of a Performance
      Compensation Award, to the extent permitted under Code Section 162(m),
      adjusted to omit the effects of extraordinary items, gain or loss on the
      disposal of a business segment, unusual or infrequently occurring events
      and transactions and cumulative effects of changes in accounting
      principles. Performance Measures may vary from Performance Period to
      Performance Period and from Participant to Participant, and may be
      established on a stand-alone basis, in tandem or in the alternative.

           (iii) "Performance Period" means one or more periods of time (of not
      less than one fiscal year of the Company), as the Committee may designate,
      over which the attainment of one or more Performance Measure(s) will be
      measured for the purpose of determining a Participant's rights in respect
      of an Award.

           (d) With respect to the maximum limits set forth in Section 10(a) and
10(b) above, the Committee shall have the discretion to provide in any Award
Agreement that any amounts earned in excess of these amounts during a
Performance Period will either be credited as Deferred Share Units, or as
deferred cash compensation under a separate plan of the Company or an Affiliate
(provided in the latter case that such deferred compensation either bears a


                                       14
<PAGE>


reasonable rate of interest or has a value based on one or more predetermined
actual investments). Any amounts for which payment to the Participant is
deferred pursuant to the preceding sentence shall be paid to the Participant in
a future year or years but not earlier than, and only to the extent that, the
Participant is either not receiving compensation in excess of these limits for a
Performance Period, or is not subject to the restrictions set forth under
Section 162(b) of the Code

11.   Taxes

      (a) General. As a condition to the issuance or distribution of Shares
pursuant to the Plan, the Participant (or in the case of the Participant's
death, the Person who succeeds to the Participant's rights) shall make such
arrangements as the Company may require for the satisfaction of any applicable
federal, state, local or foreign withholding tax obligations that may arise in
connection with the Award and the issuance of Shares. The Company shall not be
required to issue any Shares until such obligations are satisfied. If the
Committee allows the withholding or surrender of Shares to satisfy a
Participant's tax withholding obligations, the Committee shall not allow Shares
to be withheld in an amount that exceeds the minimum statutory withholding rates
for federal and state tax purposes, including payroll taxes.

      (b) Default Rule for Employees. In the absence of any other arrangement,
an Employee shall be deemed to have directed the Company to withhold or collect
from his or her cash compensation an amount sufficient to satisfy such tax
obligations from the next payroll payment otherwise payable after the date of
the exercise of an Award.

      (c) Special Rules. In the case of a Participant other than an Employee (or
in the case of an Employee where the next payroll payment is not sufficient to
satisfy such tax obligations, with respect to any remaining tax obligations), in
the absence of any other arrangement and to the extent permitted under the
Applicable Law, the Participant shall be deemed to have elected to have the
Company withhold from the Shares or cash to be issued pursuant to an Award that
number of Shares (or equivalent cash amount) having a Fair Market Value
determined as of the applicable Tax Date (as defined below) equal to the amount
required to be withheld. For purposes of this Section 11, the Fair Market Value
of the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined under the Applicable Law (the "Tax
Date").

      (d) Surrender of Shares. If permitted by the Committee, in its discretion,
a Participant may satisfy the minimum applicable tax withholding and employment
tax obligations associated with an Award by surrendering Shares to the Company
(including Shares that would otherwise be issued pursuant to the Award) that
have a Fair Market Value determined as of the applicable Tax Date equal to the
amount required to be withheld. In the case of Shares previously acquired from
the Company that are surrendered under this Section 11, such Shares must have
been owned by the Participant for more than six months on the date of surrender
(or such longer period of time the Company may in its discretion require).


                                       15
<PAGE>


12.   Non-Transferability of Awards

      (a) General. Except as set forth in this Section 12, or as otherwise
approved by the Committee for a select group of management or highly compensated
Employees, Awards may not be sold, pledged, assigned, hypothecated, transferred
or disposed of in any manner other than by will or by the laws of descent or
distribution. The designation of a beneficiary by a Participant will not
constitute a transfer. An Award may be exercised, during the lifetime of the
Participant issued an Award, only by such Participant, the duly-authorized legal
representative of a disabled Participant, or a transferee permitted by this
Section 12.

      (b) Limited Transferability Rights. Notwithstanding anything else in this
Section 12, the Committee may in its discretion provide in an Award Agreement
that the Award may be transferred by instrument to an inter vivos or
testamentary trust (or other entity) in which the Award is to be passed to
beneficiaries upon the death of the trustor (settlor), or by gift to charitable
institutions, the Participant's "Immediate Family" (as defined below), on such
terms and conditions as the Committee deems appropriate. "Immediate Family"
means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, domestic partner, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
and shall include adoptive relationships.

13.   Adjustments Upon Changes in Capitalization, Merger or Certain Other
Transactions

      (a) Changes in Capitalization. The Committee shall equitably adjust the
number of Shares covered by each outstanding Award, and the number of Shares
that have been authorized for issuance under the Plan but as to which no Awards
have yet been granted or that have been returned to the Plan upon cancellation,
forfeiture, or expiration of an Award, as well as the price per Share covered by
each such outstanding Award, to reflect any increase or decrease in the number
of issued Shares resulting from a stock-split, reverse stock-split, stock
dividend, combination, recapitalization or reclassification of the Shares, or
any other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company. In the event of any such transaction or
event, the Committee may provide in substitution for any or all outstanding
Options under the Plan such alternative consideration (including securities of
any surviving entity) as it may in good faith determine to be equitable under
the circumstances and may require in connection therewith the surrender of all
Options so replaced. In any case, such substitution of securities shall not
require the consent of any Person who is granted options pursuant to the Plan.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be required to be made
with respect to, the number or price of Shares subject to any Award.

      (b) Dissolution or Liquidation. In the event of the dissolution or
liquidation of the Company other than as part of a Change of Control, each Award
will terminate immediately prior to the consummation of such action, subject to
the discretion of the Committee to exercise any discretion authorized in the
case of a Change in Control.


                                       16
<PAGE>


      (c) Change in Control. In the event of a Change in Control (or beforehand
through an Award Agreement or modification of an Award Agreement), the Committee
may in its sole and absolute discretion and authority, without obtaining the
approval or consent of the Company's shareholders or any Participant (subject to
the specific commitments made in any Award Agreement) with respect to his or her
outstanding Awards, take one or more of the following actions:

           (i)   arrange for or otherwise provide that each outstanding Award
      shall be assumed or a substantially similar award shall be substituted by
      a successor corporation or a parent or subsidiary of such successor
      corporation (the "Successor Corporation");

           (ii)  accelerate the vesting of Awards for any period that the
      Committee may authorize at the end of which the Committee may provide for
      termination of any unexercised Options or SARs, so that Awards shall vest
      (and, to the extent applicable, become exercisable) as to the Shares that
      otherwise would have been unvested and provide that repurchase rights of
      the Company, if any, with respect to Shares issued upon exercise of an
      Award shall lapse as to the Shares subject to such repurchase right; or

           (iii) arrange or otherwise provide for the payment of cash or other
      consideration to Participants in exchange for the satisfaction and
      cancellation of outstanding Awards.

      Notwithstanding the above, in the event a Participant holding an Award
assumed or substituted by the Successor Corporation in a Change in Control is
Involuntarily Terminated by the Successor Corporation in connection with, or
within 12 months following consummation of, the Change in Control, then any
assumed or substituted Award held by the terminated Participant at the time of
termination shall accelerate and become fully vested (and exercisable in full in
the case of Options and SARs), and any repurchase right applicable to any Shares
shall lapse in full. The acceleration of vesting and lapse of repurchase rights
provided for in the previous sentence shall occur immediately prior to the
effective date of the Participant's termination.

      (d) Certain Distributions. In the event of any distribution to the
Company's shareholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Committee may, in its discretion,
appropriately adjust the price per Share covered by each outstanding Award to
reflect the effect of such distribution.

14.   Time of Granting Awards.

      The date of grant ("Grant Date") of an Award shall be the date on which
the Committee makes the determination granting such Award or such other date as
is determined by the Committee, provided that in the case of an ISO, the Grant
Date shall be the later of the date on which the Committee makes the
determination granting such ISO or the date of commencement of the Participant's
employment relationship with the Company.


                                       17
<PAGE>


15.   Modification of Awards and Substitution of Options.

      (a) Modification, Extension, and Renewal of Awards. Within the limitations
of the Plan and any Award Agreement, the Committee may modify an Award (i) to
accelerate the rate at which an Option or SAR may be exercised (including
without limitation permitting an Option or SAR to be exercised in full without
regard to the installment or vesting provisions of the applicable Award
Agreement or whether the Option or SAR is at the time exercisable, to the extent
it has not previously been exercised), (ii) to accelerate the vesting of any
Award, (iii) to extend or renew outstanding Awards, or (iv) to accept the
cancellation of outstanding Awards to the extent not previously exercised either
for the granting of new Awards or for other consideration in substitution or
replacement thereof.

      (b) Substitution of Options. Notwithstanding any inconsistent provisions
or limits under the Plan, in the event the Company or an Affiliate acquires
(whether by purchase, merger or otherwise) all or substantially all of
outstanding capital stock or assets of another corporation or in the event of
any reorganization or other transaction qualifying under Section 424 of the
Code, the Committee may, in accordance with the provisions of that Section,
substitute Options for options under the plan of the acquired company provided
(i) the excess of the aggregate fair market value of the shares subject to an
option immediately after the substitution over the aggregate option price of
such shares is not more than the similar excess immediately before such
substitution and (ii) the new Option does not give Persons additional benefits,
including any extension of the exercise period.

16.   Term of Plan.

      The Plan shall continue in effect for a term of ten (10) years from its
effective date as determined under Section 20 below, unless the Plan is sooner
terminated under Section 17 below.

17.   Amendment and Termination of the Plan.

      (a) Authority to Amend or Terminate. Subject to Applicable Laws, the Board
may from time to time amend, alter, suspend, discontinue, or terminate the Plan.

      (b) Effect of Amendment or Termination. No amendment, suspension, or
termination of the Plan shall materially and adversely affect Awards already
granted unless either it relates to an adjustment pursuant to Section 13 above,
or it is otherwise mutually agreed between the Participant and the Committee,
which agreement must be in writing and signed by the Participant and the
Company. Notwithstanding the foregoing, the Committee may amend the Plan to
eliminate provisions which are no longer necessary as a result of changes in tax
or securities laws or regulations, or in the interpretation thereof.

18.   Conditions Upon Issuance of Shares.

      Notwithstanding any other provision of the Plan or any agreement entered
into by the Company pursuant to the Plan, the Company shall not be obligated,
and shall have no liability for failure, to issue or deliver any Shares under
the Plan unless such issuance or delivery would


                                       18
<PAGE>


comply with Applicable Law, with such compliance determined by the Company in
consultation with its legal counsel.

19.   Reservation of Shares.

      The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

20.   Effective Date.

      This Plan shall become effective on the date of its approval by the Board;
provided that this Plan shall be submitted to the Company's shareholders for
approval, and if not approved by the shareholders within one year from the date
of approval by the Board, this Plan and any Awards shall be null, void, and of
no force and effect. Awards granted under this Plan before approval of this Plan
by the shareholders shall be granted subject to such approval and no Shares
shall be distributed before such approval.

21.   Controlling Law.

      All disputes relating to or arising from the Plan shall be governed by the
internal substantive laws (and not the laws of conflicts of laws) of the State
of New York, to the extent not preempted by United States federal law. If any
provision of this Plan is held by a court of competent jurisdiction to be
invalid and unenforceable, the remaining provisions shall continue to be fully
effective.

22.   Laws And Regulations.

      (a) U.S. Securities Laws. This Plan, the grant of Awards, and the exercise
of Options and SARs under this Plan, and the obligation of the Company to sell
or deliver any of its securities (including, without limitation, Options,
Restricted Shares, Restricted Share Units, Unrestricted Shares, Deferred Share
Units, and Shares) under this Plan shall be subject to all Applicable Law. In
the event that the Shares are not registered under the Securities Act of 1933,
as amended (the "Act"), or any applicable state securities laws prior to the
delivery of such Shares, the Company may require, as a condition to the issuance
thereof, that the Persons to whom Shares are to be issued represent and warrant
in writing to the Company that such Shares are being acquired by him or her for
investment for his or her own account and not with a view to, for resale in
connection with, or with an intent of participating directly or indirectly in,
any distribution of such Shares within the meaning of the Act, and a legend to
that effect may be placed on the certificates representing the Shares.

      (b) Other Jurisdictions. To facilitate the making of any grant of an Award
under this Plan, the Committee may provide for such special terms for Awards to
Participants who are foreign nationals or who are employed by the Company or any
Affiliate outside of the United States of America as the Committee may consider
necessary or appropriate to accommodate differences in local law, tax policy or
custom. The Company may adopt rules and procedures relating to the operation and
administration of this Plan to accommodate the specific requirements of local
laws and procedures of particular countries. Without limiting the


                                       19
<PAGE>


foregoing, the Company is specifically authorized to adopt rules and procedures
regarding the conversion of local currency, taxes, withholding procedures and
handling of stock certificates which vary with the customs and requirements of
particular countries. The Company may adopt sub-plans applicable to particular
locations and countries.

23. No Shareholder Rights. Neither a Participant nor any transferee of a
Participant shall have any rights as a shareholder of the Company with respect
to any Shares underlying any Award until the date of issuance of a share
certificate to a Participant or a transferee of a Participant for such Shares in
accordance with the Company's governing instruments and Applicable Law. Prior to
the issuance of Shares pursuant to an Award, a Participant shall not have the
right to vote or to receive dividends or any other rights as a shareholder with
respect to the Shares underlying the Award, notwithstanding its exercise in the
case of Options and SARs. No adjustment will be made for a dividend or other
right that is determined based on a record date prior to the date the stock
certificate is issued, except as otherwise specifically provided for in this
Plan.

24. No Employment Rights. The Plan shall not confer upon any Participant any
right to continue an employment, service or consulting relationship with the
Company, nor shall it affect in any way a Participant's right or the Company's
right to terminate the Participant's employment, service, or consulting
relationship at any time, with or without Cause.


                                       20
<PAGE>


                               CAPITAL TRUST, INC.
                          2004 LONG-TERM INCENTIVE PLAN

                                   __________


                             Appendix A: Definitions

                                   __________

As used in the Plan, the following definitions shall apply:

      "Affiliate" means, with respect to any Person (as defined below), any
other Person that directly or indirectly controls or is controlled by or under
common control with such Person. For the purposes of this definition, "control,"
when used with respect to any Person, means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
such Person or the power to elect directors, whether through the ownership of
voting securities, by contract or otherwise; and the terms "affiliated,"
"controlling" and "controlled" have meanings correlative to the foregoing.

      "Applicable Law" means the legal requirements relating to the
administration of options and share-based plans under applicable U.S. federal
and state laws, the Code, any applicable stock exchange or automated quotation
system rules or regulations, and the applicable laws of any other country or
jurisdiction where Awards are granted, as such laws, rules, regulations and
requirements shall be in place from time to time.

      "Award" means any award made pursuant to the Plan, including awards made
in the form of an Option, an SAR, a Restricted Share, an Unrestricted Share, a
Restricted Share Unit, a Deferred Share Unit and a Performance Award, or any
combination thereof, whether alternative or cumulative, authorized by and
granted under this Plan.

      "Award Agreement" means any written document setting forth the terms of an
Award that has been authorized by the Committee. The Committee shall determine
the form or forms of documents to be used, and may change them from time to time
for any reason.

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

      "Cause" for termination of a Participant's Continuous Service will exist
if the Participant is terminated from employment or other service with the
Company or an Affiliate for any of the following reasons: (i) the Participant's
conviction of a felony committed in connection with his or her employment or
service with the Company, (ii) the Participant's willful and failure to
substantially perform his or her duties and responsibilities to the Company or
deliberate violation of a material Company policy; (iii) the Participant's
commission of any material act or acts of fraud, embezzlement, dishonesty, or
other willful misconduct; (v) the Participant's material unauthorized use or
disclosure of any proprietary information or trade secrets of the Company or any
other party to whom the Participant owes an obligation of nondisclosure as a
result of his or


                                       21
<PAGE>


her relationship with the Company; or (v) Participant's willful and material
breach of any of his or her obligations under any written agreement or covenant
with the Company.

      The Committee shall in its discretion determine whether or not a
Participant is being terminated for Cause. The Committee's determination shall,
unless arbitrary and capricious, be final and binding on the Participant, the
Company, and all other affected Persons. The foregoing definition does not in
any way limit the Company's ability to terminate a Participant's employment or
consulting relationship at any time, and the term "Company" will be interpreted
herein to include any Affiliate or successor thereto, if appropriate.


      "Change in Control" means any of the following:

      (a) Approval by the shareholders of the Company of the dissolution or
liquidation of the Company;

      (b) Approval by the shareholders of the Company of an agreement to merge
or consolidate, or otherwise reorganize, with or into one or more entities that
are not Affiliates, as a result of which less than 50% of the outstanding voting
securities of the surviving or resulting entity immediately after such
transaction are, or will be, owned, directly or indirectly, by shareholders of
the Company immediately before such transaction (assuming for purposes of such
determination that there is no change in the record ownership of the Company's
securities from the record date for such approval until such transaction and
that such record owners hold no securities of the other parties to such
reorganization), but including in such determination any securities of the other
parties to such transaction held by Affiliates of the Company);

      (c) Approval by the shareholders of the Company of the sale of
substantially all of the Company's business and/or assets to a Person or entity
that is not an Affiliate of the Company;

      (d) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act but excluding any Person described in and satisfying the conditions
of Rule 13d-1(b)(1) thereunder), other than a Person that is a shareholder of
the Company on the Effective Date or a trustee or a fiduciary holding securities
under an employee benefit plan of the Company or any of its subsidiaries or an
entity owned directly or indirectly by the shareholders of the Company in
substantially the same proportion as their ownership of the stock of the
Company, becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
more than 33% of the combined voting power of the Company's then outstanding
securities entitled to then vote generally in the election of directors of the
Company other than as a result of the acquisition of securities directly from
the Company; or

      (e) During any period not longer than two consecutive years, individuals
who at the beginning of such period constituted the Board cease to constitute at
least a majority thereof, unless the election, or the nomination for election by
the Company's shareholders, of each new Board member was approved by a vote of
at least three-fourths of the Board members then still


                                       22
<PAGE>


in office who were Board members at the beginning of such period (including for
these purposes, new members whose election or nomination was so approved).

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

      "Committee" means one or more committees or subcommittees of the Board
appointed by the Board to administer the Plan in accordance with Section 4
above. With respect to any decision involving an Award intended to satisfy the
requirements of Section 162(m) of the Code, the Committee shall consist solely
of two or more Directors of the Company who are "outside directors" within the
meaning of Section 162(m) of the Code.

      "Company" means Capital Trust, Inc., a Maryland corporation.

      "Consultant" means any natural person, including an advisor, who is
engaged by the Company or any Affiliate to render services and is compensated
for such services.

      "Continuous Service" means the absence of any interruption or termination
of service as an Employee, Director, or Consultant. Continuous Service shall not
be considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Committee, provided that such
leave is for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; (iv)
changes in status from Director to advisory director or emeritus status; or (iv)
in the case of transfers between locations of the Company or between the
Company, its Affiliates or their respective successors. Changes in status
between service as an Employee, Director, and a Consultant will not constitute
an interruption of Continuous Service.

      "Deferred Share Units" mean Awards pursuant to Section 9 of the Plan.

      "Director" means a member of the Board, or a member of the board of
directors of an Affiliate.

      "Eligible Person" means any Consultant, Director or Employee and includes
non-Employees to whom an offer of employment has been extended.

      "Employee" means any natural person whom the Company or any Affiliate
classifies as an employee (including an officer) for employment tax purposes.
The payment by the Company of a director's fee to a Director shall not be
sufficient to constitute "employment" of such Director by the Company.

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

      "Fair Market Value" means, as of any date (the "Determination Date")
means: (i) the closing price of a Share on the New York Stock Exchange or the
American Stock Exchange (collectively, the "Exchange"), on the Determination
Date, or, if shares were not traded on the Determination Date, then on the
nearest preceding trading day during which a sale occurred; or (ii) if such
stock is not traded on the Exchange but is quoted on NASDAQ or a successor
quotation system, (A) the last sales price (if the stock is then listed as a
National Market Issue


                                       23
<PAGE>


under The Nasdaq National Market System) or (B) the mean between the closing
representative bid and asked prices (in all other cases) for the stock on the
Determination Date as reported by NASDAQ or such successor quotation system; or
(iii) if such stock is not traded on the Exchange or quoted on NASDAQ but is
otherwise traded in the over-the-counter, the mean between the representative
bid and asked prices on the Determination Date; or (iv) if subsections (i)-(iii)
do not apply, the fair market value established in good faith by the Board.

      "Grant Date" has the meaning set forth in Section 14 of the Plan.

      "Incentive Share Option or ISO" hereinafter means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code, as designated in the applicable Award Agreement.

      "Involuntary Termination" means termination of a Participant's Continuous
Service under the following circumstances occurring on or after a Change in
Control: (i) termination without Cause by the Company or an Affiliate or
successor thereto, as appropriate; or (ii) voluntary termination by the
Participant within 60 days following (A) a material reduction in the
Participant's job responsibilities, provided that neither a mere change in title
alone nor reassignment to a substantially similar position shall constitute a
material reduction in job responsibilities; (B) an involuntary relocation of the
Participant's work site to a facility or location more than 50 miles from the
Participant's principal work site at the time of the Change in Control; or (C) a
material reduction in Participant's total compensation other than as part of an
reduction by the same percentage amount in the compensation of all other
similarly-situated Employees, Directors or Consultants.

      "Non-ISO" means an Option not intended to qualify as an ISO, as designated
in the applicable Award Agreement.

      "Option" means any stock option granted pursuant to Section 6 of the Plan.

      "Participant" means any holder of one or more Awards, or the Shares
issuable or issued upon exercise of such Awards, under the Plan.

      "Performance Awards" mean Performance Units and Performance Compensation
Awards granted pursuant to Section 10.

      "Performance Compensation Awards" mean Awards granted pursuant to Section
10(b) of the Plan.

      "Performance Unit" means Awards granted pursuant to Section 10(a) of the
Plan which may be paid in cash, in Shares, or such combination of cash and
Shares as the Committee in its sole discretion shall determine.

      "Person" means any natural person, association, trust, business trust,
cooperative, corporation, general partnership, joint venture, joint-stock
company, limited partnership, limited liability company, real estate investment
trust, regulatory body, governmental agency or instrumentality, unincorporated
organization or organizational entity.


                                       24
<PAGE>


      "Plan" means this Capital Trust, Inc. 2004 Long-term Incentive Plan.

      "Reporting Person" means an officer, Director, or greater than ten percent
shareholder of the Company within the meaning of Rule 16a-2 under the Exchange
Act, who is required to file reports pursuant to Rule 16a-3 under the Exchange
Act.

      "Restricted Shares" mean Shares subject to restrictions imposed pursuant
to Section 8 of the Plan.

      "Restricted Share Units" mean Awards designated as such pursuant to
Section 8 of the Plan.

      "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, as
amended from time to time, or any successor provision.

      "SAR" or "Share Appreciation Right" means Awards granted pursuant to
Section 7 of the Plan.

      "Share" means a share of class A common stock, par value $0.01 per share,
of the Company, as adjusted or substituted in accordance with Section 13 of the
Plan.

      "Ten Percent Holder" means a Person who owns stock representing more than
ten percent (10%) of the combined voting power of all classes of stock of the
Company or any Affiliate.

      "Unrestricted Shares" mean Awards designated as such pursuant to Section 8
of the Plan.


                                       25
<PAGE>




                              CAPITAL TRUST, INC.

                         2004 LONG-TERM INCENTIVE PLAN





                                               As approved by the Board of
                                               Directors on May 6, 2004 and by
                                               the shareholders on June 17,
                                               2004




</TEXT>
</DOCUMENT>
