10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

Commission File Number 1-14788

Capital Trust, Inc.

(Exact name of registrant as specified in its charter)

Maryland	94-6181186
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
410 Park Avenue, 14th Floor, New York, NY	10022
(Address of principal executive offices)	(Zip Code)
(212) 655-0220 (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o   No o [This requirement is currently not applicable to the registrant.] 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer   ý (Do not check if a smaller reporting company)	Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o   No ý

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of outstanding shares of the registrant's class A common stock, par value $0.01 per share, as of October 22, 2010 was 21,962,663.

CAPITAL TRUST, INC.

INDEX

Part I.	Financial Information
	Item 1:	Financial Statements	1
		Consolidated Balance Sheets – September 30, 2010 (unaudited) and December 31, 2009	1
		Consolidated Statements of Operations – Three and Nine Months Ended September 30, 2010 (unaudited) and 2009 (unaudited)	2
		Consolidated Statements of Changes in Shareholders' Equity (Deficit) – Nine Months Ended September 30, 2010 (unaudited) and 2009 (unaudited)	3
		Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2010 (unaudited) and 2009 (unaudited)	4
		Notes to Consolidated Financial Statements (unaudited)	5
	Item 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations	44
	Item 3:	Quantitative and Qualitative Disclosures About Market Risk	62
	Item 4:	Controls and Procedures	64
Part II.	Other Information
	Item 1:	Legal Proceedings	65
	Item 1A:	Risk Factors	65
	Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	65
	Item 3:	Defaults Upon Senior Securities	65
	Item 4:	(Removed and Reserved)	65
	Item 5:	Other Information	65
	Item 6:	Exhibits	66
	Signatures		67

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Capital Trust, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 2010 and December 31, 2009
(in thousands, except per share data)
	September 30,			December 31,
Assets	2010			2009
	(unaudited)
Cash and cash equivalents	$	24,149		$	27,954
Securities held-to-maturity		3,345			17,332
Loans receivable, net		610,633			766,745
Loans held-for-sale, net		59,953			—
Equity investments in unconsolidated subsidiaries		7,597			2,351
Accrued interest receivable		2,600			3,274
Deferred income taxes		1,155			2,032
Prepaid expenses and other assets		5,976			8,391
Subtotal		715,408			828,079
Assets of Consolidated Variable Interest Entities ("VIEs")
Securities held-to-maturity		531,349			697,864
Loans receivable, net		2,962,597			391,499
Loans held-for-sale, net		—			17,548
Real estate held-for-sale		8,055			—
Accrued interest receivable and other assets		18,442			1,645
Subtotal		3,520,443			1,108,556
Total assets	$	4,235,851		$	1,936,635
Liabilities & Shareholders' Deficit
Liabilities:
Accounts payable and accrued expenses	$	7,325		$	8,228
Repurchase obligations		407,921			450,137
Senior credit facility		98,393			99,188
Junior subordinated notes		131,145			128,077
Participations sold		288,127			289,144
Interest rate hedge liabilities		5,900			4,184
Subtotal		938,811			978,958
Non-Recourse Liabilities of Consolidated VIEs
Accounts payable and accrued expenses		4,588			1,798
Securitized debt obligations		3,683,774			1,098,280
Interest rate hedge liabilities		35,329			26,766
Subtotal		3,723,691			1,126,844
Total liabilities		4,662,502			2,105,802
Shareholders' deficit:
Class A common stock, $0.01 par value, 100,000 shares authorized, 21,912      and 21,796 shares issued and outstanding as of September 30, 2010 and      December 31, 2009, respectively ("class A common stock")		219			218
Restricted class A common stock, $0.01 par value, 51 and 79 shares issued      and outstanding as of September 30, 2010 and December 31, 2009,      respectively ("restricted class A common stock" and together with class      A common stock, "common stock")		1			1
Additional paid-in capital		559,339			559,145
Accumulated other comprehensive loss		(55,940	)		(39,135	)
Accumulated deficit		(930,270	)		(689,396	)
Total shareholders' deficit		(426,651	)		(169,167	)
Total liabilities and shareholders' deficit	$	4,235,851		$	1,936,635

See accompanying notes to consolidated financial statements.

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Capital Trust, Inc. and Subsidiaries
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2010 and 2009
(in thousands, except share and per share data)
(unaudited)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
Income from loans and other investments:
Interest and related income	$	40,125		$	29,527		$	119,523		$	93,341
Less: Interest and related expenses		31,557			19,604			94,462			61,116
Income from loans and other investments, net		8,568			9,923			25,061			32,225
Other revenues:
Management fees from affiliates		2,050			2,959			5,990			8,768
Incentive management fees from affiliates		733			—			733			—
Servicing fees		84			168			2,821			1,502
Other interest income		155			16			260			153
Total other revenues		3,022			3,143			9,804			10,423
Other expenses:
General and administrative		5,143			5,492			14,383			18,450
Depreciation and amortization		5			51			15			65
Total other expenses		5,148			5,543			14,398			18,515
Total other-than-temporary impairments of securities		(29,963	)		(77,883	)		(69,798	)		(96,529	)
Portion of other-than-temporary impairments of securities      recognized in other comprehensive income		(5,921	)		11,987			12,094			17,612
Impairment of goodwill		—			—			—			(2,235	)
Impairment of real estate held-for-sale		(4,000	)		—			(4,000	)		(2,233	)
Net impairments recognized in earnings		(39,884	)		(65,896	)		(61,704	)		(83,385	)
Provision for loan losses		(95,916	)		(47,222	)		(150,143	)		(113,716	)
Valuation allowance on loans held-for-sale		(6,036	)		—			(6,036	)		(10,363	)
Gain on extinguishment of debt		185			—			648			—
Income (loss) from equity investments		1,056			(862	)		2,358			(3,074	)
Loss before income taxes		(134,153	)		(106,457	)		(194,410	)		(186,405	)
Income tax provision (benefit)		556			—			849			(408	)
Net loss	$	(134,709	)	$	(106,457	)	$	(195,259	)	$	(185,997	)
Per share information:
Net loss per share of common stock:
Basic	$	(6.02	)	$	(4.75	)	$	(8.73	)	$	(8.32	)
Diluted	$	(6.02	)	$	(4.75	)	$	(8.73	)	$	(8.32	)
Weighted average shares of common stock outstanding:
Basic		22,389,901			22,426,623			22,356,857			22,361,541
Diluted		22,389,901			22,426,623			22,356,857			22,361,541

See accompanying notes to consolidated financial statements.

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Capital Trust, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity (Deficit)
For the Nine Months Ended September 30, 2010 and 2009
(in thousands)
(unaudited)
	Comprehensive Loss			Class A Common Stock		Restricted Class A Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
Balance at January 1, 2009				$	217	$	3	$	557,435	$	(41,009	)	$	(115,202	)	$	401,444
Net loss	$	(185,997	)		—		—		—		—			(185,997	)		(185,997	)
Cumulative effect of change in accounting principle		—			—		—		—		(2,243	)		2,243			—
Unrealized gain (loss) on derivative financial instruments		13,465			—		—		—		13,465			—			13,465
Amortization of net unrealized gains and losses on securities		(675	)		—		—		—		(675	)		—			(675	)
Amortization of net deferred gains and losses on settlement of swaps		(70	)		—		—		—		(70	)		—			(70	)
Other-than-temporary impairments of securities related to fair value adjustments in excess of expected credit losses, net of amortization		(17,346	)		—		—		—		(17,346	)		—			(17,346	)
Issuance of warrants in conjunction with debt restructuring		—			—		—		940		—			—			940
Restricted class A common stock earned		—			1		—		1,091		—			—			1,092
Deferred directors' compensation		—			—		—		393		—			—			393
Balance at September 30, 2009	$	(190,623	)	$	218	$	3	$	559,859	$	(47,878	)	$	(298,956	)	$	213,246
Balance at January 1, 2010				$	218	$	1	$	559,145	$	(39,135	)	$	(689,396	)	$	(169,167	)
Net loss	$	(195,259	)		—		—		—		—			(195,259	)		(195,259	)
Cumulative effect of change in accounting principle		—			—		—		—		3,800			(45,615	)		(41,815	)
Unrealized gain (loss) on derivative financial instruments		(10,281	)		—		—		—		(10,281	)		—			(10,281	)
Amortization of net unrealized gains and losses on securities		(754	)		—		—		—		(754	)		—			(754	)
Amortization of net deferred gains and losses on settlement of swaps		(74	)		—		—		—		(74	)		—			(74	)
Other-than-temporary impairments of securities related to fair value adjustments in excess of expected credit losses, net of amortization		(9,496	)		—		—		—		(9,496	)		—			(9,496	)
Restricted class A common stock earned		—			1		—		44		—			—			45
Deferred directors' compensation		—			—		—		150		—			—			150
Balance at September 30, 2010	$	(215,864	)	$	219	$	1	$	559,339	$	(55,940	)	$	(930,270	)	$	(426,651	)

See accompanying notes to consolidated financial statements.

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Capital Trust, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2010 and 2009
(in thousands)
(unaudited)
	2010			2009
Cash flows from operating activities:
Net loss	$	(195,259	)	$	(185,997	)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Net impairments recognized in earnings		61,704			83,385
Provision for loan losses		150,143			113,716
Valuation allowance on loans held-for-sale		6,036			10,363
Gain on extinguishment of debt		(648	)		—
(Income) loss from equity investments		(2,358	)		3,074
Employee stock-based compensation		107			1,102
Depreciation and amortization		15			65
Amortization of premiums/discounts on loans and securities and deferred              interest on loans		(2,581	)		(4,966	)
Amortization of deferred gains and losses on settlement of swaps		(74	)		(70	)
Amortization of deferred financing costs and premiums/discounts on
debt obligations		5,596			5,166
Deferred interest on senior credit facility		2,954			1,943
Deferred directors' compensation		150			393
Changes in assets and liabilities, net:
Accrued interest receivable		351			1,439
Deferred income taxes		877			—
Prepaid expenses and other assets		1,163			2,220
Accounts payable and accrued expenses		56			(1,747	)
Net cash provided by operating activities		28,232			30,086
Cash flows from investing activities:
Principal collections of securities		35,806			11,342
Add-on fundings under existing loan commitments		(1,562	)		(7,698	)
Principal collections of loans receivable		183,761			56,188
Proceeds from operation/disposition of real estate held-for-sale		—			7,665
Proceeds from disposition of loans		23,548			—
Contributions to unconsolidated subsidiaries		(2,917	)		(2,315	)
Distributions from unconsolidated subsidiaries		29			—
Net cash provided by investing activities		238,665			65,182
Cash flows from financing activities:
Decrease in restricted cash		—			18,666
Repayments under repurchase obligations		(42,568	)		(93,709	)
Repayments under senior credit facility		(3,750	)		(2,500	)
Repayment of securitized debt obligations		(224,384	)		(31,636	)
Repayment of participations sold		—			(2,889	)
Payment of deferred financing costs		—			(7	)
Net cash used in financing activities		(270,702	)		(112,075	)
Net decrease in cash and cash equivalents		(3,805	)		(16,807	)
Cash and cash equivalents at beginning of period		27,954			45,382
Cash and cash equivalents at end of period	$	24,149		$	28,575

See accompanying notes to consolidated financial statements.

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Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited)

Note 1. Organization

References herein to “we,” “us” or “our” refer to Capital Trust, Inc., a Maryland corporation, and its subsidiaries unless the context specifically requires otherwise.

We are a fully integrated, self-managed, real estate finance and investment management company that specializes in credit sensitive financial products. To date, our investment programs have focused on loans and securities backed by commercial real estate assets. We invest for our own account directly on our balance sheet and for third parties through a series of investment management vehicles. From the inception of our finance business in 1997 through September 30, 2010, we have completed over $11.4 billion of investments in the commercial real estate debt arena. We conduct our operations as a real estate investment trust, or REIT, for federal income tax purposes. We are traded on the New York Stock Exchange under the symbol “CT”, and are headquartered in New York City.

Note 2. Summary of Significant Accounting Policies

The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the consolidated financial statements and the related management’s discussion and analysis of financial condition and results of operations filed with our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. In our opinion, all material adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation, in accordance with GAAP, have been included. The results of operations for the nine months ended September 30, 2010 are not necessarily indicative of results that may be expected for the entire year ending December 31, 2010.

Principles of Consolidation

The accompanying financial statements include, on a consolidated basis, our accounts, the accounts of our wholly-owned subsidiaries, and variable interest entities, or VIEs, in which we are the primary beneficiary, prepared in accordance with GAAP. All significant intercompany balances and transactions have been eliminated in consolidation.

VIEs are defined as entities in which equity investors (i) do not have the characteristics of a controlling financial interest, and/or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The entity that consolidates a VIE is known as its primary beneficiary. Our consolidated VIEs generally include two categories of entities: (i) collateralized debt obligations sponsored and issued by us, which we refer to as CT CDOs, and (ii) other consolidated VIEs, which are also securitization vehicles but were not issued or sponsored by us.

As of September 30, 2010, our consolidated balance sheet includes an aggregate $3.5 billion of assets and $3.7 billion of liabilities related to 11 consolidated VIEs. Due to the non-recourse nature of these VIEs, and other factors, our net exposure to loss from investments in these entities is limited to $34.3 million. See Note 11 for additional information on our investments in VIEs.

Balance Sheet Presentation

As a result of the recent accounting pronouncements discussed below, we have adjusted the presentation of our consolidated balance sheet, in accordance with GAAP, to separately categorize (i) our assets and liabilities, and (ii) the assets and liabilities of consolidated VIEs. Assets of consolidated VIEs can generally only be used to satisfy the obligations of those VIEs, and the liabilities of consolidated VIEs are non-recourse to us. We have aggregated all the assets and liabilities of our consolidated VIEs due to our determination that these entities are substantively similar and therefore a further disaggregated presentation would not be more meaningful. Similarly, the notes to our consolidated financial statements separately describe our assets and liabilities and those of consolidated VIEs.

Equity Investments in Unconsolidated Subsidiaries

Our co-investment interest in the private equity funds we manage are accounted for using the equity method. These entities’ assets and liabilities are not consolidated into our financial statements due to our determination that (i) these entities are not VIEs, and (ii) the investors have sufficient rights to preclude consolidation by us. As such, we report our allocable percentage of the earnings or losses of these entities on a single line item in our consolidated statements of operations as income (loss) from equity investments.

One such fund, CT Opportunity Partners I, LP, or CTOPI, maintains its financial records at fair value in accordance with GAAP. We have applied such accounting relative to our investment in CTOPI, and include any adjustments to fair value recorded at the fund level in determining the income (loss) we record on our equity investment in CTOPI.

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Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

Revenue Recognition

Interest income from our loans receivable is recognized over the life of the investment using the effective interest method and is recorded on the accrual basis. Fees, premiums, discounts and direct costs associated with these investments are deferred until the loan is advanced and are then recognized over the term of the loan as an adjustment to yield. For loans where we have unfunded commitments, we amortize these fees and other items on a straight line basis. Fees on commitments that expire unused are recognized at expiration. Income accrual is generally suspended for loans at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, recovery of income and principal becomes doubtful. Income is then recorded on the basis of cash received until accrual is resumed when the loan becomes contractually current and performance is demonstrated to be resumed.

Interest income from our securities is recognized using a level yield with any purchase premium or discount accreted through income over the life of the security. This yield is calculated using cash flows expected to be collected which are based on a number of assumptions on the underlying loans. Examples include, among other things, the rate and timing of principal payments, including prepayments, repurchases, defaults and liquidations, the pass-through or coupon rate and interest rates. Additional factors that may affect reported interest income on our securities include interest payment shortfalls due to delinquencies on the underlying mortgage loans and the timing and magnitude of expected credit losses on the mortgage loans underlying the securities. These are impacted by, among other things, the general condition of the real estate market, including competition for tenants and their related credit quality, and changes in market rental rates. These uncertainties and contingencies are difficult to predict and are subject to future events that may alter the assumptions.

Fees from special servicing and asset management services are recorded on an accrual basis as services are rendered under the applicable agreements, and when receipt of fees is reasonably certain. We do not recognize incentive income from our investment management business until contingencies have been eliminated. Depending on the structure of our investment management vehicles, certain incentive fees may be in the form of carried interest or promote distributions.

Cash and Cash Equivalents

We classify highly liquid investments with original maturities of three months or less from the date of purchase as cash equivalents. We place our cash and cash equivalents with high credit quality institutions to minimize credit risk exposure. As of, and for the periods ended, September 30, 2010 and December 31, 2009, we had bank balances in excess of federally insured amounts. We have not experienced any losses on our demand deposits, commercial paper or money market investments.

Securities

We classify our securities as held-to-maturity, available-for-sale, or trading on the date of acquisition of the investment. On August 4, 2005, we decided to change the accounting classification of certain of our securities from available-for-sale to held-to-maturity. Held-to-maturity investments are stated at cost adjusted for the amortization of any premiums or discounts, which are amortized through our consolidated statements of operations using the effective interest method described above. Other than in the instance of an other-than-temporary impairment (as discussed below), these held-to-maturity investments are shown in our consolidated financial statements at their adjusted values pursuant to the methodology described above.

We may also invest in securities which may be classified as available-for-sale. Available-for-sale securities are carried at estimated fair value with the net unrealized gains or losses reported as a component of accumulated other comprehensive income (loss) in shareholders’ equity. Many of these investments are relatively illiquid and management is required to estimate their fair values. In making these estimates, management utilizes market prices provided by dealers who make markets in these securities, but may, under limited circumstances, adjust these valuations based on management’s judgment. Changes in the valuations do not affect our reported income or cash flows, but impact shareholders’ equity and, accordingly, book value per share.

Further, as required under GAAP, when, based on current information and events, there has been an adverse change in cash flows expected to be collected from those previously estimated, an other-than-temporary impairment is deemed to have occurred. A change in expected cash flows is considered adverse if the present value of the revised cash flows (taking into consideration both the timing and amount of cash flows expected to be collected) discounted using the security’s current yield is less than the present value of the previously estimated remaining cash flows, adjusted for cash receipts during the intervening period. Should an other-than-temporary impairment be deemed to have occurred, the security is written down to fair value. The total other-than-temporary impairment is bifurcated into (i) the amount related to expected credit losses, and (ii) the amount related to fair value adjustments in excess of expected credit losses, or the Valuation Adjustment. The portion of the other-than-temporary impairment related to expected credit losses is calculated by comparing the amortized cost basis of the security to the present value of cash flows expected to be collected, discounted at the security’s current yield, and is recognized through earnings in the consolidated statement of operations. The remaining other-than-temporary impairment related to the Valuation Adjustment is recognized as a component of accumulated other comprehensive income (loss) in shareholders’ equity. A portion of other-than-temporary impairments recognized through earnings is accreted back to the amortized cost basis of the security through interest income, while amounts recognized through other comprehensive income (loss) are amortized over the life of the security with no impact on earnings.

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Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

Loans Receivable, Provision for Loan Losses, Loans Held-for-Sale and Related Allowance

We purchase and originate commercial real estate debt and related instruments, or Loans, generally to be held as long-term investments at amortized cost. Management is required to periodically evaluate each of these Loans for possible impairment. Impairment is indicated when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the Loan. If a Loan is determined to be impaired, we write down the Loan through a charge to the provision for loan losses. Impairment on these loans is measured by comparing the estimated fair value of the underlying collateral to the carrying value of the respective loan. These valuations require significant judgments, which include assumptions regarding capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders and other factors deemed necessary by management. Actual losses, if any, could ultimately differ from these estimates.

In addition, for certain pools of smaller loans which have similar credit characteristics, primarily loans with an outstanding principal balance of $10.0 million or less in our other consolidated VIEs, we have recorded a general provision for loan losses in lieu of the asset-specific provisions we record on all other loans. This general provision is based on macroeconomic data with respect to historic loan losses, vintage, property type, and other factors deemed relevant for such loan pools. These loans do not undergo the same level of asset management as our larger, direct investments.

Loans held-for-sale are carried at the lower of our amortized cost basis and fair value. A reduction in the fair value of loans held-for-sale is recorded as a charge to our consolidated statement of operations as a valuation allowance on loans held-for-sale.

Deferred Financing Costs

The deferred financing costs which are included in prepaid expenses and other assets on our consolidated balance sheets include issuance costs related to our debt obligations and are amortized using the effective interest method, or a method that approximates the effective interest method, over the life of the related obligations.

Repurchase Obligations

In certain circumstances, we have financed the purchase of investments from a counterparty through a repurchase agreement with that same counterparty. We currently record these investments in the same manner as other investments financed with repurchase agreements, with the investment recorded as an asset and the related borrowing under any repurchase agreement recorded as a liability on our consolidated balance sheets. Interest income earned on the investments and interest expense incurred on the repurchase obligations are reported separately on our consolidated statements of operations.

Subsequent to our origination of these investments, revisions to GAAP presume that an initial transfer of a financial asset and a repurchase financing shall be evaluated as a linked transaction and not evaluated separately. If the transaction does not meet the requirements for sale accounting, it shall generally be accounted for as a forward contract, as opposed to the current presentation, where the purchased asset and the repurchase liability are reflected separately on the balance sheet. This revised guidance was effective on a prospective basis, as of January 1, 2009, with earlier application prohibited. Accordingly, new transactions entered into subsequently, which are subject to the revised guidance, may be presented differently on our consolidated financial statements. No such transactions have occurred since January 1, 2009.

Interest Rate Derivative Financial Instruments

In the normal course of business, we use interest rate derivative financial instruments to manage, or hedge, cash flow variability caused by interest rate fluctuations. Specifically, we currently use interest rate swaps to effectively convert floating rate liabilities that are financing fixed rate assets, to fixed rate liabilities. The differential to be paid or received on these agreements is recognized on the accrual basis as an adjustment to the interest expense related to the attendant liability. The interest rate swap agreements are generally accounted for on a held-to-maturity basis, and, in cases where they are terminated early, any gain or loss is generally amortized over the remaining life of the hedged item. These swap agreements must be effective in reducing the variability of cash flows of the hedged items in order to qualify for the aforementioned hedge accounting treatment. Changes in value of effective cash flow hedges are reflected in our consolidated financial statements through accumulated other comprehensive income (loss) and do not affect our net income. To the extent a derivative does not qualify for hedge accounting, and is deemed a non-hedge derivative, the changes in its value are included in net income.

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Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

To determine the fair value of interest rate derivative financial instruments, we use a third-party derivative specialist to assist us in periodically valuing our interests.

Income Taxes

Our financial results generally do not reflect provisions for current or deferred income taxes on our REIT taxable income. Management believes that we operate in a manner that will continue to allow us to be taxed as a REIT and, as a result, we do not expect to pay substantial corporate level taxes other than taxes payable by our taxable REIT subsidiaries. Many of these requirements, however, are highly technical and complex. If we were to fail to meet these requirements, we may be subject to federal, state and local income tax on current and past income, and penalties.

Accounting for Stock-Based Compensation

Stock-based compensation expense is recognized in net income using a fair value measurement method, which we determine with the assistance of a third-party appraisal firm. Compensation expense for the time vesting of stock-based compensation grants is recognized on the accelerated attribution method and compensation expense for performance vesting of stock-based compensation grants is recognized on a straight line basis.

The fair value of the performance vesting restricted common stock is measured on the grant date using a Monte Carlo simulation to estimate the probability of the market vesting conditions being satisfied. The Monte Carlo simulation is run approximately 100,000 times. For each simulation, the payoff is calculated at the settlement date, and is then discounted to the grant date at a risk-free interest rate. The average of the values over all simulations is the expected value of the restricted common stock on the grant date. The valuation is performed in a risk-neutral framework, so no assumption is made with respect to an equity risk premium. Significant assumptions used in the valuation include an expected term and stock price volatility, an estimated risk-free interest rate and an estimated dividend growth rate.

Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by us.

Comprehensive Income (Loss)

Total comprehensive loss was ($215.9) million and ($190.6) million, for the nine months ended September 30, 2010 and 2009, respectively. The primary components of comprehensive loss other than net income (loss) are the unrealized gains and losses on derivative financial instruments and the component of other-than-temporary impairments of securities related to the Valuation Adjustment.

There was a one-time $3.8 million adjustment to accumulated other comprehensive loss upon our adoption of new accounting guidance effective January 1, 2010. See below in this Note 2 the discussion under “Recent Accounting Pronouncements” for additional information. See also Note 12 for additional discussion of accumulated other comprehensive loss.

Earnings per Share of Common Stock

Basic earnings per share, or EPS, is computed based on the net earnings allocable to common stock and stock units, divided by the weighted average number of shares of common stock and stock units outstanding during the period. Diluted EPS is based on the net earnings allocable to common stock and stock units, divided by the weighted average number of shares of common stock, stock units and potentially dilutive common stock options and warrants. See also Note 12 for additional discussion of earnings per share.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may ultimately differ from those estimates.

Reclassifications

Certain reclassifications have been made in the presentation of the prior period consolidated financial statements to conform to the September 30, 2010 presentation. Primarily, certain assets and liabilities of consolidated VIEs have been presented separately on our consolidated balance sheet. See above in this Note 2 the discussion under “Balance Sheet Presentation” for additional information.

- 8 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

Segment Reporting

We operate in two reportable segments. We have an internal information system that produces performance and asset data for the two segments along service lines.

The Balance Sheet Investment segment includes our entire portfolio of interest earning assets and the financing thereof.

The Investment Management segment includes the investment management activities of our wholly-owned investment management subsidiary, CT Investment Management Co., LLC, or CTIMCO, and its subsidiaries, as well as our co-investments in investment management vehicles. CTIMCO is a taxable REIT subsidiary and serves as the investment manager of Capital Trust, Inc., all of our investment management vehicles and all of our CT CDOs, and serves as senior servicer and special servicer for certain of our investments and for third parties.

Goodwill

Goodwill represents the excess of acquisition costs over the fair value of the net assets of businesses acquired. Goodwill is reviewed, at least annually, to determine if there is an impairment at a reporting unit level, or more frequently if an indication of impairment exists. During the second quarter of 2009, we completely impaired goodwill, and therefore do not have any recorded goodwill as of September 30, 2010.

Fair Value of Financial Instruments

The “Fair Value Measurements and Disclosures” Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or the Codification, defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements under GAAP. Specifically, this guidance defines fair value based on exit price, or the price that would be received upon the sale of an asset or the transfer of a liability in an orderly transaction between market participants at the measurement date. Our assets and liabilities which are measured at fair value are discussed in Note 16.

Recent Accounting Pronouncements

New accounting guidance which was effective as of January 1, 2010 changed the criteria for consolidation of VIEs and removed a preexisting consolidation exception for qualified special purpose entities, such as certain securitization vehicles. The amended guidance requires a qualitative, rather than quantitative assessment of when a VIE should be consolidated. Specifically, an entity would generally be required to consolidate a VIE if it has (i) the power to direct the activities that most significantly impact the entity’s economic performance, and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE.

As a result of the amended guidance, we have consolidated an additional seven VIEs beginning January 1, 2010, all of which are securitization vehicles not sponsored by us. We have consolidated these entities generally due to our ownership interests in subordinate classes of securities issued by the VIEs, which investments carry certain control provisions. Although our investments are generally passive in nature, by owning more than 50% of the controlling class of each VIE we do control special servicer naming rights, which we believe gives us the power to direct the most significant economic activities of these entities.

Upon consolidation of these seven VIEs, we recorded a one-time adjustment to shareholders’ equity of ($41.8) million on January 1, 2010. This reduction in equity is due to the difference between the aggregate pre-consolidation carrying value of our investment in these VIEs (which were accounted for as securities) and the aggregate net assets, or equity, of those VIEs upon consolidation. This difference was primarily caused by asset impairments recorded at the VIEs which are in excess of our investment amount. Due to the fact that the liabilities of these VIEs are entirely non-recourse to us, this excess charge to equity, as well as similar charges on VIEs previously consolidated, will eventually be reversed when our interests in the VIEs are repaid, sold, or the VIEs are otherwise deconsolidated in the future.

In January 2010, the FASB issued Accounting Standards Update 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements,” or ASU 2010-06. ASU 2010-06 amends existing disclosure guidance related to fair value measurements. Specifically, ASU 2010-06 requires (i) details of significant asset or liability transfers in and out of Level 1 and Level 2 measurements within the fair value hierarchy, and (ii) inclusion of gross purchases, sales, issuances, and settlements within the rollforward of assets and liabilities valued using Level 3 inputs within the fair value hierarchy. In addition, ASU 2010-06 clarifies and increases existing disclosure requirements related to (i) the disaggregation of fair value disclosures, and (ii) the inputs used in arriving at fair values for assets and liabilities valued using Level 2 and Level 3 inputs within the fair value hierarchy. ASU 2010-06 is effective for the first interim or annual period beginning after December 15, 2009, except for the gross presentation of the Level 3 rollforward, which is required for annual reporting periods beginning after December 15, 2010 and for interim periods within those years. The adoption of ASU 2010-06 did not have a material impact on our consolidated financial statements. Additional disclosure, as applicable, is included in Note 16.

- 9 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

In February 2010, the FASB issued Accounting Standards Update 2010-09, “Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements,” or ASU 2010-09. ASU 2010-09 primarily rescinds the requirement that, for listed companies, financial statements clearly disclose the date through which subsequent events have been evaluated. Subsequent events must still be evaluated through the date of financial statement issuance; however, the disclosure requirement has been removed to avoid conflicts with other SEC guidelines. ASU 2010-09 was effective immediately upon issuance and was adopted in February 2010. The adoption of ASU 2010-09 did not have a material impact on our consolidated financial statements.

In July 2010, the FASB issued Accounting Standards Update 2010-20, “Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses,” or ASU 2010-20. ASU 2010-20 primarily requires additional disaggregated disclosures of (i) credit risks associated with financing receivables, and (ii) impaired financing receivables and the related allowance for credit losses. ASU 2010-20 is generally effective for the first interim or annual period ending after December 15, 2010; however certain disclosures are not required until the first interim or annual period beginning after December 15, 2010. The adoption of ASU 2010-20 will require us to include additional disclosures in the notes to our consolidated financial statements.

Note 3. Securities Held-to-Maturity

As described in Note 2, our consolidated balance sheets separately state our assets and liabilities and certain assets and liabilities of consolidated VIEs. The following disclosures relate only to our securities portfolio we own directly.

See also Note 11 for comparable disclosures regarding securities that are held in consolidated VIEs, as separately stated on our consolidated balance sheets.

Our securities portfolio consists of commercial mortgage-backed securities, or CMBS, collateralized debt obligations, or CDOs, and other securities. Activity relating to our securities portfolio for the nine months ended September 30, 2010 was as follows (in thousands):

	CMBS			CDOs & Other			Total Book Value (1)
December 31, 2009		$2,081			$15,251			$17,332
Principal paydowns		(127	)		—			(127	)
Discount/premium amortization & other (2)		193			590			783
Other-than-temporary impairments:
Recognized in earnings		(586	)		(17,211	)		(17,797	)
Recognized in accumulated other comprehensive income		586			2,568			3,154
September 30, 2010		$2,147			$1,198			$3,345

(1)	Includes securities with a total face value of $36.1 million and $105.2 million as of September 30, 2010 and December 31, 2009, respectively. Securities with an aggregate face value of $69.0 million, which had a net carrying value of zero as of December 31, 2009, have been eliminated in consolidation beginning January 1, 2010 as discussed in Note 2.
(2)	Includes mark-to-market adjustments on securities previously classified as available-for-sale, amortization of other-than-temporary impairments, and losses, if any.

As detailed in Note 2, on August 4, 2005, we changed the accounting classification of our then portfolio of securities from available-for-sale to held-to-maturity. While we typically account for the securities in our portfolio on a held-to-maturity basis, under certain circumstances we will account for securities on an available-for-sale basis. As of both September 30, 2010 and December 31, 2009, we had no securities classified as available-for-sale.

- 10 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

The following table allocates our securities’ book value as of September 30, 2010 between their amortized cost basis, amounts related to mark-to-market adjustments on securities previously classified as available-for-sale, and the portion of other-than-temporary impairments not related to expected credit losses (in thousands):

	CMBS			CDOs & Other		Total Securities
Amortized cost basis		$5,541			$1,198		$6,739
Mark-to-market adjustments on securities previously classified     as available-for-sale		(549	)		—		(549	)
Other-than-temporary impairments recognized in accumulated    other comprehensive income		(2,845	)		—		(2,845	)
Total book value		$2,147			$1,198		$3,345

The following table details overall statistics for our securities portfolio as of September 30, 2010 and December 31, 2009:

	September 30, 2010	December 31, 2009
Number of securities	7	9
Number of issues	5	6
Rating (1) (2)	CCC	B-
Fixed / Floating (in millions) (3)	$2 / $1	$16 / $1
Coupon (1) (4)	6.81%	9.82%
Yield (1) (4)	8.58%	7.89%
Life (years) (1) (5)	2.0	2.8

(1)	Represents a weighted average as of September 30, 2010 and December 31, 2009, respectively.
(2)	Weighted average ratings are based on the lowest rating published by Fitch Ratings, Standard & Poor’s or Moody’s Investors Service for each security and exclude unrated equity investments in CDOs with a net book value of $1.2 million as of both September 30, 2010 and December 31, 2009.
(3)	Represents the aggregate net book value of our portfolio allocated between fixed rate and floating rate securities.
(4)	Coupon is based on the securities’ contractual interest rates, while yield is based on expected cash flows for each security, and considers discounts/premiums and asset non-performance. Calculations for floating rate securities are based on LIBOR of 0.26% and 0.23% as of September 30, 2010 and December 31, 2009, respectively.
(5)	Weighted average life is based on the timing and amount of future expected principal payments through the expected repayment date of each respective investment.

The table below details the ratings and vintage distribution of our securities as of September 30, 2010 and December 31, 2009 (in thousands):

	Rating as of September 30, 2010			Rating as of December 31, 2009
Vintage	B	CCC and Below	Total	B	CCC and Below	Total
2003	$—	$1,197	$1,197	$13,488	$1,162	$14,650
2002	—	—	—	—	602	602
2000	—	866	866	—	879	879
1997	226	—	226	246	—	246
1996	—	1,056	1,056	—	955	955
Total	$226	$3,119	$3,345	$13,734	$3,598	$17,332

Other-than-temporary impairments

Quarterly, we reevaluate our securities portfolio to determine if there has been an other-than-temporary impairment based upon expected future cash flows from each securities investment. As a result of this evaluation, under the accounting guidance discussed in Note 2, during the nine months ended September 30, 2010, we recorded a gross other-than-temporary impairment of $14.6 million. In addition, we determined that $3.2 million of impairments previously recorded in other comprehensive income should be recognized as credit losses due to a decrease in cash flow expectations for two of our securities with an aggregate net book value of $1.1 million.

- 11 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

To determine the component of the gross other-than-temporary impairment related to expected credit losses, we compare the amortized cost basis of each other-than-temporarily impaired security to the present value of its revised expected cash flows, discounted using its pre-impairment yield. Significant judgment of management is required in this analysis that includes, but is not limited to, (i) assumptions regarding the collectability of principal and interest, net of related expenses, on the underlying loans, and (ii) current subordination levels at both the individual loans which serve as collateral under our securities and at the securities themselves.

The following table summarizes activity related to the other-than-temporary impairments of our securities during the nine months ended September 30, 2010 (in thousands):

	Gross Other-Than-Temporary Impairments			Credit Related Other-Than-Temporary Impairments			Non-Credit Related Other-Than-Temporary Impairments
December 31, 2009		$85,838			$79,210			$6,628
Impact of change in accounting principle (1)		(68,989	)		(68,989	)		—
Additions due to change in expected cash flows		14,643			17,797			(3,154	)
Amortization of other-than-temporary impairments		(831	)		(202	)		(629	)
September 30, 2010		$30,661			$27,816			$2,845

(1) Due to the consolidation of additional VIEs, as discussed in Note 2, other-than-temporary impairments which were previously recorded on our investment in these entities have been eliminated in consolidation beginning January 1, 2010.

Unrealized losses and fair value of securities

Certain of our securities are carried at values in excess of their fair values. This difference can be caused by, among other things, changes in credit spreads and interest rates. The following table shows the gross unrealized losses and fair value of our securities for which the fair value is lower than our book value as of September 30, 2010 and that are not deemed to be other-than-temporarily impaired (in millions):

	Less Than 12 Months		Greater Than 12 Months		Total
	Estimated Fair Value	Gross Unrealized Loss	Estimated Fair Value	Gross Unrealized Loss	Estimated Fair Value	Gross Unrealized Loss	Book Value (1)
Floating Rate	$—	$—	$0.2	($1.0)	$0.2	($1.0)	$1.2
Fixed Rate	—	—	—	—	—	—	—
Total	$—	$—	$0.2	($1.0)	$0.2	($1.0)	$1.2

(1) Excludes, as of September 30, 2010, $2.1 million of securities which were carried at or below fair value and securities against which an other-than-temporary impairment equal to the entire book value was recognized in earnings.

As of September 30, 2010, one of our securities with an aggregate carrying value of $1.2 million was carried at a balance in excess of its fair value. Fair value for this security was $158,000 as of September 30, 2010. In total, as of September 30, 2010, we had seven investments in securities with an aggregate book value of $3.3 million that have an estimated fair value of $4.6 million, including three investments in CMBS with an estimated fair value of $4.4 million and four investments in CDOs and other securities with an estimated fair value of $158,000. These valuations do not include the value of interest rate swaps entered into in conjunction with the purchase/financing of these investments, if any.

- 12 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

The following table shows the gross unrealized losses and fair value of our securities for which the fair value is lower than our book value as of December 31, 2009 and that are not deemed to be other-than-temporarily impaired (in millions):

	Less Than 12 Months		Greater Than 12 Months		Total
	Estimated Fair Value	Gross Unrealized Loss	Estimated Fair Value	Gross Unrealized Loss	Estimated Fair Value	Gross Unrealized Loss	Book Value (1)
Floating Rate	$—	$—	$0.2	($0.9)	$0.2	($0.9)	$1.1
Fixed Rate	—	—	3.8	(9.7)	3.8	(9.7)	13.5
Total	$—	$—	$4.0	($10.6)	$4.0	($10.6)	$14.6

(1) Excludes, as of December 31, 2009, $2.7 million of securities which were carried at or below fair value and securities against which an other-than-temporary impairment equal to the entire book value was recognized in earnings.

As of December 31, 2009, three securities with an aggregate carrying value of $14.6 million were carried at values in excess of their fair values. Fair value for these securities was $4.0 million as of December 31, 2009. In total, as of December 31, 2009, we had nine investments in securities with an aggregate book value of $17.3 million that have an estimated fair value of $8.5 million, including three investments in CMBS with an estimated fair value of $3.9 million and six investments in CDOs and other securities with an estimated fair value of $4.7 million. These valuations do not include the value of interest rate swaps entered into in conjunction with the purchase/financing of these investments, if any.

We determine fair values using third party dealer assessments of value, supplemented in limited cases with our own internal financial model-based estimations of fair value. We regularly examine our securities portfolio and have determined that, despite the differences between carrying value and fair value discussed above, our expectations of future cash flows have only changed adversely for six of our securities, against which we have recognized other-than-temporary-impairments.

Our estimation of cash flows expected to be generated by our securities portfolio is based upon an internal review of the underlying loans securing our investments both on an absolute basis and compared to our initial underwriting for each investment. Our efforts are supplemented by third party research reports, third party market assessments and our dialogue with market participants. As of September 30, 2010, we do not intend to sell our securities, nor do we believe it is more likely than not that we will be required to sell our securities before recovery of their amortized cost bases, which may be at maturity. This, combined with our assessment of cash flows, is the basis for our conclusion that these investments are not impaired, other than as described above, despite the differences between estimated fair value and book value. We attribute the difference between book value and estimated fair value to the current market dislocation and a general negative bias against structured financial products such as CMBS and CDOs.

Investments in variable interest entities

Our securities portfolio includes investments in both CMBS and CDOs, which securitization structures are generally considered VIEs. We have not consolidated these VIEs due to our determination that, based on the structural provisions of each entity and the nature of our investments, we do not have the power to direct the activities that most significantly impact these entities' economic performance.

These securities were acquired through investment, and do not represent a securitization or other transfer of our assets. We are not named as special servicer on these investments, nor do we have the right to name special servicer.

We are not obligated to provide, nor have we provided, any financial support to these entities. As of September 30, 2010, our maximum exposure to loss as a result of our investment in these entities is $36.1 million, the principal amount of our securities portfolio. We have recorded other-than-temporary impairments of $30.7 million against this portfolio, resulting in a net exposure to loss of $5.4 million as of September 30, 2010.

Note 4. Loans Receivable, net

As described in Note 2, our consolidated balance sheets separately state our assets and liabilities and certain assets and liabilities of consolidated VIEs. The following disclosures relate only to our loans receivable portfolio we own directly.

- 13 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

See also Note 11 for comparable disclosures regarding loans receivable that are held in consolidated VIEs, as separately stated on our consolidated balance sheets.

Activity relating to our loans receivable for the nine months ended September 30, 2010 was as follows (in thousands):

	Gross Book Value	Provision for Loan Losses	Net Book Value (1)
December 31, 2009	$1,126,697	($359,952)	$766,745
Additional fundings (2)	1,842	—	1,842
Satisfactions (3)	(21,000)	—	(21,000)
Principal paydowns	(10,215)	—	(10,215)
Discount/premium amortization & other	580	—	580
Provision for loan losses (4)	—	(61,330)	(61,330)
Realized loan losses	(17,511)	17,511	—
Reclassification to loans held-for-sale	(76,632)	10,643	(65,989)
September 30, 2010	$1,003,761	($393,128)	$610,633

(1)	Includes loans with a total principal balance of $1.00 billion and $1.13 billion as of September 30, 2010 and December 31, 2009, respectively.
(2)	Additional fundings includes capitalized interest of $281,000.
(3)	Includes final maturities, full repayments, and sales.
(4)	Provision for loan losses is presented net of a $10.0 million recovery of provisions recorded in prior periods.

The following table details overall statistics for our loans receivable portfolio as of September 30, 2010 and December 31, 2009:

	September 30, 2010	December 31, 2009
Number of investments	31	35
Fixed / Floating (in millions) (1)	$53 / $558	$58 / $708
Coupon (2) (3)	3.71%	3.77%
Yield (2) (3)	3.71%	3.59%
Maturity (years) (2) (4)	1.7	2.2

(1)	Represents the aggregate net book value of our portfolio allocated between fixed rate and floating rate loans.
(2)	Represents a weighted average as of September 30, 2010 and December 31, 2009, respectively.
(3)	Calculations for floating rate loans are based on LIBOR of 0.26% and 0.23% as of September 30, 2010 and December 31, 2009, respectively.
(4)	Represents the final maturity of each investment assuming all extension options are executed.

- 14 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

The tables below detail the types of loans in our portfolio, as well as the property type and geographic distribution of the properties securing our loans, as of September 30, 2010 and December 31, 2009 (in thousands):

	September 30, 2010					December 31, 2009
Asset Type	Book Value		Percentage			Book Value		Percentage
Senior mortgages		$238,614		39	%		$302,999		40	%
Mezzanine loans		232,460		38			209,980		27
Subordinate interests in mortgages		116,425		18			179,525		23
Other		23,134		5			74,241		10
Total		$610,633		100	%		$766,745		100	%
Property Type	Book Value		Percentage			Book Value		Percentage
Office		$310,755		51	%		$339,142		44	%
Hotel		146,883		24			176,557		23
Healthcare		52,104		9			113,900		15
Multifamily		18,102		3			23,657		3
Retail		14,230		2			14,219		2
Other		68,559		11			99,270		13
Total		$610,633		100	%		$766,745		100	%
Geographic Location	Book Value		Percentage			Book Value		Percentage
Northeast		$178,342		29	%		$222,303		29	%
Southeast		170,031		28			196,640		26
Southwest		96,190		16			97,384		13
West		54,714		9			76,751		10
Northwest		29,926		5			64,260		8
Midwest		6,614		1			18,827		2
International		39,558		6			54,800		7
Diversified		35,258		6			35,780		5
Total		$610,633		100	%		$766,745		100	%

Quarterly, management evaluates our loan portfolio for impairment as described in Note 2. The following table describes our impaired loans as of September 30, 2010, including impaired loans that are current in their interest payments and those that are delinquent on contractual payments (in thousands):

	No. of Loans	Gross Book Value	Provision for Loan Loss	Net Book Value
Impaired loans:
Performing loans	6	$365,701	($316,680)	$49,021
Non-performing loans	4	101,846	(76,448)	25,398
Total impaired loans	10	$467,547	($393,128)	$74,419

The following table details the allocation of our provision for loan losses as of September 30, 2010 (in thousands):

	September 30, 2010
Provision for Loan Losses	Book Value	Percentage
Mezzanine loans	$302,288	77%
Subordinate interests in mortgages	73,931	19
Senior mortgages	16,909	4
Total	$393,128	100%

Our average balance of impaired loans was $75.8 million during the nine months ended September 30, 2010. Subsequent to their impairment, we recorded interest on impaired loans that are performing of $8.9 million during the first nine months of 2010, substantively all of which was received in cash. Our average balance of impaired loans was $25.2 million during the nine months ended September 30, 2009. Subsequent to their impairment, we recorded interest on these loans of $357,000 during the first nine months of 2009.

- 15 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

In some cases our loan originations are not fully funded at closing, creating an obligation for us to make future fundings, which we refer to as Unfunded Loan Commitments. Typically, Unfunded Loan Commitments are part of construction and transitional loans. As of September 30, 2010, our two Unfunded Loan Commitments totaled $778,000, which will generally only be funded when and/or if the borrower meets certain performance hurdles with respect to the underlying collateral, or to reimburse costs associated with leasing activity.

Note 5. Loans Held-for-Sale, Net

Activity relating to our loans held-for-sale for the nine months ended September 30, 2010 was as follows (in thousands):

	Gross Book Value	Valuation Allowance	Net Book Value
December 31, 2009	$—	$—	$—
Reclassification from loans receivable	76,632	(10,643)	65,989
Valuation allowance on loans held-for-sale	—	(6,036)	(6,036)
September 30, 2010	$76,632	($16,679)	$59,953

The following table details overall statistics for our loans held-for-sale portfolio as of September 30, 2010:

	September 30, 2010
Number of investments	2
Coupon (1) (2)	4.88%
Yield (1) (2)	4.81%
Maturity (years) (1) (3)	1.5

(1)	Represents a weighted average as of September 30, 2010.
(2)	Calculations for floating rate loans are based on LIBOR of 0.26% as of September 30, 2010.
(3)	Represents the final maturity of each investment assuming all extension options are executed.

During the third quarter of 2010, we reclassified a $60.7 million senior mortgage loan to loans held-for-sale, against which we recorded a $2.5 million valuation allowance resulting in a net book value of $58.0 million as of September 30, 2010, which amount approximates fair value. We have previously sold a $28.7 million pari passu interest in this loan to one of our investment management vehicles. The transaction did not qualify for sale treatment under GAAP and we therefore still carry the entire $60.7 million loan as an asset and $28.7 million as a liability, as described in Note 9.

During the second quarter of 2010, we reclassified a $16.1 million mezzanine loan to loans held-for-sale, against which we have previously recorded a provision for loan losses of $10.6 million. During the third quarter of 2010, we recorded an additional $3.5 million valuation allowance against this loan resulting in a net book value of $2.0 million as of September 30, 2010, which amount approximates fair value.

See also Note 11 for comparable disclosures regarding loans held-for-sale that are held in consolidated VIEs, as separately stated on our consolidated balance sheets.

Note 6. Real Estate Held-for-Sale

We do not have any real estate held-for-sale as of September 30, 2010. During the nine months ended September 30, 2009, we recorded a $2.2 million impairment against an investment which was sold in July 2009.

See also Note 11 for comparable disclosures regarding real estate held-for-sale that are held in consolidated VIEs, as separately stated on our consolidated balance sheets.

Note 7. Equity Investments in Unconsolidated Subsidiaries

Our equity investments in unconsolidated subsidiaries consist primarily of our co-investments in investment management vehicles that we sponsor and manage. As of September 30, 2010, we had a co-investment in one such vehicle, CT Opportunity Partners I, LP, or CTOPI, in which we have a commitment to invest up to $25.0 million, or 4.6% of CTOPI’s total capital commitments. We have funded $10.1 million of our commitment as of September 30, 2010, resulting in a $14.9 million unfunded commitment balance. In addition to our co-investments, we record capitalized costs associated with these vehicles in equity investments in unconsolidated subsidiaries.

- 16 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

During the third quarter of 2010, we completed the liquidation of one of our investment management vehicles, CT Mezzanine Partners III, Inc., or Fund III, and recorded $733,000 of incentive management fees.

Activity relating to our equity investments in unconsolidated subsidiaries for the nine months ended September 30, 2010 was as follows (in thousands):

	Fund III	CTOPI	Other	Total
December 31, 2009	$158	$2,175	$18	$2,351
Contributions	—	2,917	—	2,917
(Loss) income from equity investments	(129)	2,492	(5)	2,358
Distributions	(29)	—	—	(29)
September 30, 2010	$—	$7,584	$13	$7,597

In accordance with the CTOPI management agreement, CTIMCO may earn incentive compensation when certain returns are achieved for the partners of CTOPI, which will be accrued if and when earned, and when appropriate contingencies have been eliminated. As of September 30, 2010, our maximum exposure to loss from CTOPI was $10.1 million.

Note 8. Debt Obligations

As described in Note 2, our consolidated balance sheets separately state our assets and liabilities and certain assets and liabilities of consolidated VIEs. The following disclosures relate to the debt obligations of Capital Trust, Inc. and its wholly-owned subsidiaries only.

See also Note 11 for comparable disclosures regarding the debt obligations of consolidated VIEs, that are non-recourse to us, as separately stated on our consolidated balance sheets.

As of September 30, 2010 and December 31, 2009, we had $637.5 million and $677.4 million of total debt obligations outstanding, respectively. The balances of each category of debt, their respective coupons and all-in effective costs, including the amortization of fees and expenses, were as follows (in thousands):

	September 30, 2010				December 31, 2009		September 30, 2010
Recourse Debt Obligations	Principal Balance		Book Balance		Book Balance		Coupon(1)			All-In Cost(1)			Maturity Date(2)
Repurchase obligations
JPMorgan		$229,403		$229,277		$258,203		1.73	%		1.78	%	March 15, 2011
Morgan Stanley		135,801		135,735		148,170		2.12	%		2.12	%	March 15, 2011
Citigroup		42,932		42,909		43,764		1.60	%		1.60	%	March 15, 2011
Total repurchase obligations		408,136		407,921		450,137		1.84	%		1.87	%	March 15, 2011
Senior credit facility		98,393		98,393		99,188		3.26	%		7.20	%	March 15, 2011
Junior subordinated notes (3)		143,753		131,145		128,077		1.00	%		4.28	%	April 30, 2036
Total/Weighted Average		$650,282		$637,459		$677,402		1.87	%		3.19	%(4)	May 15, 2016

(1)	Represents a weighted average for each respective facility, assuming LIBOR of 0.26% at September 30, 2010 for floating rate debt obligations.
(2)	Maturity dates for our repurchase obligations with JPMorgan, Morgan Stanley and Citigroup, and our senior credit facility, do not give effect to the potential one year extension, to March 15, 2012, which is at our lenders’ sole discretion.
(3)	The coupon for junior subordinated notes will remain at 1.00% per annum through April 29, 2012, increase to 7.23% per annum for the period from April 30, 2012 through April 29, 2016 and then convert to a floating interest rate of three-month LIBOR + 2.44% per annum through maturity.
(4)	Including the impact of interest rate hedges with an aggregate notional balance of $64.2 million as of September 30, 2010, the effective all-in cost of our debt obligations would be 3.68% per annum.

- 17 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

Repurchase Obligations

On March 16, 2009, we amended and restructured our repurchase obligations with: (i) JPMorgan Chase Bank, N.A., JPMorgan Chase Funding Inc. and J.P. Morgan Securities Inc., or collectively JPMorgan, (ii) Morgan Stanley Bank, N.A., or Morgan Stanley, and (iii) Citigroup Financial Products Inc. and Citigroup Global Markets Inc., or collectively Citigroup.

Specifically, on March 16, 2009, we entered into separate amendments to the respective master repurchase agreements with JPMorgan, Morgan Stanley and Citigroup. Pursuant to the terms of each such agreement, we amended the terms of each such facility, without any change to the collateral pool securing the debt owed to each repurchase lender, to provide the following:

· Maturity dates were modified to one year from the March 16, 2009 effective date of each respective agreement, which maturity dates may be extended further for two one-year periods. The first one-year extension option was exercised by us in March 2010, as a result of a successful twenty percent reduction in the amount owed each repurchase lender from the amount outstanding as of the March 16, 2009 amendment. The second one-year extension option is exercisable by each repurchase lender in its sole discretion. Currently, maturity dates for our repurchase agreements have been extended to March 15, 2011.

· We agreed to pay each repurchase lender periodic amortization as follows: (i) mandatory payments, payable monthly in arrears, in an amount equal to sixty-five (65%) of the net interest income generated by each such lender’s collateral pool (this amount did not change during the first one-year extension period), and (ii) one hundred percent (100%) of the principal proceeds received from the repayment of assets in each such lender’s collateral pool. In addition, under the terms of the amendment with Citigroup, we agreed to pay Citigroup an additional quarterly amortization payment generally equal to the product of (i) the total cash paid (including both principal and interest) during the period to our senior credit facility in excess of an amount equivalent to LIBOR plus 1.75% based upon a $100.0 million facility amount, and (ii) a fraction, the numerator of which is Citigroup’s then outstanding repurchase facility balance and the denominator is the total outstanding indebtedness of our repurchase lenders.

· We further agreed to amortize each repurchase lender’s secured debt at the end of each calendar quarter on a pro rata basis until we have repaid our repurchase facilities and thereafter our senior credit facility in an amount equal to any unrestricted cash in excess of the sum of (i) $25.0 million, and (ii) any unfunded loan and co-investment commitments.

· Each repurchase lender was relieved of its obligation to make future advances with respect to unfunded commitments arising under investments in its collateral pool.

· We received the right to sell or refinance collateral assets provided we apply one hundred percent (100%) of the proceeds to pay down the related repurchase facility balance subject to minimum release price mechanics.

· We eliminated the cash margin call provisions and amended the mark-to-market provisions that were in effect under the original terms of the repurchase facilities. Under the revised facilities, going forward, collateral value is expected to be determined by our lenders based upon changes in the performance of the underlying real estate collateral as opposed to changes in market spreads under the original terms. Beginning September 2009, each collateral pool may be valued monthly. If a repurchase lender determines that the ratio of their total outstanding facility balance to total collateral value exceeds 1.15x the ratio calculated as of the effective date of the amended agreements, we may be required to liquidate collateral and reduce the borrowings or post other collateral in an effort to bring the ratio back into compliance with the prescribed ratio, which may or may not be successful.

In each master repurchase agreement amendment and the amendment to our senior credit agreement described in greater detail below, which we collectively refer to as our restructured debt obligations, we also replaced all existing financial covenants with the following uniform covenants which:

· prohibit new balance sheet investments except, subject to certain limitations, co-investments in our investment management vehicles or protective investments to defend existing collateral assets on our balance sheet;

· prohibit the incurrence of any additional indebtedness except in limited circumstances;

- 18 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

· limit the total cash compensation to all employees and, specifically with respect to our chief executive officer and chief financial officer, freeze their base salaries at 2008 levels, and require cash bonuses to any of them to be approved by a committee comprised of one representative designated by the repurchase lenders, the administrative agent under the senior credit facility and a representative of our board of directors;

· prohibit the payment of cash dividends to our common shareholders except to the minimum extent necessary to maintain our REIT status;

· require us to maintain a minimum amount of liquidity, as defined, of $5.0 million;

· trigger an event of default if our current chief executive officer ceases his employment with us during the term of the agreement and we fail to hire a replacement acceptable to the lenders; and

· trigger an event of default, if any event or condition occurs which causes any obligation or liability of more than $1.0 million to become due prior to its scheduled maturity or any monetary default under our restructured debt obligations if the amount of such obligation is at least $1.0 million.

On March 16, 2009, in connection with the restructuring discussed above, we issued to JPMorgan, Morgan Stanley and Citigroup warrants to purchase 3,479,691 shares of our class A common stock at an exercise price of $1.79 per share, which is equal to the closing bid price on the New York Stock Exchange on March 13, 2009. The fair value assigned to these warrants, totaling $940,000, has been recorded as a discount on the related debt obligations with a corresponding increase to additional paid-in capital, and will be accreted as a component of interest expense over the term of each respective facility. The warrants were valued using the Black-Scholes valuation method.

The following table details the aggregate outstanding principal balance, carrying value and fair value of our assets, primarily loans receivable, which were pledged as collateral under our repurchase facilities as of September 30, 2010, as well as the amount at risk under each facility (in thousands). The amount at risk is generally equal to the carrying value of our collateral less the outstanding principal balance of the associated repurchase facility.

		Loans and Securities Collateral Balances, as of September 30, 2010
Repurchase Lender	Facility Balance	Principal Balance	Carrying Value	Fair Value (1)	Amount at Risk (2)
JPMorgan (3)	$229,403	$476,921	$308,217	$261,203	$86,336
Morgan Stanley (4)	135,801	367,636	238,749	144,320	102,948
Citigroup	42,932	77,648	76,340	61,327	33,407
	$408,136	$922,205	$623,306	$466,850	$222,691

(1)	Fair values represent the amount at which assets could be sold in an orderly transaction between a willing buyer and willing seller. The immediate liquidation value of these assets would likely be substantially lower.
(2)	Amount at risk is calculated on an asset-by-asset basis for each facility and considers the greater of (a) the carrying value of an asset and (b) the fair value of an asset, in determining the total risk.
(3)	In addition to serving as collateral for our JPMorgan repurchase facility, these assets also secure our interest rate swap agreements. These agreements with JPMorgan are in a net liability position of $11.0 million (their termination value), as described in Note 10.
(4)	Amounts other than principal exclude certain subordinate interests in our CT CDOs which have been pledged as collateral to Morgan Stanley. These interests have been eliminated in consolidation and therefore have a carrying value of zero on our balance sheet.

Senior Credit Facility

On March 16, 2009, we entered into an amended and restated senior credit agreement governing our term loan from WestLB AG, New York Branch, participant and administrative agent, Fortis Capital Corp., Wells Fargo Bank, N.A., JPMorgan Chase Bank, N.A., Morgan Stanley Bank, N.A. and Deutsche Bank Trust Company Americas, which we collectively refer to as the senior lenders. Pursuant to the amended and restated senior credit agreement, we and the senior lenders agreed to:

· extend the maturity date of the senior credit agreement to be co-terminus with the maturity date of our repurchase facilities (as they may be further extended until March 16, 2012, as described above);

· increase the cash interest rate under the senior credit agreement to LIBOR plus 3.00% per annum (from LIBOR plus 1.75%), plus an accrual rate of 7.20% per annum less the cash interest rate;

· initiate quarterly amortization equal to the greater of: (i) $5.0 million per annum, and (ii) 25% of the annual cash flow received from our then unencumbered collateralized debt obligation interests;

· pledge our unencumbered CT CDO interests and provide a negative pledge with respect to certain other assets; and

- 19 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

· replace all existing financial covenants with substantially similar covenants and default provisions to those described above with respect to our repurchase facilities.

As of September 30, 2010, we had $98.4 million outstanding under our senior credit facility at a cash cost of LIBOR plus 3.00% per annum. Since we amended and restated our senior credit agreement on March 16, 2009, we have made amortization payments of $7.5 million, and $5.9 million of accrued interest was added to the outstanding balance.

Junior Subordinated Notes

The most subordinate component of our debt obligations are our junior subordinated notes. As of September 30, 2010, these notes had a principal balance of $143.8 million ($131.1 million book balance) at a cash cost of 1.00% per annum.

Pursuant to exchange agreements dated March 16, 2009 and May 14, 2009, we issued a $143.8 million aggregate principal amount of junior subordinated notes which mature on April 30, 2036 and are freely redeemable by us at par at any time. The interest rate payable under the subordinated notes is 1% per annum from the date of issuance through and including April 29, 2012, a fixed rate of 7.23% per annum through and including April 29, 2016, and thereafter a floating rate, reset quarterly, equal to three-month LIBOR plus 2.44% until maturity. The junior subordinated notes contain a covenant that through April 30, 2012, subject to certain exceptions, we may not declare or pay dividends or distributions on, or redeem, purchase or acquire any of our equity interests except to the extent necessary to maintain our status as a REIT.

Note 9. Participations Sold

Participations sold represent interests in certain loans that we originated and subsequently sold to one of our investment management vehicles or to third parties. We present these participations sold as both assets and non-recourse liabilities because these arrangements do not qualify as sales under GAAP. We have no economic exposure to these liabilities in excess of the value of the assets sold. As of September 30, 2010, we had five such participations sold with a total gross carrying value of $288.1 million.

The income earned on these loans is recorded as interest income and an identical amount is recorded as interest expense in our consolidated statements of operations. Generally, participations sold are recorded as assets and liabilities in equal amounts on our consolidated balance sheets. We have recorded an aggregate $173.7 million of provisions for loan losses against certain of our participations sold assets, resulting in a net book value of $114.5 million as of September 30, 2010. The associated liabilities have not been adjusted as of September 30, 2010, because we are prohibited by GAAP from reducing their carrying value until the loan assets are contractually extinguished.

The following table describes our participations sold assets and liabilities as of September 30, 2010 and December 31, 2009 (in thousands):

	September 30,			December 31,
	2010			2009
Participations sold assets
Gross carrying value		$288,127			$289,144
Less: Provision for loan losses		(173,668	)		(172,465	)
Net book value of assets		$114,459			$116,679
Participations sold liabilities
Net book value of liabilities		$288,127			$289,144
Net impact to shareholders' equity		($173,668	)		($172,465	)

Note 10. Derivative Financial Instruments

To manage interest rate risk, we typically employ interest rate swaps, or other arrangements, to convert a portion of our floating rate debt to fixed rate debt in order to index match our assets and liabilities. The interest rate swaps that we employ are designated as cash flow hedges and are designed to hedge fixed rate assets against floating rate liabilities. Under cash flow hedges, we pay our hedge counterparties a fixed rate amount and our counterparties pay us a floating rate amount, which we settle monthly, and record as a component of interest expense. Our counterparties in these transactions are financial institutions and we are dependent upon the financial health of these counterparties and a functioning interest rate derivative market in order to effectively execute our hedging strategy.

- 20 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

As described in Note 2, our consolidated balance sheets separately state our assets and liabilities and certain assets and liabilities of consolidated VIEs. The following disclosures relate only to the interest rate hedge liabilities of Capital Trust, Inc. and its wholly-owned subsidiaries.

See also Note 11 for comparable disclosures regarding the interest rate hedge liabilities of consolidated VIEs, which are non-recourse to us, as separately stated on our consolidated balance sheets.

The following table summarizes the notional amounts and fair values of our interest rate swaps as of September 30, 2010 and December 31, 2009 (in thousands). The notional amount provides an indication of the extent of our involvement in the instruments at that time, but does not represent exposure to credit or interest rate risk.

Type	Counterparty	September 30, 2010 Notional Amount	Interest Rate (1)	Maturity	September 30, 2010 Fair Value	December 31, 2009 Fair Value
Cash Flow Hedge	JPMorgan Chase	$17,806	5.14%	2014	($1,537)	($1,182)
Cash Flow Hedge	JPMorgan Chase	16,894	4.83%	2014	(1,402)	(966)
Cash Flow Hedge	JPMorgan Chase	16,377	5.52%	2018	(1,865)	(1,239)
Cash Flow Hedge	JPMorgan Chase	7,062	5.11%	2016	(702)	(440)
Cash Flow Hedge	JPMorgan Chase	3,221	5.45%	2015	(335)	(237)
Cash Flow Hedge	JPMorgan Chase	2,812	5.08%	2011	(59)	(120)
Total/Weighted Average		$64,172	5.16%	2015	($5,900)	($4,184)

(1) Represents the gross fixed interest rate we pay to our counterparties under these derivative instruments. We receive an amount of interest indexed to one-month LIBOR on all of our interest rate swaps.

As of both September 30, 2010 and December 31, 2009, all of our derivative financial instruments were recorded at fair value as interest rate hedge liabilities on our consolidated balance sheet. During the nine months ended September 30, 2010, we did not enter into any new derivative financial instrument contracts.

The table below shows amounts recorded to other comprehensive income and amounts recorded to interest expense from other comprehensive income for the nine months ended September 30, 2010 and 2009 (in thousands):

	Amount of gain (loss) recognized		Amount of loss reclassified from OCI
	in OCI for the nine months ended		to income for the nine months ended (1)
Hedge	September 30, 2010	September 30, 2009	September 30, 2010	September 30, 2009
Interest rate swaps	($1,716)	$6,768	($2,237)	($2,581)

(1) Represents net amounts paid to swap counterparties during the period, which are included in interest expense, offset by an immaterial amount of non-cash swap amortization.

All of our hedges were classified as highly effective for all of the periods presented. Over the next twelve months, as we make payments under our hedge agreements, we expect approximately $2.9 million to be reclassified from other comprehensive income to interest expense. This amount is generally equal to the present value of such expected payments under the respective derivative contracts.

Certain of our derivative agreements contain provisions whereby a default on any of our recourse debt obligations could also constitute a default under these derivative obligations. As of September 30, 2010, derivatives related to these agreements were in a net liability position of $11.0 million (their termination value) based on their contractual terms, which amount excludes certain adjustments made in arriving at fair value in accordance with GAAP. If we default on any of our recourse debt obligations, we could be required to settle our obligations under the derivative agreements at their termination value. As of September 30, 2010, we were not in default under any of our recourse debt obligations and have not posted any assets as collateral under our derivative agreements.

On October 10, 2008, we terminated an interest rate swap with a notional amount of $18.0 million as a result of our counterparty filing for bankruptcy. In the second quarter of 2010, we paid our former counterparty $246,000 to settle a claim concerning the termination of this interest rate swap, which is included as a component of interest expense on our consolidated statement of operations.

Note 11. Consolidated Variable Interest Entities

As of September 30, 2010, our consolidated balance sheet includes an aggregate $3.5 billion of assets and $3.7 billion of liabilities related to 11 consolidated variable interest entities, or VIEs. Due to the non-recourse nature of these VIEs, and other factors discussed below, our net exposure to loss from investments in these entities is limited to $34.3 million.

- 21 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

Our consolidated VIEs generally include two categories of entities: (i) collateralized debt obligations sponsored and issued by us, which we refer to as CT CDOs, and (ii) other consolidated VIEs, which are also securitization vehicles but were not issued or sponsored by us. We have historically consolidated the CT CDOs; however we began consolidating the additional VIEs as of January 1, 2010, as discussed in Note 2.

CT CDOs

We currently consolidate four collateralized debt obligation, or CDO, trusts, which are VIEs that were sponsored by us. These CT CDO trusts invest in commercial real estate debt instruments, some of which we originated/acquired and transferred to the trust entities, and are financed by the debt and equity they issue. We are named as collateral manager of all four CT CDO trusts and are named special servicer on a number of CDO collateral assets. As a result of consolidation, our subordinate debt and equity ownership interests in these CT CDO trusts have been eliminated, and our balance sheet reflects both the assets held and debt issued by these CDO trusts to third parties. Similarly, our operating results and cash flows include the gross amounts related to the assets and liabilities of the CT CDO entities, as opposed to our net economic interests in these entities. Fees earned by us for the management of these CDO trusts are eliminated in consolidation.

Our interest in the assets held by these CT CDO trusts, which are consolidated on our balance sheet, is restricted by the structural provisions of these entities, and our recovery of these assets will be limited by the CDO trusts’ distribution provisions, which are subject to change due to covenant breaches or asset impairments, as further described below in this Note 11. The liabilities of the CT CDO trusts, which are also consolidated on our balance sheet, are non-recourse to us, and can generally only be satisfied from each CDO trust’s respective asset pool.

We are not obligated to provide, nor have we provided, any financial support to these CT CDO trusts. Accordingly, other than in the event of a breach of certain representations or warranties (discussed in detail below), our maximum exposure to loss as a result of our investment in these entities is limited to $233.8 million, the notional amount of the subordinate debt and equity interest we retained in these CDO trusts. After giving effect to certain transfers of these interests, provisions for loan losses and other-than-temporary impairments recorded as of September 30, 2010, our remaining net exposure to loss from these entities is $34.3 million.

Other Consolidated VIEs

As discussed above, we currently consolidate seven additional VIEs, all of which are securitization vehicles substantially similar to the CT CDOs. These VIEs invest in commercial real estate debt instruments, which investments were not originated or transferred to the VIEs by us. In addition to our investment in the subordinate classes of the securities issued by these VIEs, we are named special servicer on a number of the VIEs’ assets. As a result of consolidation, our ownership interests in these VIEs have been eliminated, and our balance sheet reflects both the assets held and debt issued by these VIEs to third parties. Similarly, our operating results and cash flows include the gross amounts related to the assets and liabilities of the VIEs, as opposed to our net economic interests in these entities. Special servicing fees paid to us on assets owned by these VIEs are eliminated in consolidation.

Our interest in the assets held by these VIEs, which are consolidated on our balance sheet, is restricted by the structural provisions of these entities, and a recovery of our investment in the VIEs will be limited by each entity’s distribution provisions. The liabilities of the VIEs, which are also consolidated on our balance sheet, are non-recourse to us, and can generally only be satisfied from each VIE’s respective asset pool.

We are not obligated to provide, nor have we provided, any financial support to these VIEs. In addition, five of these seven investments have been made through our CT CDOs, which limits our exposure to loss as discussed above. Accordingly, as of September 30, 2010, our maximum exposure to loss as a result of our investment in these entities is limited to $69.0 million, the notional amount of our investment in the two VIEs not held by our CT CDOs. Prior to consolidation, we have previously impaired 100% of our investment in these entities, resulting in a zero net exposure to loss as of September 30, 2010.

As described in Note 2, our consolidated balance sheets separately state our assets and liabilities and certain assets and liabilities of consolidated VIEs. The following disclosures relate specifically to the assets and liabilities of these VIEs, as separately stated on our consolidated balance sheets.

- 22 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

A. Securities Held-to-Maturity – Consolidated VIEs

Our consolidated VIEs’ securities portfolio consists of CMBS, CDOs, and other securities. Activity relating to these securities for the nine months ended September 30, 2010 was as follows (in thousands):

	CMBS			CDOs & Other			Total Book Value (1)
December 31, 2009		$624,791			$73,073			$697,864
Impact of consolidation due to change in accounting principal		(78,087	)		—			(78,087	)
Principal paydowns		(7,993	)		(17,906	)		(25,899	)
Maturities		(9,781	)		—			(9,781	)
Discount/premium amortization & other (2)		3,068			(661	)		2,407
Other-than-temporary impairments:
Recognized in earnings		(39,907	)		—			(39,907	)
Recognized in accumulated other comprehensive income		(15,248	)		—			(15,248	)
September 30, 2010		$476,843			$54,506			$531,349

(1)	Includes securities with a total face value of $614.4 million and $751.2 million as of September 30, 2010 and December 31, 2009, respectively. Securities with an aggregate face value of $92.4 million, which had a net carrying value of $78.1 million as of December 31, 2009, have been eliminated in consolidation beginning January 1, 2010 as discussed in Note 2.
(2)	Includes mark-to-market adjustments on securities previously classified as available-for-sale, amortization of other-than-temporary impairments, and losses, if any.

As detailed in Note 2, on August 4, 2005, we changed the accounting classification of our then portfolio of securities from available-for-sale to held-to-maturity. While we typically account for the securities in our portfolio on a held-to-maturity basis, under certain circumstances, we will account for securities on an available-for-sale basis. As of both September 30, 2010 and December 31, 2009, our consolidated VIEs had no securities classified as available-for-sale.

The following table allocates our consolidated VIEs’ securities’ book value as of September 30, 2010 between their amortized cost basis, amounts related to mark-to-market adjustments on securities previously classified as available-for-sale, and the portion of other-than-temporary impairments not related to expected credit losses (in thousands):

	CMBS			CDOs & Other		Total Securities
Amortized cost basis	$	488,348		$	54,506	$	542,854
Mark-to-market adjustments on securities previously classified as available-for-sale		5,371			—		5,371
Other-than-temporary impairments recognized in accumulated other comprehensive income		(16,876	)		—		(16,876	)
Total book value	$	476,843		$	54,506	$	531,349

- 23 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

The following table details overall statistics for our consolidated VIEs’ securities portfolio as of September 30, 2010 and December 31, 2009:

	September 30, 2010	December 31, 2009
Number of securities	57	64
Number of issues	41	47
Rating (1) (2) (3)	BBB-	BB-
Fixed / Floating (in millions) (4)	$530 / $1	$618 / $80
Coupon (1) (5)	6.67%	6.11%
Yield (1) (5)	7.11%	6.58%
Life (years) (1) (6)	2.9	3.6

(1)	Represents a weighted average as of September 30, 2010 and December 31, 2009, respectively.
(2)	Weighted average ratings are based on the lowest rating published by Fitch Ratings, Standard & Poor’s or Moody’s Investors Service for each security.
(3)	Increase in weighted average rating as of September 30, 2010 is primarily due to the consolidation of additional VIEs as described in Note 2.
(4)	Represents the aggregate net book value of our portfolio allocated between fixed rate and floating rate securities.
(5)	Coupon is based on the securities’ contractual interest rates, while yield is based on expected cash flows for each security, and considers discounts/premiums and asset non-performance. Calculations for floating rate securities are based on LIBOR of 0.26% and 0.23% as of September 30, 2010 and December 31, 2009, respectively.
(6)	Weighted average life is based on the timing and amount of future expected principal payments through the expected repayment date of each respective investment.

The table below details the ratings and vintage distribution of our consolidated VIEs’ securities as of September 30, 2010 (in thousands):

	Rating as of September 30, 2010
Vintage	AAA	AA	A	BBB	BB	B	CCC and Below	Total
2007	$—	$—	$—	$—	$—	$—	$—	$—
2006	—	—	—	—	—	—	15,445	15,445
2005	—	—	—	—	—	3,761	19,650	23,411
2004	—	24,823	10,195	—	—	—	2,335	37,353
2003	9,906	—	—	4,978	—	—	—	14,884
2002	—	—	—	6,651	—	2,639	—	9,290
2001	—	—	—	4,821	4,131	—	5,000	13,952
2000	7,434	—	—	—	3,966	—	22,300	33,700
1999	—	—	11,362	1,425	17,363	—	—	30,150
1998	103,287	45,426	37,780	43,377	43,056	—	9,041	281,967
1997	—	—	34,601	—	5,173	3,416	3,500	46,690
1996	24,507	—	—	—	—	—	—	24,507
Total	$145,134	$70,249	$93,938	$61,252	$73,689	$9,816	$77,271	$531,349

- 24 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

The table below details the ratings and vintage distribution of our consolidated VIEs’securities as of December 31, 2009 (in thousands):

	Rating as of December 31, 2009
Vintage	AAA	AA	A	BBB	BB	B	CCC and Below	Total
2007	$—	$—	$—	$—	$2,812	$—	$28,921	$31,733
2006	—	—	—	—	—	8,933	28,325	37,258
2005	—	—	—	11,866	1,250	14,630	22,104	49,850
2004	—	24,848	19,225	—	25,540	9,782	—	79,395
2003	9,905	—	—	4,976	—	—	—	14,881
2002	—	—	—	6,616	—	2,599	—	9,215
2001	—	—	—	4,843	14,204	—	—	19,047
2000	7,506	—	—	—	4,982	—	22,069	34,557
1999	—	—	11,436	1,432	17,359	—	—	30,227
1998	117,349	—	82,791	75,314	11,807	—	12,900	300,161
1997	—	—	35,101	4,876	8,580	—	18,778	67,335
1996	24,205	—	—	—	—	—	—	24,205
Total	$158,965	$24,848	$148,553	$109,923	$86,534	$35,944	$133,097	$697,864

Other-than-temporary impairments

Quarterly, we reevaluate our consolidated VIEs’ securities portfolio to determine if there has been an other-than-temporary impairment based upon expected future cash flows from each securities investment. As a result of this evaluation, under the accounting guidance discussed in Note 2, during the nine months ended September 30, 2010, we recorded a gross other-than-temporary impairment of $55.2 million. This gross other-than-temporary impairment includes $39.9 million related to expected credit losses which has been recorded through earnings, and $15.2 million of fair value adjustments in excess of expected credit losses, or Valuation Adjustments, which have been recorded as a component of accumulated other comprehensive income (loss) on our consolidated balance sheet with no impact on earnings.

To determine the component of the gross other-than-temporary impairment related to expected credit losses, we compare the amortized cost basis of each other-than-temporarily impaired security to the present value of its revised expected cash flows, discounted using its pre-impairment yield. Significant judgment of management is required in this analysis that includes, but is not limited to, (i) assumptions regarding the collectability of principal and interest, net of related expenses, on the underlying loans, and (ii) current subordination levels at both the individual loans which serve as collateral under our securities and at the securities themselves.

The following table summarizes activity related to the other-than-temporary impairments of our consolidated VIEs’ securities during the nine months ended September 30, 2010 (in thousands):

	Gross Other-Than-Temporary Impairments			Credit Related Other-Than-Temporary Impairments			Non-Credit Related Other-Than-Temporary Impairments
December 31, 2009		$32,508			$25,112			$7,396
Impact of change in accounting principle (1)		(5,376	)		(1,576	)		(3,800	)
Additions due to change in expected cash flows		55,155			39,907			15,248
Amortization of other-than-temporary impairments		(1,702	)		267			(1,969	)
September 30, 2010		$80,585			$63,710			$16,875

(1) Due to the consolidation of additional VIEs, as discussed in Note 2, other-than-temporary impairments which were previously recorded on our investment in these entities have been eliminated in consolidation beginning January 1, 2010.

Unrealized losses and fair value of securities

Certain of our consolidated VIEs’ securities are carried at values in excess of their fair values. This difference can be caused by, among other things, changes in credit spreads and interest rates.

- 25 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

The following table shows the gross unrealized losses and fair value of securities for which the fair value is lower than their book value as of September 30, 2010 and that are not deemed to be other-than-temporarily impaired (in millions):

	Less Than 12 Months		Greater Than 12 Months		Total
	Estimated Fair Value	Gross Unrealized Loss	Estimated Fair Value	Gross Unrealized Loss	Estimated Fair Value	Gross Unrealized Loss	Book Value (1)
Floating Rate	$—	$—	$—	$—	$—	$—	$—
Fixed Rate	26.1	(0.3)	285.8	(51.1)	311.9	(51.4)	363.3
Total	$26.1	($0.3)	$285.8	($51.1)	$311.9	($51.4)	$363.3

(1) Excludes, as of September 30, 2010, $168.0 million of securities which were carried at or below fair value and securities against which an other-than-temporary impairment equal to the entire book value was recognized in earnings.

As of September 30, 2010, 36 of our consolidated VIEs’ securities with an aggregate carrying value of $363.3 million were carried at values in excess of their fair values. Fair value for these securities was $311.9 million as of September 30, 2010. In total, as of September 30, 2010, we had 57 investments in securities with an aggregate book value of $531.3 million that have an estimated fair value of $488.8 million, including 55 investments in CMBS with an estimated fair value of $436.3 million and two investments in CDOs and other securities with an estimated fair value of $52.5 million. These valuations do not include the value of interest rate swaps entered into in conjunction with the purchase/financing of these investments, if any.

The following table shows the gross unrealized losses and fair value of our consolidated VIEs securities for which the fair value is lower than our book value as of December 31, 2009 and that are not deemed to be other-than-temporarily impaired (in millions):

	Less Than 12 Months		Greater Than 12 Months		Total
	Estimated Fair Value	Gross Unrealized Loss	Estimated Fair Value	Gross Unrealized Loss	Estimated Fair Value	Gross Unrealized Loss	Book Value (1)
Floating Rate	$—	$—	$24.5	($55.1)	$24.5	($55.1)	$79.6
Fixed Rate	27.6	(3.9)	333.6	(125.9)	361.2	(129.8)	491.0
Total	$27.6	($3.9)	$358.1	($181.0)	$385.7	($184.9)	$570.6

(1) Excludes, as of December 31, 2009, $127.2 million of securities which were carried at or below fair value and securities against which an other-than-temporary impairment equal to the entire book value was recognized in earnings.

As of December 31, 2009, 54 of our consolidated VIEs securities with an aggregate carrying value of $570.6 million were carried at values in excess of their fair values. Fair value for these securities was $385.7 million as of December 31, 2009. In total, as of December 31, 2009, we had 64 investments in securities with an aggregate book value of $697.9 million that have an estimated fair value of $519.1 million, including 62 investments in CMBS with an estimated fair value of $451.5 million and two investments in CDOs and other securities with an estimated fair value of $67.6 million. These valuations do not include the value of interest rate swaps entered into in conjunction with the purchase/financing of these investments, if any.

We determine fair values using third party dealer assessments of value, supplemented in limited cases with our own internal financial model-based estimations of fair value. We regularly examine our securities portfolio and have determined that, despite these differences between carrying value and fair value, our expectations of future cash flows have only changed adversely for 10 of our securities, against which we have recognized other-than-temporary-impairments. See Note 3 for additional discussion of fair value estimations.

Investments in variable interest entities

Our consolidated VIEs’ securities portfolio includes investments in both CMBS and CDOs, which securitization structures are generally considered VIEs. We have not consolidated these VIEs due to our determination that, based on the structural provisions of each entity and the nature of our investments, we do not have the power to direct the activities that most significantly impact these entities' economic performance.

- 26 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

These securities were acquired through investment, and do not represent a securitization or other transfer of our assets. We are not named as special servicer on these investments.

We are not obligated to provide, nor have we provided, any financial support to these entities. As these securities are financed by our non-recourse CT CDOs, our exposure to loss is therefore limited to our interests in these consolidated entities described above.

B. Loans Receivable, Net – Consolidated VIEs

Activity relating to our consolidated VIEs’ loans receivable for the nine months ended September 30, 2010 was as follows (in thousands):

	Gross Book Value	Provision for Loan Losses	Net Book Value (1)
December 31, 2009	$508,971	($117,472)	$391,499
Impact of consolidation due to change in accounting principal	2,980,075	(134,834)	2,845,241
Satisfactions (2)	(103,816)	—	(103,816)
Principal paydowns	(63,218)	—	(63,218)
Discount/premium amortization & other (3)	(6,242)	—	(6,242)
Provision for loan losses (4)	—	(88,813)	(88,813)
Realized loan losses	(45,020)	45,020	—
Reclassification to real estate held-for-sale	(15,068)	3,014	(12,054)
September 30, 2010	$3,255,682	($293,085)	$2,962,597

(1)	Includes loans with a total principal balance of $3.26 billion and $511.4 million as of September 30, 2010 and December 31, 2009, respectively. Loans with an aggregate principal balance of $2.98 billion as of December 31, 2009 have been consolidated onto our balance sheet beginning January 1, 2010, as discussed in Note 2.
(2)	Includes final maturities and full repayments.
(3)	Includes one loan which was restructured in June 2010 and converted to a $6.6 million equity participation in the borrower entity. This equity investment has been reclassified to Accrued Interest Receivable and Other Assets on our consolidated balance sheet as of September 30, 2010.
(4)	Provision for loan losses is presented net of a $2.5 million recovery of provisions recorded in prior periods.

The following table details overall statistics for our consolidated VIEs’ loans receivable portfolio as of September 30, 2010 and December 31, 2009:

	September 30, 2010	December 31, 2009
Number of investments	96	26
Fixed / Floating (in millions) (1)	$222 / $2,741	$72 / $319
Coupon (2) (3)	2.28%	3.65%
Yield (2) (3)	2.30%	3.58%
Maturity (years) (2) (4)	1.3	3.4

(1)	Represents the aggregate net book value of our portfolio allocated between fixed rate and floating rate loans.
(2)	Represents a weighted average as of September 30, 2010 and December 31, 2009, respectively.
(3)	Calculations for floating rate loans are based on LIBOR of 0.26% and 0.23% as of September 30, 2010 and December 31, 2009, respectively.
(4)	For loans in CT CDOs, assumes all extension options are executed. For loans in other consolidated VIEs, maturity is based on information provided by the trustees of each respective VIE.

- 27 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

The tables below detail the types of loans in our consolidated VIEs’ portfolio, as well as the property type and geographic distribution of the properties securing these loans, as of September 30, 2010 and December 31, 2009 (in thousands):

	September 30, 2010						December 31, 2009
Asset Type	Book Value			Percentage			Book Value		Percentage
Senior mortgages		$2,250,318			75	%		$35,829		9	%
Mezzanine loans		356,485			12			103,726		26
Subordinate interests in mortgages		343,496			11			228,662		59
Other		22,963			2			23,282		6
Total		$2,973,262			100	%		$391,499		100	%
Property Type	Book Value			Percentage			Book Value		Percentage
Healthcare		$1,162,495			39	%		$27,976		7	%
Office		827,261			28			174,695		45
Hotel		655,266			22			128,150		33
Retail		196,250			7			8,660		2
Other		131,990			4			52,018		13
Total		$2,973,262			100	%		$391,499		100	%
Geographic Location	Book Value			Percentage			Book Value		Percentage
Northeast		$463,725			16	%		$225,117		57	%
Southeast		322,352			10			72,976		19
Southwest		177,959			6			29,550		8
West		165,123			6			36,041		9
Midwest		26,305			1			8,884		2
Diversified		1,817,798			61			18,931		5
Total		$2,973,262			100	%		$391,499		100	%
Unallocated loan loss provision:		(10,665	)					—
Net book value		$2,962,597						$391,499

Quarterly, management evaluates our consolidated VIEs’ loan portfolio for impairment as described in Note 2. The following table describes our consolidated VIEs’ impaired loans as of September 30, 2010, including impaired loans that are current in their interest payments and those that are delinquent on contractual payments (in thousands):

	No. of Loans	Gross Book Value	Provision for Loan Loss	Net Book Value
Impaired loans:
Performing loans	7	$421,974	($184,937)	$237,037
Non-performing loans	7	167,661	(97,483)	70,178
Total impaired loans	14	$589,635	($282,420)	$307,215

In addition, as described in Note 2, we have recorded a $10.7 million general provision for loan losses against 41 loans in our consolidated VIEs with an aggregate principal balance of $127.2 million.

- 28 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

The following table details the allocation of our consolidated VIEs’ provision for loan losses as of September 30, 2010 (in thousands):

	September 30, 2010
Provision for Loan Losses	Book Value		Percentage
Subordinate interests in mortgages		$108,337		36	%
Senior mortgages		90,334		31
Mezzanine loans		83,749		29
Unallocated		10,665		4
Total		$293,085		100	%

The average balance of impaired loans held by consolidated VIEs was $172.8 million during the nine months ended September 30, 2010. Subsequent to their impairment, we recorded interest on impaired loans that are performing of $4.3 million during the first nine months of 2010, substantively all of which was received in cash. The average balance of impaired loans held by consolidated VIEs was $30.1 million during the nine months ended September 30, 2009. Subsequent to their impairment, we recorded interest on these loans of $397,000 during the first nine months of 2009.

C. Loans Held-for-Sale, Net – Consolidated VIEs

As of December 31, 2009, we were in the process of finalizing a sale of one of our consolidated VIEs’ non-performing loans with a gross carrying value of $18.3 million to a third party. We had previously recorded a provision for loan losses of $9.2 million against this loan, and in the fourth quarter of 2009 recaptured $8.4 million of the provision to reflect the expected sales proceeds. In January 2010, we completed the sale of this loan for $17.5 million, which approximates its net book value at December 31, 2009. Accordingly, our consolidated VIEs do not have any loans classified as held-for-sale as of September 30, 2010.

D. Real Estate Held-for-Sale – Consolidated VIEs

In April 2010 we completed foreclosure on the land which served as collateral for a $15.1 million loan held by one of our consolidated VIEs. This loan had a net book value of $12.1 million at the time of foreclosure, which amount was transferred to real estate held-for-sale. Subsequently, in the third quarter of 2010, we recorded a $4.0 million impairment to reflect this investment at its approximate fair value of $8.1 million.

- 29 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

E. Debt Obligations – Consolidated VIEs

As of September 30, 2010 and December 31, 2009, our consolidated VIEs had $3.7 billion and $1.1 billion of total non-recourse securitized debt obligations outstanding, respectively. The balances of each entity’s outstanding securitized debt obligations, their respective coupons and all-in effective costs, including the amortization of fees and expenses, were as follows (in thousands):

	September 30, 2010				December 31, 2009		September 30, 2010
Non-Recourse Securitized Debt Obligations	Principal Balance		Book Balance		Book Balance		Coupon(1)			All-In Cost(1)			Maturity Date(2)
CT collateralized debt obligations (CDOs)
CT CDO I		$201,136		$201,136		$233,168		0.95	%		0.95	%	July 2039
CT CDO II		264,533		264,533		283,671		0.78	%		1.05	%	March 2050
CT CDO III		247,828		248,709		254,156		5.23	%		5.15	%	June 2035
CT CDO IV (3)		292,289		292,289		327,285		0.90	%		1.02	%	October 2043
Total CT CDOs		1,005,786		1,006,667		1,098,280		1.95	%		2.04	%	July 2042
Other consolidated VIEs
GMACC 1997-C1		102,579		102,579		N/A		7.11	%		7.11	%	July 2029
GSMS 2006-FL8A		136,598		136,598		N/A		0.81	%		0.81	%	June 2020
JPMCC 2005-FL1A		97,796		97,796		N/A		0.84	%		0.84	%	February 2019
MSC 2007-XLFA		753,888		753,888		N/A		0.52	%		0.52	%	October 2020
MSC 2007-XLCA		535,229		535,229		N/A		1.53	%		1.53	%	July 2017
CSFB 2006-HC1		1,051,017		1,051,017		N/A		0.80	%		0.80	%	May 2023
Total other consolidated VIEs		2,677,107		2,677,107		N/A		1.11	%		1.11	%	May 2021
Total/Weighted Average		$3,682,893		$3,683,774		$1,098,280		1.34	%		1.36	%(4)	February 2027

(1)	Represents a weighted average for each respective facility, assuming LIBOR of 0.26% at September 30, 2010 for floating rate debt obligations.
(2)	Maturity dates represent the contractual maturity of each securitization trust. Repayment of securitized debt is a function of collateral cash flows which are disbursed in accordance with the contractual provisions of each trust, and is therefore expected to occur prior to contractual maturity.
(3)	Comprised, at September 30, 2010 of $279.8 million of floating rate notes sold and $12.5 million of fixed rate notes sold.
(4)	Including the impact of interest rate hedges with an aggregate notional balance of $344.4 million as of September 30, 2010, the effective all-in cost of our consolidated VIEs’ debt obligations would be 1.80% per annum.

As discussed above, our consolidated VIEs generally include two categories of entities: (i) collateralized debt obligations sponsored and issued by us, which we refer to as CT CDOs, and (ii) other consolidated VIEs, which are also securitization vehicles but were not issued or sponsored by us. We have historically consolidated the CT CDOs; however we began consolidating the additional VIEs as of January 1, 2010.

CT CDOs

As of September 30, 2010, we had CT CDOs outstanding from four separate issuances with a total face value of $1.0 billion. As of September 30, 2010, $349.9 million of loans receivable and $531.3 million of securities were financed by our CT CDOs. As of December 31, 2009, $409.0 million of loans receivable and $697.9 million of securities were financed by our CT CDOs.

CT CDO I and CT CDO II each have interest coverage and overcollateralization tests, which, when breached, provide for hyper-amortization of the senior notes sold by a redirection of cash flow that would otherwise have been paid to the subordinate classes, some of which are owned by us. Furthermore, all four of our CT CDOs provide for the re-classification of interest proceeds from impaired collateral as principal proceeds, which also serve to hyper-amortize senior notes sold.

During 2009, we were informed by our CDO trustee of impairments due to rating agency downgrades of certain of the securities which serve as collateral in all of our CT CDOs. These impairments, combined with the non-performance of certain loan collateral, resulted in breaches of interest coverage and overcollateralization tests at CT CDO I and CT CDO II, as well as the reclassification of interest proceeds from the impaired collateral as principal proceeds in all four of our CT CDOs. Other than collateral management fees, we currently receive cash payments from only one of our four CT CDOs, CT CDO III.

Further, due to the hyper-amortization of senior notes, certain subordinate classes are accruing unpaid interest, resulting in an increased liability to these classes. As senior notes which carry a lower rate of interest continue to hyper-amortize, and certain subordinate notes continue to accrue deferred interest, the weighted-average cost of debt for our CT CDOs has and will continue to increase.

- 30 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

When we formed (and reinvested) our four CT CDOs, we made certain representations and warranties with respect to Capital Trust, Inc. and the loans and securities that we contributed as collateral to these CT CDOs. In the event that these representations or warranties are proved to be untrue at the time that the respective collateral was contributed, we may be required to repurchase certain of those loans and securities. These representations and warranties generally relate to specific corporate and asset related subjects, including, among other things, proper corporate authorization, compliance with laws and regulations, ownership of the assets, title to, lack of liens encumbering and adequate insurance covering the underlying collateral properties and the lack of existing loan defaults.

The maximum potential amount of future payment we may be required to make to repurchase assets is $1.2 billion, the current face amount of all loans and securities in our four CT CDOs. In certain cases, we may be able to reduce the impact of any such purchase obligation through recoveries from the exercise of remedies against the institution from which we acquired the asset and received substantially the same representations and warranties. This potential recoverable amount is not currently estimable and would depend on the nature of the representation and warranty breached and the circumstances under which each asset was transferred to the CT CDO. Since inception, we have not been required to repurchase any assets nor have we received any notice of assertion of a potential breach of any representation or warranty. Any payment required to repurchase a loan or security could materially impact our liquidity.

Other Consolidated VIEs

In addition to the CT CDOs sponsored by us, which are discussed above, we also have consolidated certain other VIEs beginning on January 1, 2010, as discussed in Note 2. The debt obligations of these entities are separately presented on our consolidated balance sheet along with the CT CDOs issued by us, as they are also securitized, non-recourse obligations. These obligations will generally be satisfied with the repayment of assets in each such entity’s collateral pool, or will be discharged when losses are realized. As of September 30, 2010, $2.6 billion of loans receivable serve as collateral for the securities issued by these other consolidated VIEs.

F. Derivative Financial Instruments – Consolidated VIEs

The following table summarizes the notional amounts and fair values of our consolidated VIEs’ interest rate swaps as of September 30, 2010 and December 31, 2009 (in thousands). The notional amount provides an indication of the extent of our involvement in the instruments at that time, but does not represent exposure to credit or interest rate risk.

Type	Counterparty	September 30, 2010 Notional Amount	Interest Rate (1)	Maturity	September 30, 2010 Fair Value	December 31, 2009 Fair Value
Cash Flow Hedge	Swiss RE Financial	$264,863	5.10%	2015	($28,684)	($21,785)
Cash Flow Hedge	Bank of America	44,891	4.58%	2014	(3,946)	(3,005)
Cash Flow Hedge	Morgan Stanley	17,878	3.95%	2011	(550)	(794)
Cash Flow Hedge	Bank of America	10,916	5.05%	2016	(1,565)	(930)
Cash Flow Hedge	Bank of America	5,104	4.12%	2016	(568)	(212)
Cash Flow Hedge	Morgan Stanley	780	5.31%	2011	(16)	(40)
Total/Weighted Average		$344,432	4.95%	2015	($35,329)	($26,766)

(1) Represents the gross fixed interest rate we pay to our counterparties under these derivative instruments. We receive an amount of interest indexed to one-month LIBOR on all of our interest rate swaps.

As of both September 30, 2010 and December 31, 2009, all of our consolidated VIEs’ derivative financial instruments were recorded at fair value as interest rate hedge liabilities on our consolidated balance sheet.

The table below shows amounts recorded to other comprehensive income and amounts recorded to interest expense from other comprehensive income for the nine months ended September 30, 2010 and 2009 (in thousands):

	Amount of (loss) gain recognized		Amount of loss reclassified from OCI
	in OCI for the nine months ended		to income for the nine months ended (1)
Hedge	September 30, 2010	September 30, 2009	September 30, 2010	September 30, 2009
Interest rate swaps	($8,563)	$6,075	($12,305)	($12,852)

(1) Represents net amounts paid to swap counterparties during the period, which are included in interest expense, offset by an immaterial amount of non-cash swap amortization.

All of our consolidated VIEs’ hedges were classified as highly effective for all of the periods presented. Over the next twelve months, as we make payments under our hedge agreements, we expect approximately $15.3 million to be reclassified from other comprehensive income to interest expense. This amount is generally equal to the present value of expected payments under the respective derivative contracts.

- 31 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

As of September 30, 2010, our consolidated VIEs have not posted any assets as collateral under derivative agreements.

Note 12. Shareholders’ Equity

Authorized Capital

We have the authority to issue up to 200,000,000 shares of stock, consisting of (i) 100,000,000 shares of class A common stock, and (ii) 100,000,000 shares of preferred stock. Subject to applicable New York Stock Exchange listing requirements, our board of directors is authorized to issue additional shares of authorized stock without shareholder approval. In addition, to the extent not issued, currently authorized stock may be reclassified between class A common stock and preferred stock.

Common Stock

Shares of class A common stock are entitled to vote on all matters presented to a vote of shareholders, except as provided by law or subject to the voting rights of any outstanding preferred stock. Holders of record of shares of class A common stock on the record date fixed by our board of directors are entitled to receive such dividends as may be declared by the board of directors subject to the rights of the holders of any outstanding preferred stock. A total of 22,415,957 shares of common stock and stock units were issued and outstanding as of September 30, 2010.

We did not repurchase any of our common stock during the nine months ended September 30, 2010, other than the 8,621 shares we acquired pursuant to elections by incentive plan participants to satisfy tax withholding obligations through the surrender of shares equal in value to the amount of the withholding obligation incurred upon the vesting of restricted stock.

Preferred Stock

We have not issued any shares of preferred stock since we repurchased all of the previously issued and outstanding preferred stock in 2001.

Warrants

As discussed in Note 8, in conjunction with our debt restructuring, we issued to our repurchase lenders warrants to purchase an aggregate 3,479,691 shares of our class A common stock at an exercise price of $1.79 per share. The warrants will become exercisable on March 16, 2012 and expire on March 16, 2019, and may be exercised through a cashless exercise at the option of the warrant holders. The fair value assigned to these warrants, totaling $940,000, has been recorded as an increase to additional paid-in capital, and will be amortized over the term of the related debt obligations. The warrants were valued using the Black-Scholes valuation method.

Dividends

We generally intend to distribute each year substantially all of our taxable income (which does not necessarily equal net income as calculated in accordance with GAAP) to our shareholders to comply with the REIT provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. If necessary for REIT qualification purposes, we may need to distribute any taxable income remaining after giving effect to the distribution of the final regular quarterly dividend each year, together with the first regular quarterly dividend payment of the following taxable year or, at our discretion, in a separate dividend distributed prior thereto. We refer to these dividends as special dividends. As required by covenants in our restructured debt obligations, our cash dividend distributions are restricted to the minimum amount necessary to maintain our status as a REIT. Moreover, such covenants require us to make any distribution in stock to the extent permitted, taking into consideration the recent Internal Revenue Service rulings which allow REITs to distribute up to 90% of their dividends in the form of stock for tax years ending on or before December 31, 2011.

In additionto the foregoing restrictions, ourdividend policy remains subject to revision at the discretion of our board of directors. All distributions will be made at the discretion of our board of directors and will depend upon our taxable income, our financial condition, our maintenance of REIT status and other factors as our board of directors deems relevant. No dividends were declared during the nine months ended September 30, 2010 or 2009.

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Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

Accumulated Other Comprehensive Income (Loss)

The following table details the primary components of accumulated other comprehensive income (loss) as of September 30, 2010 and significant activity for the nine months ended September 30, 2010 (in thousands):

	Mark-to-Market on Interest Rate Hedges	Deferred Gains on Settled Hedges	Other-than-Temporary Impairments	Unrealized Gains on Securities	Total
December 31, 2009	($30,950)	$263	($14,024)	$5,576	($39,135)
Cumulative effect of change in accounting principle	—	—	3,800	—	3,800
Unrealized loss on derivative financial instruments	(10,281)	—	—	—	(10,281)
Amortization of net unrealized gains on securities	—	—	—	(754)	(754)
Amortization of net deferred gains on settlement of swaps	—	(74)	—		(74)
Other-than-temporary impairments of securities (1)	—	—	(9,496)	—	(9,496)
September 30, 2010	($41,231)	$189	($19,720)	$4,822	($55,940)

(1) Represents other-than-temporary impairments of securities related to fair value adjustments in excess of expected credit losses, net of amortization of $2.6 million.

Earnings Per Share

The following table sets forth the calculation of Basic and Diluted earnings per share, or EPS, based on the weighted average of both restricted and unrestricted class A common stock outstanding, for the nine months ended September 30, 2010 and 2009 (in thousands, except share and per share amounts):

	Nine Months Ended September 30, 2010								Nine Months Ended September 30, 2009
	Net			Wtd. Avg.		Per Share			Net			Wtd. Avg.		Per Share
	Loss			Shares		Amount			Loss			Shares		Amount
Basic EPS:
Net loss allocable to
common stock		($195,259	)		22,356,857		($8.73	)		($185,997	)		22,361,541		($8.32	)
Effect of Dilutive Securities:
Warrants & Options outstanding
for the purchase of common stock		—			—					—			—
Diluted EPS:
Net loss per share of
common stock and assumed
conversions		($195,259	)		22,356,857		($8.73	)		($185,997	)		22,361,541		($8.32	)

The following table sets forth the calculation of Basic and Diluted earnings per share, or EPS, based on the weighted average of both restricted and unrestricted class A common stock outstanding, for the three months ended September 30, 2010 and 2009 (in thousands, except share and per share amounts):

	Three Months Ended September 30, 2010								Three Months Ended September 30, 2009
	Net			Wtd. Avg.		Per Share			Net			Wtd. Avg.		Per Share
	Loss			Shares		Amount			Loss			Shares		Amount
Basic EPS:
Net loss allocable to
common stock		($134,709	)		22,389,901		($6.02	)		($106,457	)		22,426,623		($4.75	)
Effect of Dilutive Securities:
Warrants & Options outstanding
for the purchase of common stock		—			—					—			—
Diluted EPS:
Net loss per share of
common stock and assumed
conversions		($134,709	)		22,389,901		($6.02	)		($106,457	)		22,426,623		($4.75	)

As of September 30, 2010, Diluted EPS excludes 129,000 options and 3.5 million warrants, which were not dilutive for the period. These instruments could potentially impact Diluted EPS in future periods depending on changes in our stock price. As of September 30, 2009, Diluted EPS excludes 162,000 options and 3.5 million warrants, which were similarly not dilutive.

- 33 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

Note 13. General and Administrative Expenses

General and administrative expenses for the nine months ended September 30, 2010 and 2009 consisted of the following (in thousands):

	Nine Months Ended September 30,
	2010	2009
Personnel costs	$7,103	$7,950
Employee stock-based compensation	107	1,102
Professional services	3,019	4,342
Restructuring costs	1,110	3,042
Operating and other costs	1,746	2,014
Subtotal	$13,085	$18,450
Expenses from other consolidated VIEs	1,298	—
Total	$14,383	$18,450

Note 14. Income Taxes

We made an election to be taxed as a REIT under Section 856(c) of the Internal Revenue Code, commencing with the tax year ending December 31, 2003. As a REIT, we generally are not subject to federal, state, and local income taxes except for the operations of our taxable REIT subsidiary, CTIMCO. To maintain qualification as a REIT, we must distribute at least 90% of our annual REIT taxable income to our shareholders and meet certain other requirements. If we fail to qualify as a REIT, we may be subject to material penalties as well as federal, state and local income tax on our taxable income at regular corporate rates. As of September 30, 2010 and December 31, 2009, we were in compliance with all REIT requirements.

In addition, we are subject to taxation on the income generated by investments in our CT CDOs. Due to the redirection provisions of our CT CDOs, which reallocate principal proceeds and interest otherwise distributable to us to repay senior note holders, assets financed through our CT CDOs may generate current taxable income without a corresponding cash distribution to us. See Note 11 for further discussion of these redirection provisions.

During the nine months ended September 30, 2010, CTIMCO paid small amounts of federal, state and local taxes. During the nine months ended September 30, 2009, CTIMCO paid no federal taxes but paid small amounts of state and local taxes. As of December 31, 2009, we had net operating losses, or NOLs, and net capital losses, or NCLs, available to be carried forward and utilized in current or future periods. These included NOLs of $324.4 million and NCLs of $97.6 million at Capital Trust, Inc., as well as NOLs of $407,000 at CTIMCO.

Deferred income taxes recorded on our consolidated balance sheets reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used in the computation of our current income tax obligations.

Note 15. Employee Benefit and Incentive Plans

We had four benefit plans in effect as of September 30, 2010: (1) the Second Amended and Restated 1997 Long-Term Incentive Stock Plan, or 1997 Employee Plan, (2) the Amended and Restated 1997 Non-Employee Director Stock Plan, or 1997 Director Plan, (3) the Amended and Restated 2004 Long-Term Incentive Plan, or 2004 Plan, and (4) the 2007 Long-Term Incentive Plan, or 2007 Plan. The 1997 Employee Plan and 1997 Director Plan expired in 2007 and no new awards may be issued under them, and no further grants will be made under the 2004 Plan. Under the 2007 Plan, a maximum of 700,000 shares of class A common stock may be issued. Shares canceled under the 2004 Plan are available to be reissued under the 2007 Plan. As of September 30, 2010, there were 388,623 shares available under the 2007 Plan.

Under these plans, our employees are issued shares of our restricted common stock. We record grant date fair value of these shares as an expense over their vesting period. A portion of these shares vest pro rata over a three-year service period, with the remainder contingently vesting after a four-year period based on the returns we have achieved.

As of September 30, 2010, unvested share-based compensation consisted of 50,611 shares of restricted common stock with an unamortized value of $137,000. Subject to vesting conditions and the continued employment of certain employees, these costs will be recognized as compensation expense over the next three years.

- 34 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

Activity under these four plans for the nine months ended September 30, 2010 is summarized in the table below in share and share equivalents:

Benefit Type	1997 Employee Plan	1997 Director Plan	2004 Plan	2007 Plan	Total
Options(1)
Beginning balance	170,477	—	—	—	170,477
Expired	(41,585)	—	—	—	(41,585)
Ending balance	128,892	—	—	—	128,892
Restricted Common Stock(2)
Beginning balance	—	—	3,480	75,543	79,023
Granted	—	—	—	16,875	16,875
Vested	—	—	(3,480)	(41,807)	(45,287)
Ending balance	—	—	—	50,611	50,611
Stock Units(3)
Beginning balance	—	80,017	—	384,029	464,046
Granted, deferred and (vested), net	—	(11,473)	—	721	(10,752)
Ending balance	—	68,544	—	384,750	453,294
Total outstanding	128,892	68,544	—	435,361	632,797

(1)	All options are fully vested as of September 30, 2010.
(2)	Comprised of both performance based awards that vest upon the attainment of certain common equity return thresholds and time based awards that vest based upon an employee’s continued employment on vesting dates.
(3)	Stock units are granted to certain members of our board of directors in lieu of cash compensation for services and in lieu of dividends earned on previously granted stock units.

The following table summarizes the outstanding options as of September 30, 2010:

			Weighted Average		Weighted Average
Exercise Price per Share	Options Outstanding		Exercise Price per Share		Remaining Life (in Years)
$10.00 - $15.00		35,557		$13.50		0.18
$15.00 - $20.00		93,335		15.80		0.22
Total/Weighted Average		128,892		$15.17		0.21

A summary of the unvested restricted common stock as of and for the nine months ended September 30, 2010 was as follows:

	Restricted Common Stock
	Shares	Grant Date Fair Value
Unvested at January 1, 2010	79,023	$7.99
Granted	16,875	1.27
Vested	(45,287)	8.16
Unvested at September 30, 2010	50,611	$6.43

A summary of the unvested restricted common stock as of and for the nine months ended September 30, 2009 was as follows:

	Restricted Common Stock
	Shares	Grant Date Fair Value
Unvested at January 1, 2009	331,197	$30.61
Granted	216,269	3.32
Vested	(58,348)	27.44
Forfeited	(201,696)	28.99
Unvested at September 30, 2009	287,422	$12.27

The total grant date fair value of restricted shares which vested during the nine months ended September 30, 2010 and 2009 was $370,000 and $1.6 million, respectively.

- 35 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

In addition to the equity interests detailed above, we may grant percentage interests in the incentive compensation received by us from certain of our investment management vehicles. As of September 30, 2010, there were no such grants outstanding; however we had previously granted a portion of the Fund III incentive compensation received by us during 2010.

Note 16. Fair Values

Assets and Liabilities Recorded at Fair Value

Certain of our assets and liabilities are measured at fair value either (i) on a recurring basis, as of each quarter-end, or (ii) on a nonrecurring basis, as a result of impairment or other events. Generally, loans held-for-sale, real estate held-for-sale, and interest rate swaps are measured at fair value on a recurring basis, while impaired loans and securities are measured at fair value on a nonrecurring basis. These fair values are determined using a variety of inputs and methodologies, which are detailed below. As discussed in Note 2, the “Fair Value Measurement and Disclosures” Topic of the Codification establishes a fair value hierarchy that prioritizes the inputs used in determining fair value under GAAP, which includes the following classifications, in order of priority:

· Level 1 generally includes only unadjusted quoted prices in active markets for identical assets or liabilities as of the reporting date.

· Level 2 inputs are those which, other than Level 1 inputs, are observable for identical or similar assets or liabilities.

· Level 3 inputs generally include anything which does not meet the criteria of Levels 1 and 2, particularly any unobservable inputs.

The following table summarizes our assets and liabilities, including those of our consolidated VIEs, which are recorded at fair value as of September 30, 2010 (in thousands):

				Fair Value Measurements at Reporting Date Using
	Total			Quoted Prices in		Significant Other			Significant
	Fair Value at			Active Markets		Observable Inputs			Unobservable Inputs
	September 30, 2010			(Level 1)		(Level 2)			(Level 3)
Measured on a recurring basis:
Non-VIE loans held-for-sale		$59,953			$—		$—			$59,953
VIE real estate held-for-sale		$8,055			$—		$—			$8,055
Non-VIE interest rate hedge liabilities		($5,900	)		$—		($5,900	)		$—
VIE interest rate hedge liabilities		($35,329	)		$—		($35,329	)		$—
Measured on a nonrecurring basis:
Non-VIE impaired loans (1)
Senior mortgage		$34,538			$—		$—			$34,538
Subordinate interests in mortgages		39,880			—		—			39,880
Mezzanine loans		—			—		—			—
		$74,418			$—		$—			$74,418
VIE impaired loans (1)
Senior mortgage		$152,286			$—		$—			$152,286
Subordinate interests in mortgages		29,100			—		—			29,100
Mezzanine loans		125,828			—		—			125,828
		$307,214			$—		$—			$307,214
Non-VIE impaired securities (2)		$—			$—		$—			$—
VIE impaired securities (2)
Commercial mortgage-backed securities		$9,001			$—		$7,699			$1,302

(1)	Loans receivable against which we have recorded a provision for loan losses as of September 30, 2010.
(2)	Securities which were other-than-temporarily impaired during the three months ended September 30, 2010.

The following methods and assumptions were used to estimate the fair value of each type of asset and liability which was recorded at fair value as of September 30, 2010:

Loans held-for-sale: Our loans held-for-sale are carried at fair value, which was determined by taking into consideration the value of the underlying collateral, creditworthiness of the borrower, and expected proceeds from the sale of the loans.

- 36 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

Real estate held-for-sale: Real estate held-for-sale is valued based on expected proceeds from a sale of the asset.

Interest rate hedge liabilities: Interest rate hedges are valued using advice from a third party derivative specialist, based on a combination of observable market-based inputs, such as interest rate curves, and unobservable inputs such as credit valuation adjustments due to the risk of non-performance by both us and our counterparties. See Notes 10 and 11 for additional details on our interest rate hedges.

Impaired loans: The loans identified for impairment are collateral dependant loans. Impairment on these loans is measured by comparing management’s estimation of fair value of the underlying collateral to the carrying value of the respective loan. These valuations require significant judgments, which include assumptions regarding capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders and other factors deemed necessary by management. The table above includes all impaired loans, regardless of the period in which impairment was recognized.

Additional details of our loans which were recorded at fair value as of September 30, 2010 are described below:

Senior mortgage loans: Two of our senior mortgage loans with an aggregate principal balance of $51.5 million are reported at fair value as of September 30, 2010, including one hotel loan ($25.1 million) and one office loan ($26.4 million). These loans have a weighted average maturity of October 2011 and a weighted average coupon of 2.0% as of September 30, 2010.

Subordinate interests in mortgages: Four of our subordinate interests in mortgage loans with an aggregate principal balance of $113.8 million are reported at fair value as of September 30, 2010, including two hotel loans ($43.4 million), one office loan ($29.0 million), and one condominium loan ($41.4 million). These loans have a weighted average maturity of March 2011 and a weighted average coupon of 3.6% as of September 30, 2010.

Mezzanine loans: Four of our mezzanine loans with an aggregate principal balance of $302.3 million are reported at fair value as of September 30, 2010, including three hotel loans ($29.3 million) and one office loan ($8.0 million). These loans have a weighted average maturity of March 2012 and a weighted average coupon of 3.3% as of September 30, 2010.

Additional details of our consolidated VIEs’ loans which were recorded at fair value as of September 30, 2010 are described below:

Senior mortgage loans: Three of our consolidated VIEs’ senior mortgage loans with an aggregate principal balance of $242.6 million are reported at fair value as of September 30, 2010, including one office loan ($75.0 million) and two mixed-use/other loan ($167.6 million). These loans have a weighted average maturity of June 2011 and a weighted average coupon of 2.1% as of September 30, 2010.

Subordinate interests in mortgages: Eight of our consolidated VIEs’ subordinate interests in mortgage loans with an aggregate principal balance of $137.8 million are reported at fair value as of September 30, 2010, including three hotel loans ($61.5 million), three office loans ($60.7 million), one multifamily loan ($5.4 million), and one mixed-use/other loan ($10.2 million). These loans have a weighted average maturity of August 2011 and a weighted average coupon of 2.7% as of September 30, 2010.

Mezzanine loans: Three of our consolidated VIEs’ mezzanine loans with an aggregate principal balance of $209.6 million are reported at fair value as of September 30, 2010, including two hotel loans ($188.6 million) and one retail loan ($21.0 million). These loans have a weighted average maturity of September 2011 and a weighted average coupon of 2.2% as of September 30, 2010.

Impaired securities: Securities which are other-than-temporarily impaired are generally valued by a combination of (i) obtaining assessments from third-party dealers and, (ii) in limited cases where such assessments are unavailable or, in the opinion of management, deemed not to be indicative of fair value, discounting expected cash flows using internal cash flow models and estimated market discount rates. In the case of internal models, expected cash flows of each security are based on management’s assumptions regarding the collection of principal and interest on the underlying loans and securities. The table above includes only securities which were impaired during the three months ended September 30, 2010. Previously impaired securities have been subsequently adjusted for amortization, and are therefore no longer reported at fair value as of September 30, 2010.

As of September 30, 2010, three of our securities were 100% impaired using assessment from third-party dealers, resulting in a net book value of zero.

- 37 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

As of September 30, 2010, four of our consolidated VIEs securities were other-than-temporarily impaired and therefore reported at fair value. Three of these securities were valued using assessments from third-party dealers. The dealer valuation obtained for one B-rated (by Fitch) security with a 2005 vintage was determined to not be indicative of fair value and, accordingly, was valued internally by discounting expected future cash flows using a 20% discount rate. This analysis resulted in a valuation equal to 12% of the face amount of the security.

The following table reconciles the beginning and ending balances of assets measured at fair value on a recurring basis using Level 3 inputs (in thousands):

	Loans			Real Estate
	Held-for-Sale			Held-for-Sale
December 31, 2009		$—			$—
Transfer from loans receivable (non-VIEs)		65,989			—
Transfer from loans receivable (VIEs)		—			12,055
Adjustments to fair value included in earnings:
Valuation allowance on loans held-for-sale		(6,036	)		—
Impairment of real estate held-for-sale		—			(4,000	)
September 30, 2010		$59,953			$8,055

Fair Value of Financial Instruments

In addition to the above disclosures for assets and liabilities which are recorded at fair value, GAAP also requires disclosure of fair value information about financial instruments, whether or not recognized in the statement of financial position, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are estimated using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the estimated market discount rate and the estimated future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in an immediate settlement of the instrument. Rather, these fair values reflect the amounts that management believes are realizable in an orderly transaction among willing parties. These disclosure requirements exclude certain financial instruments and all non-financial instruments.

The following table details the carrying amount, face amount, and approximate fair value of the financial instruments described above (in thousands):

Fair Value of Financial Instruments
(in thousands)	September 30, 2010			December 31, 2009
	Carrying Amount	Face Amount	Fair Value	Carrying Amount	Face Amount	Fair Value
Financial assets:
Cash and cash equivalents	$24,149	$24,149	$24,149	$27,954	$27,954	$27,954
Securities held-to-maturity	3,345	36,059	4,570	17,332	105,174	8,544
Loans receivable, net	610,633	1,005,036	514,242	766,745	1,128,738	588,466
Consolidated VIE assets
Securities held-to-maturity	531,349	614,448	488,768	697,864	751,214	519,118
Loans receivable, net	2,962,597	3,257,620	2,559,740	391,499	511,412	316,230
Financial liabilities:
Repurchase obligations	407,921	408,136	408,136	450,137	450,704	450,704
Senior credit facility	98,393	98,393	14,759	99,188	99,188	24,797
Junior subordinated notes	131,145	143,753	2,875	128,077	143,753	14,375
Participations sold	288,127	259,568	109,209	289,144	289,209	102,220
Consolidated VIE liabilities
Securitized debt obligations	3,683,774	3,682,893	2,526,524	1,098,280	1,097,106	494,704

The following methods and assumptions were used to estimate the fair value of each class of financial instruments, excluding those described above that are carried at fair value, for which it is practicable to estimate that value:

Cash and cash equivalents: The carrying amount of cash on deposit and in money market funds is considered to be a reasonable estimate of fair value.

- 38 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

Securities held-to-maturity: These investments, other than securities that have been other-than-temporarily impaired, are recorded on a held-to-maturity basis and not at fair value. The fair values presented above have been estimated by a combination of (i) obtaining assessments from third party dealers and, (ii) in limited cases where such assessments are unavailable or, in the opinion of management, deemed not to be indicative of fair value, discounting expected cash flows using internal cash flow models and estimated market discount rates. The expected cash flows of each security are based on management’s assumptions regarding the collection of principal and interest on the underlying loans and securities.

Loans receivable, net: Other than impaired loans, these assets are recorded at their amortized cost and not at fair value. The fair values presented above were estimated by management taking into consideration factors including capitalization rates, leasing, occupancy rates, availability and cost of financing, exit plan, sponsorship, actions of other lenders and indications of market value from other market participants.

Repurchase obligations: These instruments are recorded at their total face balance, less unamortized discount. As a result of our debt restructuring on March 16, 2009, our repurchase obligations no longer have terms which are comparable to other facilities in the market. Given the unique nature of our restructured obligations, it is not practicable to estimate their fair value. Accordingly, they are presented above at their current face value. See Note 8 for a detailed description of our repurchase obligations.

Senior credit facility: This instrument is recorded on the basis of total cash proceeds borrowed, and not at fair value. The fair value presented above was estimated by management based on the amount at which similar placed financial instruments would be valued today.

Junior subordinated notes: These instruments are recorded at their total face balance, less unamortized discount. The fair value presented above was estimated by management based on the amount at which similar placed financial instruments would be valued today.

Securitized debt obligations: These obligations are recorded at the face value of outstanding obligations to third parties and not at fair value.The fair values presented above have been estimated by obtaining assessments from third party dealers.

Note 17. Supplemental Disclosures for Consolidated Statements of Cash Flows

As a result of the amended accounting guidance described in Note 2, we have consolidated an additional seven VIEs beginning January 1, 2010, all of which are securitization vehicles not sponsored by us. The consolidation of these entities has materially impacted our statement of cash flows, primarily the amounts reported as principal collections of loans and repayments of securitized debt obligations. Notwithstanding the gross presentation on our consolidated statement of cash flows, the consolidation of these entities has no impact on our net cash flow.

Interest paid on our outstanding debt obligations during the nine months ended September 30, 2010 and 2009 was $79.9 million and $50.8 million, respectively. This includes $36.3 million of interest paid on our outstanding debt obligations for the nine months ended September 30, 2010 from newly consolidated VIEs. The difference between interest expense on our consolidated statement of operations and interest paid is primarily due to non-cash interest expense recorded on loan participations sold, as well as amortization of discounts on our debt obligations and deferred interest on our senior credit facility.

Taxes recovered by us during the nine months ended September 30, 2010 and 2009 were $132,000 and $408,000, respectively.

Note 18. Transactions with Related Parties

We earn base management and incentive fees in our capacity as investment manager for multiple vehicles which we have sponsored. Due to the nature of our relationship with these vehicles, all management fees are considered revenue from related parties under GAAP.

On November 9, 2006, we commenced our CT High Grade MezzanineSM investment management initiative and entered into three separate account agreements with affiliates of W. R. Berkley Corporation, or WRBC, for an aggregate of $250 million. On July 25, 2007, we amended the agreements to increase the aggregate commitment of the WRBC affiliates to $350 million. Pursuant to these agreements, we invested capital, on a discretionary basis, on behalf of WRBC in commercial real estate mortgages, mezzanine loans and participations therein. The separate accounts are entirely funded with committed capital from WRBC and are managed by a subsidiary of CTIMCO. CTIMCO earns a management fee equal to 0.25% per annum on invested assets.

WRBC beneficially owned approximately 17.0% of our outstanding common stock and stock units as of October 22, 2010, and a member of our board of directors is an employee of WRBC.

- 39 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

In July 2008, CTOPI, a private equity fund that we manage, held its final closing completing its capital raise with $540 million total equity commitments. EGI-Private Equity II, L.L.C., an affiliate under common control of the chairman of our board of directors, owns a 3.7% limited partner interest in CTOPI. During the nine months ended September 30, 2010, we recorded $3.2 million in fees from CTOPI, $131,000 of which were attributable to EGI Private Equity II, L.L.C. Affiliates of the chairman of our board of directors also owned interests in Fund III, an investment management vehicle that we managed and in which we also had an ownership interest. Fund III completed its liquidation in the normal course in September 2010.

Effective December 1, 2009, John R. Klopp retired as our chief executive officer. In conjunction with his departure, Mr. Klopp was retained as a consultant to the company through November 2010, for which he is paid $83,333 per month over the twelve-month term. We recognized 100% of this consulting fee in 2009 as a component of general and administrative expense.

Note 19. Segment Reporting

We operate in two reportable segments. We have an internal information system that produces performance and asset data for our two segments along service lines.

The Balance Sheet Investment segment includes our entire portfolio of interest earning assets and the financing thereof.

The Investment Management segment includes the investment management activities of our wholly-owned investment management subsidiary, CT Investment Management Co., LLC, or CTIMCO, and its subsidiaries, as well as our co-investments in investment management vehicles. CTIMCO is a taxable REIT subsidiary and serves as the investment manager of Capital Trust, Inc., all of our investment management vehicles and all of our CT CDOs, and serves as senior servicer and special servicer for certain of our investments and for third parties.

- 40 - -

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

The following table details each segment's contribution to our operating results and the identified assets attributable to each such segment for the nine months ended, and as of, September 30, 2010 (in thousands):

	Balance Sheet			Investment		Inter-Segment
	Investment			Management		Activities			Total
Income from loans and other investments:
Interest and related income		$119,523			$—		$—			$119,523
Less: Interest and related expenses		94,462			—		—			94,462
Income from loans and other investments, net		25,061			—		—			25,061
Other revenues:
Management fees from affiliates		—			6,244		(254	)		5,990
Incentive management fees from affiliates		—			733		—			733
Servicing fees		—			4,351		(1,530	)		2,821
Other interest income		259			1		—			260
Total other revenues		259			11,329		(1,784	)		9,804
Other expenses
General and administrative		4,659			9,978		(254	)		14,383
Servicing fee expense		1,530			—		(1,530	)		—
Depreciation and amortization		—			15		—			15
Total other expenses		6,189			9,993		(1,784	)		14,398
Total other-than-temporary impairments of securities		(69,798	)		—		—			(69,798	)
Portion of other-than-temporary impairments of securities recognized in other comprehensive income		12,094			—		—			12,094
Impairment of real estate held-for-sale		(4,000	)							(4,000	)
Net impairments recognized in earnings		(61,704	)		—		—			(61,704	)
Provision for loan losses		(150,143	)		—		—			(150,143	)
Valuation allowance on loans held-for-sale		(6,036	)		—		—			(6,036	)
Gain on extinguishment of debt		648			—		—			648
Income from equity investments		—			2,358		—			2,358
(Loss) income before income taxes		(198,104	)		3,694		—			(194,410	)
Income tax provision		14			835		—			849
Net (loss) income		($198,118	)		$2,859		$—			($195,259	)
Total assets		$4,225,572			$13,111		($2,832	)		$4,235,851

All revenues were generated from external sources within the United States. The Investment Management segment earned fees of $254,000 for management of the Balance Sheet Investment segment and $1.5 million for serving as collateral manager of the four CT CDOs consolidated under our Balance Sheet Investment segment as well as special servicing activity for certain CT CDO assets for the nine months ended September 30, 2010.

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Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

The following table details each segment's contribution to our operating results and the identified assets attributable to each such segment for the nine months ended, and as of, September 30, 2009 (in thousands):

	Balance Sheet			Investment			Inter-Segment
	Investment			Management			Activities			Total
Income from loans and other investments:
Interest and related income		$93,341			$—			$—			$93,341
Less: Interest and related expenses		61,116			—			—			61,116
Income from loans and other investments, net		32,225			—			—			32,225
Other revenues:
Management fees from affiliates		—			12,746			(3,978	)		8,768
Servicing fees		—			2,012			(510	)		1,502
Other interest income		150			16			(13	)		153
Total other revenues		150			14,774			(4,501	)		10,423
Other expenses
General and administrative		10,066			12,362			(3,978	)		18,450
Servicing fee expense		510			—			(510	)		—
Other interest expense		—			13			(13	)		—
Depreciation and amortization		—			65			—			65
Total other expenses		10,576			12,440			(4,501	)		18,515
Total other-than-temporary impairments of securities		(96,529	)		—			—			(96,529	)
Portion of other-than-temporary impairments of securities recognized in other comprehensive income		17,612			—			—			17,612
Impairment of goodwill		—			(2,235	)		—			(2,235	)
Impairment of real estate held-for-sale		(2,233	)		—			—			(2,233	)
Net impairments recognized in earnings		(81,150	)		(2,235	)		—			(83,385	)
Provision for loan losses		(113,716	)		—			—			(113,716	)
Valuation allowance on loans held-for-sale		(10,363	)		—			—			(10,363	)
Loss from equity investments		—			(3,074	)		—			(3,074	)
Loss before income taxes		(183,430	)		(2,975	)		—			(186,405	)
Income tax benefit		(408	)		—			—			(408	)
Net loss		($183,022	)		($2,975	)		$—			($185,997	)
Total assets		$2,382,157			$10,424			($1,957	)		$2,390,624

All revenues were generated from external sources within the United States. The Investment Management segment earned fees of $4.0 million for management of the Balance Sheet Investment segment and $510,000 for servicing as collateral manager of the four CT CDOs consolidated under our Balance Sheet Investment segment, and was charged $13,000 for inter-segment interest for the nine months ended September 30, 2009.

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Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

The following table details each segment's contribution to our operating results and the identified assets attributable to each such segment for the three months ended, and as of, September 30, 2010 (in thousands):

	Balance Sheet			Investment		Inter-Segment
	Investment			Management		Activities			Total
Income from loans and other investments:
Interest and related income		$40,125			$—		$—			$40,125
Less: Interest and related expenses		31,557			—		—			31,557
Income from loans and other investments, net		8,568			—		—			8,568
Other revenues:
Management fees from affiliates		—			1,859		191			2,050
Incentive management fees from affiliates		—			733		—			733
Servicing fees		—			1,066		(982	)		84
Other interest income		155			—		—			155
Total other revenues		155			3,658		(791	)		3,022
Other expenses
General and administrative		1,295			3,657		191			5,143
Servicing fee expense		982			—		(982	)		—
Depreciation and amortization		—			5		—			5
Total other expenses		2,277			3,662		(791	)		5,148
Total other-than-temporary impairments of securities		(29,963	)		—		—			(29,963	)
Portion of other-than-temporary impairments of securities recognized in other comprehensive income		(5,921	)		—		—			(5,921	)
Impairment of real estate held-for-sale		(4,000	)							(4,000	)
Net impairments recognized in earnings		(39,884	)		—		—			(39,884	)
Provision for loan losses		(95,916	)		—		—			(95,916	)
Valuation allowance on loans held-for-sale		(6,036	)							(6,036	)
Gain on extinguishment of debt		185			—		—			185
Income from equity investments		—			1,056		—			1,056
(Loss) income before income taxes		(135,205	)		1,052		—			(134,153	)
Income tax provision		—			556		—			556
Net (loss) income		($135,205	)		$496		$—			($134,709	)
Total assets		$4,225,572			$13,111		($2,832	)		$4,235,851

All revenues were generated from external sources within the United States. The Investment Management segment refunded fees of $191,000 related to its management of the Balance Sheet Investment segment and earned $982,000 for serving as collateral manager of the four CT CDOs consolidated under our Balance Sheet Investment segment as well as special servicing activity for certain CT CDO assets for the three months ended September 30, 2010.

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Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

(unaudited)

The following table details each segment's contribution to our operating results and the identified assets attributable to each such segment for the three months ended, and as of, September 30, 2009 (in thousands):

	Balance Sheet			Investment			Inter-Segment
	Investment			Management			Activities			Total
Income from loans and other investments:
Interest and related income		$29,527			$—			$—			$29,527
Less: Interest and related expenses		19,604			—			—			19,604
Income from loans and other investments, net		9,923			—			—			9,923
Other revenues:
Management fees from affiliates		—			4,459			(1,500	)		2,959
Servicing fees		—			423			(255	)		168
Other interest income		15			1			—			16
Total other revenues		15			4,883			(1,755	)		3,143
Other expenses
General and administrative		2,600			4,392			(1,500	)		5,492
Servicing fee expense		255			—			(255	)		—
Depreciation and amortization		—			51			—			51
Total other expenses		2,855			4,443			(1,755	)		5,543
Total other-than-temporary impairments of securities		(77,883	)		—			—			(77,883	)
Portion of other-than-temporary impairments of securities recognized in other comprehensive income		11,987			—			—			11,987
Net impairments recognized in earnings		(65,896	)		—			—			(65,896	)
Provision for loan losses		(47,222	)		—			—			(47,222	)
Loss from equity investments		—			(862	)		—			(862	)
Loss before income taxes		(106,035	)		(422	)		—			(106,457	)
Income tax provision		—			—			—			—
Net loss		($106,035	)		($422	)		$—			($106,457	)
Total assets		$2,382,157			$10,424			($1,957	)		$2,390,624

All revenues were generated from external sources within the United States. The Investment Management segment earned fees of $1.5 million for management of the Balance Sheet Investment segment and $255,000 for serving as collateral manager of the four CT CDOs consolidated under our Balance Sheet Investment segment for the three months ended September 30, 2009.

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ITEM 2.                   Management's Discussion and Analysis of Financial Condition and Results of Operations

References herein to “we,” “us” or “our” refer to Capital Trust, Inc. and its subsidiaries unless the context specifically requires otherwise.

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q. Historical results set forth are not necessarily indicative of our future financial position and results of operations.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. The preparation of these financial statements requires our management to make estimates and assumptions with regard to the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Actual results could differ from these estimates. Other than the adoption of the new accounting guidance discussed below under “Principles of Consolidation,” there have been no material changes to our Critical Accounting Policies described in our annual report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2010.

Principles of Consolidation

The accompanying financial statements include, on a consolidated basis, our accounts, the accounts of our wholly-owned subsidiaries, and variable interest entities, or VIEs, in which we are the primary beneficiary, prepared in accordance with GAAP. All significant intercompany balances and transactions have been eliminated in consolidation.

VIEs are defined as entities in which equity investors (i) do not have the characteristics of a controlling financial interest, and/or (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The entity that consolidates a VIE is known as its primary beneficiary.

As of September 30, 2010, our consolidated balance sheet includes an aggregate $3.5 billion of assets and $3.7 billion of liabilities related to 11 consolidated VIEs. Due to the non-recourse nature of these VIEs, and other factors, our net exposure to loss from investments in these entities is limited to $34.3 million. See Note 11 to our consolidated financial statements for additional information on our investments in VIEs.

Balance Sheet Presentation

We have adjusted the presentation of our consolidated balance sheet, in accordance with GAAP, to separately categorize (i) our assets and liabilities, and (ii) the assets and liabilities of consolidated VIEs. Assets of consolidated VIEs can generally only be used to satisfy the obligations of those VIEs, and the liabilities of consolidated VIEs are non-recourse to us. Similarly, the following discussion of our financial condition and results of operations separately describes our assets and liabilities from those of our consolidated VIEs.

We believe that the accounting for loan participations sold as well as consolidation of VIEs, in particular the VIEs newly consolidated effective January 1, 2010, while in accordance with GAAP, has resulted in a presentation of gross assets and liabilities and provisions/impairments being recorded in excess of our economic exposure in such entities.

Introduction

Our business model is designed to produce a mix of net interest margin from our balance sheet investments and fee income plus co-investment income from our investment management vehicles. In managing our operations, we focus on originating investments, managing our portfolios and capitalizing our businesses.

Originations

We have historically allocated investment opportunities between our balance sheet and investment management vehicles based upon our assessment of risk and return profiles, the availability and cost of capital, and applicable regulatory restrictions associated with each opportunity. The restructuring of our recourse secured and unsecured debt obligations, as discussed in Note 8 to our consolidated financial statements, includes covenants that require us to effectively cease our balance sheet investment activities. Going forward, until these covenants are eliminated, we will not make new balance sheet investments, but will continue to carry out investment activities for our investment management vehicles, consistent with our previous strategies and investment mandates for each respective vehicle.

Notwithstanding the current capabilities of our investment management platform, we have maintained a defensive posture with respect to investment originations in light of the continued market volatility.

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The table below summarizes our total originations and the allocation of opportunities between our balance sheet and investment management business for the nine months ended September 30, 2010 and for the year ended December 31, 2009.

Originations(1)
(in millions)	Nine months ended September 30, 2010	Year ended December 31, 2009
Balance sheet	$―	$―
Investment management	212	138
Total originations	$212	$138

(1) Includes total commitments, both funded and unfunded, net of any related purchase discounts.

Balance Sheet Investments

Our balance sheet investments include various types of commercial mortgage backed securities and collateralized debt obligations, or Securities, and commercial real estate loans and related instruments, or Loans, certain of which are assets of consolidated VIEs. We collectively refer to these as Interest Earning Assets. The table below shows our Interest Earning Assets as of September 30, 2010 and December 31, 2009.

Interest Earning Assets
(in millions)	September 30, 2010					December 31, 2009
	Book Value		Yield(1)			Book Value		Yield(1)
Securities held-to-maturity		$3		8.58	%		$17		7.89	%
Loans receivable, net (2)		524		3.97			650		3.73
Loans held-for-sale, net (2)		33		4.98			—		—
Subtotal / Weighted Average		$560		4.06	%		$667		3.84	%
Consolidated VIE Assets
Securities held-to-maturity		$531		7.11	%		$698		6.58	%
Loans receivable, net		2,963		2.30			391		3.58
Loans held-for-sale, net		—		—			18		—
Subtotal / Weighted Average		$3,494		3.03	%		$1,107		5.41	%
Total / Weighted Average		$4,054		3.17	%		$1,774		4.82	%

(1)	Yield on floating rate assets assumes LIBOR of 0.26% and 0.23% at September 30, 2010 and December 31, 2009, respectively.
(2)	Excludes loan participations sold with a net book value of $114.5 million and $116.7 million as of September 30, 2010 and December 31, 2009, respectively. These participations are net of $173.7 million and $172.5 million of provisions for loan losses as of September 30, 2010 and December 31, 2009, respectively.

In some cases our Loan originations are not fully funded at closing, creating an obligation for us to make future fundings, which we refer to as Unfunded Loan Commitments. Typically, Unfunded Loan Commitments are part of construction and transitional Loans. As of September 30, 2010, our two Unfunded Loan Commitments totaled $778,000, which will generally only be funded when and/or if the borrower meets certain performance hurdles with respect to the underlying collateral, or to reimburse costs associated with leasing activity.

In addition to our investments in Interest Earning Assets, we also hold equity investments in unconsolidated subsidiaries, which represent our co-investments in private equity funds that we manage. As of September 30, 2010, this balance primarily relates to one such fund, CT Opportunity Partners I, LP, or CTOPI.

During the third quarter of 2010, we completed the liquidation of one of our investment management vehicles, CT Mezzanine Partners III, Inc., or Fund III, in which we had a 4.7% investment. We recorded $733,000 of incentive management fees in conjunction with the liquidation of Fund III.

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The table below details the carrying value of these investments, as of September 30, 2010 and December 31, 2009.

Equity Investments
(in thousands)	September 30, 2010	December 31, 2009
Fund III	$—	$158
CTOPI	7,584	2,175
Capitalized costs/other	13	18
Total	$7,597	$2,351

Asset Management

We actively manage our balance sheet portfolio and the assets held by our investment management vehicles with our in-house team of asset managers. While our investments are primarily in the form of debt, we are aggressive in exercising the rights afforded to us as a lender. These rights may include collateral level budget approvals, lease approvals, loan covenant enforcement, escrow/reserve management/collection, collateral release approvals and other rights that we may negotiate. In light of the recent deterioration in property level performance, property valuation, and the real estate capital markets, an increasing number of our loans are either non-performing and/or on our watch list. This requires intensive efforts on the part of our asset management team to maximize our recovery of those investments.

We actively manage our Securities portfolio using a combination of quantitative tools and loan/property level analysis to monitor the performance of the Securities and their collateral against our original expectations. Securities are analyzed to monitor underlying loan delinquencies, transfers to special servicing, and changes to the servicer’s watch list population. Realized losses on underlying loans are tracked and compared to our original loss expectations. On a periodic basis, individual loans of concern are also re-underwritten.

As of September 30, 2010, there were significant differences between the estimated fair value and the book value of some of the Securities in our portfolio. We believe these differences to be related to the current market dislocation and a general negative bias against structured financial products and not reflective of a change in cash flow expectations from these securities. Accordingly, we have not recorded any additional other-than-temporary impairments against such Securities.

The table below details the overall credit profile of our Interest Earning Assets, excluding those held by consolidated VIEs, which includes: (i) Loans against which we have recorded a provision for loan losses, or reserves, (ii) Securities against which we have recorded an other-than-temporary impairment, and (iii) Loans and Securities that are categorized as Watch List, which are currently performing but pose a higher risk of non-performance and/or loss. We actively monitor and manage Watch List Assets to mitigate these risks in our portfolio.

Portfolio Performance - Non-VIE Assets(1)
(in millions, except for number of investments)	September 30, 2010		December 31, 2009
Interest earning assets, excluding VIEs ($ / #)	$560 /	40	$667 /	44
Impaired Loans (2)
Performing loans ($ / #)	$80 /	7	$53 /	6
Non-performing loans ($ / #)	$27 /	5	$5 /	3
Total ($ / #)	$107 /	12	$58 /	9
Percentage of interest earning assets	19.1%		8.7%
Impaired Securities (2) ($ / #)	$2 /	6	$3 /	6
Percentage of interest earning assets	0.4%		0.4%
Watch List Assets (3)
Watch list loans ($ / #)	$156 /	8	$259 /	8
Watch list securities ($ / #)	$1 /	1	$15 /	3
Total ($ / #)	$157 /	9	$274 /	11
Percentage of interest earning assets	28.0%		41.1%

(1)	Portfolio statistics include Loans classified as held-for-sale, but exclude loan participations sold.
(2)	Amounts represent net book value after provisions for loan losses, valuation allowances on loans-held-for-sale and other-than-temporary impairments of securities.
(3)	Watch List Assets exclude Loans against which we have recorded a provision for loan losses or valuation allowance, and Securities which have been other-than-temporarily impaired.

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Excluding Loans in our consolidated VIEs, three Loans with an outstanding balance of $80.9 million as of September 30, 2010, which did not qualify for extension pursuant to the corresponding loan agreements, were extended during the nine months ended September 30, 2010.

The table below details the overall credit profile of Interest Earning Assets held in consolidated VIEs, which includes: (i) Loans where we have foreclosed upon the underlying collateral and own an equity interest in real estate, (ii) Loans against which we have recorded a provision for loan losses, or reserves, (iii) Securities against which we have recorded an other-than-temporary impairment, and (iv) Loans and Securities that are categorized as Watch List, which are currently performing but pose a higher risk of non-performance and/or loss. We actively monitor and manage Watch List assets to mitigate these risks in our portfolio.

Portfolio Performance - Consolidated VIE Assets(1)
(in millions, except for number of investments)	September 30, 2010		December 31, 2009
Interest earning assets of consolidated VIEs ($ / #)	$3,494	/ 153	$1,107	/ 91
Real estate owned ($ / #)	$8	/ 1	$―	/ ―
Percentage of interest earning assets	0.2%		―%
Impaired Loans (2)
Performing loans ($ / #)	$237	/ 7	$43	/ 6
Non-performing loans ($ / #)	$70	/ 7	$30	/ 5
Total ($ / #)	$307	/ 14	$73	/ 11
Percentage of interest earning assets	8.8%		6.6%
Impaired Securities (2) ($ / #)	$14	/ 10	$25	/ 5
Percentage of interest earning assets	0.4%		2.3%
Watch List Assets (3)
Watch list loans ($ / #)	$516	/ 15	$53	/ 2
Watch list securities ($ / #)	$72	/ 10	$150	/ 16
Total ($ / #)	$588	/ 25	$203	/ 18
Percentage of interest earning assets	16.8%		18.3%

(1)	Portfolio statistics include Loans classified as held-for-sale.
(2)	Amounts represent net book value after provisions for loan losses, valuation allowances on loans-held-for-sale and other-than-temporary impairments of securities.
(3)	Watch List Assets exclude Loans against which we have recorded a provision for loan losses or valuation allowances, and Securities which have been other-than-temporarily impaired.

The ratings performance of our Securities portfolio, including securities held by consolidated VIEs, over the nine months ended September 30, 2010 and the year ended December 31, 2009 is detailed below:

Rating Activity(1)
	Nine months ended September 30, 2010	Year ended December 31, 2009
Securities Upgraded	2	1
Securities Downgraded	23	21

(1) Represents activity from any of Fitch Ratings, Standard & Poor’s or Moody’s Investors Service.

We continue to foresee trends in asset performance in that are likely to lead to further defaults and downgrades: borrowers faced with maturities continue to have a difficult time refinancing their properties in light of the volatility and lack of liquidity in the financial markets, and the continued weakness of real estate fundamentals as the impacts of a weak U.S. economy continue to filter into the commercial real estate sector, impacting cash flows. These trends may result in negotiated extensions or modifications of the terms of our investments or the exercise of foreclosure and other remedies. In any event, it is likely that we will continue to experience difficulty with respect to our investments and will likely incur material losses in our portfolio.

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Capitalization

We capitalize our business with a combination of debt and equity. Our debt sources, which we collectively refer to as Interest Bearing Liabilities, currently include repurchase agreements, a senior credit facility and junior subordinated notes. Our balance sheet also includes the non-recourse securitized debt obligations of consolidated VIEs. Our equity capital is currently comprised entirely of common stock.

During 2009, our recourse Interest Bearing Liabilities, including repurchase agreements, our senior credit facility and junior subordinated notes, were restructured, exchanged, terminated, or otherwise satisfied. We believe that the March 2009 restructuring improved the stability of our capital structure, however, there can be no assurance that a further restructuring will not be required or that any such further restructuring will be successful.

Critical features of our restructured debt obligations are described below; see also Note 8 to our consolidated financial statements for additional information.

· Maturity dates of our repurchase agreements and senior credit facility have been extended to March 16, 2011 with an additional one-year extension option, exercisable by each lender in its sole discretion.

· We agreed to pay each of our repurchase lenders periodic amortization as follows: (i) sixty-five (65%) of the net interest income generated by each lender’s collateral pool, and (ii) one hundred percent (100%) of the principal proceeds received from the repayment of assets in each lender’s collateral pool.

· We agreed to initiate quarterly amortization of our senior credit facility, an amount generally equal to $5.0 million per annum.

· We eliminated the cash margin call provisions and amended the mark-to-market provisions that were in effect under the original terms of the repurchase facilities. Generally, if a repurchase lender determines that the ratio of their total outstanding facility balance to total collateral value exceeds 1.15x the ratio calculated as of the effective date of the amended agreements, we may be required to liquidate collateral and reduce the borrowings or post other collateral in an effort to bring the ratio back into compliance with the prescribed ratio.

· We are prohibited from making new balance sheet investments except, subject to certain limitations, co-investments in our investment management vehicles or protective investments to defend existing collateral assets on our balance sheet.

· We are prohibited from incurring any additional indebtedness except in limited circumstances.

· We are prohibited from paying cash dividends to our common shareholders except to the minimum extent necessary to maintain our REIT status.

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The table below describes our Interest Bearing Liabilities as of September 30, 2010 and December 31, 2009:

Interest Bearing Liabilities(1)
(Principal balance, in millions)	September 30, 2010			December 31, 2009
Recourse debt obligations
Secured credit facilities
Repurchase obligations		$408			$451
Senior credit facility		98			99
Subtotal		506			550
Unsecured credit facilities
Junior subordinated notes		144			144
Total recourse debt obligations		$650			$694
% Subject to valuation tests		62.8	%		65.0	%
Weighted average effective cost of recourse debt (2) (3)		3.19	%		3.11	%
Non-recourse securitized debt obligations
CT Collateralized debt obligations		$1,006			$1,097
Other consolidated VIE's		2,678			N/A
Total non-recourse securitized debt obligations		$3,684			$1,097
Weighted average effective cost of non-recourse debt (2) (4)		1.36	%		1.93	%
Total interest bearing liabilities		$4,334			$1,791
Shareholders' deficit		($427	)		($169	)

(1)	Excludes participations sold.
(2)	Floating rate debt obligations assume LIBOR of 0.26% and 0.23% at September 30, 2010 and December 31, 2009, respectively.
(3)	Including the impact of interest rate hedges with an aggregate notional balance of $64.2 million as of September 30, 2010 and $64.4 million as of December 31, 2009, the effective all-in cost of our recourse debt obligations would be 3.68% and 3.58% per annum, respectively.
(4)	Including the impact of interest rate hedges with an aggregate notional balance of $344.4 million as of September 30, 2010 and $352.8 million as of December 31, 2009, the effective all-in cost of our non-recourse debt obligations would be 1.80% and 3.44% per annum, respectively.

Recourse Debt Obligations

The table below summarizes our repurchase obligations as of September 30, 2010 and December 31, 2009, the terms of which are generally discussed above:

Repurchase Obligations
($ in millions)	September 30, 2010	December 31, 2009
Counterparties	3	3
Outstanding repurchase obligations	$408	$451
All-in cost	L + 1.61%	L + 1.66%

Our senior credit facility currently has a cash interest rate of LIBOR plus 3.00% per annum, and accrues additional interest equal to 7.20% per annum less the cash interest rate. Additional accrued interest is added to the outstanding facility balance on a quarterly basis.

The most subordinated component of our recourse debt obligations are our junior subordinated notes. These securities represent long-term, subordinated, unsecured financing and generally carry limited covenants. As of September 30, 2010, we had $143.8 million of junior subordinated notes outstanding with a book value of $131.1 million and a current coupon of 1.00% per annum. The interest rate on these notes will increase to 7.23% per annum for the period from April 30, 2012 through April 29, 2016 and then convert to a floating interest rate of three-month LIBOR plus 2.44% per annum through maturity on April 30, 2036.

Non-Recourse Debt Obligations

Non-recourse securitized debt obligations of consolidated VIEs include our four CT CDOs as well as securities issued by other consolidated VIEs, which are securitization vehicles not sponsored by us.

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These consolidated non-recourse securitized debt obligations are described below:

Non-Recourse Securitized Debt Obligations
(in millions)	September 30, 2010					December 31, 2009
	Book Value		All-in Cost(1)			Book Value		All-in Cost(1)
CT collateralized debt obligations
CT CDO I		$201		0.95	%		$233		0.88	%
CT CDO II		265		1.05			284		0.99
CT CDO III		249		5.15			254		5.15
CT CDO IV		292		1.02			327		0.97
Total CT CDOs		$1,007		2.04	%		$1,098		1.92	%
Other consolidated VIEs
GMACC 1997-C1		$102		7.11	%		N/A		N/A
GSMS 2006-FL8A		137		0.81			N/A		N/A
JPMCC 2005-FL1A		98		0.84			N/A		N/A
MSC 2007-XLFA		754		0.52			N/A		N/A
MSC 2007-XLCA		535		1.53			N/A		N/A
CSFB 2006-HC1		1,051		0.80			N/A		N/A
Total other consolidated VIEs		$2,677		1.11	%		N/A		N/A
Total non-recourse debt obligations		$3,684		1.36	%		$1,098		1.92	%

(1) Includes amortization of premiums and issuance costs of CT CDOs. Floating rate debt obligations assume LIBOR of 0.26% and 0.23% at September 30, 2010 and December 31, 2009, respectively.

Shareholders’ Equity

We did not issue any new shares of class A common stock during the year. Changes in the number of outstanding shares during the nine months ended September 30, 2010 resulted from restricted common stock grants, forfeitures and vesting, as well as stock unit grants.

The following table calculates our book value per share as of September 30, 2010 and December 31, 2009:

Shareholders' Equity
	September 30, 2010			December 31, 2009
Book value (in millions)		($427	)		($169	)
Shares:
Class A common stock		21,912,052			21,796,259
Restricted common stock		50,611			79,023
Stock units		453,294			464,046
Warrants & Options(1)		—			—
Total		22,415,957			22,339,328
Book value per share		($19.03	)		($7.57	)

(1) Excludes shares issuable upon the exercise of outstanding warrants and options. These shares would be anti-dilutive as of both September 30, 2010 and December 31, 2009 because an increase in shares would decrease the book deficit per share.

As of September 30, 2010, there were 21,962,663 shares of our class A common stock and restricted common stock outstanding.

Other Balance Sheet Items

Participations sold represent interests in certain loans that we originated and subsequently sold to one of our investment management vehicles or to third parties. We present these participations sold as both assets and non-recourse liabilities because these arrangements do not qualify as sales under GAAP. We have no economic exposure to these liabilities in excess of the value of the assets sold. As of September 30, 2010, we had five such participations sold with a total gross carrying value of $288.1 million.

The income earned on these loans is recorded as interest income and an identical amount is recorded as interest expense on our consolidated statements of operations. Generally, participations sold are recorded as assets and liabilities in equal amounts on our consolidated balance sheet. We have recorded an aggregate $173.7 million of provisions for loan losses against certain of our participations sold assets, resulting in a net book value of $114.5 million as of September 30, 2010. The associated liabilities have not been adjusted as of September 30, 2010, and will not be eliminated until the loans are contractually extinguished, at which time we will record a gain of $173.7 million.

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Interest Rate Exposure

We endeavor to manage a book of assets and liabilities that are generally matched with respect to interest rates, typically financing floating rate assets with floating rate liabilities and fixed rate assets with fixed rate liabilities. In some cases, we finance fixed rate assets with floating rate liabilities and, in those cases, we may use interest rate derivatives, such as swaps, to effectively convert the floating rate debt to fixed rate debt. In such instances, the equity we have invested in fixed rate assets is not typically swapped, leaving a portion of our equity capital exposed to changes in value of the fixed rate assets due to interest rate fluctuations. The balance of our assets earn interest at floating rates and are financed with floating rate liabilities, leaving a portion of our equity capital exposed to cash flow variability from fluctuations in rates. Generally, these assets and liabilities earn interest at rates indexed to one-month LIBOR.

Our counterparties in these transactions are large financial institutions and we are dependent upon the financial health of these counterparties and a functioning interest rate derivative market in order to effectively execute our hedging strategy.

The table below details our interest rate exposure as of September 30, 2010 and December 31, 2009:

Interest Rate Exposure
(in millions)	September 30, 2010			December 31, 2009
Value exposure to interest rates(1)
Fixed rate assets		$925			$833
Fixed rate debt		(507	)		(410	)
Interest rate swaps		(409	)		(417	)
Net fixed rate exposure		$9			$6
Weighted average coupon (fixed rate assets)		7.18	%		6.91	%
Cash flow exposure to interest rates(1)
Floating rate assets		$3,776			$1,678
Floating rate debt less cash		(3,802	)		(1,642	)
Interest rate swaps		409			417
Net floating rate exposure		$383			$453
Weighted average coupon (floating rate assets) (2)		2.16	%		3.29	%
Net income impact from 100 bps change in LIBOR		$3.8			$4.5

(1)	All values are in terms of face or notional amounts, and include loans classified as held-for-sale.
(2)	Weighted average coupon assumes LIBOR of 0.26% and 0.23% at September 30, 2010 and December 31, 2009, respectively.

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Investment Management Overview

In addition to our balance sheet investment activities, we act as an investment manager for third parties and as special servicer for certain of our loan investments, as well as for third parties. The table below details investment management and special servicing fee revenue generated by our wholly-owned, taxable, investment management subsidiary, CT Investment Management Co., LLC, or CTIMCO, for the nine months ended September 30, 2010 and 2009:

Investment Management Revenues
(in thousands)	September 30, 2010			September 30, 2009
Fees generated as:
Public company manager (1)		$254			$3,978
Private equity manager		6,723			8,768
CDO collateral manager		715			510
Special servicer		3,636			1,502
Total fees		$11,328			$14,758
Eliminations (2)		(1,784	)		(4,488	)
Total fees, net		$9,544			$10,270

(1)	Beginning in the fourth quarter of 2009, public company management fees were offset by special servicing and CDO collateral management fees generated by our balance sheet portfolio. Gross public company management fees were $2.6 million for the nine months ended September 30, 2010, offset by $2.3 million of special servicing and CDO collateral management fees.
(2)	Fees received by CTIMCO from Capital Trust, Inc., or other consolidated subsidiaries, have been eliminated in consolidation.

We have developed our investment management business to leverage our platform, generate fee revenue from investing third party capital and, in certain instances, earn co-investment income. Our active investment management mandates are described below:

· CT Opportunity Partners I, LP, or CTOPI, is currently investing capital. The fund held its final closing in July 2008 with $540 million in total equity commitments from 28 institutional and individual investors. Currently, $322 million of committed equity remains undrawn. We have a $25 million commitment to invest in the fund ($10 million currently funded, $15 million unfunded) and entities controlled by the chairman of our board have committed to invest $20 million. In May 2010 the fund’s investment period was extended to December 13, 2011. The fund targets opportunistic investments in commercial real estate, specifically high yield debt, equity and hybrid instruments, as well as non-performing and sub-performing loans and securities. Currently, we earn base management fees of 0.6% per annum of unfunded equity commitments and 1.3% per annum of invested capital through December 13, 2010. Subsequent to December 13, 2010, we will earn base management fees of 1.3% per annum of invested capital. In addition, we earn net incentive management fees of 17.7% of profits after a 9% preferred return and a 100% return of capital.

· CT High Grade Partners II, LLC, or CT High Grade II, is currently investing capital. The fund closed in June 2008 with $667 million of commitments from two institutional investors. Currently, $207 million of committed equity remains undrawn. In May 2010, the fund’s investment period was extended to May 30, 2011. The fund targets senior debt opportunities in the commercial real estate sector and does not employ leverage. We earn a base management fee of 0.40% per annum on invested capital.

· CT High Grade MezzanineSM, or CT High Grade, is no longer investing capital (its investment period expired in July 2008). The fund closed in November 2006, with a single, related party institutional investor committing $250 million, which was subsequently increased to $350 million in July 2007. This separate account targeted lower LTV subordinate debt investments without leverage. We earn management fees of 0.25% per annum on invested capital.

· CT Large Loan 2006, Inc., or CT Large Loan, is no longer investing capital (its investment period expired in May 2008). The fund closed in May 2006 with total equity commitments of $325 million from eight institutional investors. We earn management fees of 0.75% per annum of fund assets (capped at 1.5% on invested equity).

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The table below provides additional information regarding the three private equity funds and one separate account we managed as of September 30, 2010.

Investment Management Mandates, as of September 30, 2010
(in millions)							Incentive Management Fee
		Total	Total Capital	Co-		Base	Company	Employee
	Type	Investments(1)	Commitments	Investment %		Management Fee	%	%
Investing:
CT High Grade II	Fund	$460	$667	—		0.40% (Assets)	N/A	N/A
CTOPI	Fund	276	540	4.63%	(2)	(Assets/Equity)(3)	100%(4)	—%(5)
Liquidating:
CT High Grade	Sep. Acc.	328	350	—		0.25% (Assets)	N/A	N/A
CT Large Loan	Fund	201	325	—	(6)	0.75% (Assets)(7)	N/A	N/A

(1)	Represents total investments, on a cash basis, as of period-end.
(2)	We have committed to invest $25.0 million in CTOPI.
(3)	CTIMCO earns base management fees of 0.6% per annum of unfunded equity commitments and 1.3% per annum of invested capital through December 13, 2010. Subsequent to December 13, 2010 CTIMCO will earn base management fees of 1.3% per annum of invested capital.
(4)	CTIMCO earns net incentive management fees of 17.7% of profits after a 9% preferred return on capital and a 100% return of capital, subject to a catch-up.
(5)	We have not allocated any of the CTOPI incentive management fee to employees as of September 30, 2010.
(6)	We have co-invested on a pari passu, asset by asset basis with CT Large Loan.
(7)	Capped at 1.5% of equity.

During the third quarter of 2010, we ceased investment management activity related to two vehicles, CT Mezzanine Partners III, Inc., or Fund III, and CTX CDO I, Ltd., or the CTX CDO. Fund III was a vehicle we co-sponsored with a joint venture partner, which completed its liquidation in the ordinary course with the satisfaction of its final investment in August 2010. We recorded $733,000 of incentive management fees in conjunction with the liquidation of Fund III. The CTX CDO was a CDO sponsored, but not issued, by us from which we earned a collateral management fee. In July 2010, we were replaced as collateral manager of the CTX CDO.

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Results of Operations

Comparison of Results of Operations: Three Months Ended September 30, 2010 vs. September 30, 2009
(in thousands, except per share data)
	2010			2009			$ Change			% Change
Income from loans and other investments:
Interest and related income		$40,125			$29,527			$10,598			35.9	%
Less: Interest and related expenses		31,557			19,604			11,953			61.0	%
Income from loans and other investments, net		8,568			9,923			(1,355	)		(13.7	%)
Other revenues:
Management fees from affiliates		2,050			2,959			(909	)		(30.7	%)
Incentive management fees from affiliates		733			—			733			N/A
Servicing fees		84			168			(84	)		(50.0	%)
Other interest income		155			16			139			N/A
Total other revenues		3,022			3,143			(121	)		(3.8	%)
Other expenses:
General and administrative		5,143			5,492			(349	)		(6.4	%)
Depreciation and amortization		5			51			(46	)		(90.2	%)
Total other expenses		5,148			5,543			(395	)		(7.1	%)
Total other-than-temporary impairments of securities		(29,963	)		(77,883	)		47,920			(61.5	%)
Portion of other-than-temporary impairments of securities      recognized in other comprehensive income		(5,921	)		11,987			(17,908	)		(149.4	%)
Impairment of real estate held-for-sale		(4,000	)		—			(4,000	)		N/A
Net impairments recognized in earnings		(39,884	)		(65,896	)		26,012			(39.5	%)
Provision for loan losses		(95,916	)		(47,222	)		(48,694	)		103.1	%
Valuation allowance on loans held-for-sale		(6,036	)		—			(6,036	)		N/A
Gain on extinguishment of debt		185			—			185			N/A
Income (loss) from equity investments		1,056			(862	)		1,918			N/A
Loss before income taxes		(134,153	)		(106,457	)		(27,696	)		26.0	%
Income tax provision		556			—			556			N/A
Net loss		($134,709	)		($106,457	)		($28,252	)		N/A
Net loss per share - diluted		($6.02	)		($4.75	)		($1.27	)		26.7	%
Dividend per share		$0.00			$0.00			$0.00			N/A
Average LIBOR		0.29	%		0.27	%		0.02	%		7.1	%

Income from loans and other investments, net

As discussed in Note 2 to our consolidated financial statements, recent accounting guidance requires us to consolidate additional VIEs, primarily CMBS and CDO trusts, beginning January 1, 2010. As a result, our interest earning assets increased $1.8 billion from September 30, 2009 to September 30, 2010. This increase resulted in a material increase in interest income for the third quarter of 2010 compared to the third quarter of 2009. Similarly, an increase in interest bearing liabilities of $2.5 billion resulted in a material increase in interest expense for the third quarter of 2010 compared to the third quarter of 2009. In addition, an increase in non-performing loans contributed to an offsetting decrease in net interest income during the third quarter of 2010 compared to the third quarter of 2009.

Management fees from affiliates

Base management fees from our investment management business decreased $909,000, or 31%, during the third quarter of 2010 compared to the third quarter of 2009. The decrease was attributed primarily to a decrease of $1.1 million in fees from CTOPI due to an amendment to the fund’s management agreement, which reduced management fees and extended the fund’s investment period. This decrease was offset by increased fees at CT High Grade II due to additional investment activity.

Incentive management fees from affiliates

We recorded $733,000 of incentive management fees during the third quarter of 2010 in conjunction with the liquidation of Fund III. We recorded no such fees during the third quarter of 2009.

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Servicing fees

Servicing fees decreased $84,000 during the third quarter of 2010 compared to the third quarter of 2009. The decrease in fees was primarily due to a one-time modification fee recorded in the third quarter of 2009.

General and administrative expenses

General and administrative expenses include personnel costs, operating expenses, professional fees and, for the third quarter of 2010, $323,000 of expenses associated with newly consolidated VIEs, as described in Note 2 to our consolidated financial statements. Excluding expenses from newly consolidated VIEs, general and administrative expenses decreased 12% between the third quarter of 2010 and the third quarter of 2009 due to lower personnel costs, and lower professional fees and other operating costs. This overall decrease was partially offset by $166,000 of incentive compensation paid during the third quarter of 2010 to employees and former employees as a result of incentive management fees received from Fund III.

Net impairments recognized in earnings

During the third quarter of 2010, we recorded a gross other-than-temporary impairment of $30.0 million on seven of our Securities that had an adverse change in cash flow expectations, all of which was included in earnings. We also reclassified $5.9 million of impairments that were previously included in other comprehensive income into earnings due to revised cash flow expectations. In addition, we recorded a $4.0 million impairment on Real Estate Held-for-Sale to reflect the property at fair value.

During the third quarter of 2009, we recorded a gross other-than-temporary impairment of $77.9 million on three of our securities that had an adverse change in cash flow expectations. Of this amount, $12.0 million (the amount considered fair value adjustments in excess of credit impairment) was included in other comprehensive income, resulting in a net $65.9 million impairment (the amount considered credit impairment) included in earnings.

Provision for loan losses

During the third quarter of 2010 we recorded an aggregate $95.9 million provision for loan losses. This net provision included $98.4 million of provisions against six loans, offset by a $2.5 million recovery of one loan that had previously been impaired. During the third quarter of 2009, we recorded an aggregate $47.2 million provision for loan losses against six loans.

Valuation allowance on loans held-for-sale

During the three months ended September 30, 2010 we recorded $6.0 million of valuation allowances on two loans that we classified as held-for-sale to reflect these assets at fair value. We did not record a valuation allowance on loans held-for-sale in the third quarter of 2009.

Gain on extinguishment of debt

During the third quarter of 2010, we recorded a $185,000 gain on the extinguishment of debt due to realized losses from collateral assets held by consolidated securitization trusts. We recorded no such gains in 2009.

Income (loss) from equity investments

The income from equity investments during the third quarter of 2010 was primarily $1.2 million from our co-investment in CTOPI. CTOPI’s income for the quarter was largely the result of fair value adjustments on its investment portfolio. The loss from equity investments during the third quarter of 2009 resulted primarily from our share of losses from CTOPI, also largely derived from fair value adjustments on the underlying investments.

Income tax provision

During the third quarter of 2010, we recorded an income tax provision of $556,000 which was primarily due to differences between GAAP and tax recognition methodologies associated with certain revenue and expense items. We did not record a tax provision in the third quarter of 2009.

Dividends

We did not pay any dividends in the third quarter of 2010 or 2009.

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Comparison of Results of Operations: Nine Months Ended September 30, 2010 vs. September 30, 2009
(in thousands, except per share data)
	2010			2009			$ Change			% Change
Income from loans and other investments:
Interest and related income		$119,523			$93,341			$26,182			28.0	%
Less: Interest and related expenses		94,462			61,116			33,346			54.6	%
Income from loans and other investments, net		25,061			32,225			(7,164	)		(22.2	%)
Other revenues:
Management fees from affiliates		5,990			8,768			(2,778	)		(31.7	%)
Incentive management fees from affiliates		733			—			733			N/A
Servicing fees		2,821			1,502			1,319			87.8	%
Other interest income		260			153			107			69.9	%
Total other revenues		9,804			10,423			(619	)		(5.9	%)
Other expenses:
General and administrative		14,383			18,450			(4,067	)		(22.0	%)
Depreciation and amortization		15			65			(50	)		(76.9	%)
Total other expenses		14,398			18,515			(4,117	)		(22.2	%)
Total other-than-temporary impairments of securities		(69,798	)		(96,529	)		26,731			(27.7	%)
Portion of other-than-temporary impairments of securities      recognized in other comprehensive income		12,094			17,612			(5,518	)		(31.3	%)
Impairment of goodwill		—			(2,235	)		2,235			N/A
Impairment of real estate held-for-sale		(4,000	)		(2,233	)		(1,767	)		79.1	%
Net impairments recognized in earnings		(61,704	)		(83,385	)		21,681			(26.0	%)
Provision for loan losses		(150,143	)		(113,716	)		(36,427	)		32.0	%
Valuation allowance on loans held-for-sale		(6,036	)		(10,363	)		4,327			(41.8	%)
Gain on extinguishment of debt		648			—			648			N/A
Income (loss) from equity investments		2,358			(3,074	)		5,432			N/A
Loss before income taxes		(194,410	)		(186,405	)		(8,005	)		4.3	%
Income tax provision (benefit)		849			(408	)		1,257			N/A
Net loss		($195,259	)		($185,997	)		($9,262	)		5.0	%
Net loss per share - diluted		($8.73	)		($8.32	)		($0.41	)		5.0	%
Dividend per share		$0.00			$0.00			$0.00			N/A
Average LIBOR		0.28	%		0.37	%		(0.09	%)		(0.25	)

Income from loans and other investments, net

As discussed in Note 2 to our consolidated financial statements, recent accounting guidance requires us to consolidate additional VIEs, primarily CMBS and CDO trusts, beginning January 1, 2010. As a result, our interest earning assets increased by $1.8 billion from September 30, 2009 to September 30, 2010. This increase resulted in a material increase in interest income for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009. Similarly, an increase in interest bearing liabilities of $2.5 billion resulted in a material increase in interest expense for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009. In addition, an increase in non-performing loans contributed to an offsetting decrease in net interest income during the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009.

Management fees from affiliates

Base management fees from our investment management business decreased $2.8 million, or 32%, during the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009. The decrease was attributed primarily to a decrease of $3.2 million in fees from CTOPI due to an amendment to the fund’s management agreement, which reduced management fees and extended the fund’s investment period. This decrease was offset by increased fees at CT High Grade II due to additional investment activity.

Incentive management fees from affiliates

We recorded $733,000 of incentive management fees during the third quarter of 2010 in conjunction with the liquidation of Fund III. We recorded no such fees during the third quarter of 2009.

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Servicing fees

Servicing fees increased $1.3 million during the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009. The increase in fees was primarily due to modification activity on loans for which we are named special servicer.

General and administrative expenses

General and administrative expenses include personnel costs, operating expenses and professional fees and, for the nine months ended September 30, 2010, $1.3 million of expenses associated with newly consolidated VIEs, as described in Note 2 to our consolidated financial statements. Excluding expenses from newly consolidated VIEs, general and administrative expenses decreased $5.4 million, or 29%, between the nine months ended September 30, 2010 and the nine months ended September 30, 2009. Personnel costs decreased $1.8 million relative to the nine months ended September 30, 2009 and $3.0 million of costs associated with our March 2009 debt restructuring were included in general and administrative expenses for the nine months ended September 30, 2009.

Net impairments recognized in earnings

During the nine months ended September 30, 2010, we recorded a gross other-than-temporary impairment of $69.8 million on 12 of our Securities that had an adverse change in cash flow expectations. Of this amount, $12.1 million (the amount considered fair value adjustments in excess of credit impairment) was included in other comprehensive income, resulting in a net $57.7 million impairment (the amount considered credit impairment) included in earnings. In addition, we recorded a $4.0 million impairment on Real Estate Held-for-Sale to reflect the property at fair value.

During the nine months ended September 30, 2009, we recorded a gross other-than-temporary impairment of $96.5 million on 10 of our securities that had an adverse change in cash flow expectations. Of this amount, $78.9 million was included in earnings and the remainder, $17.6 million, was included in other comprehensive income. We also recorded (i) an other-than-temporary impairment of $2.2 million on our Real Estate Held-for-Sale to reflect the property at fair value, and (ii) a $2.2 million impairment of goodwill related to our June 2007 acquisition of a healthcare loan origination platform.

Provision for loan losses

During the nine months ended September 30, 2010, we recorded $150.1 million of provisions for loan losses against 11 loans. During the nine months ended September 30, 2009, we recorded an aggregate $113.7 million provision for loan losses against 13 loans.

Valuation allowance on loans held-for-sale

During the nine months ended September 30, 2010 we recorded $6.0 million of valuation allowances on twoloans that we classified as held-for-sale to reflect these assets at fair value. During the nine months ended September 30, 2009,we recorded a $10.4 million valuation allowance against two loans that we classified as held-for-sale to reflect these assets at fair value.

Gain on extinguishment of debt

During the third quarter of 2010, we recorded a $648,000 gain on the extinguishment of debt due to realized losses from collateral assets held by consolidated securitization trusts. We recorded no such gains in 2009.

Income (loss) from equity investments

The income from equity investments during the nine months ended September30, 2010 was primarily $2.5 million from our co-investment in CTOPI. CTOPI’s income for the quarter was largely the result of fair value adjustments on its investment portfolio. The loss from equity investments during the nine months ended September30, 2009 resulted primarily from our share of losses at both CTOPI and Fund III. The $2.9 million loss recorded in 2009 with respect to CTOPI was also largely derived from fair value adjustments on the underlying investments.

Income tax provision (benefit)

During the nine months ended September 30, 2010, we recorded an income tax provision of $849,000 which was primarily due to differences between GAAP and tax recognition methodologies associated with certain revenue and expense items. During the nine months ended September30, 2009, we received $408,000 in tax refunds that we recorded as an offset to income tax expense.

Dividends

We did not pay any dividends in the nine months ended September 30, 2010 or 2009.

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Liquidity and Capital Resources

Sources of liquidity as of September 30, 2010 include cash on deposit, the net cash flow generated by our interest earning assets described below, interest from unencumbered assets, and investment management fees from private equity funds, CDOs, and special servicing. Uses of liquidity other than those described below related to our secured debt obligations include interest on our senior credit facility and junior subordinated notes, operating expenses, Unfunded Loan Commitments, various commitments to our managed funds, and any dividends necessary to maintain our REIT status. We believe our current sources of capital, coupled with our expectations regarding potential asset dispositions and other transactions, will be adequate to meet our near term cash requirements.

Our primary source of liquidity is our portfolio of interest earning assets, a significant portion of which serves as collateral for our secured debt obligations (primarily our repurchase facilities and CT CDOs). Correspondingly, our primary use of liquidity is the payment of interest and principal to our lenders.

Our liquidity and capital resources outlook was significantly impacted by the restructuring of our debt obligations during the first quarter of 2009. We agreed to pay each of our repurchase lenders additional principal amortization equal to 65% of the net interest margin and 100% of the principal proceeds from assets in their collateral pool, which amounts would otherwise have been free cash flow available to us. In addition, as described in Note 11 to our consolidated financial statements, covenant breaches in our CT CDOs have resulted in a redirection of cash flow to amortize senior note holders, which amounts would similarly have been available to us. In both cases, the additional principal amortization to our repurchase lenders and senior CT CDO notes are a function of cash received under each respective collateral pool, and are only required to the extent there is cash flow in excess of the interest expense otherwise due under each respective facility. Accordingly, these amortization and redirection provisions cannot result in a cash outflow to our repurchase lenders and CT CDOs, only a diminution of liquidity available to us. In addition to the required repayments to our repurchase lenders, we agreed to increase the cash coupon by 1.25% per annum and to make a minimum quarterly amortization payment of $1.3 million under our senior credit facility. See Note 8 to our consolidated financial statements for additional information on our restructured debt obligations.

Cash Flows

Our consolidated statement of cash flows for the nine months ended September30, 2010 includes the cash inflows and outflows of the newly consolidated VIEs described in Note 2 to our consolidated financial statements. While this does not impact our net cash flow, it does increase certain gross cash flow disclosures.

We experienced a net decrease in cash of $3.8 million for the nine months ended September 30, 2010, compared to a net decrease of $16.8 million for the nine months ended September 30, 2009.

Cash provided by operating activities during the nine months ended September 30, 2010 was $28.2 million, compared to cash provided by operating activities of $30.1 million during the same period of 2009. The decrease was primarily due to a decrease in our net interest margin.

During the nine months ended September 30, 2010, cash provided by investing activities was $238.7 million, compared to $65.2 million provided by investing activities during the same period in 2009. Excluding $146.0 million of asset principal repayments in the first nine months of 2010 resulting from newly consolidated VIEs, as discussed above, cash provided by investing activities increased by $27.5 million. This increase was primarily due to (i) an additional $6.0 million of asset principal repayments in the first nine months of 2010 (ii) an additional $15.9 million of proceeds collected from the disposition of loans and real estate held-for-sale, and (iii) a decrease of $6.1 million in add-on loan fundings over the same period.

During the nine months ended September 30, 2010, cash used in financing activities was $270.7 million, compared to $112.1 million during the same period in 2009. Excluding $131.8 million of securitized debt repayments in the first nine months of 2010 resulting from newly consolidated VIEs, as discussed above, cash used in financing activities increased by $26.8 million. This increase was primarily due to (i) additional repayments of securitized debt obligations at CT CDOs of $60.1 million during the first nine months of 2010, and (ii) a change in restricted cash of $18.7 million. This was offset by a net decrease of repayments under recourse debt obligations of $49.9 million over the same period.

Capitalization

Our authorized capital stock consists of 100,000,000 shares of $0.01 par value class A common stock, of which 21,962,663 shares were issued and outstanding as of September 30, 2010, and 100,000,000 shares of preferred stock, none of which were outstanding as of September 30, 2010.

Pursuant to the terms of our debt restructuring on March 16, 2009, we issued to JPMorgan, Morgan Stanley and Citigroup warrants to purchase 3,479,691 shares of our class A common stock at an exercise price of $1.79 per share, the closing bid price on the New York Stock Exchange on March 13, 2009. The warrants will become exercisable on March 16, 2012 and expire on March 16, 2019, and may be exercised through a cashless exercise.

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Repurchase Obligations

As of September 30, 2010, we were party to three master repurchase agreements with three counterparties, with aggregate total outstanding borrowings of $408.1 million. The terms of these agreements are described in Note 8 to our consolidated financial statements.

Senior Credit Facility

As of September 30, 2010, we had $98.4 million outstanding under our senior credit facility at a cash cost of LIBOR plus 3.00% and an all-in cost of 7.20%. The terms of this agreement are described in Note 8 to our consolidated financial statements.

Junior Subordinated Notes

As of September 30, 2010 we had $143.8 million of junior subordinated notes outstanding with a book value of $131.1 million and a current coupon of 1.00% per annum. The terms of these notes are described in Note 8 to our consolidated financial statements.

Non-Recourse Securitized Debt Obligations

As of September 30, 2010, we had non-recourse securitized debt obligations from consolidated VIEs with a total face value of $3.7 billion. The terms of these obligations are described in Note 11 to our consolidated financial statements.

The information concerning the terms of our repurchase agreements, our senior credit facility, our junior subordinated notes, and the non-recourse securitized debt obligations of consolidated VIEs, presented in Notes 8 and 11 to our consolidated financial statements, is incorporated herein by reference.

Contractual Obligations

The following table sets forth information about certain of our contractual obligations as of September 30, 2010:

Contractual Obligations(1)
(in millions)
	Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Parent company obligations
Recourse debt obligations
Repurchase obligations		$408		$408		$—		$—		$—
Senior credit facility		98		98		—		—		—
Junior subordinated notes		144		—		—		—		144
Total recourse debt obligations		650		506		—		—		144
Unfunded commitments
Loans		1		—		1		—		—
Equity investments(2)		16		—		16		—		—
Total unfunded commitments		17		—		17		—		—
Operating lease obligations		9		1		2		2		4
Total parent company obligations		676		507		19		2		148
Consolidated VIE obligations
Non-recourse securitized debt obligations
CT collateralized debt obligations		1,006		—		—		—		1,006
Other consolidated VIEs		2,757		—		—		—		2,757
Total non-recourse debt obligations		3,763		—		—		—		3,763
Total consolidated VIE obligations		3,763		—		—		—		3,763
Total contractual obligations		$4,439		$507		$19		$2		$3,911

(1)	We are also subject to interest rate swaps for which we cannot estimate future payments due.
(2)	CTOPI’s investment period expires in December 2011, at which point our obligation to fund capital calls will be limited. It is possible that our unfunded capital commitment will not be entirely called, and the timing and amount of such required contributions is not estimable. Our entire unfunded commitment is assumed to be funded by December 2011 for purposes of the above table.

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Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Note on Forward-Looking Statements

Except for historical information contained herein, this quarterly report on Form 10-Q contains forward-looking statements within the meaning of the Section 21E of the Securities and Exchange Act of 1934, as amended, which involve certain risks and uncertainties. Forward-looking statements are included with respect to, among other things, our current business plan, business and investment strategy and portfolio management. These forward-looking statements are identified by their use of such terms and phrases as "intends," "intend," "intended," "goal," "estimate," "estimates," "expects," "expect," "expected," "project," "projected," "projections," "plans," "anticipates," "anticipated," "should," "designed to," "foreseeable future," "believe," "believes" and "scheduled" and similar expressions. Our actual results or outcomes may differ materially from those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. We assume no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Important factors that we believe might cause actual results to differ from any results expressed or implied by these forward-looking statements are discussed in the risk factors contained in Exhibit 99.1 to this Form 10-Q, which are incorporated herein by reference. In assessing forward-looking statements contained herein, readers are urged to read carefully all cautionary statements contained in this Form 10-Q.

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ITEM 3.                      Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The principal objective of our asset and liability management activities is to maximize net interest income while minimizing levels of interest rate risk. Interest income and interest expense are subject to the risk of interest rate fluctuations. In certain instances, to mitigate the impact of fluctuations in interest rates, we use interest rate swaps to effectively convert floating rate liabilities to fixed rate liabilities for proper matching with fixed rate assets. Each derivative used as a hedge is matched with a liability with which it is expected to have a high correlation. The swap agreements are generally held-to-maturity and we do not use interest rate derivative financial instruments for trading purposes. The differential to be paid or received on these agreements is recognized as an adjustment to interest expense and is recognized on the accrual basis.

As of September 30, 2010, a 100 basis point change in LIBOR would impact our net income by approximately $3.8 million.

Credit Risk

Our loans and investments, including our fund investments, are also subject to credit risk. The ultimate performance and value of our loans and investments depends upon the owner’s ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, our asset management team continuously reviews our investment portfolio and in certain instances is in constant contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.

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The following table provides information about our financial instruments that are sensitive to changes in interest rates as of September 30, 2010. For financial assets and debt obligations, the table presents face balance and weighted average interest rates. For interest rate swaps, the table presents notional amounts and weighted average fixed pay and floating receive interest rates. These notional amounts are used to calculate the contractual cash flows to be exchanged under each contract.

Financial Assets and Liabilities Sensitive to Changes in Interest Rates as of September 30, 2010
(in thousands)
Non-VIE Assets:
	Securities	Loans Receivable	Loans Held-for-Sale	Total
Fixed rate assets	$34,475	$52,247	$16,130	$102,852
Interest rate(1)	8.24%	8.23%	8.55%	8.28%
Floating rate assets	$1,584	$952,789	$60,699	$954,373
Interest rate(1)	5.44%	3.41%	4.76%	3.72%
Non-VIE Debt Obligations:
	Repurchase	Senior	Jr. Subordinated	Participations
	Obligations	Credit Facility	Notes	Sold	Total
Fixed rate debt	$—	$—	$143,753	$—	$143,753
Interest rate(1) (2)	—	—	1.00%	—	1.00%
Floating rate debt	$408,136	$98,393	$—	$288,220	$766,097
Interest rate(1) (2)	1.84%	3.26%	—	3.21%	2.43%
Non-VIE Derivative Financial Instruments:
Notional amounts	$64,172
Fixed pay rate(1)	5.16%
Floating receive rate(1)	0.26%
Assets of Consolidated VIEs:
	Securities	Loans Receivable	Total
Fixed rate assets	$588,697	$233,850	$822,547
Interest rate(1)	6.58%	8.22%	7.05%
Floating rate assets	$25,752	$3,023,769	$3,049,521
Interest rate(1)	1.82%	1.82%	1.82%
Securitized Non-Recourse Debt Obligations of Consolidated VIEs:
		Other
	CT CDOs	Consolidated VIEs	Total
Fixed rate debt	$260,275	$102,579	$362,854
Interest rate(1)	5.31%	7.11%	5.81%
Floating rate debt	$745,511	$2,574,528	$3,320,039
Interest rate(1)	0.77%	0.87%	0.85%
Derivative Financial Instruments of Consolidated VIEs:
Notional amounts	$344,432
Fixed pay rate(1)	4.95%
Floating receive rate(1)	0.26%

(1)	Represents weighted average rates where applicable. Floating rates are based on LIBOR of 0.26%, which is the rate as of September 30, 2010.
(2)	The coupon on our junior subordinated notes will remain at 1.00% per annum through April 29, 2012, increase to 7.23% per annum for the period from April 30, 2012 through April 29, 2016 and then convert to a floating interest rate of three-month LIBOR + 2.44% per annum through maturity in 2036.

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ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our "disclosure controls and procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this quarterly report was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by Securities and Exchange Commission rules and forms and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There have been no significant changes in our "internal control over financial reporting" (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1: Legal Proceedings

None.

ITEM 1A: Risk Factors

In addition to the other information discussed in this quarterly report on Form 10-Q, please consider the risk factors provided in our updated risk factors attached as Exhibit 99.1, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we deem to be immaterial may adversely affect our business, financial condition, or operating results.

ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3: Defaults Upon Senior Securities

None.

ITEM 4: (Removed and Reserved)

None.

ITEM 5: Other Information

None.

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ITEM 6: Exhibits

	3.1a	Charter of the Capital Trust, Inc. (filed as Exhibit 3.1.a to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788) filed on April 2, 2003 and incorporated herein by reference).
	3.1b	Certificate of Notice (filed as Exhibit 3.1 to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788) filed on February 27, 2007 and incorporated herein by reference).
	3.2	Second Amended and Restated By-Laws of Capital Trust, Inc. (filed as Exhibit 3.2 to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-4788) filed on February 27, 2007 and incorporated herein by reference).
·	10.1	Securities Purchase Agreement, dated as of May 11, 2004, by and among Capital Trust, Inc., W.R. Berkley Corporation and certain shareholders of Capital Trust, Inc.
·	10.2	Junior Subordinated Indenture, dated as of March 16, 2009, between Capital Trust, Inc. and The Bank of New York Mellon Trust Company, National Association, as Trustee.
·	10.3	Junior Subordinated Indenture, dated as of May 14, 2009, between Capital Trust, Inc. and The Bank of New York Mellon Trust Company, National Association, as Trustee.
+ ·	10.4	Amendment No. 10 to Master Repurchase Agreement, dated as of March 16, 2009, by and among Capital Trust, Inc, CT RE CDO 2004-1 SUB, LLC, CT RE CDO 2005-1 SUB, LLC, CT XLC Holding, LLC and Morgan Stanley Bank, N.A.
+ ·	10.5	Amendment No. 1 to Master Repurchase Agreement, dated as of March 16, 2009, by and among CT BSI Funding Corp., Capital Trust, Inc. and JPMorgan Chase Bank, N.A.
+ ·	10.6	Amendment No. 1 to Master Repurchase Agreement, dated as of March 16, 2009, by and among Capital Trust, Inc., CT BSI Funding Corp. and JPMorgan Chase Funding Inc.
+ ·	10.7	Amendment No. 3 to Master Repurchase Agreement, dated as of March 16, 2009, by and between Capital Trust, Inc., Citigroup Global Markets, Inc. and Citigroup Financial Products Inc.
+ ·	10.8	Pledge and Security Agreement, dated as of March 16, 2009, by and between Capital Trust, Inc. and WestLB AG, New York Branch.
·	31.1	Certification of Stephen D. Plavin, Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
·	31.2	Certification of Geoffrey G. Jervis, Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
·	32.1	Certification of Stephen D. Plavin, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
·	32.2	Certification of Geoffrey G. Jervis, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
·	99.1	Updated Risk Factors from our Annual Report on Form 10-K for the year ended December 31, 2009, filed on March 2, 2010 with the Securities and Exchange Commission.

· Filed herewith

+ Confidential treatment has been requested for certain portions which are omitted in the copy of the exhibit electronically filed with the SEC. The omitted information has been filed separately with the SEC pursuant to our application for confidential treatment.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CAPITAL TRUST, INC.
October 26, 2010	/s/ Stephen D. Plavin
Date	Stephen D. Plavin Chief Executive Officer (Principal executive officer)
October 26, 2010	/s/ Geoffrey G. Jervis
Date	Geoffrey G. Jervis Chief Financial Officer (Principal financial officer and Principal accounting officer)

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EX-10.1

SECURITIES PURCHASE AGREEMENT

DATED AS OF MAY 11, 2004

among

CAPITAL TRUST, INC.

and

W. R. BERKLEY CORPORATION

and

CERTAIN STOCKHOLDERS OF CAPITAL TRUST, INC.

TABLE OF CONTENTS

Page

ARTICLE I	Sale of the Shares and the Warrant	1
Section 1.1	Authorization of Issuance and Sale and Delivery of the Shares and the Warrant	1
Section 1.2	The Closings of the Sales of the Shares and the Warrant	1
ARTICLE II	Certain Agreements	2
Section 2.1	Delivery of Prospectus	2
Section 2.2	Filing of Prospectus	2
Section 2.3	Board of Directors	3
Section 2.4	Stockholder Approval	3
Section 2.5	Post-Closing Compliance	4
Section 2.6	Commercially Reasonable Efforts	4
Section 2.7	Purchaser Lock-Up Agreement	4
ARTICLE III	Conditions to the Obligations of the Purchaser	5
Section 3.1	Obligations	5
Section 3.2	Representations and Warranties	5
Section 3.3	Absence of Litigation	5
Section 3.4	Consents and Approvals	5
Section 3.5	No Change in Law	6
Section 3.6	Opinion of Counsel	6
Section 3.7	NYSE Approval	6
Section 3.8	Registration Rights Agreement	6
Section 3.9	Conditions Applicable to Subsequent Closing	6
ARTICLE IV	Conditions to Obligation of the Company	7
Section 4.1	Representations and Warranties	7
Section 4.2	Absence of Litigation	7
Section 4.3	Consents and Approvals	7
Section 4.4	No Change in Law	7
Section 4.5	NYSE Approval	8

-i-

TABLE OF CONTENTS

(continued)

Page

Section 4.6	Conditions Applicable to Subsequent Closing	8
ARTICLE V	Representations and Warranties of the Company	8
Section 5.1	Registration Statement	8
Section 5.2	Organization; Good Standing; Qualification and Power	9
Section 5.3	Authorization; Enforceability; Corporate and Other Proceedings	9
Section 5.4	Non Contravention	9
Section 5.5	Anti-Takeover Law and REIT Restrictions	10
Section 5.6	Capitalization of the Company	10
Section 5.7	Use of Proceeds	11
Section 5.8	SEC Reports	11
Section 5.9	Financial Statements	11
Section 5.10	No Material Adverse Change	11
Section 5.11	No Consent or Approval Required	12
Section 5.12	New York Stock Exchange Listing	12
Section 5.13	Tax Matters	12
Section 5.14	Legal Compliance	12
Section 5.15	Litigation	13
Section 5.16	Material Contracts	13
Section 5.17	Brokers or Finders	13
Section 5.18	Liabilities	13
Section 5.19	Loan and Investment Losses	13
ARTICLE VI	Representations and Warranties of the Purchaser	14
Section 6.1	Organization; Good Standing; Qualification and Power	14
Section 6.2	Authorization; Enforceability; Corporate and Other Proceedings	14
Section 6.3	Non Contravention	14
Section 6.4	No Consent or Approval Required	15
Section 6.5	Beneficial Ownership	15

-ii-

TABLE OF CONTENTS

(continued)

Page

Section 6.6	Brokers or Finders	15
ARTICLE VII	Termination	15
Section 7.1	Termination Events	15
Section 7.2	Effect of Termination	16
ARTICLE VIII	Indemnification	16
Section 8.1	Indemnification Generally	16
Section 8.2	Indemnification Procedures For Third Party Claims	16
Section 8.3	Survival of Representations, Warranties, Agreements, Etc.	17
ARTICLE IX	Miscellaneous	17
Section 9.1	Expenses and Taxes	17
Section 9.2	Further Assurances	18
Section 9.3	Public Announcement	18
Section 9.4	No Third Party Beneficiaries	18
Section 9.5	Entire Agreement	19
Section 9.6	Successors and Assigns	18
Section 9.7	Counterparts	18
Section 9.8	Notices	19
Section 9.9	Governing Law; Submission to Jurisdiction	20
Section 9.10	Amendments and Waivers	20
Section 9.11	Incorporation of Schedules	21
Section 9.12	Construction	21
Section 9.13	Interpretation	21
Section 9.14	Severability	21
Section 9.15	Waiver of Jury Trial.	22

-iii-

Annexes   Annex I   Exhibits Exhibit A Exhibit B Exhibit C Exhibit D   Schedules   Schedule A Schedule B Schedule 5.5 Schedule 5.10 Schedule 5.19 – Certain Definitions       Form of Warrant Form of Paul, Hastings, Janofsky & Walker LLP Opinion Form of Venable LLP Opinion Form of Registration Rights Agreement

This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of May 10, 2004, is entered into among Capital Trust, Inc., a Maryland corporation (the “Company”), W. R. Berkley Corporation, a Delaware corporation (“Berkley”), and, solely for purposes of Section 2.4 hereof, the holders of shares of Class A Common Stock, par value $.01 per share, of the Company (the “Common Stock”) identified on Schedule A attached hereto (collectively, the “Stockholders”).  Berkley and its designated controlled Affiliates identified on Schedule B attached hereto are collectively referred to in this Agreement as the “Purchaser” (provided that only Berkley shall be a direct party hereto and responsible for its obligations hereunder).

RECITALS

WHEREAS, the Company desires to sell to the Purchaser, and the Purchaser desires to purchase from the Company, (1) on the date hereof (i) 1,310,000 shares (the “Tranche 1 Shares”) of Common Stock and (ii) one or more warrant(s) in the form attached as Exhibit A hereto (the “Warrant”) initially exercisable for a total of 365,000 shares (the “Warrant Shares”) of Common Stock and (2) on the Subsequent Closing Date (as defined below), 325,000 shares (the “Tranche 2 Shares” and, together with the Tranche 1 Shares and the Warrant Shares, the “Shares”) of Common Stock;

NOW, THEREFORE, in consideration of the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Company and the Purchaser agree as follows:

All capitalized terms used and not otherwise defined in this Agreement shall have the definitions set forth on Annex I hereto.

ARTICLE I

Sale of the Shares and the Warrant

Section 1.1                      Authorization of Issuance and Sale and Delivery of the Shares and the Warrant.

(1)      Subject to the terms and conditions hereof, the Purchaser agrees to purchase at the Initial Closing (as defined below), and the Company agrees to sell and issue to the Purchaser at the Initial Closing, the Tranche 1 Shares and the Warrant.

(2)      Subject to the terms and conditions hereof, the Purchaser agrees to purchase at the Subsequent Closing (as defined below), and the Company agrees to sell and issue to the Purchaser at the Subsequent Closing, the Tranche 2 Shares.

Section 1.2                      The Closings of the Sales of the Shares and the Warrant.

(1)      Subject to the terms and conditions of this Agreement, the sale of the Tranche 1 Shares and the Warrant by the Company to the Purchaser contemplated hereby shall take place at a closing (the “Initial Closing”) on the date hereof (the “Initial Closing Date”), simultaneously with the execution and delivery of this Agreement, at the offices of Paul, Hastings, Janofsky & Walker LLP, 75 East 55th Street, New York, New York 10022 (the “Closing Location”).  Subject to the terms and conditions of this Agreement, the sale of the Tranche 2 Shares by the Company to the Purchaser contemplated hereby shall take place at a closing (the “Subsequent Closing”) at the Closing Location at 10:00 a.m., New York time, on the later of (a) June 18, 2004 or (b) the date that is two Business Days following the satisfaction or waiver of all of the conditions contained herein (the “Subsequent Closing Date”), or at such other time and date as may be agreed upon between the Purchaser and the Company.  For the purposes of this Agreement, (i) the Initial Closing and the Subsequent Closing may be referred to herein as a “Closing” and (ii) the Initial Closing Date and the Subsequent Closing Date may be referred to herein as a “Closing Date”.

(2)      At the Initial Closing, on the terms and subject to the conditions contained herein, the Company shall issue and deliver the Tranche 1 Shares and the Warrant against receipt by the Company of $30,654,000 by wire transfer of immediately available funds to an account designated by the Company prior to the Initial Closing in writing.  The Tranche 1 Shares and the Warrant shall be evidenced by certificates, registered in the name of the Purchaser or the name of the Purchaser’s nominee(s) or designee(s) identified to the Company at least two Business Days prior to such Closing.

(3)      At the Subsequent Closing, on the terms and subject to the conditions contained herein, the Company shall issue and deliver the Tranche 2 Shares against receipt by the Company of $7,605,000 by wire transfer of immediately available funds to an account designated by the Company prior to the Subsequent Closing in writing.  The Tranche 2 Shares shall be evidenced by a certificate, registered in the name of the Purchaser or the name of the Purchaser’s nominee(s) or designee(s) identified to the Company at least two Business Days prior to such Closing.

ARTICLE II

Certain Agreements

Section 2.1                      Delivery of Prospectus.  Concurrently with the execution and delivery of this Agreement and the Initial Closing, the Company is delivering to the Purchaser a final prospectus supplement relating to the offer and sale of the Shares to the Purchaser together with a prospectus to be filed with the Commission in accordance with Rule 424(b) under the Securities Act (the “Prospectus”) to amend the prospectus forming part of the Company’s registration statement on Form S-3 (file number 333-111261) (the “Registration Statement”).

Section 2.2                      Filing of Prospectus.  Concurrently with the Initial Closing, the Company will file the Prospectus in the form delivered to the Purchaser with the Commission pursuant to Rule 424(b) under the Securities Act.

2

Section 2.3                      Board of Directors.  On the date hereof, the Company shall, consistent with and subject to the Maryland General Corporation Law (“MGCL”), acting through its board of directors (the “CT Board”), appoint to the CT Board one (1) representative designated by the Purchaser.  From and after the date hereof until the earlier of (i) such time as the Purchaser collectively owns less than fifty percent (50%) of the Shares purchased by the Purchaser hereunder and pursuant to the Warrant and (ii) such time after May 10, 2007 as the Purchaser collectively owns less than an aggregate of five (5%) of the Company’s outstanding shares of Common Stock on a fully diluted basis assuming the conversion and exercise of outstanding convertible or exercisable securities (the “Termination Date”), the Company shall, consistent with and subject to the MGCL, acting through the CT Board, nominate for election to the CT Board one (1) representative designed by the Purchaser (the “Purchaser Designee”).  At any time when the Purchaser shall have the right to designate a representative for appointment, or nomination for election, to the CT Board, pursuant to this Section 2.3, the Company shall give William R. Berkley notice (in the same manner as notice is given to directors) and permit William R. Berkley to attend as observer, all meetings of the CT Board.

Section 2.4                      Stockholder Approval.

(1)      From and after the date hereof until the Termination Date, on each occasion at which the holders of Common Stock of the Company meet, or act by written consent in lieu of meeting, for the purpose of electing directors, each Stockholder shall vote all shares of Common Stock they beneficially own or over which they have voting control over for the election of the Purchaser Designee in accordance with the provisions of Section 2.4(2) at such time as such designee stands for election to the CT Board.

(2)      From and after the date hereof until the Termination Date, the Stockholders who are directors of the Company shall, consistent with and subject to their duties as directors under the MGCL, in their capacity as directors, take such action as may reasonably be within their power to cause the CT Board to appoint, elect or nominate for election to the CT Board the Purchaser Designee and shall promptly provide prior written notice of the CT Board’s consideration of individuals to be nominated for election as directors of CT, whereupon the Purchaser shall promptly provide written notice of the name(s) of the Purchaser Designee designated by them to the extent that the incumbent Purchaser Designee is unable to stand for reelection for any reason or the Purchaser intends to designate an individual to replace such designee and biographical information relating to such designee in a form compliant with applicable securities laws and regulations and with the charter and bylaws of the Company.  In the absence of such notice from the Purchaser, the incumbent Purchaser Designee then serving on the CT Board shall be deemed to be the Purchaser Designee designated by the Purchaser.  From and after the date hereof until the Termination Date, any Stockholder who is a director of the Company shall, consistent with and subject to his duties as a director under the MGCL, in his capacity as a director, recommend to the CT Board that the board nominate the Purchaser Designee for, and actively solicit stockholder proxies in favor of his or her, election as a director of the Company.

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(3)      From and after the date hereof until the Termination Date, the Stockholders shall not take, or support the taking of, any action to remove as a director the Purchaser Designee unless the Purchaser has requested that such director be removed (in which case the Stockholders shall cooperate in effecting such removal and electing a replacement).  In the event that the Purchaser Designee ceases to serve as a director of the Company due to death, resignation or removal of said director at any time prior to the Termination Date, the Purchaser may submit written notice to the Stockholders designating an individual to replace said Purchaser Designee.  From and after the date hereof until the Termination Date, any Stockholder who is a director of the Company shall, consistent with and subject to his duties as a director under the MGCL, in his capacity as a director, promptly recommend that the CT Board appoint such replacement designee as a director of the Company to fill any vacancy resulting from the death, resignation or removal of the Purchaser Designee and, when called for a vote of the CT Board, vote for such replacement designee.

(4)      At the Company’s 2004 annual meeting of stockholders or at any adjournment or postponement thereof, the Stockholders shall vote (or cause to be voted) all shares of Common Stock they beneficially own or have voting control over in favor of the issuance and sale of the Tranche 2 Shares and the Warrant Shares.

(5)      From and after the date hereof until the earlier of (i) the Subsequent Closing Date and (ii) the termination of this Agreement in accordance with Section 7.1 hereof, each Stockholder shall not sell, transfer or otherwise dispose of any of the shares of Common Stock such Stockholder beneficially owns or over which such Stockholder has voting control; provided, however, that the foregoing shall not prohibit any Stockholder from pledging or creating any lien or granting a security interest on any shares of Common Stock beneficially owned by such Stockholder or over which such Stockholder has voting control.

(6)      Notwithstanding anything to the contrary herein, the rights and obligation contained in Sections 2.4(5) shall terminate and shall be of no further legal force on the earlier of (i) the Subsequent Closing Date and (ii) the termination of this Agreement in accordance with Section 7.1 hereof.

Section 2.5                      Post-Closing Compliance.  From and after the Initial Closing Date until the Termination Date, the Company will use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and the New York Stock Exchange or such other securities exchange or quotation system on which the Common Stock is then listed for trading or quoted, as the case may be.

Section 2.6                      Commercially Reasonable Efforts.  Upon the terms and subject to the conditions of this Agreement, from and after the Initial Closing Date until the Termination Date, the Company shall use its commercially reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable consistent with applicable law to consummate and make effective in the most expeditious manner practicable the transactions contemplated hereby.

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Section 2.7                      Purchaser Lock-Up Agreement.

From and after the date hereof until November 11, 2004, the Purchaser shall not sell, transfer or otherwise dispose of any of the Shares or Warrants beneficially owned by the Purchaser or over which the Purchaser has voting control (the “Beneficially Owned Securities”); provided, however, that the foregoing shall not prohibit the Purchaser from pledging or creating any lien or granting a security interest on any of the Beneficially Owned Securities or transferring any of the Beneficially Owned Securities to any controlled Affiliate of Berkley; provided, further, that, if as a result of action taken by the Company, the Purchaser shall at any time beneficially own Common Stock (including any Warrant Shares obtained upon exercise of the Warrants) representing 20% or more of the outstanding shares of voting stock of the Company, the foregoing shall not prohibit the Purchaser from selling, transferring or otherwise disposing of up to such number of Shares as shall be necessary so that after such sale, transfer or disposition, the Purchaser shall beneficially own shares of Common Stock representing less than 20% of the outstanding shares of voting stock of the Company.

ARTICLE III

Conditions to the Obligations of the Purchaser

The obligations of the Purchaser to consummate the transactions to be performed by it in connection with any Closing are subject to satisfaction of each of the following conditions as of such Closing, unless otherwise waived in writing by the Purchaser:

Section 3.1                      Obligations.

The obligations of the Company set forth in Article II hereof shall be complied with and performed in all material respects by the Company.

Section 3.2                      Representations and Warranties.

The representations and warranties of the Company set forth in Article V hereof shall be true, correct and complete in all material respects on and as of the applicable Closing Date (other than those that are qualified by a reference to materiality, which representations and warranties as so qualified shall be true, correct and complete in all respects).

Section 3.3                      Absence of Litigation.

There shall not be (a) any Order of any nature issued by a Governmental Entity with competent jurisdiction directing that the transactions provided for herein or any material aspect of them not be consummated as herein provided or (b) any Proceeding pending wherein an Order would prevent the performance of this Agreement or the consummation of any material aspect of the transactions or events contemplated by this Agreement, declare unlawful any material aspect of the transactions or events contemplated by this Agreement, cause any material aspect of the transactions contemplated by this Agreement to be rescinded or be reasonably likely to have a Material Adverse Effect on the Company or the Purchaser.

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Section 3.4                      Consents and Approvals.

All consents, approvals or authorizations of, or declarations to or filings with, any Governmental Entity necessary to permit the Company and the Purchaser to perform their obligations under this Agreement and consummate the transactions contemplated thereby have been obtained or made and are in full force and effect.

Section 3.5                      No Change in Law.

There shall not have been any change in any Law applicable to the Purchaser that would prevent the performance of this Agreement or the consummation by the Purchaser of any material aspect of the transactions contemplated hereby.

Section 3.6                      Opinion of Counsel.

The Purchaser shall have received an opinion of Paul, Hastings, Janofsky & Walker LLP, counsel to the Company, in the form attached as Exhibit B hereto, and an opinion of Venable LLP, Maryland counsel to the Company, in the form attached as Exhibit C hereto.  For purposes of the Subsequent Closing, the Purchaser shall have received a bringdown of the opinions referred to in this Section 3.6 as of the Subsequent Closing Date.

Section 3.7                      NYSE Approval.

The New York Stock Exchange shall have admitted the Tranche 1 Shares and the Tranche 2 Shares and Warrant Shares to listing, subject to official notice of issuance and, in the case of the Tranche 2 Shares and the Warrant Shares, subject to notice of shareholder approval of the issuance of the Tranche 2 Shares and the Warrant Shares.

Section 3.8                      Registration Rights Agreement.

The Registration Rights Agreement, in the form attached as Exhibit D hereto, shall have been executed by the Company.

Section 3.9                      Conditions Applicable to Subsequent Closing.

In addition to the foregoing conditions, the obligations of the Purchaser to consummate the transactions to be performed by it in connection with the Subsequent Closing are subject to satisfaction of each of the following conditions, unless otherwise waived in writing by the Purchaser:

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(1)      during the period from the date of this Agreement to the Subsequent Closing Date, there shall not have occurred any event that, individually or when taken together with any other event or circumstance, has had or could reasonably be expected to have a Material Adverse Effect on the Company;

(2)      the issuance of the Tranche 2 Shares and the Warrant Shares, shall have been approved by an affirmative vote of a majority of the votes cast at the Company’s 2004 annual meeting of Stockholders or at any adjournment or postponement thereof in accordance with applicable New York Stock Exchange rules (the “Stockholder Approval”); and

(3)      in no way limiting the foregoing, the representations and warranties of the Company set forth in Section 5.18 and Section 5.19 hereof shall be true, correct and complete in all material respects on and as of the Subsequent Closing Date (as if made on the Subsequent Closing Date) (other than those that are qualified by a reference to materiality, which representations and warranties as so qualified shall be true, correct and complete in all respects).

ARTICLE IV

Conditions to Obligation of the Company

The obligations of the Company to consummate the transactions to be performed by it in connection with any Closing are subject to satisfaction of each of the following conditions as of such Closing, unless otherwise waived in writing by the Company:

Section 4.1                      Representations and Warranties.

The representations and warranties of the Purchaser set forth in Article VI hereof shall be true, correct and complete in all material respects on and as of the applicable Closing Date (other than those that are qualified by a reference to materiality, which representations and warranties as so qualified shall be true, correct and complete in all respects).

Section 4.2                      Absence of Litigation.

There shall not be (a) any Order of any nature issued by a Governmental Entity with competent jurisdiction directing that the transactions provided for herein or any material aspect of them not be consummated as herein provided or (b) any Proceeding pending wherein an Order would prevent the performance of this Agreement or the consummation of any material aspect of the transactions or events contemplated hereby, declare unlawful any material aspect of the transactions or events contemplated by this Agreement, or cause any material aspect of any transaction contemplated by this Agreement to be rescinded or be reasonably likely to have a Material Adverse Effect on the Company or the Purchaser.

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Section 4.3                      Consents and Approvals.

All consents, approvals or authorizations of, or declarations to or filings with, any Governmental Entity necessary to permit the Company and the Purchaser to perform their obligations under this Agreement and consummate the transactions contemplated thereby have been obtained or made and are in full force and effect.

Section 4.4                      No Change in Law.

There shall not have been any change in any Law applicable to the Company that would prevent the performance of this Agreement or the consummation by the Company of any material aspect of the transactions contemplated hereby.

Section 4.5                      NYSE Approval.

The New York Stock Exchange shall have admitted the Tranche 1 Shares and the Tranche 2 Shares and Warrant Shares to listing, subject to official notice of issuance and, in the case of the Tranche 2 Shares and the Warrant Shares, subject to notice of shareholder approval of the issuance of the Tranche 2 Shares and the Warrant Shares.

Section 4.6                      Conditions Applicable to Subsequent Closing.

(1)      In addition to the foregoing conditions, the obligations of the Company to consummate the transactions to be performed by it in connection with the Subsequent Closing are subject to the receipt of the Stockholder Approval.

ARTICLE V

Representations and Warranties of the Company

As an inducement to the Purchaser to enter into and perform its obligations under this Agreement, the Company hereby represents and warrants as of the Initial Closing and the Subsequent Closing to the Purchaser as follows:

Section 5.1                      Registration Statement.

(1)      The Company meets the requirements for use of Form S-3 under the Securities Act and the Registration Statement has been filed with the Commission for registration under the Securities Act of the offering and sale of debt and equity securities of the Company and has been declared effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted, or to the best knowledge of the Company, are contemplated by the Commission. 

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(2)      On the effective date of the Registration Statement (the “Effective Date”), the Registration Statement did, and when the Prospectus is first filed with the Commission in accordance with Rule 424(b) under the Securities Act and at the Closing, the Prospectus will, comply in all material respects with the applicable requirements of the Securities Act and the Exchange Act and the respective rules thereunder; on the Effective Date, the Registration Statement did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; and on the date of any filing pursuant to Rule 424(b) and at the Closing, the Prospectus will not, include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

Section 5.2                      Organization; Good Standing; Qualification and Power.

The Company and each of its Subsidiaries are duly organized, validly existing and in good standing under the Laws of their respective jurisdictions of formation, have all requisite power (corporate or otherwise) to carry on their respective businesses as presently being conducted and are qualified to do business and in good standing in every jurisdiction in which the failure so to qualify or be in good standing could reasonably be expected to have a Material Adverse Effect on the Company.

Section 5.3                      Authorization; Enforceability; Corporate and Other Proceedings.

(1)      The Company has all requisite power and authority (corporate or otherwise) to execute and deliver this Agreement and to perform its obligations hereunder.  This Agreement has been duly authorized by all necessary corporate action (corporate or otherwise) on the part of the Company, and this Agreement has been duly executed and delivered by the Company, and, assuming due execution and delivery of this Agreement by the Purchaser, constitutes the valid and legally binding obligation of the Company, enforceable in accordance with its terms and conditions, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the enforcement of creditors’ rights generally and to general equitable principles.

(2)      The authorization, issuance, sale and delivery of the Shares and the Warrant have been duly authorized by all requisite action of the CT Board and, to the extent required by applicable Law or the rules of the New York Stock Exchange as of the Subsequent Closing Date, will have been duly approved by the Company’s stockholders.  The Shares being issued as of the applicable Closing Date will be validly issued and outstanding, fully paid and nonassessable, with no personal Liability attaching to the ownership thereof, free and clear of any Liens whatsoever and with no restrictions on the voting rights thereof, and other incidents of record and beneficial ownership pertaining thereto, except as provided in the Company’s charter.  The Warrant Shares, if and when issued in accordance with the terms of the Warrant and this Agreement, will be validly issued and outstanding, fully paid and nonassessable, with no personal Liability attaching to the ownership thereof, free and clear of any Liens whatsoever and with no restrictions on the voting rights thereof, and other incidents of record and beneficial ownership pertaining thereto, except as provided in the Company’s charter.

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Section 5.4                      Non Contravention.

The execution, delivery and performance by the Company of this Agreement, the consummation of the transactions contemplated hereby and compliance with the provisions thereof, including the issuance, sale and delivery of the Shares and the Warrant have not, do not and shall not, (a) violate any provision of the Fundamental Documents of the Company, (b) violate any Law to which the Company is subject,(c) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any material contract to which the Company is a party or (d) result in the imposition of any Lien upon any of the Assets of the Company, except where such violation, conflict, default, acceleration, termination, modification, cancellation or imposition with respect to clauses (b), (c) and (d) could not reasonably be expected to have a Material Adverse Effect on the Company.

Section 5.5                      Anti-Takeover Law and REIT Restrictions.

(1)      The CT Board has amended the Amended and Restated Bylaws of the Company to provide that Title 3, Subtitle 7 of the Corporations and Associations Article of the Annotated Code of Maryland (or any successor statute) shall not apply to any acquisition of shares of Class A Common Stock by the Purchaser and that such amendment shall not be repealed without the consent of Berkley.

(2)      The CT Board has resolved that the Purchaser shall be excluded from the definition of “interested stockholder” as a result of the approval of the offering of the Shares and Warrant pursuant to § 3-601(j)(3) of the MGCL.

(3)      The CT Board has resolved that, pursuant to Section 7.2.7 of the Company’s charter, William R. Berkley and up to one other major shareholder of Berkley, who shall be identified in writing to the Company by Berkley upon the request of the Company from time to time (the “Berkley Shareholder”), shall be exempt from the Aggregate Stock Ownership Limit (as defined in the Company’s charter) and the Common Stock Ownership Limit (as defined in the Company’s charter), and an Excepted Holder Limit (as defined in the Company’s charter) of 6.0% and 4.0% of the outstanding Common Stock shall be established for William R. Berkley and the Berkley Shareholder, respectively.

Section 5.6                      Capitalization of the Company.

(1)      As of the Initial Closing Date, the authorized capital stock of the Company and the issued and outstanding shares of the capital stock of the Company after giving effect to the sale of the Tranche 1 Shares and the Tranche 2 Shares is as set forth on Schedule 5.6.

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(2)      Except as contemplated by the Agreement or as otherwise set forth on Schedule 5.6, there are, and immediately after consummation of the Closing there will be, no (i) outstanding warrants, options, agreements, convertible securities or other commitments or instruments pursuant to which the Company is or may become obligated to issue or sell any shares of its capital stock or other securities or (ii) preemptive or similar rights to purchase or otherwise acquire shares of the capital stock or other securities of the Company pursuant to any provision of Law, the Company’s Fundamental Documents or any contract, “shareholders’ rights plan”, “poison pill” or similar plan, arrangement or scheme to which the Company is a party.

(3)      All shares of the capital stock and other securities issued by the Company have been issued in transactions in accordance with applicable foreign, state and federal Laws and regulations governing the sale and purchase of securities.

Section 5.7                      Use of Proceeds.

Unless otherwise consented to in writing by the Purchaser, the proceeds received by the Company from the sale of the Shares and the Warrant and, if and when issued, the Warrant Shares, shall be used by the Company for general corporate purposes, including funding balance sheet investments, capital commitments to private equity funds, repayment of indebtedness, working capital purposes and potential business acquisitions.

Section 5.8                      SEC Reports.

The Company has since its inception filed all required forms, reports and documents required to be filed by it (“SEC Reports”) with the Commission when due in accordance with the Securities Act and Exchange Act.  As of their respective dates, the SEC Reports complied in all material respects with all applicable requirements of the Exchange Act or the Securities Act, as the case may be.  As of their respective dates, none of the SEC Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

Section 5.9                      Financial Statements.

The consolidated financial statements of the Company contained in the SEC Reports (the “Financial Statements”) complied as to form in all material respects with the published rules and regulations of the Commission with respect thereto, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects, in conformity with GAAP (except as may be indicated in the notes thereto), the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and their consolidated results of operations and changes in financial position for the periods then ended (subject to normal year-end adjustments in the case of any unaudited interim financial statements).

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Section 5.10                      No Material Adverse Change.

Since December 31, 2003, except in each case as disclosed or contemplated in the Prospectus (A) there has been no material adverse change in or affecting the business, Assets, condition (financial or otherwise), operating results or Liabilities of the Company and its Subsidiaries taken as a whole, whether or not arising in the ordinary course of business, (B) there have been no transactions entered into by the Company or any of its Subsidiaries which are material with respect to the Company and its Subsidiaries taken as a whole, other than those in the ordinary course of business, and (C) except in the ordinary course of business, there has not been any material decrease in the total Assets of the Company and its Subsidiaries, taken as a whole, or any material increase in the total Liabilities of the Company and its Subsidiaries, taken as a whole.

Section 5.11                      No Consent or Approval Required.

Except as set forth on Schedule 5.11, no material consent, approval or authorization of, or declaration to or filing with, any Person is required by the Company for the valid authorization, execution and delivery by the Company of this Agreement or for its consummation of the transactions contemplated hereby or for the valid authorization, issuance and delivery of the Shares and the Warrant, other than those consents, approvals, authorizations, declarations or filings which have been obtained or made, as the case may be.

Section 5.12                      New York Stock Exchange Listing.

The New York Stock Exchange has admitted the Tranche 1 Shares and the Tranche 2 Shares and Warrant Shares to listing, subject to official notice of issuance and, in the case of the Tranche 2 Shares and the Warrant Shares, subject to notice of shareholder approval of the issuance of the Tranche 2 Shares and the Warrant Shares.

Section 5.13                      Tax Matters.

The CT Board has authorized the Company to file its tax returns to be taxed as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the “Code”), for taxable year ending December 31, 2003, such authorization has not been amended, revoked or rescinded, the Company has operated in conformity with the requirements for qualification as a REIT under the Code since January 1, 2003 and the Company intends to properly and formally elect to be taxed as a REIT when it files its federal income tax returns for the taxable year ending December 31, 2003 on or before September 15, 2004.

Section 5.14                      Legal Compliance.

The Company and its Subsidiaries are in compliance with, and the respective businesses of the Company and its Subsidiaries are being conducted in compliance with, all applicable Laws, Orders and Permits which are necessary to conduct the business now operated by them, and neither the Company nor any of its Subsidiaries has received written notice of any Proceeding alleging any failure to so comply, except in each case such as could not reasonably be expected to have a Material Adverse Effect.  The material Permits under which the Company or any of its Subsidiaries is operating or bound (a) constitute all material Permits used or required in the conduct of the respective businesses of the Company and its Subsidiaries as presently conducted and (b) are in full force and effect, except in each case as could not reasonably be expected to have a Material Adverse Effect.

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Section 5.15                      Litigation.

Except as disclosed in the Registration Statement, there is no Proceeding pending or, to the knowledge of the Company, threatened against, or affecting the Assets of the Company or any of its Subsidiaries or any of their respective predecessors, in each case which could reasonably be expected to have a Material Adverse Effect.

Section 5.16                      Material Contracts.

Neither the Company nor any of its Subsidiaries is in default, and no event has occurred which, with due notice or lapse of time or both, would constitute such a default under, any material contract, agreement, instrument, commitment and other arrangement to which the Company or any of its Subsidiaries is a party or otherwise relating to or affecting any of their respective assets, including, without limitation, employment, severance or consulting agreements, loan, credit or security agreements, joint venture agreements and license and distribution agreements, except in each case such as could not reasonably be expected to have a Material Adverse Effect.

Section 5.17                      Brokers or Finders.

The Company has not retained any investment banker, broker or finder in connection with the purchase of the Shares and the Warrant.

Section 5.18                      Liabilities.

As of the Initial Closing Date, to the best knowledge of the Company, the Company has no liability or obligation, absolute or contingent (individually or in the aggregate), including, without limitation, any tax liability due and payable, which is not reflected on the consolidated balance sheet of the Company as of December 31, 2003 contained in the Financial Statements for the year ended December 31, 2003 (the “Balance Sheet”), other than liabilities and obligations incurred after the date of the Balance Sheet in the ordinary course of business.  To the best knowledge of the Company, there were no “loss contingencies” (as such term is used in Statement of Financial Accounting Standards No. 5 issued by the Financial Accounting Standards Board in March 1975) that were not adequately provided for on the Balance Sheet.

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Section 5.19                      Loan and Investment Losses.

As of the Initial Closing Date, to the best knowledge of the Company, except as set forth on Schedule 5.19 hereof, none of the Company’s loans are in default and the Company has not received notice from any borrower under any of its loans that a default is imminent and all of the Company’s investments are making payments in accordance with their contractual terms.

ARTICLE VI

Representations and Warranties of the Purchaser

As an inducement to the Company to enter into and perform its obligations under this Agreement, the Purchaser hereby represents and warrants as of the Initial Closing and the Subsequent Closing to the Company as follows:

Section 6.1                      Organization; Good Standing; Qualification and Power.

The Purchaser is a corporation duly incorporated, validly existing and in good standing under the Laws of its jurisdiction of formation, has all requisite power (corporate or otherwise) to carry on its business as presently being conducted and is qualified to do business and in good standing in every jurisdiction in which the failure so to qualify or be in good standing could reasonably be expected to have a Material Adverse Effect on the Purchaser.

Section 6.2                      Authorization; Enforceability; Corporate and Other Proceedings.

The Purchaser has all requisite power and authority (corporate or otherwise) to execute and deliver this Agreement and any and all instruments necessary or appropriate in order to effectuate fully the terms and conditions of this Agreement and all related transactions and to perform its obligations hereunder and thereunder.  This Agreement, and the transactions contemplated hereby have been duly authorized by all necessary action (corporate or other) on the part of the Purchaser, and this Agreement has been duly executed and delivered by the Purchaser, and, assuming due execution and delivery of this Agreement by the Company, constitutes the valid and legally binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms and conditions, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the enforcement of creditors’ rights generally and to general equitable principles.

Section 6.3                      Non Contravention

The execution, delivery and performance by the Purchaser of this Agreement, the consummation of the transactions contemplated hereby and compliance with the provisions hereof, including the purchase of the Shares and the Warrant have not, do not and shall not, (a) violate any provision of the Fundamental Documents of the Purchaser, (b) violate any Law to which the Purchaser is subject or (c) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any material contract to which the Purchaser is a party, except where such violation, conflict, default, acceleration, termination, modification or cancellation with respect to clauses (b) and (c) could not reasonably be expected to have a Material Adverse Effect on the Purchaser.

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Section 6.4                      No Consent or Approval Required.

No material consent, approval or authorization of, or declaration to or filing with, any Person is required by the Purchaser for the valid authorization, execution and delivery by the Purchaser of this Agreement or for its consummation of the transactions contemplated hereby other than those consents, approvals, authorizations, declarations or filings which have been obtained or made, as the case may be.

Section 6.5                      Beneficial Ownership.

As of the Initial Closing Date, William R. Berkley is currently the owner of less than 15% of the outstanding shares of Berkley and the other Purchasers.  For purposes of the foregoing, “own” means ownership or determined in accordance with Section 856(h) of the Internal Revenue Code of 1986, as amended.

Section 6.6                      Brokers or Finders.

The Purchaser has not retained any investment banker, broker or finder in connection with the purchase of the Shares and the Warrant.

ARTICLE VII

Termination

Section 7.1                      Termination Events.

This Agreement may, by notice given prior to or at the Subsequent Closing, be terminated:

(1)      by either the Company or the Purchaser if a material breach or default of any provision of this Agreement has been committed by the other party which would make the conditions to this Agreement incapable of being satisfied; provided that neither party may terminate this Agreement prior to the date set forth in paragraph (3) below if the breaching or defaulting party has not had an adequate opportunity to cure such breach or default;

(2)      by mutual consent of the Company and the Purchaser;

(3)      by the Purchaser or the Company if the Stockholder Approval has not been obtained on or before June 25, 2004; or

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(4)      by either the Company or the Purchaser if the Subsequent Closing has not occurred (other than through the failure of any party seeking to terminate this Agreement to comply fully with its obligations under this Agreement) on or before June 30, 2004 or such later date as the parties may agree upon.

Section 7.2                      Effect of Termination.

Each party’s right of termination under Section 7.1 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies.  If this Agreement is terminated pursuant to Section 7.1, all further obligations of the parties under this Agreement will terminate, except that the obligations in Sections 8.1 and 8.2 and Article IX will survive; provided, however, that if this Agreement is terminated by a party because of the breach or default of the Agreement by the other party or because one or more of the conditions to the terminating party’s obligations under this Agreement is not satisfied as a result of the other party’s failure to comply with its obligations under this Agreement, the terminating party’s right to pursue all legal remedies will survive such termination unimpaired.

ARTICLE VIII

Indemnification

Section 8.1                      Indemnification Generally.

The Company, on the one hand, and the Purchaser, on the other hand (each an “Indemnifying Party”), shall indemnify the other from and against any and all losses, damages, liabilities, claims, charges, actions, proceedings, demands, judgments, settlement costs and expenses of any nature whatsoever (including, without limitation, reasonable attorneys’ fees and expenses) or deficiencies (collectively, “Losses”) resulting from any breach of a representation, warranty or covenant by the Indemnifying Party and all claims, charges, actions or proceedings incident to or arising out of the foregoing.  The Company shall further indemnify the Purchaser for any and all Losses incurred by the Purchaser which arise out of any claim by or on behalf of any stockholder, security holder, private equity fund investor or joint venture partner of the Company in connection with any act or omission by the Company in respect of its obligations under this Agreement.  Except with respect to third party claims being defended in good faith or claims for indemnification with respect to which there exists a good faith dispute, the Indemnifying Party shall satisfy its obligations hereunder within thirty (30) days of receipt of a notice of claim under this Section 8.1.

Section 8.2                      Indemnification Procedures For Third Party Claims.

If a claim by a third party is made against a Person entitled to indemnification under this Article VIII (an “Indemnified Party”) and such Indemnified Party intends to seek indemnity with respect thereto from any Indemnifying Party, such Indemnified Party shall give notice in writing as promptly as reasonably practicable to each such Indemnifying Party of any action commenced against or by it in respect of which indemnity may be sought hereunder, but failure to so notify an Indemnified Party shall not relieve such Indemnifying Party from any liability that it may have otherwise than on account of this indemnity agreement so long as such failure shall not have materially prejudiced the position of the Indemnifying Party.  Upon such notification, the Indemnifying Party shall assume the defense of such action brought by a third party, and after such assumption, the Indemnified Party shall not be entitled to reimbursement of any expenses incurred by it in connection with such action except as described below.  In any such action, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party shall have failed to promptly assume and thereafter vigorously conduct such defense, (ii) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the contrary or (iii) the named parties in any such action (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing or conflicting interests between them.  No Indemnifying Party, in the defense of a third party claim shall, except with the consent of the Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim.  The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent (which shall not be unreasonably withheld or delayed by such Indemnifying Party), but if settled with such consent or if there be final judgment for the plaintiff, the Indemnifying Party shall indemnify the Indemnified Party from and against any loss, damage or liability by reason of such settlement or judgment.

16

Section 8.3                      Survival of Representations, Warranties, Agreements, Etc.

All representations and warranties contained in this Agreement or made in writing by or on behalf of the Company in connection with the transactions contemplated by this Agreement shall survive for the duration of any statutes of limitation applicable thereto, the execution and delivery of this Agreement, any investigation at any time made by the Company, the Purchaser or on such party’s behalf, the purchase of the Shares by the Purchaser under this Agreement and any disposition of or payment on the Shares.  All statements contained in any certificate or other instrument delivered to the Purchaser by or on behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of the Company under this Agreement.  Except as otherwise provided herein, all covenants and agreements contained herein shall survive for the duration of any statutes of limitations applicable thereto or until, by their respective terms, they are no longer operative.

17

ARTICLE IX

Miscellaneous

Section 9.1                      Expenses and Taxes.

(1)      At each Closing, the Company shall pay fifty percent (50%) of all of the reasonable out-of-pocket expenses (including but not limited to attorneys’ and accountants’ fees and expenses) of the Purchaser arising in connection with the preparation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby; provided, however, that the Company shall not be required to pay more than $50,000 of such expenses in the aggregate.

(2)      Subject to Section 9.1(1), each party to this Agreement shall bear its own respective costs and expenses incurred in connection with the preparation, execution and delivery of this Agreement and the agreements and consummation of the transactions contemplated hereby.

(3)      All transfer, stamp (including documentary stamp Taxes, if any), and other similar Taxes with respect to the purchase and sale of the Shares, shall be borne by the Company.

Section 9.2                      Further Assurances.

The Purchaser and the Company shall duly execute and deliver, or cause to be duly executed and delivered, at their own cost and expense, such further instruments and documents and to take all such action, in each case as may be necessary or proper in the reasonable judgment of the other party to carry out the provisions and purposes of this Agreement.

Section 9.3                      Public Announcement.

The Purchaser and the Company will consult with each other before issuing any press release or otherwise making any public statements with respect to the transactions contemplated by this Agreement, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required based upon the reasonable opinion of counsel by applicable law or by obligations pursuant to any listing agreement with any national securities exchange or transaction reporting system or automated quotation system.

Section 9.4                      No Third Party Beneficiaries.

Except as expressly provided herein, this Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective successors and permitted assigns.

18

Section 9.5                      Entire Agreement.

This Agreement constitutes the entire agreement among the parties hereto and supersedes any prior understandings, agreements or representations by or among such parties, written or oral, that may have related in any way to the subject matter of this Agreement.

Section 9.6                      Successors and Assigns.

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other party; provided, however, that the Berkley may assign all or any of its rights and obligations hereunder to one or more designated controlled Affiliates without such prior written approval provided that Berkley remains responsible for the obligations under this Agreement with respect to such assignee.

Section 9.7                      Counterparts.

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

Section 9.8                      Notices.

All notices, requests, demands, claims, and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, telecopied, sent by internationally-recognized overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

If to the Company, to:

Capital Trust, Inc.

410 Park Avenue, 14th Floor

New York, New York 10022

Telephone:  (212) 655-0220

Telecopy:   (212) 655-0044

Attention:  John R. Klopp

                    Chief Executive Officer

with a copy to:

Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, New York  10022

Telephone:  (212) 318-6000

Telecopy:   (212) 319-4090

Attention:  Michael L. Zuppone, Esq.

19

If to the Purchasers:

W. R. Berkley Corporation

475 Steamboat Road

Greenwich, Connecticut 06830

Telephone: (203) 629-3000

Telecopy: (203) 769-4098

Attention:  Ira S. Lederman, Esq.

                    General Counsel

with a copy to:

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019-6099

Telephone: (212) 728-8000

Telecopy: (212) 728-8111

Attention: Gordon R. Caplan, Esq.

All such notices and other communications shall be deemed to have been given and received (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of delivery by telecopy, on the date of such delivery, (iii) in the case of delivery by internationally-recognized overnight courier, on the third Business Day following dispatch and (iv) in the case of mailing, on the seventh Business Day following such mailing.

Section 9.9                      Governing Law; Submission to Jurisdiction.

This agreement shall be governed by and construed in accordance with the internal laws of the state of New York, without regard to the principles of conflicts of laws thereof.  All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in a New York State or federal court sitting in the City of New York, and the parties hereto irrevocably submit to the exclusive jurisdiction of such courts in any such action or proceeding and irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or proceeding (and the parties agree not to commence any actions or proceedings relating hereto except in such courts).  The parties hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the courts of the State of New York or the United States of America located in the State of New York, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

20

Section 9.10                      Amendments and Waivers.

No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by all of the parties.  No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

Section 9.11                      Incorporation of Schedules.

The Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.

Section 9.12                      Construction.

Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates.  The use in this Agreement of the term “including” means “including, without limitation.”  The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

Section 9.13                      Interpretation.

Unless otherwise indicated, references to “$” are references to the U.S. dollar.  Accounting terms used but not otherwise defined herein shall have the meanings given to them under GAAP.  As used in this Agreement (including all Schedules and amendments hereto), the masculine, feminine and neuter gender and the singular or plural number shall be deemed to include the others whenever the context so requires.  References to Articles and Sections refer to articles and sections of this Agreement.  Similarly, references to Schedules refer to schedules attached to this Agreement.  Unless the content requires otherwise, words such as “hereby,” “herein,” “hereinafter,” “hereof,” “hereto,” “hereunder” and words of like import refer to this Agreement.  The article and section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 9.14                      Severability.

It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the Laws and public policies applied in each jurisdiction in which enforcement is sought.  Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.  Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

21

Section 9.15                      Waiver of Jury Trial.

EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT.

[Signature pages to follow]

22

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed this Agreement as of the date first above written by their respective officers thereunto duly authorized.

CAPITAL TRUST, INC.
By:	/s/ John R. Klopp
	Name:  John R. Klopp
	Title:    Chief Executive Officer

W. R. BERKLEY CORPORATION
By:	/s/ William R. Berkley
	Name:  William R. Berkley
	Title:    Chief Executive Officer

SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT

Solely for purposes of Section 2.4 of this Agreement the following: 

/s/ John R. Klopp

John R. Klopp

JRK Investment Partnership LP 

By:	/s/ John R. Klopp
	Name:
	Title:

/s/ Craig M. Hatkoff

Craig M. Hatkoff

CMH Investment Partnership LP

By:	/s/ Craig M. Hatkoff
	Name:
	Title:

Veqtor Finance Company, L.L.C.
By:	/s/ Donald Liebentritt
	Name:
	Title:

Samstock, L.L.C.
By:	/s/ Donald Liebentritt
	Name:
	Title:

2

Annex 1

CERTAIN DEFINITIONS

“Affiliates” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with such Person.  The term “control” includes, without limitation, the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Assets” means, with respect to any Person, all of the assets, rights, interests and other properties, real, personal and mixed, tangible and intangible, owned by such Person.

“Business Day” means any day that is not a Saturday, Sunday, legal holiday or other day on which banks are required to be closed in New York, New York.

“Commission” means the Securities and Exchange Commission.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Fundamental Documents” means, with respect to a corporation, the charter and bylaws (each as amended) or, with respect to any other Person, the documents by which such Person (other than an individual) establishes its legal existence or which govern its internal affairs.

“GAAP” means, at any time, generally accepted accounting principles in the jurisdiction in which the Person to which such principles are applied is organized at such time.

“Governmental Entity” means any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, federal, state or local.

“Law” means any constitution, law, statute, treaty, rule, directive, requirement or regulation or Order, domestic or foreign, of any Governmental Entity, including, without limitation, the rules and regulations of any stock exchange and/or quotation system on which the subject Person’s securities are listed for trading or quoted, as the case may be.

“Liability” means any liability or obligation, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated and whether due or to become due, regardless of when asserted.

“Lien” means any security interest, pledge, bailment (in the nature of a pledge or for purposes of security), mortgage, deed of trust, the grant of a power to confess judgment, conditional sale, trust receipt or other title retention agreement (including any lease in the nature thereof), charge, encumbrance, easement, reservation, restriction, cloud, right of first refusal or first offer, option, equity or adverse claim or other similar arrangement or interest in real or personal property.

“Material Adverse Effect” means, with respect to any Person, a material adverse effect on the business, operations, Assets, condition (financial or otherwise), operating results, or prospects of such Person and its Subsidiaries, if any, taken as a whole; provided, however, with respect to the Company, that any decrease in the trading price or volume of the Company’s Common Stock that occurs in the absence of a material adverse effect on any of the foregoing shall not, in itself, be deemed to be a “Material Adverse Effect.”

“Order” means any order, writ, judgment, injunction, decree, determination or award issued by a Governmental Entity.

“Permits” means all permits, licenses, authorizations, registrations, franchises, approvals, consents, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Entities.

“Person” means any individual, corporation, partnership, limited liability company, trust, estate, or unincorporated organization, or other entity or Governmental Entity or other juridical entity.

“Proceeding” means any action, suit, proceeding, complaint, charge, hearing, inquiry or investigation before or by a Governmental Entity or an arbitrator, mediator or tribunal.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Subsidiary” means (i) any entity in which the Company owns directly or indirectly, more than 50% of the voting capital stock or equity interest and (ii) any commercial real estate mezzanine investment fund managed by the Company or any subsidiary (whether or not the Company or any subsidiary owns a majority interest).

“Tax” or “Taxes” as used in this Agreement, means, with respect to any Person, (a) all taxes, customs duties and other Taxes, fees, assessments or charges of any kind whatsoever including without limitation all income, gross receipts, sales, use, ad valorem, transfer, franchise, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property or windfall profits Taxes, alternative or add-on minimum Taxes, together with all interest and penalties, additions to Tax and other additional amounts imposed by any taxing authority (domestic or foreign) on such Person (if any) and (b) any Liability for the payment of any amount of the type described in clause (a) above as a result of being a “transferee” (within the meaning of Section 6901 of the Internal Revenue Code of 1986, as amended, or any other applicable Law) of another entity or a member of an affiliated or combined group, and (c) any liability under any tax sharing or other contractual arrangement.

I-2

EXHIBIT A

CAPITAL TRUST, INC.

Warrant for Class A Common Stock

       FOR VALUE RECEIVED, Capital Trust, Inc., a Maryland corporation (the"Company"), hereby grants, pursuant hereto (this "Warrant"), to ________ (the "Initial Holder") or its permitted assigns, the right, subject to the terms and conditions contained herein, to purchase from the Company, at any time or from time to time commencing at the Commencement Time (as defined below) and prior to 5:00 p.m., Eastern Time, on December 31, 2004, up to ______________ (____) (subject to adjustment as provided herein) fully paid and non-assessable shares of class A common stock, par value $.01 per share, of the Company for twenty-three dollars and forty cents ($23.40) per share (subject to adjustment as provided herein) for an aggregate purchase price (assuming full exercise) of ______________ ($_________). The Aggregate Exercise Price is not subject to adjustment.

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

1. Exercise of Warrant.

(a) This Warrant may be exercised in whole at any time, or in part from time to time, commencing at the Commencement Time and prior to 5:00 p.m., Eastern Time, on December 31, 2004 (the "Exercise Period") by the Holder by the surrender of this Warrant (with the subscription form at the end hereof duly executed) to the Company at the address set forth in Section 11 hereof, together with proper payment of the Aggregate Exercise Price, or the proportionate part thereof if this Warrant is exercised in part, with payment for the Warrant Shares made by wire transfer of immediately available funds or certified or official bank check payable to the order of the Company. If this Warrant is exercised in part, it must be exercised for a number of whole shares of Common Stock.

(b) The "Commencement Time" shall begin when the issuance of the Warrant Shares shall have been approved by an affirmative vote of a majority of the votes cast at the Company's 2004 annual meeting of shareholders or at any adjournment or postponement thereof in accordance with Sections 310.00 and 312.03(c) of the New York Stock Exchange, Inc. Listed Company Manual.

A-1

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

(d) As soon as practicable, but within ten (10) days following the surrender of this Warrant and the receipt of payment of the Aggregate Exercise Price, or the proportionate part thereof, as the case may be, pursuant to subsection (a) of this Section 1, the Company, within seven (7) days,

                      (i) will issue a certificate or certificates in the name of the Holder or such other Person designated in writing by the Holder for the largest number of whole shares of Common Stock to which the Holder shall be entitled by the exercise (full or partial, in accordance with the subscription form) or exchange of this Warrant;

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

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

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

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

A-2

(a) In case the Company shall, while any of the Warrants are outstanding, (i) pay a dividend or make any other distribution with respect to shares of Common Stock in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, (iii) combine outstanding shares of Common Stock into a smaller number of shares or (iv) issue by reclassification of its Common Stock any shares of stock of the Company (other than the reclassifications covered by subsection (d) of this Section 3), the Per-Share Exercise Price shall be adjusted to be equal to a fraction, the numerator of which shall be the Aggregate Exercise Price and the denominator of which shall be the number of shares of Common Stock or other stock of the Company that the Holder would have owned immediately following such action had such Warrant been exercised immediately prior thereto or, in the case of a dividend, distribution, subdivision, combination or reclassification with respect to which a record date has been established, prior to such record date. An adjustment made pursuant to this subsection (a) shall be made immediately prior to the opening of business on the day following (x) the date of the payment of the dividend or distribution (retroactive to the record date) or (y) the effective date in the case of a subdivision, combination or reclassification (retroactive to the record date, if any). If the Board of Directors shall declare any dividend or distribution or resolve to take any action referred to in this subsection (a), it shall provide written notice thereof to the Holder not less than ten (10) days prior to the record date fixed for determining the stockholders entitled to participate therein.

(b) In case the Company shall, while any of the Warrants are outstanding, issue rights or warrants to purchase, or securities convertible into or exchangeable for, Common Stock ("Rights") to any holders of its outstanding shares of Common Stock entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for, purchase, convert or exchange shares of Common Stock at a price per share less than the current market price per share of Common Stock (as determined pursuant to subsection (e) of this Section 3) on the record date mentioned below, provided the purchase price is less than the Per-Share Exercise Price theretofore in effect, the Per-Share Exercise Price shall be adjusted so that the same shall equal the amount determined by multiplying the Per-Share Exercise Price theretofore in effect by a fraction the numerator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such Rights plus the number of shares which the aggregate offering price would purchase at such current market price, and the denominator of which shall be the number of shares of Common Stock outstanding on the date of issuance of such Rights plus the number of additional shares of Common Stock offered for subscription or purchase. "Aggregate offering price," as used in the preceding sentence, shall mean the amount received or receivable by the Company in consideration of the issuance or sale of Rights plus any additional consideration payable to the Company upon exercise thereof, in each case with reference to the total number of shares of Common Stock offered for subscription or purchase. Such adjustment shall be made immediately prior to the opening of business on the day following the date of issuance of Rights, retroactive to the record date for the determination of stockholders entitled to receive Rights.

A-3

 (c) In case the Company shall, by dividend or otherwise, distribute to any holders of its outstanding shares of Common Stock, evidences of its indebtedness, shares of any class or series of its stock, assets, securities convertible into or exchangeable for any of its stock or rights or warrants to subscribe for or purchase any of its securities (excluding any Rights referred to in subsection (b) of this Section 3, any dividend or other distribution paid exclusively in cash and any dividend or other distribution referred to in subsection (a) of this Section 3), the Per-Share Exercise Price shall be reduced so that the same shall equal the price determined by multiplying the Per-Share Exercise Price theretofore in effect by a fraction the numerator of which shall be the current market price (determined as provided in subsection (e) of this Section 3) per share of Common Stock on the record date referred to below less the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive), on the record date referred to below, of the portion of the evidences of indebtedness, shares of stock, assets, convertible or exchangeable securities, rights or warrants (including fractions)so distributed with respect to each share of Common Stock and the denominator of which shall be such current market price per share of Common Stock. Such adjustment shall be made immediately prior to the opening of business on the day following the date on which any such distribution is made, retroactive to the record date for the determination of stockholders entitled to receive such distribution. In the event that no such dividend or other distribution is so paid or made, the Per-Share Exercise Price shall again be adjusted to be the Per-Share Exercise Price which would then be in effect if such dividend or other distribution had not occurred. If the Board of Directors determines the fair market value of any distribution for purposes of this subsection (c) by reference to the actual or when-issued trading market for any securities comprising such distribution, it must in doing so consider the prices in such market over the same period used in computing the current market price per share of Common Stock (determined as provided in subsection (e) of this Section 3).

 (d) In the case of any capital reorganization of the Company or reclassification of the Common Stock, or any consolidation or merger to which the Company is a party other than a merger or consolidation in which the Company is the continuing corporation, or in the case of any sale or conveyance to another entity of the property of the Company as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Company), the Holder shall have the right thereafter to receive on the exercise of this Warrant the kind and amount of securities, cash or other property which the Holder would have owned or have been entitled to receive immediately after such reorganization, reclassification, consolidation, merger, statutory exchange, sale or conveyance had this Warrant been exercised immediately prior to the effective date of such reorganization, reclassification consolidation, merger, statutory exchange, sale or conveyance and in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this Section 3 with respect to the rights and interests thereafter of the Holder to the end that the provisions set forth in this Section 3 shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock or other securities or property thereafter deliverable on the exercise of the Warrant. Notice of any such reorganization, reclassification, consolidation, merger, exchange, sale or conveyance shall be mailed to the Holder not less than ten (10) days prior to such event. The above provisions of this subsection (d) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, statutory exchanges, sales or conveyances. The Company shall require the issuer of any shares of stock or other securities or property thereafter deliverable on the exercise of the Warrant to be responsible for all of the agreements and obligations of the Company hereunder.

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

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

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

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

(i) In case the Company shall, by dividend or otherwise, declare or make a distribution on the shares of Common Stock referred to in subsection (c) of this Section 3, the Holder, upon the exercise thereof subsequent to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution and prior to the effectiveness of the Per-Share Exercise Price adjustment in respect of such distribution, shall be entitled to receive, for each share of Common Stock for which the Warrant is exercised, the portion of the evidences of indebtedness, shares of stock, assets, securities convertible into or exchangeable for any of its stock, or rights or warrants to subscribe for or purchase any of its securities (including fractions) so distributed with respect to each share of Common Stock; provided, however, that, at the election of the Company with respect to all Holders so exercising, the Company may, in lieu of distributing to such Holder any portion of such distribution not consisting of cash or securities of the Company, pay such Holder an amount in cash equal to the fair market value thereof (as determined in good faith by the Board of Directors, whose determination shall be conclusive). If any exercise of a Warrant described in the immediately preceding sentence occurs prior to the payment date for a distribution to holders of shares of Common Stock which the Holder of a Warrant so exercised is entitled to receive in accordance with the immediately preceding sentence, the Company may elect to distribute to such Holder a due bill for the evidences of indebtedness, shares of stock, assets, securities convertible into or exchangeable for any of its stock, or rights or warrants to subscribe for or purchase any of its securities to which such Holder is so entitled, provided, that such due bill (a) meets any applicable requirements of the principal national securities exchange or other market on which the shares of Common Stock are then traded and (b) requires payment or delivery of such evidences of indebtedness, shares of stock, assets, securities convertible into or exchangeable for any of its stock, or rights or warrants to subscribe for or purchase any of its securities no later than the date of payment or delivery thereof to holders of Common Stock receiving such distribution.

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

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

(l) If, as a result of an adjustment made pursuant to this Section 3, the Holder of any Warrant thereafter surrendered for exercise shall become entitled to receive shares of two or more classes of stock or other securities, the Board of Directors shall in good faith determine the allocation of the adjusted Per-Share Exercise Price between or among such classes of stock or other securities (whose determination shall be conclusive).

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

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

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

 (p) If the Company shall take a record of the holders of its Common Stock for any purpose requiring an adjustment hereunder, but shall, thereafter and before the consummation of the event requiring such adjustment legally abandon its plan, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

 (q) Notwithstanding anything herein to the contrary, no adjustment to the Per-Share Exercise Price hereunder shall be made, to the extent it would cause the Per-Share Exercise Price to be less than the par value of the Common Stock.

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

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

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6. Transfer; Etc.

(a) This Warrant may not be transferred without the consent of the Company; provided, however, that that the Initial Holder may assign all or any portion of this Warrant to one or more designated controlled Affiliates of W. R. Berkley Corporation, a Delaware corporation, by execution of the form of assignment attached hereto or a substantially equivalent assignment form. Until this Warrant is transferred on the books of the Company, the Company may treat the registered Holder of this Warrant as he or it appears on the Company's books at any time as the Holder for all purposes. The Company shall permit any Holder of a Warrant or his duly authorized attorney, upon written request during ordinary business hours, to inspect and copy or make extracts from its books showing the registered holders of Warrants.

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

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

(d) The Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issue of any certificates for Warrants in a name other than that of the registered Holder of a Warrant surrendered upon the exercise or transfer of a Warrant and the Company shall not be required to issue or deliver such certificates for Warrants unless and until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid or are not due and owing.

(e) In connection with any transfer, the Holder will deliver to the Company such certificates and other information as the Company may reasonably require to confirm that the transfer complies with the foregoing restrictions.

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

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

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

If to the Company, to:

Capital Trust, Inc.

410 Park Avenue

14th Floor

New York, New York  10022

Attn: John R. Klopp, Chief Executive Officer

If to the Holder, to:

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

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

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

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

13. Certain Definitions.

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

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

       "Closing Price", with respect to any security on any day, means the last reported sale price, regular way on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices on such day, regular way, in either case as reported on the NYSE Composite Tape, or, if such security is not listed or admitted to trading on the New York Stock Exchange, on the principal national securities exchange on which such security is listed or admitted to trading, or, if such security is not listed or admitted to trading on a national securities exchange, on the NASDAQ Stock.

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed this 11th day of May, 2004.

CAPITAL TRUST, INC.

By: 

John R. Klopp 

Chief Executive Officer 

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SUBSCRIPTION

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

Dated:	Signature:
	Address:

ASSIGNMENT

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

Dated:	Signature:
	Address:

PARTIAL ASSIGNMENT

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

Dated:	Signature:
	Address:

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EXHIBIT B

May 11, 2004

Capital Trust, Inc.

410 Park Avenue, 14th Floor

New York, New York 10022

Ladies and Gentlemen:

           We have acted as counsel to Capital Trust, Inc., a Maryland corporation (the "Company"), in connection with the execution, delivery and performance by the Company of the Securities Purchase Agreement, dated as of May 11, 2004 (the "Purchase Agreement"), among the Company, certain of its stockholders named therein and W. R. Berkley Corporation, a Delaware corporation, and/or one or more of its designated controlled Affiliates (collectively, the "Purchaser"), pursuant to which the Company agreed to issue and sell to the Purchaser (i) 1,310,000 shares (the "Tranche 1 Shares") of its Class A Common Stock, par value $.01 per share (the "Common Stock"), (ii) warrants (the "Warrants") initially exercisable, subject to shareholder approval, of 365,000 shares (the "Warrant Shares") of Common Stock and, (iii) subject to shareholder approval, 325,000 shares (the "Tranche 2 Shares" and, together with the Tranche 1 Shares and the Warrant Shares, the "Shares") of Common Stock. "). The offering of the Shares and the Warrants is being made pursuant to a Registration Statement on Form S-3 (Registration No. 333-111261) filed by the Company with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act") (such Registration Statement at the time it was declared effective by the Commission being hereinafter referred to as the "Registration Statement"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Purchase Agreement.

           As such counsel and for purposes of our opinion set forth below, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments as we have deemed necessary or appropriate as a basis for the opinion set forth herein, including, without limitation:

(i)  the Purchase Agreement;

(ii) the Warrants;

(iii) the Registration Statement;

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(iv) the form of final  prospectus,  dated May 11, 2004,  relating to the Shares and the Warrant, as filed with the Commission on May 11, 2004 pursuant to Rule 424(b) under the  Securities  Act (the "Prospectus");

(v) the Current Report on Form 8-K filed by the Company with the Commission (File no. 001-14788) under the Securities Exchange Act of 1934, as amended; and

(vi) resolutions adopted by the Company's board of directors on May 6, 2004 certified by the Secretary of the Company relating to the execution and delivery of, and the defined below.

           In addition to the foregoing, we have made such investigations of law, as we have deemed necessary or appropriate as a basis for the opinion set forth herein.

           The Purchase Agreement and the Warrants are referred to herein, individually, as a "Transaction Document" and, collectively, as the "Transaction Documents."

           In such examination and in rendering the opinion expressed below, we have  assumed:  (i)  the  due  authorization,  execution  and  delivery  of each Transaction Document  and each other  document  referred to above by all of the parties thereto (including the due authorization,  execution and delivery of the Transaction Documents by the Company); (ii) the genuineness of all signatures on all documents  submitted to us; (iii) the  authenticity  and completeness of all documents,  corporate records,  certificates and other instruments  submitted to us; (iv) that photocopy,  electronic,  certified, conformed, facsimile and other copies submitted to us of original  documents,  corporate records,  certificates and other instruments conform to the original documents,  records,  certificates and other instruments, and that all such original documents,  corporate records, certificates and instruments were authentic and complete; (v) the legal capacity of all individuals executing documents;  (vi) that the Transaction Documents are the valid and binding obligations of each of the parties thereto (in the case of the Warrants, other than the Company),  enforceable against such parties (in the case  of the  Warrants,  other  than  the  Company)  in  accordance  with  their respective  terms and that no such  documents  have been  amended or  terminated orally  or in  writing  except  as has  been  disclosed  to us;  (vii)  that the Purchaser has satisfied all regulatory and legal requirements  applicable to its activities; and (viii) that the rights and remedies set forth in the Transaction Documents  will be  exercised  reasonably  and in good  faith  and were  granted without fraud or duress and for good,  valuable and adequate  consideration  and without  intent to  hinder,  delay or defeat  any  rights  of any  creditors  or stockholders of the Company. As to all questions of fact material to the opinion expressed herein and as to the materiality of any fact or other matter referred to herein, we have relied (without independent investigation) upon certificates or comparable documents of officers and representatives of the Company and upon the representations, warranties and covenants of the Company contained in the Transaction Documents, including the Purchase Agreement.  We have also assumed that the representations and warranties of the Purchaser appearing in Article VI of the Purchase Agreement are true and correct.

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           Based upon the foregoing, and in reliance thereon, and subject to the limitations,  qualifications and  exceptions set forth herein, we are of the opinion that, when issued pursuant to the terms of the Purchase Agreement, the Warrants will constitute the valid and binding  obligation of the Company, enforceable against the Company in accordance with their respective terms.

           The opinion expressed herein is subject to the following exceptions, qualifications and limitations:

                      A.  We express  no  opinion   with   respect  to  (i)  the  truth  of  the representations  and warranties  contained in the Transaction  Documents or (ii) any other document,  instrument or agreement other than the Warrants  (including the  exhibits  or  schedules  to  the  Registration  Statement  or  Prospectus), regardless of whether such  document,  instrument or agreement is referred to in the Registration Statement or Prospectus.

                       B. We express no opinion with respect to the effect that the introduction of extrinsic evidence as to the meaning of any Transaction Document may have on the enforceability thereof.

                      C. With respect to our opinion set forth above, we have assumed that there will be sufficient  authorized and unissued shares of Common Stock available for issuance each time a Warrant is exercised.

                      D.  Our opinion  set  forth  above is  subject  to (i) the  effect  of any applicable bankruptcy,  insolvency,  reorganization,  moratorium or similar laws and  principles  affecting   creditors'  rights  generally,   including  without limitation fraudulent transfer or fraudulent conveyance laws; (ii) the effect of public policy considerations or court decisions which may limit rights to obtain indemnification  or contribution;  and (iii) the effect of general principles of equity (including, without limitation, concepts of materiality,  reasonableness, good  faith  and  fair  dealing)  and the  availability  of  equitable  remedies (including,  without  limitation,  specific  performance and equitable  relief), regardless of whether considered in a proceeding in equity or at law.

                      E.  No opinion is expressed herein with respect to (i) the validity or enforceability of any provision contained in the Transaction Documents allowing any party to exercise any remedial rights without notice to the Company, (ii) the validity or enforceability of any waiver of demand by the Company, or any waiver of any rights or any defense which as a matter of law or public policy cannot be waived, (iii) the validity or enforceability of any provisions contained in the Transaction Documents purporting to establish evidentiary standards, (iv) the validity or enforceability of any provision of the Transaction Documents which purports to establish the subject matter jurisdiction of the United States District Court to adjudicate any controversy related to any of the Transaction Documents, (v) the validity or enforceability of any provision of the Transaction Documents which purports to entitle any person or entity to specific performance of any provision thereof, (vi) the validity or enforceability of any provision of the Transaction Documents which requires a person or entity to cause another person or entity to take or to refrain from taking action under circumstances in which such person or entity does not control such other person or entity, (vii) the validity of enforceability of any provision of the Transaction Documents insofar as it purports to effect a choice of governing law or choice of forum for the adjudication of disputes or (viii) the effectiveness of service of process by mail in any suit, action or proceeding of any nature arising in connection with or in any way relating to any Transaction Document.

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                      F.  Our opinion expressed above is limited solely to laws, rules and regulations that in our experience are generally applicable to transactions in the nature of those contemplated by the Transaction Documents between unregulated parties.

                      G.  No opinion is expressed as to the validity or enforceability of any provision of any Transaction Document that (i) requires that waivers or amendments must be in writing in so far as it suggests that oral or other modifications, amendments or waivers could not be effectively agreed upon by the parties or that the doctrine of promissory estoppel might not apply; (ii) waives (a) vague or broadly stated rights, (b) future rights, (c) the benefits of statutory, regulatory or constitutional rights, unless and to the extent that the statute, regulation or constitution expressly allows waiver, (d) unknown future defenses, or (e) rights to damages; (iii) states that rights or remedies are not exclusive, that every right or remedy is cumulative and may be exercised in addition to any other right or remedy, that the election of some particular remedy does not preclude recourse to one or more others or that failure to exercise or delay in exercising rights or remedies will not operate as a waiver of any such right or remedy; (iv) imposes penalties, forfeitures, late payment charges or an increase in interest rate upon delinquency in payment or the occurrence of a default; (v) appoints one party as an attorney-in-fact for an adverse party; or (vi) states that time is of the essence.

Without  limiting  any  of  the  other  limitations,  exceptions  and qualifications stated elsewhere herein, we express no opinion with regard to the applicability or effect of the law of any jurisdiction  other than, as in effect on the date of this letter, the internal laws of the State of New York.

This opinion letter deals only with the specified legal issues expressly addressed herein, and you should not infer any opinion that is not explicitly addressed herein from any matter stated in this letter.

We  consent  to  the  use  of  this  opinion  as an  exhibit  to  the Registration  Statement and the  reference to our firm under the caption  "Legal Matters" in the Prospectus which is a part of the  Registration  Statement.  In giving this consent, we do not hereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act and the rules and regulations thereunder. This opinion is rendered to you as of the date hereof and is not to be deemed to have been reissued by any subsequent  delivery as  permitted  above,  and we assume no  obligation  to advise  you or any other Person  hereafter  with  regard  to any  change  after  the date  hereof  in the circumstances or the law that may bear on the  matters  set forth  herein  even though the change may affect the legal  analysis or a legal  conclusion or other matters in this letter.

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                                  Very truly yours,

                                  /s/ Paul, Hastings, Janofsky & Walker LLP

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Exhibit C

[Venable LLP Letterhead]

May 11, 2004

Capital Trust, Inc.

410 Park Avenue, 14th Floor

New York, New York 10022

Re: Capital Trust, Inc.

Ladies and Gentlemen:

           We have served as Maryland counsel to Capital Trust, Inc., a Maryland corporation (the "Company"), in connection with certain matters of Maryland law arising out of the offering by the Company pursuant to a Prospectus Supplement, dated as of May 11, 2004 (the "Prospectus Supplement"), of securities consisting of (i) up to 1,635,000 shares (the "Direct Shares") of Class A Common Stock, par value $.01 per share (the "Common Stock"), of the Company, and (ii) a warrant (the "Warrant") exercisable for up to 365,000 shares (the "Warrant Shares" and, together with the Direct Shares, the "Shares"), covered by the Registration Statement on Form S-3 (No. 333-111261), and all amendments thereto (collectively, the "Registration Statement"), as filed with the United States Securities and Exchange Commission (the "Commission") by the Company under the Securities Act of 1933, as amended (the "1933 Act"). The Warrant and the Direct Shares will be issued pursuant to a Securities Purchase Agreement, dated as of May 11, 2004, by and between the Company and W. R. Berkley Corporation ( the "Agreement").

           In connection with our representation of the Company, and as a basis for the opinion hereinafter set forth, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (hereinafter collectively referred to as the "Documents"):

           1. The charter of the Company (the "Charter"), certified as of a recent date by the State Department of Assessments and Taxation of Maryland (the "SDAT");

           2. The Amended and Restated Bylaws of the Company, certified as of the date hereof by an officer of the Company;

           3. A certificate of the SDAT as to the good standing of the Company, dated as of a recent date;

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Venable LLP

May 11, 2004

Page 2

           4. Resolutions adopted by the Board of Directors of the Company or a duly authorized committee thereof, relating to the issuance of the Warrant and the Shares (the "Resolutions"), certified as of the date hereof by an officer of the Company;

           5. The Agreement, certified as of the date hereof by an officer of the Company;

           6. A certificate executed by an officer of the Company, dated as of the date hereof;

           7. The Registration Statement and the related form of prospectus included therein in the form in which it was transmitted to the Commission under the 1933 Act;

           8. The Prospectus Supplement; and

           9. Such other documents and matters as we have deemed necessary or appropriate to express the opinion set forth in this letter, subject to the assumptions, limitations and qualifications stated herein.

In expressing the opinion set forth below, we have assumed the following:

           1. Each individual executing any of the Documents, whether on behalf of such individual or another person, is legally competent to do so.

           2. Each individual executing any of the Documents on behalf of a party (other than the Company) is duly authorized to do so.

           3. Each of the parties (other than the Company) executing any of the Documents has duly and validly executed and delivered each of the Documents to which such party is a signatory, and such party's obligations set forth therein are legal, valid and binding and are enforceable in accordance with all stated terms.

           4. All Documents submitted to us as originals are authentic. The form and content of all Documents submitted to us as unexecuted drafts do not differ in any respect relevant to this opinion from the form and content of such Documents as executed and delivered. All Documents submitted to us as certified or photostatic copies conform to the original documents. All signatures on all Documents are genuine. All public records reviewed or relied upon by us or on our behalf are true and complete. All representations, warranties, statements and information contained in the Documents are true and complete. There has been no oral or written modification of or amendment to any of the Documents, and there has been no waiver of any provision of any of the Documents, by action or omission of the parties or otherwise.

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Venable LLP

May 11, 2004

Page 3

           5. None of the Shares will be issued, sold or transferred in violation of the restrictions on ownership and transfer contained in Article VII of the Charter and, upon issuance of any of the Shares, the total number of shares of Common Stock issued and outstanding will not exceed the total number of shares of Common Stock that the Company is then authorized to issue under the Charter. The issuance of the Warrant Shares and up to 325,000 Direct Shares will have been approved by the stockholders of the Company in accordance with the listing standards of the New York Stock Exchange, Inc. prior to the issuance thereof.

           Based upon the foregoing, and subject to the assumptions, limitations and qualifications stated herein, it is our opinion that:

           1. The Company is a corporation duly incorporated and existing under and by virtue of the laws of the State of Maryland and is in good standing with the SDAT.

           2. The Direct Shares have been duly authorized and, when issued and delivered by the Company pursuant to the Charter, the Resolutions and the Agreement, will be validly issued, fully paid and non-assessable.

           3. The Warrant has been duly authorized by all necessary corporate action on the part of the Company. The Warrant Shares have been duly authorized and, when issued and delivered by the Company upon exercise of the Warrant in accordance with its terms pursuant to the Charter, the Resolutions and the Agreement, will be validly issued, fully paid and non-assessable.

           The foregoing opinion is limited to the substantive laws of the State of Maryland and we do not express any opinion herein concerning any other law. We express no opinion as to the applicability or effect of any federal or state securities laws, including the securities laws of the State of Maryland, or as to federal or state laws regarding fraudulent transfers. To the extent that any matter as to which our opinion is expressed herein would be governed by any jurisdiction other than the State of Maryland, we do not express any opinion on such matter.

           We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinion expressed herein after the date hereof.

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Venable LLP

May 11, 2004

Page 4

           This opinion is being furnished to you for your submission to the Commission as an exhibit to the report filed on Form 8-K (the "8-K"), to be filed by the Company with the Commission on or about the date hereof. We hereby consent to the filing of this opinion as an exhibit to the 8-K and to the use of the name of our firm therein and under the caption "Legal

           Matters" in the Prospectus Supplement related to the Shares, which supplements the prospectus included in the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the Act.

Very truly yours,

/s/ Venable LLP

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Exhibit D

REGISTRATION RIGHTS AGREEMENT

           THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of May 11, 2004 by and among Capital Trust, Inc., a Maryland corporation (the "Company"), and W. R. Berkley Corporation, a Delaware corporation ("Berkley"). Berkley and its designated controlled Affiliates identified on Schedule A attached hereto are each referred to in this Agreement as an "Initial Holder" and are collectively referred to in this Agreement as the "Initial Holders" (provided that only Berkley shall be a direct party hereto and responsible for its obligations hereunder).

Recitals

           WHEREAS, pursuant to the terms of that certain securities purchase agreement, dated as of the date hereof, among the Company, the Initial Holders and the stockholders named therein (the "Securities Purchase Agreement"), the Company has agreed to sell to the Initial Holders and the Initial Holders have agreed to purchase (1) at the Initial Closing 1,310,000 shares (the "Tranche 1 Shares") of class A common stock, par value $.01 per share, of the Company (the "Common Stock") and a warrant (the "Warrant") initially exercisable for 365,000 shares (the "Warrant Shares") and (2) at the Subsequent Closing 325,000 shares of Common Stock (the "Tranche 2 Shares") and together with the Tranche 1 Shares and the Warrant Shares, the "Shares"); and

           WHEREAS, pursuant to the Securities Purchase Agreement, the Company has agreed to grant to the Holders (as defined below) the registration rights set forth in this Agreement.

           NOW, THEREFORE, the parties hereto, in consideration of the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby agree as follows:

   Section 1.   Definitions.

           Capitalized terms used, but not otherwise defined herein, shall have the meanings assigned to such terms in the Securities Purchase Agreement. As used in this Agreement, the following capitalized defined terms shall have the following meanings:

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

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           "Agent" means the principal placement agent on an agented placement of Registrable Securities.

           "Business Day" means a day other than a Saturday, Sunday or other day on which banking institutions in New York, New York are permitted or required by any applicable law to close.

           "Commission" means the Securities and Exchange Commission.

           "Common Stock" has the meaning set forth in the Recitals.

           "Company" has the meaning set forth in the Preamble and also includes the Company's successors.

           "Continuously Effective" means, with respect to a specified registration statement, that it shall not cease to be effective and current and compliant with respect to applicable disclosure requirements and available for Transfers of Registrable Securities thereunder, and shall not be subject to any stop order or similar order issued by the Commission, for longer than either (i) any ten (10) consecutive Business Days, or (ii) an aggregate of fifteen (15) Business Days during the period specified in the relevant provision of this Agreement.

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

           "Demand Registration" shall have the meaning set forth in Section 2(a).

           "Demanding Holders" shall have the meaning set forth in Section 2(a).

           "Holder" or "Holders" means the Initial Holder(s) or each Person to whom a Holder Transfers Registrable Securities in accordance with Section 7(c) whenever such Person owns of record Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company may act upon the basis of the instructions, notice or election received from the registered owner of such Registrable Securities.

           "Initial Holder" or "Initial Holders" has the meaning set forth in the Preamble

           "Majority Selling Holders" means those Selling Holders whose Registrable Securities included in such registration represent a majority of the Registrable Securities of all Selling Holders included therein.

           "NASD" means the National Association of Securities Dealers, Inc.

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           "Person" means an individual, partnership, corporation, limited liability company, trust, estate, or unincorporated organization, or other entity, or a government or agency or political subdivision thereof.

           "Register," "Registered" and "Registration" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering by the Commission of effectiveness of such registration statement or document.

           "Registrable Securities" means (i) the Tranche 1 Shares and Tranche 2 Shares purchased pursuant to the Securities Purchase Agreement; (ii) the Warrant Shares issuable upon the exercise of the Warrant purchased pursuant to the Securities Purchase Agreement; (iii) any shares of Common Stock or other securities issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange by the Company generally for, or in replacement by the Company generally of, the Shares; and (iv) any securities issued in exchange for such shares of Common Stock in any merger, combination or reorganization of the Company; provided, however, that Registrable Securities shall not include any securities which have theretofore been registered pursuant to this Agreement and sold by a Holder pursuant to the Securities Act or which have been sold by a Holder to the public pursuant to Rule 144 or any similar rules promulgated by the Commission pursuant to the Securities Act, and, provided further, that the Company shall have no obligation under Section 2 to register any Registrable Securities of any Holder if the Company shall deliver to the Holders requesting such registration an opinion of counsel reasonably satisfactory to such Holders and their counsel to the effect that such Registrable Securities may be resold pursuant to Rule 144(k) under the Securities Act (or any successor provision) or, at the time of calculation, one hundred percent (100%) of such Holder's Registrable Securities may be resold in a single ninety (90) day period under Rule 144 of the Securities Act. For purposes of this Agreement, a Person will be deemed to be a Holder of Registrable Securities whenever such Person has the then-existing right to acquire such Registrable Securities (by conversion, purchase or otherwise), whether or not such acquisition has actually been effected.

           "Rule 144" and "Rule 145" mean Rule 144 and Rule 145 promulgated under the Securities Act.

           "Securities Act" means the Securities Act of 1933, as amended from time to time.

           "Selling Holders" means, with respect to a specified registration pursuant to this Agreement, the Holders whose Registrable Securities are proposed to be included in such registration.

           "Securities Purchase Agreement" has the meaning set forth in the Recitals.

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           "Transfer" means and includes the act of selling, giving, transferring, creating a trust (voting or otherwise), assigning or otherwise disposing of (other than pledging, hypothecating or otherwise transferring as security or any transfer upon any merger or consolidation) (and correlative words shall have correlative meanings); provided however, that any transfer or other disposition upon foreclosure or other exercise of remedies of a secured creditor after an event of default under or with respect to a pledge, hypothecation or other transfer as security shall constitute a Transfer.

           "Underwriters' Representative" means the managing underwriter, or , in the case of a co-managed underwriting, the managing underwriter designated as the Underwriters' Representative by the co-managers.

Section 2.   Demand Registration.

           (a)   Request for Demand Registration.

       (i) Subject to Sections 2(b), 2(d) and 2(e) below, at any time, if one or more Holders shall make a written request to the Company (the "Demanding Holders"), the Company shall cause there to be filed with the Commission a registration statement meeting the requirements of the Securities Act (a "Demand Registration"), and each Demanding Holder shall be entitled to have included therein (subject to Section 3 hereof) all or such number of such Demanding Holder's Registrable Securities as the Demanding Holder shall request in writing. Any request made pursuant to this Section 2(a) shall be addressed to the attention of the Secretary of the Company, and shall specify the number of Registrable Securities to be registered, the intended methods of disposition thereof and that the request is for a Demand Registration pursuant to this Section 2(a).

       (ii) Whenever the Company shall have received a demand pursuant to Section 2(a) to effect the Demand Registration of any Registrable Securities, the Company shall promptly give written notice of such proposed registration to all Holders of Registrable Securities, if any. Any such Holder may, within twenty (20) days after receipt of such notice, request in writing that all of such Holder's Registrable Securities, or any portion thereof designated by such Holder, be included in the registration and such request shall not be considered one of the Demand Registrations under Section 2(a) to which Holders are entitled under Section 2(b)(i).

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           (b)   Limitations on Demand Registrations.

       (i) The Company shall be obligated to effect no more than four Demand Registrations in total and no more than two such registrations in any twelve-month period. For purposes of the preceding sentence, registration shall not be deemed to have been effected (A) unless a registration statement with respect thereto has become effective, (B) if after such registration statement has become effective, such registration or the related offer, sale or distribution of Registrable Securities thereunder is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason not attributable to the Selling Holders and such interference is not thereafter eliminated, or (C) if the conditions to closing specified in the underwriting agreement, if any, entered into in connection with such registration are not satisfied or waived by reason of a failure on the part of the Company, unless caused by a Selling Holder. If the Company shall have complied with its obligations under this Section 2, a right to demand a registration pursuant to Section 2(a) shall be deemed to have been satisfied upon the earlier of (X) the date as of which all of the Registrable Securities included therein shall have been disposed of pursuant to a registration statement, (Y) the date when all of the Registrable Securities covered by the Registration Statement cease to be Registrable Securities and (Z) the date as of which such Demand Registration shall have been Continuously Effective for a period of not less than one hundred eighty (180) days ("Minimum Effective Period").

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       (ii) Notwithstanding the foregoing, the Demand Registration rights granted to the Holders in Section 2(a) are subject to the following limitations: (A) each registration in respect of a Demand Registration must include Registrable Securities having an aggregate market value of at least $5,000,000, which market value shall be determined by multiplying the number of Registrable Securities to be included in the Demand Registration by the proposed per share offering price (provided that (x) the limitation set forth in this clause (A) shall not be in effect at any time the Holders' Registrable Securities are not able to be sold under Rule 144 because of the Company's failure to comply with the information requirements thereunder, unless at such time, the Company's counsel delivers a written opinion of counsel, which shall be in a form reasonably satisfactory to such Holder's counsel, to such Holders to the effect that such Holder's Registrable Securities may be publicly offered and sold without registration under the Act and (y) if the Underwriters' Representative or Agent advises the Company in writing that, in its opinion, the amount of securities requested to be included in such offering exceeds the amount which can be sold in such offering without adversely affecting the marketability of the offering, the minimum aggregate market value of Registrable Securities to be included in such Demand Registration may be reduced to the extent required, but in no event may the aggregate market value of the Registrable Securities included therein be lower than $2,000,000); (B) the Company shall not be required to cause a registration pursuant to Section 2(a) to be declared effective within a period of one hundred twenty (120) days of the effective date of any registration statement of the Company effected in connection with a Demand Registration, provided the Company has not breached its obligations under Section 2(a); (C) the Demand Registration rights contained herein shall be subject to the terms and conditions of the registration rights and other terms and conditions contained in Section 7.3 of the Preferred Share Purchase Agreement, dated as of June 16, 1997, as amended, between the Company, formerly known as California Real Estate Investment Trust, and Veqtor Finance Company, LLC, and Section 6 of the Registration Rights Agreement, dated as of July 28, 1998, among the Company, Vornado Realty L.P., EOP Operating Limited Partnership, Mellon Bank N.A., as trustee for General Motors Hourly-Rate Employees Pension Trust and Mellon Bank N.A., as trustee for General Motors Salaried Employees Pension Trust (the "Existing Registration Rights") and the Company shall not be required to cause a registration pursuant to Section 2(a) to be declared effective or to include any Registrable Securities in a Demand Registration hereunder to the extent not permitted by the Existing Registration Rights; (D) the Company shall not be required to file a registration statement at any time prior to October 11, 2004 nor have any registration statement declared effective prior to November 11, 2004 if filed prior thereto unless Purchaser is permitted to sell, transfer or otherwise dispose of Registrable Securities prior to such time pursuant to Section 2.7 of the Securities Purchase Agreement; (E) the Company shall not be required to file a registration statement or to keep a registration statement effective and current and compliant with respect to applicable disclosure requirements and the Company shall be permitted to suspend the use of any then effective registration statement if the Chief Executive Officer or the Chief Financial Officer of the Company certifies to the Holders in writing the existence of circumstances relating to a material pending development, including, but not limited to a pending or contemplated material acquisition or merger or other material transaction or event, which would require additional disclosure by the Company in the registration statement of previously non-public material information which the Company in its good faith judgment has a bona fide business purpose for keeping confidential and the nondisclosure of which in the registration statement might cause the registration statement to fail to comply with applicable disclosure requirements; provided, however, that the Company may not delay the filing of a registration or documents necessary to keep an existing registration statement effective and current and compliant nor suspend the use thereof for such reason for more than ninety (90) days in the aggregate in any calendar year; and (F) the Company shall not be required to file a registration statement or to keep a registration statement effective and current and compliant and the Company shall be permitted to suspend the use of any then effective registration statement during the period starting with the date fifteen (15) days prior to the Company's good faith estimate, as certified in writing by an executive officer of the Company to the Holders, of the date of the proposed pricing of an underwritten public offering of equity securities of the Company for the account of the Company whether covered by a prospectus under primary registration statement filed specifically for the proposed offering or a prospectus supplement under an effective primary shelf registration statement on file pursuant to Rule 415 under the Securities Act, and ending on the date ninety (90) days following the consummation of such underwritten public offering; provided, however, in the case of foregoing clauses (E) and (F), the Minimum Effective Period shall be extended by the aggregate number of days of such period of restriction.

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           (c) Effective Demand Registration. Following receipt of a request for a Demand Registration, the Company shall:

       (i) file the registration statement with the Commission as promptly as practicable, and shall use the Company's commercially reasonable efforts to have the registration declared effective under the Securities Act as soon as reasonably practicable, in each instance giving due regard to the need to prepare current financial statements, conduct due diligence and complete other actions that are reasonably necessary to effect a registered public offering; and

       (ii) use the Company's commercially reasonable efforts to keep the relevant registration statement Continuously Effective for no less than the Minimum Effective Period or until such earlier date as of which all the Registrable Securities under the registration statement filed pursuant to the Demand Registration shall have been disposed of in the manner described in the registration statement. Notwithstanding the foregoing, if for any reason the effectiveness of a registration pursuant to this Section 2 is suspended or such registration statement shall not be current and compliant with respect to applicable disclosure requirements, the Minimum Effective Period shall be extended by the aggregate number of days of such suspension or period of non-compliance.

           (d) Form of Registration Statement. A registration pursuant to this Section 2 shall be on such appropriate registration form of the Commission as shall (i) be selected by the Company and be reasonably acceptable to the Majority Selling Holders and (ii) permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the request pursuant to Section 2(a).

           (e) Selection of Underwriters. If any registration pursuant to Section 2(a) involves an underwritten offering (whether on a "firm," "best efforts" or "all reasonable efforts" basis or otherwise), or an agented offering, the Majority Selling Holders shall have the right to select the underwriter or underwriters and manager or managers to administer such underwritten offering or the placement agent or agents for such agented offering; provided, however, that each Person so selected shall be reasonably acceptable to the Company.

        Section 3.   Registration Procedures.

           (a) Obligations of the Company. Whenever required under Section 2 to effect a Demand Registration of any Registrable Securities, the Company shall use its commercially reasonable efforts to:

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       (i) Prepare and file with the Commission a registration statement with respect to such Registrable Securities (which registration statement shall be available for the Selling Holders' intended method of distribution and comply in all material respects with the requirements of the applicable form and include all financial statements required by the Commission to be filed therewith) and cause such registration statement to become effective.

       (ii) Notify each Selling Holder when the registration statement and any post-effective amendments thereto are declared effective.

       (iii) Notify each Selling Holder of the receipt of any comments from the Commission with respect to the registration statement and, subject to Section 2(b)(ii), respond to such comments and prepare and file with the Commission, if necessary, such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement or any document incorporated therein by reference or file any other required document as may be necessary to comply with the provisions of the Securities Act and rules thereunder with respect to the disposition of all securities covered by such registration statement and the instructions applicable to the registration form used by the Company. In the event that any Registrable Securities included in a registration statement subject to, or required by, this Agreement remain unsold at the end of the period during which the Company is obligated to use its commercially reasonable efforts to maintain the effectiveness of such registration statement, the Company may file a post-effective amendment to the registration statement for the purpose of removing such securities from registered status.

       (iv) Furnish to each Selling Holder of Registrable Securities, without charge, such numbers of copies of the registration statement, any pre-effective or post-effective amendment thereto, the prospectus, including each preliminary prospectus and any amendments or supplements thereto, in each case in conformity with the requirements of the Securities Act and the rules thereunder, and such other related documents as any such Selling Holder may reasonably request in order to facilitate the disposition of Registrable Securities owned by such Selling Holder.

       (v) Register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such states or jurisdictions as shall be reasonably requested by the Underwriters' Representative or Agent (as applicable, or if inapplicable, the Majority Selling Holders) and to keep such qualification effective during the period such registration statement is effective and obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification (or exemption from qualification) of the offer and transfer of any of the Registrable Securities in any jurisdiction, at the earliest possible moment; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business, subject itself to taxation in any such jurisdiction, or to file a general consent to service of process in any such states or jurisdictions.

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       (vi) in the event of any underwritten or agented offering, enter into and perform the Company's obligations under an underwriting or agency agreement (including indemnification and contribution obligations of underwriters or agents and representations and warranties by the Company to the Selling Holders and the underwriters), in usual and customary form, with the managing underwriter or underwriters of or agents for such offering and use its commercially reasonable efforts to obtain executed lock-up agreements from the officers and directors of the Company and from the holders of more than 5% of the Company's equity securities, if requested by the underwriters. The Company shall also cooperate with the Majority Selling Holders and the Underwriters' Representative or Agent for such offering in the marketing of the Registrable Shares, including making available the Company's officers, accountants, counsel, premises, books and records for such purpose, but the Company shall not be required to incur any material out-of-pocket expense pursuant to this sentence and shall not be required to conduct a road-show in connection therewith.

       (vii) Notify each Selling Holder of any stop order issued or threatened to be issued by the Commission in connection therewith and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered.

       (viii) Notify each Selling Holder of the happening of any transaction or event during the period a registration statement is effective which is of a type specified in Section 2(b)(ii)(C) or as a result of which such registration statement or the related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they were made (in the case of any prospectus), not misleading.

       (ix) Make generally available to the Company's security holders copies of an earnings statement satisfying the provisions of Section 11(a) of the Securities Act no later than ninety (90) days following the end of the 12-month period beginning with the first month of the Company's first fiscal quarter commencing after the effective date of each registration statement filed pursuant to this Agreement.

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       (x) Make available for inspection by any Selling Holder, any underwriter participating in such offering and the representatives of such Selling Holder and Underwriter (but not more than one firm of counsel to such Selling Holders), all financial and other information as shall be reasonably requested by them, and provide the Selling Holders, any underwriter participating in such offering and the representatives of such Selling Holders and Underwriters the opportunity discuss the business affairs of the Company with its principal executives and independent public accountants who have certified the audited financial statements included in such registration statement in each case all as necessary to enable them to exercise their due diligence responsibility under the Securities Act; provided, however, that information that the Company determines, in good faith, to be confidential and which the Company advises such Person in writing is confidential shall not be disclosed unless such Person signs a confidentiality agreement reasonably satisfactory to the Company or the related Selling Holder of Registrable Securities agrees to be responsible for such Person's breach of confidentiality on terms reasonably satisfactory to the Company.

       (xi) Obtain a so-called "comfort letter" from the Company's independent public accountants, and legal opinions of counsel to the Company addressed to the Selling Holders, in customary form and covering such matters of the type customarily covered by such letters, and in a form that shall be reasonably satisfactory to Majority Selling Holders. The Company shall furnish to each Selling Holder a signed counterpart of any such comfort letter or legal opinion. Delivery of any such opinion or comfort letter shall be subject to the recipient furnishing such written representations or acknowledgements as are customarily provided by selling shareholders who receive such comfort letters or opinions.

       (xii) Provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such registration statement from and after a date not later than the effective date of such registration statement.

       (xiii) Cause the Registrable Securities to continue to be listed on the New York Stock Exchange, Inc.

       (xiv) Provide a CUSIP number for the Registrable Securities prior to the effective date of the first registration statement including Registrable Securities.

       (xv) Take such other actions as are reasonably required in order to expedite or facilitate the disposition of Registrable Securities included in each such registration.

           (b) Holders' Obligations. In connection with any registration pursuant to Section 2, each Selling Holder agrees, as applicable:

       (i) to execute the underwriting agreement, if any, agreed to by the Majority Selling Holders or the Company, as the case may be;

       (ii) that it will not offer or sell its Registrable Securities under the registration statement until it has received copies of the supplemented or amended prospectus contemplated by Section 3(a)(iii) and receives notice that any post-effective amendment (if required) has become effective;

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       (iii) that, upon receipt of any notice from the Company of the happening of any transaction or occurrence of any event of the kind specified in Sections 2(b)(ii)(C), 2(b)(ii)(D), 3(a)(iii), 3(a)(vii) or 3(a)(viii), such Holder will forthwith discontinue disposition of Registrable Securities pursuant to any registration statement at issue until such Holder's receipt of copies of a supplemented or amended prospectus contemplated by Section 3(a)(iii) and receives notice that any post-effective amendment (if required) has become effective or until it is advised in writing by the Company that the use of the applicable prospectus and registration statement may be resumed, and, if so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies in such Holder's possession, other than permanent file copies then in such Holder's possession, of the registration statement and prospectus covering such Registrable Securities current at the time of receipt of such notice; and

       (iv) that the Company may require each Selling Holder as to which any registration is being effected to furnish to it such information regarding such Selling Holder, the number of the Registrable Securities owned by it and the intended method of disposition of such Registrable Securities as may be required to effect the registration of such Selling Holder's Registrable Securities, and to cooperate with the Company in preparing such registration, the Company may exclude from such registration the Registrable Securities of any Selling Holder who fails to furnish such information within 5 Business Days after receiving such request and to provide such cooperation, and the Company shall have no obligation to register under the Securities Act the Registrable Securities of a proposed Selling Holder who so fails to furnish such information or provide such cooperation.

           (c) Lock-Up Agreement. If requested in writing by the Company, each Holder agrees to execute a lock-up agreement pursuant to which such Holder shall not effect any public or private sale or distribution, including sales pursuant to Rule 144 of the Securities Act (but excluding Transfers, whether public or private to an Affiliate of such Holder), of Common Stock, or any securities convertible into or exchangeable or exercisable for such securities, held by such Holder during the period starting with date fifteen (15) days prior to the Company's good faith estimate, as certified in writing by an executive officer of the Company to the Holders, of the date of the proposed pricing of an underwritten public offering of equity securities of the Company for the account of the Company whether covered by a prospectus under primary registration statement filed specifically for the proposed offering or a prospectus supplement under an effective primary shelf registration statement on file pursuant to Rule 415 under the Securities Act, and ending on the date ninety (90) days following the consummation of such underwritten public offering; provided, however, that each Holder shall be required to execute a lock-up agreement in accordance with this Section 3(c) only in the event that each other stockholder of the Company holding 5% or more of the then outstanding Common Stock on a fully-diluted basis (including securities convertible into or exchangeable for Common Stock) executes a lock-up agreement on substantially the same terms as set forth herein.

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   Section 4.   Expenses of Registration. The Company shall bear and pay all expenses incurred in connection with any registration, filing, or qualification of Registrable Securities with respect to a Demand Registration for each Selling Holder, including all registration, exchange listing, accounting, filing and NASD fees, all fees and expenses of complying with securities or blue sky laws, all word processing, duplicating and printing expenses, messenger and delivery expenses, the reasonable fees and disbursements of counsel for the Company, and of the Company's independent public accountants, including the expenses of "comfort letters" required by or incident to such performance and compliance and reasonable fees and disbursements of one firm of counsel for the Initial Holders (selected by the Selling Holders who constitute Majority Selling Holders); provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2 if the registration is subsequently withdrawn at the request of the Selling Holders (if such request is not made as a result of any action or inaction of the Company) (in which case all Selling Holders and any other Holders of Registrable Securities to be included in the registration shall bear such expenses pro rata according to their number of shares requested to be registered), unless all Holders of Registrable Securities then outstanding agree that such withdrawn registration shall constitute one of the Demand Registrations under Section 2(a) hereof. Holders shall be responsible for any underwriting discounts and commissions and taxes of any kind (including without limitation, transfer taxes) relating to any disposition, sale or transfer of Registrable Securities.

   Section 5.   Indemnification; Contribution.

           (a) Indemnification by the Company. If any Registrable Securities are included in a registration statement under this Agreement:

       (i) To the extent permitted by applicable law, the Company shall indemnify and hold harmless each Selling Holder, each Person, if any, who controls such Selling Holder within the meaning of the Securities Act, and each officer, director, trustee, partner, and employee of such Selling Holder and such controlling Person, against any and all losses, claims, damages, liabilities and expenses (joint or several), including reasonable attorneys' fees and disbursements and expenses of investigation, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may become subject under the Securities Act, the Exchange Act or other federal or state laws, insofar as such losses, claims, damages, liabilities and expenses arise out of or are based upon any of the following statements, omissions or violations:

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           (A) Any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein, or any amendments or supplements thereto or any document incorporated by reference therein;

           (B) Any omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein (in light of the circumstances under which they were made in the case of any prospectus) not misleading; or

           (C) Any violation or alleged violation by the Company of the federal securities laws, any applicable state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any applicable state securities law;

provided, however, that the indemnification required by this Section 5(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable in any such case for any such loss, claim, damage, liability or expense to the extent that it arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any such Registration Statement in reliance upon and in conformity with written information furnished to the Company by a Holder, underwriter or the indemnified party expressly for use in connection with such registration; provided, further, that the indemnity agreement contained in this Section 5(a) shall not apply to any underwriter to the extent that any such loss is based on or arises out of an untrue statement or alleged untrue statement of a material fact, or an omission or alleged omission to state a material fact, contained in or omitted from any preliminary prospectus if the final prospectus shall correct such untrue statement or alleged untrue statement, or such omission or alleged omission, and a copy of the final prospectus has not been sent or given to such Person at or prior to the confirmation of sale to such Person. The Company shall also indemnify underwriters participating in the distribution of the Registrable Securities, their officers, directors, agents and employees and each Person who controls such Persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same extent as provided above with respect to the indemnification of the Selling Holders.

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       (ii) Indemnification by Holder. If any of a Selling Holder's Registrable Securities are included in a registration statement under this Agreement, to the extent permitted by applicable law, such selling Holder shall indemnify and hold harmless the Company, each of its directors, each of its officers who shall have signed the registration statement, each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, any other Selling Holder, any controlling Person of any such other selling Holder and each officer, director, partner, and employee of such other Selling Holder and such controlling Person, against any and all losses, claims, damages, liabilities and expenses (joint and several), including reasonable attorneys' fees and disbursements and expenses of investigation, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may otherwise become subject under the Securities Act, the Exchange Act or other federal or state laws, insofar as such losses, claims, damages, liabilities and expenses arise out or are based upon any untrue statement or alleged untrue statement of a material fact contained in the applicable registration statement, including any preliminary prospectus or final prospectus contained therein, or any amendments or supplements thereto or any document incorporated by reference therein or any omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein (in light of the circumstances under which they were made in the case of any prospectus) not misleading or any violation or alleged violation by any Holder or underwriter of the federal securities laws, any applicable state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any applicable state securities law, but only to the extent, that such untrue statement or omission had been contained in any information furnished in writing by such Selling Holder to the Company expressly for use in connection with such registration; provided, however, that (x) the indemnification required by this Section 5(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if settlement is effected without the consent of the relevant Selling Holder of Registrable Securities, which consent shall not be unreasonably withheld, and (y) in no event shall the amount of any indemnity under this Section 5(b) exceed the gross proceeds from the applicable offering received by such selling Holder. In no event shall a Holder be jointly liable with any other Holder as a result of its indemnification obligations.

D-14

           (b) Conduct of Indemnification Proceedings. Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action, suit, proceeding, investigation or threat thereof made in writing for which such indemnified party may make a claim under this Section 5, such indemnified party shall deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel retained by the indemnifying party (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. The failure to deliver written notice to the indemnifying party within a reasonable time following the commencement of any such action, if it prejudices or results in forfeiture of rights or defenses, shall relieve such indemnifying party of any liability to the indemnified party under this Section 5, to the extent of any damage directly suffered by the indemnifying party as a result thereof. Any fees and expenses incurred by the indemnified party (including any fees and expenses incurred in connection with investigating or preparing to defend such action or proceeding) shall be paid to the indemnified party, as incurred, within thirty (30) days of written notice thereof to the indemnifying party. Any such indemnified party shall have the right to employ separate counsel in any such action, claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be the expenses of such indemnified party unless (i) the indemnifying party has agreed to pay such fees and expenses, (ii) the indemnifying party shall have failed to promptly assume the defense of such action, claim or proceeding or (iii) the named parties to any such action, claim or proceeding (including any impleaded parties) include both such indemnified party and the indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or in addition to those available to the indemnifying party (in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action, claim or proceeding on behalf of such indemnified party, it being understood, however, that the indemnifying party shall not, in connection with any one such action, claim or proceeding or separate but substantially similar or related actions, claims or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one additional firm of attorneys (together with appropriate local counsel) at any time for all such indemnified parties. No indemnifying party shall be liable to an indemnified party for any settlement of any action, proceeding or claim without the written consent of the indemnifying party, which consent shall not be unreasonably withheld.

           (c) Contribution. If the indemnification required by this Section 5 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to in this Section 5:

       (i) The indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action has been committed by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 5(a) and Section 5(b), any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding.

D-15

       (ii) The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in Section 5(d)(i). No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

           (d) Full Indemnification. If indemnification is available under this Section 5, the indemnifying parties shall indemnify each indemnified party to the full extent provided in this Section 5 without regard to the relative fault of such indemnifying party or indemnified party or any other equitable consideration referred to in Section 5(d)(i) hereof.

           (e) Survival. The obligations of the Company and the Selling Holders of Registrable Securities under this Section 5 shall survive the completion of any offering of Registrable Securities pursuant to a registration statement under this agreement, and otherwise.

        Section 6.   Covenants of the Company.  The Company hereby agrees and covenants as follows:

           (a) The Company shall use its commercially reasonable efforts to file as and when applicable, on a timely basis, all reports required to be filed by it under the Exchange Act. If the Company is not required to file reports pursuant to the Exchange Act, upon the request of any Holder of Registrable Securities, the Company shall use its commercially reasonable efforts to make publicly available the information specified in subparagraph (c)(2) of Rule 144. The Company shall use its commercially reasonable efforts to take such further action as may be reasonably required from time to time and as may be within the reasonable control of the Company, to enable the Holders to Transfer Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 or any other exemption from registration. Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements and, if not, the specifics thereof.

D-16

           (b) In connection with any sale, transfer or other disposition by a Holder of any Registrable Securities pursuant to Rule 144, the Company shall cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any Securities Act legend, and enable certificates for such Registrable Securities to be for such number of shares and registered in such names as the Holder may reasonably request at least two Business Days prior to any sale of Registrable Securities.

           Section 7.   Miscellaneous.

           (a) Amendments and Waivers.

       (i) The provisions of this Agreement, including the provisions of this Section 7(a), may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given without the written consent of the Company and the Holders of a majority of the outstanding Registrable Securities. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each Holder, each future Holder of Registrable Securities, and the Company.

       (ii) Notice of any amendment, modification or supplement to this Agreement adopted in accordance with this Section 7 shall be provided by the Company to the Holders prior to the effective date of such amendment, modification or supplement.

           (b) Notices. All notices or other communications under this Agreement shall be sufficient if in writing and delivered by hand or sent, postage prepaid by registered, certified or express mail, or by recognized overnight air courier service and shall be deemed given when so delivered by hand, or if mailed or sent by overnight courier service, on the third Business Day after mailing (one Business Day in the case of express mail or overnight courier service) to the parties at the following addresses:

       (i) if to the Initial Holders, to the addresses set forth under their signatures on the signature page hereof and if to any other Holder to the address contained in the records of the Company;

D-17

       (ii) if to the Company, to:

                                    Capital Trust, Inc.

                                    410 Park Avenue,

                                    14th Floor,

                                    New York, New York 10022

                                    Attention:  John R. Klopp

                                                        Chief Executive Officer

                                    with a copy to:

                                    Paul, Hastings, Janofsky & Walker LLP

                                    75 East 55th Street

                                    New York, New York  10022

                                    Attention:  Michael L. Zuppone

or at such other address as the addressee may have furnished in writing to the sender as provided herein.

           (c) Assignment.

       (i) Except as expressly provided in this Section 7(c), the rights of the parties hereto cannot be assigned and any purported assignment or transfer to the contrary shall be void ab initio. So long as the terms of this Section 7(c) are followed, any Holder may assign any of its rights under this Agreement, without the consent of the Company, to any Person to whom such holder Transfers any Registrable Securities or any rights to acquire Registrable Securities so long as such Transfer is not made pursuant to an effective Registration Statement or pursuant to Rule 144 or Rule 145 (or any successor provisions) under the Securities Act or in any other manner or to any Person the effect or consequences of which is to cause the Transferred securities to be freely transferable without regard to the volume and manner of sale limitations set forth in Rule 144 (or any successor provision) in the hands of the transferee as of the date of such Transfer.

       (ii) Notwithstanding Section 7(c)(i), no Holder may assign any of its rights under this Agreement to any Person to whom such Holder Transfers any Registrable Securities if the Transfer of such Registrable Securities requires registration under the Securities Act.

D-18

       (iii) The nature and extent of any rights assigned shall be as agreed to between the assigning party and the assignee. No Person may be assigned any rights under this Agreement unless (x) the Company is given written notice by the assigning party at the time of such assignment stating the name and address of the assignee, identifying the securities of the Company as to which the rights in question are being assigned, and providing a detailed description of the nature and extent of the rights that are being assigned and (y) and the assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement, including, without limitation, the provisions of this Section 7(c).

       (iv) Notwithstanding the foregoing, Berkley may assign its rights, under this Agreement without the prior written consent of the Company to one or more of its designated controlled Affiliates provided that Berkley remains responsible for the obligations under this Agreement with respect to such assignee.

           (d) Successors and Assigns; No Third Party Beneficiaries. This Agreement will be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns. Except as set forth herein and by operation of law, no party to this Agreement may assign or delegate all or any portion of its rights, obligations, or liabilities under this Agreement without the prior written consent of the Company in the case of a Holder or without the written consent of Holders holding a majority of Registrable Securities in the case of the Company. Notwithstanding the foregoing, Berkley may assign its rights, obligations and liabilities under this Agreement without the prior written consent of the Company to one or more of its designated controlled Affiliates provided that Berkley remains responsible for the obligations under this Agreement with respect to such assignee. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties hereto and their respective successors and permitted assigns to the extent contemplated herein.

           (e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

           (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

           (g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

           (h) Specific Performance; Costs and Expenses. The parties hereto acknowledge that there would be no adequate remedy at law if any party fails to perform any of its obligations hereunder, and accordingly agree that each party, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to compel specific performance of the obligations of any other party under this Agreement in accordance with the terms and conditions of this Agreement in any court of the United States or any State thereof having jurisdiction.

           (i) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

D-19

           IN WITNESS WHEREOF, the undersigned Company has executed this Agreement as of the date first written above.

CAPITAL TRUST, INC.
By:	/s/ John R. Klopp
	Name:  John R. Klopp
	Title:    Chief Executive Officer

D-20

           IN WITNESS WHEREOF, the undersigned Berkley has executed this Agreement as of the date first written above.

/s/ William R. Berkley

Name: William R. Berkley

Address:

D-21

SCHEDULE A

Admiral Insurance Company

Berkley Insurance Company

Berkley Regional Insurance Company

Nautilus Insurance Company

SCHEDULE A

John R. Klopp

JRK Investment Partnership LP

Craig M. Hatkoff

CMH Investment Partnership LP

Veqtor Finance Company L.L.C.

Samstock, L.L.C.

SCHEDULE B

Admiral Insurance Company

Berkley Insurance Company

Berkley Regional Insurance Company

Nautilus Insurance Company

SCHEDULE 5.6

1.		Authorized Capital Stock		Issued Capital Stock
	Class A Common Stock		100,000,000		8,271,882
	Preferred Stock		100,000,000		0
			200,000,000		8,271,882
2.	Outstanding options issued under the Company’s incentive stock plan and director stock plan				552,780
	Outstanding stock units issued under the Company’s incentive stock plan and director stock plan				73,956
	Shares which may be obtained upon conversion of convertible trust preferred securities issued by the Company’s subsidiary, CT Convertible Trust I				4,273,422
	Shares to be issued to John R. Klopp pursuant to the terms of his employment agreement, dated as of February 24, 2004				218,818
	Shares which may be issued upon exercise of the Warrant				365,000
3.	The Company’s employment agreement, dated as of February 24, 2004, with John R. Klopp provides for various awards of restricted shares of Common Stock pursuant to the Company’s 2004 long-term incentive plan over the term of the agreement.

SCHEDULE 5.11

The issuance of the Tranche 2 Shares contemplated by this Agreement requires the affirmative vote of a majority of the votes cast at the Company’s 2004 annual meeting of stockholders to be held on June 17, 2004 in accordance with the applicable New York Stock Exchange rules.

The transactions contemplated by this Agreement require the listing of the Shares pursuant to a subsequent listing application to be filed with and approved by the New York Stock Exchange.

The transactions contemplated by this Agreement require the filing of the Prospectus in the form delivered to the Purchaser with the Commission pursuant to Rule 424(b) under the Securities Act.

SCHEDULE 5.19

Loans	3/31/04 Carrying Value
TriNational Baja Loan	$	3,037,733
Investments
ASC 96-D2-B1B   CMBS   CUSIP# 045424B43	$	4,000,000
RMF 97-1-F   CMBS   CUSIP# 749930AW3	$	3,127,785

Management currently believes that for both the loans and the investments listed on this Schedule 5.19, the Company will realize at least the carrying value of the assets as of March 31, 2004 as listed in this schedule.

EX-10.2

JUNIOR SUBORDINATED INDENTURE

between

CAPITAL TRUST, INC.

and

THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION,

as Trustee

________________

Dated as of March 16, 2009

________________

TABLE OF CONTENTS

Page

ARTICLE I Definitions and Other Provisions of General Application		1
SECTION 1.1	Definitions	1
SECTION 1.2	Compliance Certificate and Opinions	8
SECTION 1.3	Forms of Documents Delivered to Trustee	9
SECTION 1.4	Acts of Holders	9
SECTION 1.5	Notices, Etc.  to Trustee and Company	11
SECTION 1.6	Notice to Holders; Waiver	12
SECTION 1.7	Effect of Headings and Table of Contents	12
SECTION 1.8	Successors and Assigns	12
SECTION 1.9	Separability Clause	13
SECTION 1.10	Benefits of Indenture	13
SECTION 1.11	Governing Law	13
SECTION 1.12	Submission to Jurisdiction	13
SECTION 1.13	Non-Business Days	13
ARTICLE II Security Forms		14
SECTION 2.1	Form of Security	14
SECTION 2.2	Restricted Legend.	18
SECTION 2.3	Form of Trustee’s Certificate of Authentication.	20
SECTION 2.4	Temporary Securities.	20
SECTION 2.5	Definitive Securities.	20
ARTICLE III The Securities		21
SECTION 3.1	Payment of Principal and Interest.	21
SECTION 3.2	Denominations.	23
SECTION 3.3	Execution, Authentication, Delivery and Dating.	23
SECTION 3.4	Global Securities.	24
SECTION 3.5	Registration, Transfer and Exchange Generally.	25
SECTION 3.6	Mutilated, Destroyed, Lost and Stolen Securities.	27
SECTION 3.7	Persons Deemed Owners.	28
SECTION 3.8	Cancellation.	28
SECTION 3.9	Reserved.	28
SECTION 3.10	Reserved.	28
SECTION 3.11	Agreed Tax Treatment.	28
SECTION 3.12	CUSIP Numbers.	28
ARTICLE IV Satisfaction and Discharge		29
SECTION 4.1	Satisfaction and Discharge of Indenture.	29
SECTION 4.2	Application of Trust Money.	30

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ARTICLE V Remedies		30
SECTION 5.1	Events of Default.	30
SECTION 5.2	Acceleration of Maturity; Rescission and Annulment.	31
SECTION 5.3	Collection of Indebtedness and Suits for Enforcement by Trustee.	32
SECTION 5.4	Trustee May File Proofs of Claim.	32
SECTION 5.5	Trustee May Enforce Claim Without Possession of Securities.	33
SECTION 5.6	Application of Money Collected.	33
SECTION 5.7	Limitation on Suits.	33
SECTION 5.8	Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest.	34
SECTION 5.9	Restoration of Rights and Remedies.	34
SECTION 5.10	Rights and Remedies Cumulative.	35
SECTION 5.11	Delay or Omission Not Waiver.	35
SECTION 5.12	Control by Holders.	35
SECTION 5.13	Waiver of Past Defaults.	35
SECTION 5.14	Undertaking for Costs.	36
SECTION 5.15	Waiver of Usury, Stay or Extension Laws.	36
ARTICLE VI The Trustee		36
SECTION 6.1	Corporate Trustee Required.	36
SECTION 6.2	Certain Duties and Responsibilities.	37
SECTION 6.3	Notice of Defaults.	38
SECTION 6.4	Certain Rights of Trustee.	38
SECTION 6.5	May Hold Securities.	40
SECTION 6.6	Compensation; Reimbursement; Indemnity.	40
SECTION 6.7	Resignation and Removal; Appointment of Successor.	41
SECTION 6.8	Acceptance of Appointment by Successor.	42
SECTION 6.9	Merger, Conversion, Consolidation or Succession to Business.	42
SECTION 6.10	Not Responsible for Recitals or Issuance of Securities.	43
SECTION 6.11	Appointment of Authenticating Agent.	43
ARTICLE VII Holder’s Lists and Reports by Company		44
SECTION 7.1	Company to Furnish Trustee Names and Addresses of Holders.	44
SECTION 7.2	Preservation of Information, Communications to Holders.	45
SECTION 7.3	Reports by Company.	45
ARTICLE VIII Consolidation, Merger, Conveyance, Transfer or Lease		46
SECTION 8.1	Company May Consolidate, Etc., Only on Certain Terms.	46
SECTION 8.2	Successor Company Substituted.	47
ARTICLE IX Supplemental Indentures		47
SECTION 9.1	Supplemental Indentures without Consent of Holders.	47
SECTION 9.2	Supplemental Indentures with Consent of Holders.	48

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SECTION 9.3	Execution of Supplemental Indentures.	49
SECTION 9.4	Effect of Supplemental Indentures.	49
SECTION 9.5	Reference in Securities to Supplemental Indentures.	49
ARTICLE X Covenants		49
SECTION 10.1	Payment of Principal, Premium, if any, and Interest.	49
SECTION 10.2	Money for Security Payments to be Held in Trust.	49
SECTION 10.3	Statement as to Compliance.	50
SECTION 10.4	Calculation Agent.	51
SECTION 10.5	Reserved.	51
SECTION 10.6	Additional Covenants.	51
SECTION 10.7	Waiver of Covenants.	53
SECTION 10.8	Treatment of Securities.	53
SECTION 10.9	Inspection of Books and Records	53
ARTICLE XI Redemption of Securities		54
SECTION 11.1	Optional Redemption.	54
SECTION 11.2	Reserved.	54
SECTION 11.3	Election to Redeem; Notice to Trustee.	54
SECTION 11.4	Selection of Securities to be Redeemed.	54
SECTION 11.5	Notice of Redemption.	55
SECTION 11.6	Deposit of Redemption Price.	55
SECTION 11.7	Payment of Securities Called for Redemption.	56
ARTICLE XII Subordination of Securities		56
SECTION 12.1	Securities Subordinate to Senior Debt.	56
SECTION 12.2	No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.	56
SECTION 12.3	Payment Permitted If No Default.	58

SECTION 12.4	Subrogation to Rights of Holders of Senior Debt.	58
SECTION 12.5	Provisions Solely to Define Relative Rights.	59
SECTION 12.6	Trustee to Effectuate Subordination.	59
SECTION 12.7	No Waiver of Subordination Provisions.	59
SECTION 12.8	Notice to Trustee.	60
SECTION 12.9	Reliance on Judicial Order or Certificate of Liquidating Agent.	60
SECTION 12.10	Trustee Not Fiduciary for Holders of Senior Debt.	61
SECTION 12.11	Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights.	61
SECTION 12.12	Article Applicable to Paying Agents	61
SECTION 12.13		61

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SCHEDULES

Schedule A–Determination of LIBOR

Exhibit A–Form of Officer’s Financial Certificate

-iv-

Junior Subordinated Indenture, dated as of March 16, 2009, between Capital Trust, Inc., a Maryland corporation (the “Company”), and The Bank of New York Mellon Trust Company, National Association, a national banking association, as Trustee (in such capacity, the “Trustee”).

Recitals of the Company

Whereas, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its unsecured junior subordinated notes (the “Securities”), and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; and

Whereas, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

Now, Therefore, this Indenture Witnesseth:

For and in consideration of the premises herein it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:

ARTICLE I

Definitions and Other Provisions of General Application

SECTION 1.1 Definitions.

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a)           the terms defined in this Article I have the meanings assigned to them in this Article I;

(b)           the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;

(c)           all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;

(d)           unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Indenture;

(e)           the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;

(f)           a reference to the singular includes the plural and vice versa; and

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(g)           the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.

“Act” when used with respect to any Holder, has the meaning specified in Section 1.4.

 “Additional Interest” means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security, in each case to the extent legally enforceable.

 “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Applicable Depositary Procedures” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.

“Authenticating Agent” means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate the Securities.

“Board of Directors” means the board of directors of the Company or any duly authorized committee of that board.

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.

“Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.

“Calculation Agent” has the meaning specified in Section 10.4.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Commission” has the meaning specified in Section 7.3(b).

“Company” means the Person named as the “Company” in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.

-2-

“Company Request” and “Company Order” mean, respectively, the written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its Chief Executive Officer, President or a Vice President, and by its Chief Financial Officer, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.

“Corporate Trust Office” means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Indenture is located at 601 Travis Street, 16th Floor, Houston, Texas 77002 Attn: Global Corporate Trust — CDO Group.  Initially, all notices and correspondence shall be addressed to Mudassir Mohamed, telephone number (713) 483-6029.

“Debt” means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).

“Defaulted Interest” has the meaning specified in Section 3.1.

 “Depositary” means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Company or any successor thereto.

“Depositary Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.

 “Dollar” or “$” means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts.

“EDGAR” has the meaning specified in Section 7.3(c).

“Equity Interests” means (a) the partnership interests (general or limited) in a partnership, (b) the membership interests in a limited liability company and (c) the shares or stock interests  (both common stock and preferred stock) in a corporation.

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“Event of Default” has the meaning specified in Section 5.1.

“Exchange Act” means the Securities Exchange Act of 1934 or any statute successor thereto, in each case as amended from time to time.

“Exchange Agreement” means that certain Exchange Agreement executed and delivered contemporaneously with this Indenture by the Company, Taberna Preferred Funding V, Ltd., Taberna Preferred Funding VI, Ltd., Taberna Preferred Funding VIII, Ltd. and Taberna Preferred Funding IX, Ltd., as the same may be amended from time to time.

“Expiration Date” has the meaning specified in Section 1.4(h).

“Fixed Rate” means a rate equal to (a) for the Interest Period commencing on March 16, 2009, and for each Interest Period thereafter through and including April 29, 2012, a fixed rate equal to one percent (1%) per annum and (b) for the Interest Period commencing on April 30, 2012 and for each Interest Period thereafter through and including April 29, 2016, a fixed rate equal to 7.23%.

“Fixed Rate Period” has the meaning specified in Section 3.1(a).

“GAAP” means United States generally accepted accounting principles, consistently applied, from time to time in effect.

“Global Security” means a Security that evidences all or part of the Securities, the ownership and transfers of which shall be made through book entries by a Depositary.

“Government Obligation” means (a) any security that is (i) a direct obligation of the United States of America of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation that is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation that is so specified and held, provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.

“Holder” means a Person in whose name a Security is registered in the Securities Register.

“Indenture” means this instrument as originally executed or as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof.

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“Interest Payment Date” means January 30, April 30, July 30 and October 30 of each year, commencing on April 30, 2009, during the term of this Indenture.

“Interest Period” means the period commencing on an Interest Payment Date and continuing through and including the day prior to the next succeeding Interest Payment Date.

“Investment Company Act” means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.

“LIBOR” has the meaning specified in Schedule A.

“LIBOR Business Day” has the meaning specified in Schedule A.

“LIBOR Determination Date” has the meaning specified in Schedule A.

 “Maturity” means, when used with respect to any Security, the date on which the principal of such Security or any installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

“Notice of Default” means a written notice of the kind specified in Section 5.1(c).

“Officers’ Certificate” means a certificate signed by the Chief Executive Officer, the President, a Managing Director, a Director or a Vice President, or by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company and delivered to the Trustee.

“Opinion of Counsel” means a written opinion of counsel, who may be counsel for or an employee of the Company or any Affiliate of the Company.

“Optional Redemption Price” has the meaning set forth in Section 11.1.

“Original Issue Date” means the date of original issuance of each Security.

“Outstanding” means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

(i)           Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

(ii)          Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securities; provided, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and

(iii)         Securities that have been paid or in substitution for or in lieu of which other Securities have been authenticated and delivered pursuant to the provisions of this Indenture, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company;

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provided, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding unless the Company shall hold all Outstanding Securities, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded.  Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor.

“Paying Agent” means the Trustee or any Person (other than the Company or any Affiliate of the Company) authorized by the Company to pay the principal of or any premium or interest on, or other amounts in respect of, any Securities on behalf of the Company.

“Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, company, limited liability company, trust, unincorporated association, or government, or any agency or political subdivision thereof, or any other entity of whatever nature.

“Place of Payment” means, with respect to the Securities, the Corporate Trust Office of the Trustee.

“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security.  For the purposes of this definition, any security authenticated and delivered under Section 3.6 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

 “Proceeding” has the meaning specified in Section 12.2(b).

 “Redemption Date” means, when used with respect to any Security to be redeemed, the date fixed for such redemption by or pursuant to this Indenture.

“Redemption Price” means, when used with respect to any Security to be redeemed, in whole or in part, the Optional Redemption Price at which such Security or portion thereof is to be redeemed as fixed by or pursuant to this Indenture.

“Reference Banks” has the meaning specified in Schedule A.

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“Regular Record Date” for the interest payable on any Interest Payment Date with respect to the Securities means the date that is fifteen (15) days preceding such Interest Payment Date (whether or not a Business Day).

“REIT” has the meaning set forth in Section 10.6(b).

“Responsible Officer” means, when used with respect to the Trustee, the officer in the Worldwide Securities Services department of the Trustee having direct responsibility for the administration of this Indenture.

“Rights Plan” means a plan of the Company providing for the issuance by the Company to all holders of its Equity Interests of rights entitling the holders thereof to subscribe for or purchase Equity Interests or any class or series of Equity Interests in the Company which rights (i) are deemed to be transferred with such Equity Interests and (ii) are also issued in respect of future issuances of such Equity Interests, in each case until the occurrence of a specified event or events.

“Securities” or “Security” means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture.

“Securities Act” means the Securities Act of 1933 or any successor statute thereto, in each case as amended from time to time.

“Securities Register” and “Securities Registrar” have the respective meanings specified in Section 3.5.

“Senior Debt” means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Company, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Securities issued under this Indenture; provided, that Senior Debt shall not be deemed to include any debt (and guarantees, if any, in respect of any such debt) issued to any trust (or a trustee of any such trust) affiliated with the Company that is a financing vehicle of the Company (a “financing entity”) in connection with the issuance by such financing entity of equity securities or other securities, in each case pursuant to an instrument that ranks pari passu with or junior in right of payment to this Indenture.  For the avoidance of doubt, the proviso in the previous sentence (x) only refers to the Company’s issuance of debt in connection with trust preferred securities substantially similar to the Original Preferred Securities (which debt and trust preferred securities may be pari passu with, or junior to, the Securities but will not be entitled to the subordination provisions of Article XII) and (y) in no way (i) affects the subordination of the Securities to other Senior Debt pursuant to the provisions of Article XII or (ii) is a limitation on the Company’s ability to issue additional Debt or other securities.

“Shareholders Act” means the Shareholders Communication Act of 1985 (as amended from time to time).

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“Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.1.

“Stated Maturity” means April 30, 2036.

“Subsidiary” of a Person means (a) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries or (b) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries.  Unless otherwise expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of the Company.

“Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument, solely in its capacity as such and not in its individual capacity, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, “Trustee” shall mean or include each Person who is then a Trustee hereunder.

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended and as in effect on the date as of this Indenture.

SECTION 1.2 Compliance Certificate and Opinions.

(a)           Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall, if requested by the Trustee, furnish to the Trustee an Officers’ Certificate stating that all conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with.

(b)           Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificate provided pursuant to Section 10.3) shall include:

(i)           a statement by each individual signing such certificate or opinion that such individual has read such covenant or condition and the definitions herein relating thereto;

(ii)           a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions of such individual contained in such certificate or opinion are based;

(iii)           a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and

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(iv)           a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with.

SECTION 1.3 Forms of Documents Delivered to Trustee.

(a)           In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

(b)           Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to matters upon which his or her certificate or opinion is based are erroneous.  Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to such matters are erroneous.

(c)           Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

(d)           Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officers’ Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally received in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted.  Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities.

SECTION 1.4 Acts of Holders.

(a)           Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments (including any appointment of an agent) is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company.  Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments.  Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.4.

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(b)           The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof.  Where such execution is by a Person acting in other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority.  The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine.

(c)           The ownership of Securities shall be proved by the Securities Register.

(d)           Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.

(e)           Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.

(f)           Except as set forth in paragraph (g) of this Section 1.4, the Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities.  If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as defined in Section 1.4(h)) by Holders of the requisite principal amount of Outstanding Securities on such record date.  Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect).  Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in Section 1.6.

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(g)           The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration or rescission or annulment thereof referred to in Section 5.2, (iii) any request to institute proceedings referred to in Section 5.7(b) or (iv) any direction referred to in Section 5.12.  If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date.  Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect).  Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in Section 1.6.

(h)           With respect to any record date set pursuant to paragraph (f) or (g) of this Section 1.4, the party hereto that sets such record date may designate any day as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided, that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities in the manner set forth in Section 1.6, on or prior to the existing Expiration Date.  If an Expiration Date is not designated with respect to any record date set pursuant to this Section 1.4, the party hereto that set such record date shall be deemed to have initially designated the ninetieth (90th) day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph.  Notwithstanding the foregoing, no Expiration Date shall be later than the one hundred eightieth (180th) day after the applicable record date.

SECTION 1.5 Notices, Etc.  to Trustee and Company.

(a)           Any request, demand, authorization, direction, notice, consent, waiver, Act of Holders, or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:

(i)           the Trustee by any Holder or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with and received by the Trustee at its Corporate Trust Office, or

(ii)          the Company by the Trustee or any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at 410 Park Avenue, 14th Floor, New York, New York 10022 or at any other address previously furnished in writing to the Trustee by the Company.

(b)           The Trustee may, but is not required to, rely upon and comply with instructions and directions sent by email or facsimile, (or any other reasonable means of communication) by persons believed by the Trustee in good faith to be authorized to provide such instructions or direction; provided, however, that the Trustee may require such additional evidence, confirmation or certification from any such party or parties as the Trustee, in its reasonable discretion, deems necessary or advisable before acting or refraining from acting upon any such instruction or direction.

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(c)           Subject to Section 1.5(b) above, the Trustee agrees to accept and act upon instructions or directions pursuant to this Agreement sent by unsecured email, facsimile transmission or other similar unsecured electronic methods; provided, however, that any Person providing such instructions or directions shall provide to the Trustee an incumbency certificate listing such designated persons, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing.  If such Person elects to give the Trustee email or facsimile instructions (or instructions by a similar electronic method) the Trustee’s understanding of such instructions shall be deemed controlling.  The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction.  Each Person providing instructions or directions to the Trustee hereunder agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting, in good faith, on unauthorized instructions, and the risk of interception and misuse by third parties.

SECTION 1.6 Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class, postage prepaid, to each Holder affected by such event to the address of such Holder as it appears in the Securities Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice.  If, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice.  In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders.  Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

SECTION 1.7 Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction of this Indenture.

SECTION 1.8 Successors and Assigns.

This Indenture shall be binding upon and shall inure to the benefit of any successor to the Company and the Trustee, including any successor by operation of law.  Except in connection with a transaction involving the Company that is permitted under Article VIII and pursuant to which the assignee agrees in writing to perform the Company’s obligations hereunder, the Company shall not assign its obligations hereunder.

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SECTION 1.9 Separability Clause.

If any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.

SECTION 1.10 Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Debt, and the Holders of the Securities any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 1.11 Governing Law.

This Indenture and the rights and obligations of each of the Holders, the Company and the Trustee shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).

SECTION 1.12 Submission to Jurisdiction.

ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN).  BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE.

SECTION 1.13 Non-Business Days.

If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest, premium, if any, or principal or other amounts in respect of such Security shall not be made on such date, but shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity.

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ARTICLE II

Security Forms

SECTION 2.1 Form of Security.

Any Security issued hereunder shall be in substantially the following form:

CAPITAL TRUST, INC.

Junior Subordinated Note due 2036

No.  _____________   $ ____________ 

Capital Trust, Inc., a corporation organized and existing under the laws of Maryland (hereinafter called the “Company,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to _____________________, or registered assigns, the principal sum of __________ Dollars ($_______) [if the Security is a Global Security, then insert— or such other principal amount represented hereby as may be set forth in the records of the Securities Registrar hereinafter referred to in accordance with the Indenture] on April 30, 2036. The Company further promises to pay interest on said principal sum from March 16, 2009 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly in arrears on January 30, April 30, July 30 and October 30 of each year, commencing April 30, 2009, or if any such day is not a Business Day, on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date until such next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on the Interest Payment Date, at a fixed rate equal to the applicable Fixed Rate through the Interest Payment Date occurring in April, 2016 (the “Fixed Rate Period”) and thereafter at a variable rate equal to LIBOR plus 2.44% per annum until the principal hereof is paid or duly provided for or made available for payment; provided, further, that any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at a fixed rate equal to the applicable Fixed Rate then in effect through the Interest Payment Date occurring in April, 2016 and thereafter at a variable rate equal to LIBOR plus 2.44% per annum (to the extent that the payment of such interest shall be legally enforceable), compounded quarterly, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand.

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During the Fixed Rate Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360 day year of twelve 30 day months.  Upon expiration of the Fixed Rate Period, the amount of interest payable for any Interest Period will be computed on the basis of a 360 day year and the actual number of days elapsed in the relevant Interest Period.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment.  Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

Payment of principal of, premium, if any, and interest on this Security shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  Payments of principal, premium, if any, and interest due at the Maturity of this Security shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent, and payments of interest shall be made, subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.

The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Indenture with respect thereto.  Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes.  Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.

Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

[FORM OF REVERSE OF SECURITY]

This Security is one of a duly authorized issue of securities of the Company (the “Securities”) issued under the Junior Subordinated Indenture, dated as of March 16, 2009 (the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, National Association, as Trustee (in such capacity, the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Debt and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.

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All terms used in this Security that are not defined herein shall have the meanings assigned to them in the Indenture.

The Company may, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee) and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time at a Redemption Price equal to one hundred percent (100%) of the principal amount hereof, (or of the redeemed portion hereof, as applicable), together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.

In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.  If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security.

The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities.  The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities, on behalf of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium, if any, and interest, including any Additional Interest (to the extent legally enforceable), on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

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As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is restricted to transfers to (i) the Company, (ii) “Qualified Institutional Buyers” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”)), (iii) outside the United States in an offshore transaction in accordance with Regulation S under the Securities Act, (iv) pursuant to an effective registration statement under the Securities Act or (v) pursuant to another exemption from registration under the Securities Act and, in the case of clauses (ii), (iii), (iv) or (v), a person whom the Company reasonably believes also is a “Qualified Purchaser” (as defined in Section 2(a)(51) of the Investment Company Act of 1940, as amended, and is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

The Securities are issuable only in registered form without coupons in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.  As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

The Company and, by its acceptance of this Security or a beneficial interest herein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that, for United States federal, state and local tax purposes, it is intended that this Security constitute indebtedness.

This Security shall be construed and enforced in accordance with and governed by the laws of the State of New York, without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on this ____ day of __________, 20__.

Capital Trust, Inc.
By:
	Name:
	Title:

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SECTION 2.2 Restricted Legend.

(a)           Any Security issued hereunder shall bear a legend in substantially the following form:

“[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC.  THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.  OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.  OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.

THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A OF THE SECURITIES ACT), (III) OUTSIDE THE UNITED STATES IN  AN OFFSHORE TRANSACTION IN  ACCORDANCE WITH REGULATION S UNDER THE SECURITIES  ACT, (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (V) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND, IN THE CASE OF CLAUSES II, III, IV, OR V, TO A PERSON WHOM THE ISSUER REASONABLY BELIEVES ALSO IS A “QUALIFIED PURCHASER” (AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

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THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.  TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.  TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.

THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN.  ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE.”

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(b)           The above legends shall not be removed from any Security unless there is delivered to the Company satisfactory evidence, which may include an Opinion of Counsel, as may be reasonably required to ensure that any future transfers thereof may be made without restriction under or violation of the provisions of the Securities Act and other applicable law.  Upon provision of such satisfactory evidence, the Company shall execute and deliver to the Trustee, and the Trustee shall deliver, upon receipt of a Company Order directing it to do so, a Security that does not bear the legend.

SECTION 2.3 Form of Trustee’s Certificate of Authentication.

The Trustee’s certificate of authentication shall be in substantially the following form:

This is one of the Securities referred to in the within-mentioned Indenture.

Dated:	[TRUSTEE], not in its individual capacity, but solely as Trustee
	By:
		Authorized Signatory

SECTION 2.4 Temporary Securities.

(a)           Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.

(b)           If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay.  After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder.  Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities.  Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.

SECTION 2.5 Definitive Securities.

The Securities issued on the Original Issue Date shall be in definitive form.  The definitive Securities shall be printed, lithographed or engraved, or produced by any combination of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.

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ARTICLE III

The Securities

SECTION 3.1 Payment of Principal and Interest.

(a)           The unpaid principal amount of the Securities shall bear interest at the applicable Fixed Rate through the Interest Payment Date occurring in April 2016 (the “Fixed Rate Period”), and thereafter at a variable rate equal to LIBOR plus 2.44% per annum, until paid as duly provided for such interest to accrue from the Original Issue Date or from the most recent Interest Payment Date to which interest has been paid or duly provided for.  Any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at a fixed rate equal to the applicable Fixed Rate through the Interest Payment Date in April, 2016, and thereafter at a variable rate equal to LIBOR plus 2.44% per annum, compounded quarterly from the dates such amounts are due until they are paid or funds for the payment thereof are made available for payment.

(b)           Interest and Additional Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, except that interest and any Additional Interest payable on the Stated Maturity (or any date of principal repayment upon early maturity) of the principal of a Security or on a Redemption Date shall be paid to the Person to whom principal is paid.  The initial payment of interest on any Security that is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security.

(c)           Any interest on any Security that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below:

(i)           The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest (a “Special Record Date”), which shall be fixed in the following manner.  At least thirty (30) days prior to the date of the proposed payment, the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest.  Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security at the address of such Holder as it appears in the Securities Register not less than ten (10) days prior to such Special Record Date.  Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date; or

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(ii)           The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities may be listed, traded or quoted and, upon such notice as may be required by such exchange or automated quotation system (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee.

(d)           Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. During the Fixed Rate Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months.  Upon expiration of the Fixed Rate Period, the amount of interest payable for any Interest Period will be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant Interest Period.

(e)           Payment of principal of, premium, if any, and interest on the Securities shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  Payments of principal, premium, if any, and interest due at the Maturity of such Securities shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent and payments of interest shall be made subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.

(f)           Subject to the foregoing provisions of this Section 3.1, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.

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SECTION 3.2 Denominations.

The Securities shall be in registered form without coupons and shall be issuable in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.

SECTION 3.3 Execution, Authentication, Delivery and Dating.

(a)           At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities in an aggregate principal amount (including all then Outstanding Securities) not in excess of One Hundred Eighteen Million Five Hundred Ninety-Three Thousand Seven Hundred Fifty Dollars ($118,593,750) executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities.  In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon:

(i)           a copy of any Board Resolution relating thereto; and

(ii)          an Opinion of Counsel stating that:  (1) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute, and the Indenture constitutes, valid and legally binding obligations of the Company, each enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; (2) the Securities have been duly authorized and executed by the Company and have been delivered to the Trustee for authentication in accordance with this Indenture; (3) the Securities are not required to be registered under the Securities Act; and (4) the Indenture is not required to be qualified under the Trust Indenture Act.

(b)           The Securities shall be executed on behalf of the Company by its Chief Executive Officer, its President, a Managing Director, a Director or one of its Vice Presidents or by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.  The signature of any of these officers on the Securities may be manual or facsimile.  Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

(c)           No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder.  Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.8, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

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(d)           Each Security shall be dated the date of its authentication.

SECTION 3.4 Global Securities.

(a)           Upon the election of the Holder after the Original Issue Date, which election need not be in writing, the Securities owned by such Holder shall be issued in the form of one or more Global Securities registered in the name of the Depositary or its nominee.  Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.

(b)           Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for registered Securities, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Security, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii) the Company executes and delivers to the Trustee a Company Order stating that the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default shall have occurred and be continuing.  Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and instruct the Depositary to notify all owners of beneficial interests in such Global Security of the occurrence of such event and of the availability of Securities to such owners of beneficial interests requesting the same.  The Trustee may conclusively rely, and be protected in relying, upon the written identification of the owners of beneficial interests furnished by the Depositary, and shall not be liable for any delay resulting from a delay by the Depositary.  Upon the issuance of such Securities and the registration in the Securities Register of such Securities in the names of the Holders of the beneficial interests therein, the Trustees shall recognize such holders of beneficial interests as Holders.

(c)           If any Global Security is to be exchanged for other Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this Article III or (ii) the principal amount thereof shall be reduced or increased by an amount equal to (x) the portion thereof to be so exchanged or canceled, or (y) the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records.  Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions, the Company shall execute and the Trustee shall authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary.  The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.

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(d)           Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.

(e)           The Depositary or its nominee, as the registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Depositary Procedures.  Accordingly, any such owner’s beneficial interest in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary Participants.  The Securities Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this Indenture relating to a Global Security (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole Holder of the Security and shall have no obligations to the owners of beneficial interests therein.  Neither the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary.

(f)           The rights of owners of beneficial interests in a Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Depositary Participants.

(g)           No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever.  None of the Company, the Trustee nor any agent of the Company or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or maintaining, supervising or reviewing any records relating to such beneficial ownership interests.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.

SECTION 3.5 Registration, Transfer and Exchange Generally.

(a)           The Trustee shall cause to be kept at the Corporate Trust Office a register (the “Securities Register”) in which the registrar and transfer agent with respect to the Securities (the “Securities Registrar”), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Securities and of transfers and exchanges of Securities.  The Trustee shall at all times also be the Securities Registrar.  The provisions of Article VI shall apply to the Trustee in its role as Securities Registrar.

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(b)           Subject to compliance with Section 2.2(b), upon surrender for registration of transfer of any Security at the offices or agencies of the Company designated for that purpose the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations of like tenor and aggregate principal amount.

(c)           At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations, of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency.  Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive.

(d)           All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.

(e)           Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.

(f)           No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities.

(g)           Neither the Company nor the Trustee shall be required pursuant to the provisions of this Section 3.5(g):  (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of Securities pursuant to Article XI and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any such Security to be redeemed in part, any portion thereof not to be redeemed.

(h)           The Company shall designate an office or offices or agency or agencies where Securities may be surrendered for registration or transfer or exchange.  The Company initially designates the Corporate Trust Office as its office and agency for such purposes.  The Company shall give prompt written notice to the Trustee and to the Holders of any change in the location of any such office or agency.

(i)           The Securities may only be transferred to (i) the Company, (ii) a “qualified institutional  buyer” (as defined in Rule 144A of the Securities Act), (iii) outside the United States in an offshore transaction in accordance with Regulation S under the Securities Act, (iv) pursuant to an effective registration statement under the Securities Act or (v) pursuant to another exemption from registration under the Securities Act and, in the case of clauses (ii), (iii), (iv) or (v), to a Person whom the Company reasonably believes is also a “Qualified Purchaser”, as such term is defined in Section 2(a)(51) of the Investment Company Act.

(j)           Neither the Trustee nor the Securities Registrar shall be responsible for ascertaining whether any transfer hereunder complies with the registration provisions of or any exemptions from the Securities Act, applicable state securities laws or the applicable laws of any other jurisdiction, ERISA, the Code, or the Investment Company Act; provided, that if a certificate is specifically required by the express terms of this Section 3.5 to be delivered to the Trustee or the Securities Registrar by a Holder or transferee of a Security, the Trustee and the Securities Registrar shall be under a duty to receive and examine the same to determine whether or not the certificate substantially conforms on its face to the requirements of this Indenture and shall promptly notify the party delivering the same if such certificate does not comply with such terms.

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SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Securities.

(a)           If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Trustee to save the Company and the Trustee harmless, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding.

(b)           If there shall be delivered to the Trustee (i) evidence to its satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by it to save each of the Company and the Trustee harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding.

(c)           If any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

(d)           Upon the issuance of any new Security under this Section 3.6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

(e)           Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.

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(f)           The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 3.7 Persons Deemed Owners.

The Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest on such Security and for all other purposes whatsoever, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

SECTION 3.8 Cancellation.

All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by it.  The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee.  No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section 3.8, except as expressly permitted by this Indenture.  All canceled Securities shall be retained or disposed of by the Trustee in accordance with its customary practices and the Trustee shall deliver to the Company a certificate of such disposition.

SECTION 3.9 Reserved.

SECTION 3.10 Reserved.

SECTION 3.11 Agreed Tax Treatment.

Each Security issued hereunder shall provide that the Company and, by its acceptance or acquisition of a Security or a beneficial interest therein, each Holder of, and any Person that acquires a direct or indirect beneficial interest in, such Security, intend and agree to treat such Security as indebtedness of the Company for United States Federal, state and local and foreign tax purposes.  The provisions of this Indenture shall be interpreted to further this intention and agreement of the parties.

SECTION 3.12 CUSIP Numbers.

The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption and other similar or related materials as a convenience to Holders; provided, that any such notice or other materials may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.

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ARTICLE IV

Satisfaction and Discharge

SECTION 4.1 Satisfaction and Discharge of Indenture.

This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this Section 4.1) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

(a)           either

(i)           all Securities theretofore authenticated and delivered (other than (A) Securities that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.6 and (B) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 10.2) have been delivered to the Trustee for cancellation; or

(ii)           all such Securities not theretofore delivered to the Trustee for cancellation

(A)           have become due and payable, or

(B)           will become due and payable at their Stated Maturity within one year of the date of deposit, or

(C)           are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency or currencies in which the Securities are payable, (y) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount or (z) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest (including any Additional Interest) to the date of such deposit (in the case of Securities that have become due and payable) or to the Stated Maturity (or any date of principal repayment upon early maturity) or Redemption Date, as the case may be;

(b)           the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

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(c)           the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.6, the obligations of the Company to any Authenticating Agent under Section 6.11 and, if money shall have been deposited with the Trustee pursuant to subclause (a)(ii) of this Section 4.1, the obligations of the Trustee under Section 4.2 and Section 10.2(e) shall survive.

SECTION 4.2 Application of Trust Money.

Subject to the provisions of Section 10.2(d), all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment in accordance with Section 3.1, either directly or through any Paying Agent as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest (including any Additional Interest) for the payment of which such money or obligations have been deposited with or received by the Trustee.  Moneys held by the Trustee under this Section 4.2 shall not be subject to the claims of holders of Senior Debt under Article XII.

ARTICLE V

Remedies

SECTION 5.1 Events of Default.

“Event of Default” means, wherever used herein with respect to the Securities, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a)           default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of thirty (30) days; or

(b)           default in the payment of the principal of or any premium on any Security at its Maturity; or

(c)           default in the performance, or breach, of any covenant or warranty in any material respect of the Company in this Indenture and continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder;

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(d)           the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of ninety (90) consecutive days; or

(e)           the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt or insolvent, or the taking of corporate action by the Company in furtherance of any such action.

SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.

(a)           If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable.

(b)           At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article V, the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Trustee, may rescind and annul such declaration and its consequences if:

(i)           the Company has paid or deposited with the Trustee a sum sufficient to pay:

(A)           all overdue installments of interest on all Securities,

(B)           any accrued Additional Interest on all Securities,

(C)           the principal of and any premium on any Securities that have become due otherwise than by such declaration of acceleration and interest (including any Additional Interest) thereon at the rate borne by the Securities, and

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(D)           all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, and its agents and counsel; and

(ii)           all Events of Default with respect to Securities, other than the non-payment of the principal of Securities that has become due solely by such acceleration, have been cured or waived as provided in Section 5.13;

No such rescission shall affect any subsequent default or impair any right consequent thereon.

SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.

(a)           The Company covenants that (subject to Section 5.2(b) hereof) if:

(i)           default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of thirty (30) days, or

(ii)           default is made in the payment of the principal of and any premium on any Security at the Maturity thereof,

the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest (including any Additional Interest) and, in addition thereto, all amounts owing the Trustee under Section 6.6.

(b)           If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated.

(c)           If an Event of Default with respect to Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 5.4 Trustee May File Proofs of Claim.

In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or similar judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized hereunder in order to have claims of the Holders and the Trustee allowed in any such proceeding.  In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to first pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6.

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SECTION 5.5 Trustee May Enforce Claim Without Possession of Securities.

All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, subject to Article XII and after provision for the payment of all the amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

SECTION 5.6 Application of Money Collected.

Any money or property collected or to be applied by the Trustee with respect to the Securities pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST:  To the payment of all amounts due the Trustee, any predecessor Trustee and other Persons under Section 6.6;

SECOND:  To the payment of all Senior Debt of the Company if and to the extent required by Article XII;

THIRD:  Subject to Article XII, to the payment of the amounts then due and unpaid upon the Securities for principal and any premium and interest (including any Additional Interest) in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and any premium and interest (including any Additional Interest), respectively; and

FOURTH:  The balance, if any, to the Person or Persons entitled thereto.

SECTION 5.7 Limitation on Suits.

Subject to Section 5.8, no Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless:

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(a)           such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities;

(b)           the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(c)           such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

(d)           the Trustee after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding for sixty (60) days; and

(e)           no direction inconsistent with such written request has been given to the Trustee during such sixty (60) day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities;

it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.

SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest.

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium on such Security at its Maturity and payment of interest (including any Additional Interest) on such Security when due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.

SECTION 5.9 Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or such Holder then and in every such case the Company, the Trustee and such Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and such Holder shall continue as though no such proceeding had been instituted.

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SECTION 5.10 Rights and Remedies Cumulative.

Except as otherwise provided in Section 3.6(f), no right or remedy herein conferred upon or reserved to the Trustee or the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 5.11 Delay or Omission Not Waiver.

No delay or omission of the Trustee or any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article V or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or the Holders, as the case may be.

SECTION 5.12 Control by Holders.

The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities  shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided, that:

(a)           such direction shall not be in conflict with any rule of law or with this Indenture,

(b)           the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction, and

(c)           subject to the provisions of Section 6.2, the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, reasonably determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability.

SECTION 5.13 Waiver of Past Defaults.

(a)           The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities may waive any past Event of Default hereunder and its consequences except an Event of Default:

(i)           in the payment of the principal of or any premium or interest (including any Additional Interest) on any Outstanding Security (unless such Event of Default has been cured and the Company has paid to or deposited with the Trustee a sum sufficient to pay all installments of interest (including any Additional Interest) due and past due and all principal of and any premium on all Securities due otherwise than by acceleration), or

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(ii)           in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of each Holder of any Outstanding Security.

(b)           Any such waiver shall be deemed to be on behalf of the Holders of all the Outstanding Securities.

(c)           Upon any such waiver, such Event of Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.

SECTION 5.14 Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium on the Security after the Stated Maturity or any interest (including any Additional Interest) on any Security after it is due and payable.

SECTION 5.15 Waiver of Usury, Stay or Extension Laws.

The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE VI

The Trustee

SECTION 6.1 Corporate Trustee Required.

There shall at all times be a Trustee hereunder with respect to the Securities.  The Trustee shall be a corporation or national banking association organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or state authority and having an office within the United States.  If such entity publishes reports of condition at  least annually, pursuant to law or to the requirements of such supervising or examining authority, then, for the purposes of this Section 6.1, the combined capital and surplus of such entity shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.1, it shall resign immediately in the manner and with the effect hereinafter specified in this Article VI.

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SECTION 6.2 Certain Duties and Responsibilities.

Except during the continuance of an Event of Default:

(i)           the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii)           in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided, that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Indenture.

(b)           If an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(c)           Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.  Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.2.  To the extent that, at law or in equity, the Trustee has duties and liabilities relating to the Holders, the Trustee shall not be liable to any Holder for the Trustee’s good faith reliance on the provisions of this Indenture.  The provisions of this Indenture, to the extent that they restrict the duties and liabilities of the Trustee otherwise existing at law or in equity, are agreed by the Company and the Holders to replace such other duties and liabilities of the Trustee.

(d)           No provisions of this Indenture shall be construed to relieve the Trustee from liability with respect to matters that are within the authority of the Trustee under this Indenture for its own negligent action, negligent failure to act or willful misconduct, except that:

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(i)           the Trustee shall not be liable for any error or judgment made in good faith by an authorized officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

(ii)          the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities; and

(iii)         the Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company and money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.

SECTION 6.3 Notice of Defaults.

Within ninety (90) days after the occurrence of any default actually known to the Trustee, the Trustee shall give the Holders notice of such default unless such default shall have been cured or waived; provided, that except in the case of a default in the payment of the principal of or any premium or interest on any Securities, the Trustee shall be fully protected in withholding the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of holders of Securities; and provided, further, that in the case of any default of the character specified in Section 5.1(c), no such notice to Holders shall be given until at least thirty (30) days after the occurrence thereof.  For the purpose of this Section 6.3, the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.

SECTION 6.4 Certain Rights of Trustee.

Subject to the provisions of Section 6.2:

(a)           the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b)           if (i) in performing its duties under this Indenture the Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Indenture the Trustee finds ambiguous or inconsistent with any other provisions contained herein or (iii) the Trustee is unsure of the application of any provision of this Indenture, then, except as to any matter as to which the Holders are entitled to decide under the terms of this Indenture, the Trustee shall deliver a notice to the Company requesting the Company’s written instruction as to the course of action to be taken and the Trustee shall take such action, or refrain from taking such action, as the Trustee shall be instructed in writing to take, or to refrain from taking, by the Company; provided, that if the Trustee does not receive such instructions from the Company within ten (10) Business Days after it has delivered such notice or such reasonably shorter period of time set forth in such notice the Trustee may, but shall be under no duty to, take such action, or refrain from taking such action, as the Trustee shall deem advisable and in the best interests of the Holders, in which event the Trustee shall have no liability except for its own negligence, bad faith or willful misconduct;

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(c)           any request or direction of the Company shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

(d)           the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the Company or any of its Affiliates, and may include any of its employees) and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(e)           the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Trustee;

(f)           the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, note or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;

(g)           the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;

(h)           whenever in the administration of this Indenture the Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action with respect to enforcing any remedy or right hereunder, the Trustee (i) may request instructions from the Holders (which instructions may only be given by the Holders of the same aggregate principal amount of Outstanding Securities as would be entitled to direct the Trustee under this Indenture in respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or taking such action until such instructions are received and (iii) shall be protected in acting in accordance with such instructions;

(i)           except as otherwise expressly provided by this Indenture, the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Indenture;

(j)           without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with any bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e) of the definition of Event of Default, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy laws or law relating to creditors rights generally;

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(k)           whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officers’ Certificate addressing such matter, which, upon receipt of such request, shall be promptly delivered by the Company;

(l)            the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge or (ii) the Trustee shall have received written notice thereof from the Company or a Holder; and

(m)          in the event that the Trustee is also acting as Paying Agent, Authenticating Agent or Securities Registrar hereunder, the rights and protections afforded to the Trustee pursuant to this Article VI shall also be afforded such Paying Agent, Authenticating Agent, or Securities Registrar.

SECTION 6.5 May Hold Securities.

The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent.

SECTION 6.6 Compensation; Reimbursement; Indemnity.

(a)           The Company agrees:

(i)           to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time; (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(ii)          to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances actually incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct; and

(iii)         to the fullest extent permitted by applicable law, to indemnify the Trustee and its Affiliates, and their officers, directors, shareholders, agents, representatives and employees for, and to hold them harmless against, any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part arising out of or in connection with the acceptance or administration of this trust or the performance of the Trustee’s duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

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(b)           To secure the Company’s payment obligations in this Section 6.6, the Company hereby grants and pledges to the Trustee and the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, other than money or property held in trust to pay principal and interest on particular Securities.  Such lien shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.

(c)           The obligations of the Company under this Section 6.6 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee.

(d)           In no event shall the Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(e)           In no event shall the Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Indenture.

SECTION 6.7 Resignation and Removal; Appointment of Successor.

(a)           No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective until the acceptance of appointment by the successor Trustee under Section 6.8.

(b)           The Trustee may resign at any time by giving written notice thereof to the Company.

(c)           The Trustee may be removed only by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and to the Company.

(d)           If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason the Holders, by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8.  If no successor Trustee shall have been so appointed by the Holders and accepted appointment within sixty (60) days after the giving of a notice of resignation by the Trustee or the removal of the Trustee in the manner required by Section 6.8, any Holder who has been a bona fide Holder of a Security for at least six months (or, if the Securities have been Outstanding for less than six (6) months, the entire period of such lesser time) may, on behalf of such Holder and all others similarly situated, and any resigning Trustee may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.

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(e)           The Company shall give notice to all Holders in the manner provided in Section 1.6 of each resignation and each removal of the Trustee and each appointment of a successor Trustee.  Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.

SECTION 6.8 Acceptance of Appointment by Successor.

(a)           In case of the appointment hereunder of a successor Trustee, each successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.

(b)           Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) of this Section 6.8.

(c)           No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article VI.

SECTION 6.9 Merger, Conversion, Consolidation or Succession to Business.

Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided, that such Person shall be otherwise qualified and eligible under this Article VI.  In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation or as otherwise provided above in this Section 6.9 to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have.

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SECTION 6.10 Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness.  The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities.  Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof.

SECTION 6.11 Appointment of Authenticating Agent.

(a)           The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder.  Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent.  Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation or national banking association organized and doing business under the laws of the United States of America, or of any State or Territory thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or state authority.  If such Authenticating Agent publishes reports of condition at least annually pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 6.11 the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section 6.11.

(b)           Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such Person shall be otherwise eligible under this Section 6.11, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

(c)           An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company.  The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company.  Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11, the Trustee may appoint a successor Authenticating Agent eligible under the provisions of this Section 6.11, which shall be acceptable to the Company, and shall give notice of such appointment to all Holders.  Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.

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(d)           The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.11 in such amounts as the Company and the Authenticating Agent shall agree from time to time.

(e)           If an appointment of an Authenticating Agent is made pursuant to this Section 6.11, the Securities may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:

This is one of the Securities referred to in the within mentioned Indenture.

Dated:	[Trustee], not in its individual capacity, but solely as Trustee
	By:
		Authenticating Agent

By:
	Authorized Signatory

ARTICLE VII

Holder’s Lists and Reports by Company

SECTION 7.1 Company to Furnish Trustee Names and Addresses of Holders.

The Company will furnish or cause to be furnished to the Trustee:

(a)           semiannually, on or before June 30 and December 31 of each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than fifteen (15) days prior to the delivery thereof, and

(b)           at such other times as the Trustee may request in writing, within thirty (30) days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than fifteen (15) days prior to the time such list is furnished,

in each case to the extent such information is in the possession or control of the Company and has not otherwise been received by the Trustee in its capacity as Securities Registrar.

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SECTION 7.2 Preservation of Information, Communications to Holders.

(a)           The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar.  The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished.

(b)           The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act.

(c)           Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act.

SECTION 7.3 Reports by Company.

(a)           The Company shall furnish to the Holders and to prospective purchasers of Securities, upon their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the Securities Act.  The delivery requirement set forth in the preceding sentence may be satisfied by compliance with Section 7.3(b) hereof.

(b)           Unless filed with the Securities and Exchange Commission (the “Commission”) as contemplated in Section 7.3(c) below, the Company shall furnish to each of (i) the Trustee, (ii) the Holders and to subsequent holders of Securities, (iii) Taberna Capital Management, LLC, 450 Park Avenue, 11th Floor, New York, New York 10022, Attn:  Raphael Licht (or such other address as designated by Taberna Capital Management, LLC) and (iv) any beneficial owner of the Securities reasonably identified to the Company (which identification may be made either by such beneficial owner or by Taberna Capital Management, LLC), a duly completed and executed certificate substantially and substantively in the form attached hereto as Exhibit A, including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Company (x) so long as the Company is registered with the Commission, not later than the time periods in which such quarterly reports would be required to be filed with the Commission after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than the time periods within which such annual report would be required to be filed with the Commission after the end of each fiscal year of the Company or (y) at any time that the Company is not registered with the Commission, not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.

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(c)           If the Company intends to file its annual and quarterly information with the Commission in electronic form pursuant to Regulation S-T of the Commission using the Commission’s Electronic Data Gathering, Analysis and Retrieval (“EDGAR”) system, the Company shall notify the Trustee in the manner prescribed herein of each such annual and quarterly filing.  The Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving the financial information so filed.  Compliance with the foregoing shall constitute delivery by the Company of its financial statements to the Trustee in compliance with the provisions of Section 314(a) of the Trust Indenture Act, if applicable, and shall satisfy its obligations to the Trustee and the Holders of the Securities under Section 7.3(b). The Trustee shall have no duty to search for or obtain any electronic or other filings that the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of reports, information and documents to the Trustee pursuant to this Section 7.3(c) shall be solely for purposes of compliance with this Section 7.3(c) and, if applicable, with Section 314(a) of the Trust Indenture Act.  The Trustee’s receipt of such reports, information and documents shall not constitute notice to it of the content thereof or any matter determinable from the content thereof, including the Company’s compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely upon Officers’ Certificates.

ARTICLE VIII

Consolidation, Merger, Conveyance, Transfer or Lease

SECTION 8.1 Company May Consolidate, Etc., Only on Certain Terms.

The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless:

(a)           if the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall (i) be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and (ii) expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;

(b)           immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and

(c)           the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this Article VIII and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1.

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SECTION 8.2 Successor Company Substituted.

(a)           Upon any consolidation or merger by the Company with or into any other Person, or any conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with Section 8.1 and the execution and delivery to the Trustee of the supplemental indenture described in Section 8.1(a), the successor entity formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and in the event of any such conveyance or transfer, following the execution and delivery of such supplemental indenture, the Company shall be discharged from all obligations and covenants under the Indenture and the Securities.

(b)           Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf.  All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture.

(c)           In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to reflect such occurrence.

ARTICLE IX

Supplemental Indentures

SECTION 9.1 Supplemental Indentures without Consent of Holders.

Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, and upon request by the Company (provided that all conditions precedent thereto have been met), the Trustee shall enter into such indenture supplemental hereto for any of the following purposes:

(a)           to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities; or

(b)           to evidence and provide for the acceptance of appointment hereunder by a successor trustee; or

(c)           to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Indenture, which shall not be inconsistent with the other provisions of this Indenture, provided, that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or

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(d)           to comply with the rules and regulations of any securities exchange or automated quotation system on which any of the Securities may be listed, traded or quoted; or

(e)           to add to the covenants, restrictions or obligations of the Company or to add to the Events of Default, provided, that such action pursuant to this clause (e) shall not adversely affect in any material respect the interests of any Holders; or

(f)           to modify, eliminate or add to any provisions of the Indenture or the Securities to such extent as shall be necessary to ensure that the Securities are treated as indebtedness of the Company for United States Federal income tax purposes, provided, that such action pursuant to this clause (f) shall not adversely affect in any material respect the interests of any Holders.

SECTION 9.2 Supplemental Indentures with Consent of Holders.

(a)           Subject to Section 9.1, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security,

(i)           change the Stated Maturity of the principal or any premium of any Security or change the date of payment of any installment of interest (including any Additional Interest) on any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or restrict or impair the right to institute suit for the enforcement of any such payment on or after such date, or

(ii)           reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provision of this Indenture or of defaults hereunder and their consequences provided for in this Indenture, or

(iii)           modify any of the provisions of this Section 9.2, Section 5.13 or Section 10.7, except to increase any percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any reason, or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security;

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(b)           It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

SECTION 9.3 Execution of Supplemental Indentures.

In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent herein provided for relating to such action have been complied with.  The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s own rights, duties, indemnities or immunities under this Indenture or otherwise.  Copies of the final form of each supplemental indenture shall be delivered by the Trustee at the expense of the Company to each Holder, promptly after the execution thereof.

SECTION 9.4 Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article IX, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

SECTION 9.5 Reference in Securities to Supplemental Indentures.

Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture.  If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.

ARTICLE X

Covenants

SECTION 10.1 Payment of Principal, Premium, if any, and Interest.

The Company covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay the principal of and any premium and interest (including any Additional Interest) on the Securities in accordance with the terms of the Securities and this Indenture.

SECTION 10.2 Money for Security Payments to be Held in Trust.

(a)           Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m., New York City time, on each due date of the principal of or any premium or interest (including any Additional Interest) on any Securities, deposit with such Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure to so act.

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(b)           The Company will cause each Paying Agent for the Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee (who by executing and delivering this Indenture agrees to be so bound), subject to the provisions of this Section 10.2, that such Paying Agent will (i) comply with the provisions of this Indenture and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities.

(c)           The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

(d)           Any money deposited with the Trustee or any Paying Agent for the payment of the principal of and any premium or interest (including any Additional Interest) on any Security and remaining unclaimed for two years after such principal and any premium or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

SECTION 10.3 Statement as to Compliance.

Upon the reasonable request of the Holders of a majority in aggregate principal amount of the Outstanding Securities, the Company shall deliver to the Trustee, within thirty (30) days after such request, an Officers’ Certificate covering the preceding calendar year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.  The delivery requirements of this Section 10.3 may be satisfied by compliance with Section 8.16(a) of the Trust Agreement.

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SECTION 10.4 Calculation Agent.

(a)           The Company hereby agrees that for so long as any of the Securities remain Outstanding, there will at all times be an agent appointed to calculate LIBOR in respect of each Interest Payment Date in accordance with the terms of Schedule A (the “Calculation Agent”).  The Company has initially appointed the Trustee as Calculation Agent for purposes of determining LIBOR for each Interest Payment Date.  The Calculation Agent may be removed by the Company at any time.  If the Calculation Agent is unable or unwilling to act as such or is removed by the Company, the Company will promptly appoint as a replacement Calculation Agent the London office of a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market and which does not control or is not controlled by or under common control with the Company or its Affiliates.  The Calculation Agent may not resign its duties without a successor having been duly appointed.

(b)           The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date (as defined in Schedule A), but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent will calculate the interest rate (the Interest Payment shall be rounded to the nearest cent, with half a cent being rounded upwards) for the related Interest Payment Date, and will communicate such rate and amount to the Company, the Trustee, each Paying Agent and the Depositary.  The Calculation Agent will also specify to the Company the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Company before 5:00 p.m.  (London time) on each LIBOR Determination Date that either:  (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor.  The Calculation Agent’s determination of the foregoing rates and amounts for any Interest Payment Date will (in the absence of manifest error) be final and binding upon all parties.  For the sole purpose of calculating the interest rate for the Securities, “Business Day” shall be defined as any day on which dealings in deposits in Dollars are transacted in the London interbank market.

SECTION 10.5 Reserved.

SECTION 10.6 Additional Covenants.

(a)           The Company covenants and agrees with each Holder of Securities that if an Event of Default shall have occurred and be continuing, it shall not (x) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company’s Equity Interests, (y) vote in favor of or permit or otherwise allow any of its Subsidiaries to declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to or otherwise retire, any shares of any such Subsidiary’s preferred stock or other Equity Interests entitling the holders thereof to a stated rate of return (for the avoidance of doubt, whether such preferred stock or other Equity Interests are perpetual or otherwise) other than to the Company or (z) make any payment of principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Securities (other than (A) repurchases, redemptions or other acquisitions of Equity Interests of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of Equity Securities of the Company (or securities convertible into or exercisable for such Equity Securities) as consideration in an acquisition transaction entered into prior to the Event of Default, (B) as a result of an exchange or conversion of any class or series of the Company’s Equity Interests (or any Equity Securities of a Subsidiary of the Company) for any class or series of the Company’s Equity Interests or of any class or series of the Company’s indebtedness for any class or series of the Company’s Equity Interests, (C) the purchase of fractional interests in shares of the Company’s Equity Interests pursuant to the conversion or exchange provisions of such Equity Interests or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto, (E) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock, or (F) any declaration or payment of a dividend or other distribution in order for the Company to maintain its status as a REIT, provided that any such declaration or payment shall be in the form of stock to the extent permitted by the Code and commercially reasonable to do so).

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(b)           The Company covenants and agrees with each Holder of Securities that during the period commencing on the date hereof and continuing through April 30, 2012, it shall not declare or pay dividends or distributions on, or redeem, purchase, or acquire any of the Company’s Equity Interests (for the avoidance of doubt the Original Preferred Securities (as defined in the Exchange Agreement) shall not be deemed to be Equity Interests of the Company), except for (A) repurchases, redemptions or other acquisitions of Equity Interests of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of Equity Securities of the Company (or securities convertible into or exercisable for such Equity Securities) as consideration in an acquisition transaction, (B) as a result of an exchange or conversion of any class or series of the Company’s Equity Interests (or any Equity Securities of a Subsidiary of the Company) for any class or series of the Company’s Equity Interests or of any class or series of the Company’s indebtedness for any class or series of the Company’s Equity Interests, (C) the purchase of fractional interests in shares of the Company’s Equity Interests pursuant to the conversion or exchange provisions of such Equity Interests or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto,  (E) any dividend in the form of Equity Interests, warrants, options or other rights exercisable for Equity Interests, or (F) any declaration or payment of a dividend or other distribution in order for the Company to maintain its status as a REIT, provided that any such declaration or payment shall be in the form of stock to the extent permitted by the Code and commercially reasonable to do so.

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(c)           As of the date hereof, the Company is qualified as a real estate investment trust (a “REIT”) under the Code and no circumstance or event has occurred that would disqualify the Company as a REIT.  Subject to the Company’s right to merge into an entity that is not a real estate investment trust pursuant to Section 8.1 hereof, the Company agrees to use its commercially reasonable efforts to, at all times meet the requirements to qualify as a REIT unless and until the Board of Directors of the Company determines that it is not in the best interests of the Company to be organized as a REIT.

SECTION 10.7 Waiver of Covenants.

The Company may omit in any particular instance to comply with any covenant or condition contained in Section 10.6 if, before or after the time for such compliance, the Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect.

SECTION 10.8 Treatment of Securities.

The Company will treat the Securities as indebtedness, and the amounts, other than payments of principal, payable in respect of the principal amount of such Securities as interest, for all U.S. federal income tax purposes.  All payments in respect of the Securities will be made free and clear of U.S. withholding tax to any beneficial owner thereof that has provided an Internal Revenue Service Form W-9 or W-8BEN (or any substitute or successor form) establishing its U.S. or non-U.S. status for U.S. federal income tax purposes, or any other applicable form establishing a complete exemption from U.S. withholding tax.

SECTION 10.9 Inspection of Books and Records

.  If the Company is no longer subject to the reporting requirements of the Exchange Act and if an Event of Default has occurred and is continuing under his Indenture, the Company shall permit the Holders to examine the books and records of account of the Company and its Subsidiaries (and to make copies thereof and extracts therefrom) and to discuss the affairs, finances and accounts of such Persons with, and to be advised as to the same by, its officers, all at such reasonable times and intervals during normal business hours as the Holders may reasonably request, provided, that prior to any such examination by the Holders, the Company and the Holders shall have entered into a commercially reasonable confidentiality agreement.  The Holders shall use good faith efforts to coordinate such inspections so as to minimize the interference with and disruption to the Company’s normal business operations.

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ARTICLE XI

Redemption of Securities

SECTION 11.1 Optional Redemption.

The Company may, at its option, redeem the Securities in whole at any time or in part from time to time, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion thereof, as applicable), together, in the case of any such redemption, with accrued and unpaid interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date (the “Optional Redemption Price”).

SECTION 11.2 Reserved.

SECTION 11.3 Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Securities, in whole or in part, shall be evidenced by or pursuant to a Board Resolution.  In case of any redemption at the election of the Company, the Company shall, not less than forty-five (45) days and not more than seventy-five (75) days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such date and of the principal amount of the Securities to be redeemed and provide the additional information required to be included in the notice or notices contemplated by Section 11.5.  In the case of any redemption of Securities, in whole or in part, (a) prior to the expiration of any restriction on such redemption provided in this Indenture or the Securities or (b) pursuant to an election of the Company which is subject to a condition specified in this Indenture or the Securities, the Company shall furnish the Trustee with an Officers’ Certificate and an Opinion of Counsel evidencing compliance with such restriction or condition.

SECTION 11.4 Selection of Securities to be Redeemed.

(a)           If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, provided, that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

(b)           The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed.  For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.

(c)           The provisions of paragraphs (a) and (b) of this Section 11.4 shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part.  In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

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SECTION 11.5 Notice of Redemption.

(a)           Notice of redemption shall be given not later than the thirtieth (30th) day, and not earlier than the sixtieth (60th) day, prior to the Redemption Date to each Holder of Securities to be redeemed, in whole or in part (unless a shorter notice shall be satisfactory to the Trustee).

(b)           With respect to Securities to be redeemed, in whole or in part, each notice of redemption shall state:

(i)           the Redemption Date;

(ii)          the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price, as calculated by the Company, together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the fifth (5th) Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated);

(iii)         if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the amount of and particular Securities to be redeemed;

(iv)        that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that any interest (including any Additional Interest) on such Security or such portion, as the case may be, shall cease to accrue on and after said date; and

(v)         the place or places where such Securities are to be surrendered for payment of the Redemption Price.

(c)           Notice of redemption of Securities to be redeemed, in whole or in part, at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company and shall be irrevocable.  The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.  In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.

SECTION 11.6 Deposit of Redemption Price.

Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption given as provided in Section 11.5, the Company will deposit with the Trustee or with one or more Paying Agents  an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including any Additional Interest) on, all the Securities (or portions thereof) that are to be redeemed on that date.

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SECTION 11.7 Payment of Securities Called for Redemption.

(a)           If any notice of redemption has been given as provided in Section 11.5, the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date.  On presentation and surrender of such Securities at a Place of Payment specified in such notice, the Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date.

(b)           Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms.

(c)           If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.

ARTICLE XII

Subordination of Securities

SECTION 12.1 Securities Subordinate to Senior Debt.

The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article XII, the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt.  Notwithstanding anything to the contrary contained herein, the Original Preferred Securities and the Existing Subordinated Notes (as defined in the Exchange Agreement) shall not be Senior Debt or otherwise entitled to the subordination provisions of this Article XII and the Securities shall be superior in right of payment to the Original Preferred Securities and the Existing Subordinated Notes and shall be deemed to be senior debt for purposes thereof, the Existing Indentures (as defined in the Exchange Agreement) and the Trust Agreements (as defined in the Exchange Agreement).

SECTION 12.2 No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.

(a)           In the event and during the continuation of any default by the Company in the payment of any principal of or any premium or interest on any Senior Debt (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.

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(b)           In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a “Proceeding”), all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof.  Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt in accordance with the priorities then existing among such holders until all Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.

(c)           In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any Equity Interests or any obligations of the Company ranking junior to the Securities and such other obligations.  If, notwithstanding the foregoing, any payment or distribution of any character on any security, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) in full.  In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same.

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(d)          The Trustee and the Holders, at the expense of the Company, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.

(e)           The provisions of this Section 12.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.

(f)           The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.

SECTION 12.3 Payment Permitted If No Default.

Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions described in paragraph (a) of Section 12.2 or of any Proceeding referred to in Section 12.2, from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with Section 12.8) that such payment would have been prohibited by the provisions of this Article XII, except as provided in Section 12.8.

SECTION 12.4 Subrogation to Rights of Holders of Senior Debt.

Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this Article XII (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full.  For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XII, and no payments made pursuant to the provisions of this Article XII to the holders of Senior Debt by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt.

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SECTION 12.5 Provisions Solely to Define Relative Rights.

The provisions of this Article XII are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on the other hand.  Nothing contained in this Article XII or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Debt or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article XII of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.

SECTION 12.6 Trustee to Effectuate Subordination.

Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article XII and appoints the Trustee his or her attorney-in-fact for any and all such purposes.

SECTION 12.7 No Waiver of Subordination Provisions.

(a)           No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.

(b)           Without in any way limiting the generality of paragraph (a) of this Section 12.7, the holders of Senior Debt may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article XII or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt, do any one or more of the following:  (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt or any instrument evidencing the same or any agreement under which Senior Debt is outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt, (iii) release any Person liable in any manner for the payment of Senior Debt and (iv) exercise or refrain from exercising any rights against the Company and any other Person.

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SECTION 12.8 Notice to Trustee.

(a)           The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities.  Notwithstanding the provisions of this Article XII or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder of Senior Debt or from any trustee, agent or representative therefor; provided, that if the Trustee shall not have received the notice provided for in this Section 12.8 at least two (2) Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two (2) Business Days prior to such date.

(b)           The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor).  In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article XII, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XII, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

SECTION 12.9 Reliance on Judicial Order or Certificate of Liquidating Agent.

Upon any payment or distribution of assets of the Company referred to in this Article XII, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XII.

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SECTION 12.10 Trustee Not Fiduciary for Holders of Senior Debt.

The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this Article XII or otherwise.

SECTION 12.11 Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights.

The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII with respect to any Senior Debt that may at any time be held by it, to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.

SECTION 12.12 Article Applicable to Paying Agents

If at any time any Paying Agent other than the Trustee shall have been appointed by the Trustee and be then acting hereunder, the term “Trustee” as used in this Article XII shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XII in addition to or in place of the Trustee. For the avoidance of doubt, neither the Company nor any Affiliate of the Company shall be permitted to serve as a Paying Agent hereunder.

SECTION 12.13

With respect to Securities issued in the United States, the Shareholders Act requires the Trustee to disclose to the issuers, upon their request, the name, address and securities position of its customers who are (a) the "beneficial owners" (as defined in the Shareholders Act) of the issuer’s Securities, if the beneficial owner does not object to such disclosure, or (b) acting as a "respondent bank" (as defined in the Shareholders Act) with respect to the Securities.  (Under the Shareholders Act, "respondent banks" do not have the option of objecting to such disclosure upon the issuers' request.)  The Shareholders Act defines a "beneficial owner" as any person who has, or shares, the power to vote a security (pursuant to an agreement or otherwise), or who directs the voting of a security.  The Shareholders Act defines a "respondent bank" as any bank, association or other entity that exercises fiduciary powers which holds securities on behalf of beneficial owners and deposits such securities for safekeeping with a bank, such as the Trustee.  Under the Shareholders Act, each Holder is either the "beneficial owner" or a "respondent bank."

For Purposes of this Indenture, until the Trustee receives a contrary written instruction from a Holder, the Trustee shall assume that such Holder is the beneficial owner of the Securities.

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For purposes of this Indenture, until the Trustee receives a contrary instruction from a Holder, the Trustee shall release the name, address and securities position to any issuer which requests such information pursuant to the Shareholders Act for the specific purpose of direct communications between such issuer and such Holder.  With respect to Securities issued outside of the United States, information shall be released to issuers only if required by law or regulation of the particular country in which the Securities are located.

* * * *

This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

* * * *

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.

Capital Trust, Inc., a Maryland Corporation
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

The Bank of New York Mellon Trust Company, National Association, as Trustee
By:	/s/ Bill Marshall
	Name: Bill Marshall
	Title: Vice President

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Schedule A

DETERMINATION OF LIBOR

With respect to the Securities, the London interbank offered rate (“LIBOR”) shall be determined by the Calculation Agent in accordance with the following provisions (in each case rounded to the nearest .000001%):

(1)           On the second LIBOR Business Day (as defined below) prior to a Interest Payment Date after the expiration of the Fixed Rate Period(each such day, a “LIBOR Determination Date”), LIBOR for any given security shall for the following Interest Period equal the rate (expressed as a percentage per annum) for U.S. dollar deposits in Europe, for a three (3) month period, that appears on Dow Jones Telerate (as defined in the International Swaps and Derivatives Association, Inc. 2000 Interest Rate and Currency Exchange Definitions) Page 3750, or such other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date, as reported by Bloomberg Financial Market Commodities News or any successor service. If such rate is superseded on Telerate Page 3750 by a corrected rate before 12:00 noon (London time) on such LIBOR Determination Date, the corrected rate as so substituted will be LIBOR for such LIBOR Determination Date.

(2)           If on any LIBOR Determination Date such rate does not appear on Dow Jones Telerate Page 3750 or such other page as may replace such Page 3750, the Calculation Agent shall determine the arithmetic mean of the offered quotations (expressed as a percentage per annum) of the Reference Banks (as defined below) to leading banks in the London interbank market for U.S. dollar deposits in Europe, for a three (3) month period, for an amount determined by the Calculation Agent (but not less than U.S. $1,000,000) by reference to requests for quotations as of approximately 11:00 A.M. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If on any LIBOR Determination Date at least two of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. If on any LIBOR Determination Date only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations (expressed as a percentage per annum) that two (2) leading banks in The City of New York selected by the Calculation Agent are quoting on the relevant LIBOR Determination Date for U.S. dollar deposits in Europe, for a three (3) month period, for an amount determined by the Calculation Agent (but not less than U.S. $1,000,000); provided, that if the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination Date.

(3)           As used herein: “Reference Banks” means four major banks in the London interbank market selected by the Calculation Agent; and “LIBOR Business Day” means a day (a) on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London and (b) is not a Saturday, Sunday or other day on which commercial banking institutions in New York, New York are authorized or obligated by law or executive order to be closed.

Schedule A-1

Exhibit A

Form of Officer’s Financial Certificate

(See Attached)

Schedule A-2

CAPITAL TRUST, INC.

Chief Financial Officer’s Certificate

March __, 2009

I, Geoffrey G. Jervis, the Chief Financial Officer of Capital Trust, Inc. (the “Company”), hereby certify that:

(i)           as of December 31, 2008, the Company had total consolidated assets of approximately _______, and no event has occurred nor circumstance exists since such date that materially and adversely affects the total assets of the Company; and

(ii)           the Company (which, for purposes of this certificate, includes any predecessor entity) has been in operation since at least 1997.

[Signature page follows]

EX-10.3

JUNIOR SUBORDINATED INDENTURE

between

CAPITAL TRUST, INC.

and

THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee

Dated as of May 14, 2009

TABLE OF CONTENTS

Page

ARTICLE I Definitions and Other Provisions of General Application		1
SECTION 1.1	Definitions	1
SECTION 1.2	Compliance Certificate and Opinions	8
SECTION 1.3	Forms of Documents Delivered to Trustee	9
SECTION 1.4	Acts of Holders	9
SECTION 1.5	Notices, Etc. to Trustee and Company	11
SECTION 1.6	Notice to Holders; Waiver	12
SECTION 1.7	Effect of Headings and Table of Contents	12
SECTION 1.8	Successors and Assigns	13
SECTION 1.9	Separability Clause	13
SECTION 1.10	Benefits of Indenture	13
SECTION 1.11	Governing Law	13
SECTION 1.12	Submission to Jurisdiction	13
SECTION 1.13	Non-Business Days	13
ARTICLE II Security Forms		14
SECTION 2.1	Form of Security	14
SECTION 2.2	Restricted Legend	18
SECTION 2.3	Form of Trustee’s Certificate of Authentication	20
SECTION 2.4	Temporary Securities.	20
SECTION 2.5	Definitive Securities	20
ARTICLE III The Securities		21
SECTION 3.1	Payment of Principal and Interest.	21
SECTION 3.2	Denominations.	23
SECTION 3.3	Execution, Authentication, Delivery and Dating.	23
SECTION 3.4	Global Securities.	24
SECTION 3.5	Registration, Transfer and Exchange Generally.	25
SECTION 3.6	Mutilated, Destroyed, Lost and Stolen Securities	27
SECTION 3.7	Persons Deemed Owners	28
SECTION 3.8	Cancellation	28
SECTION 3.9	Reserved	28
SECTION 3.10	Reserved	28
SECTION 3.11	Agreed Tax Treatment.	28
SECTION 3.12	CUSIP Numbers	28
ARTICLE IV Satisfaction and Discharge		29
SECTION 4.1	Satisfaction and Discharge of Indenture.	29
SECTION 4.2	Application of Trust Money	30

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Page

ARTICLE V Remedies		30
SECTION 5.1	Events of Default	30
SECTION 5.2	Acceleration of Maturity; Rescission and Annulment	31
SECTION 5.3	Collection of Indebtedness and Suits for Enforcement by Trustee	32
SECTION 5.4	Trustee May File Proofs of Claim	32
SECTION 5.5	Trustee May Enforce Claim Without Possession of Securities.	33
SECTION 5.6	Application of Money Collected	33
SECTION 5.7	Limitation on Suits	33
SECTION 5.8	Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest	34
SECTION 5.9	Restoration of Rights and Remedies	34
SECTION 5.10	Rights and Remedies Cumulative.	34
SECTION 5.11	Delay or Omission Not Waiver	35
SECTION 5.12	Control by Holders	35
SECTION 5.13	Waiver of Past Defaults.	35
SECTION 5.14	Undertaking for Costs.	36
SECTION 5.15	Waiver of Usury, Stay or Extension Laws	36
ARTICLE VI The Trustee		36
SECTION 6.1	Corporate Trustee Required.	36
SECTION 6.2	Certain Duties and Responsibilities.	37
SECTION 6.3	Notice of Defaults.	38
SECTION 6.4	Certain Rights of Trustee.	38
SECTION 6.5	May Hold Securities	40
SECTION 6.6	Compensation; Reimbursement; Indemnity	40
SECTION 6.7	Resignation and Removal; Appointment of Successor	41
SECTION 6.8	Acceptance of Appointment by Successor	42
SECTION 6.9	Merger, Conversion, Consolidation or Succession to Business	42
SECTION 6.10	Not Responsible for Recitals or Issuance of Securities.	43
SECTION 6.11	Appointment of Authenticating Agent	43
ARTICLE VII Holder’s Lists and Reports by Company		44
SECTION 7.1	Company to Furnish Trustee Names and Addresses of Holders	44
SECTION 7.2	Preservation of Information, Communications to Holders.	45
SECTION 7.3	Reports by Company	45
ARTICLE VIII Consolidation, Merger, Conveyance, Transfer or Lease		46
SECTION 8.1	Company May Consolidate, Etc., Only on Certain Terms.	46
SECTION 8.2	Successor Company Substituted.	47
ARTICLE IX Supplemental Indentures		47
SECTION 9.1	Supplemental Indentures without Consent of Holders	47
SECTION 9.2	Supplemental Indentures with Consent of Holders	48

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Page

SECTION 9.3	Execution of Supplemental Indentures.	49
SECTION 9.4	Effect of Supplemental Indentures	49
SECTION 9.5	Reference in Securities to Supplemental Indentures	49
ARTICLE X Covenants		49
SECTION 10.1	Payment of Principal, Premium, if any, and Interest.	49
SECTION 10.2	Money for Security Payments to be Held in Trust	49
SECTION 10.3	Statement as to Compliance	50
SECTION 10.4	Calculation Agent	51
SECTION 10.5	Reserved	51
SECTION 10.6	Additional Covenants	51
SECTION 10.7	Waiver of Covenants	53
SECTION 10.8	Treatment of Securities.	53
SECTION 10.9	Inspection of Books and Records	53
ARTICLE XI Redemption of Securities		54
SECTION 11.1	Optional Redemption.	54
SECTION 11.2	Reserved	54
SECTION 11.3	Election to Redeem; Notice to Trustee.	54
SECTION 11.4	Selection of Securities to be Redeemed	54
SECTION 11.5	Notice of Redemption.	55
SECTION 11.6	Deposit of Redemption Price.	55
SECTION 11.7	Payment of Securities Called for Redemption	56
ARTICLE XII Subordination of Securities		56
SECTION 12.1	Securities Subordinate to Senior Debt.	56
SECTION 12.2	No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc	56
SECTION 12.3	Payment Permitted If No Default	58
SECTION 12.4	Subrogation to Rights of Holders of Senior Debt.	58
SECTION 12.5	Provisions Solely to Define Relative Rights	58
SECTION 12.6	Trustee to Effectuate Subordination	59
SECTION 12.7	No Waiver of Subordination Provisions.	59
SECTION 12.8	Notice to Trustee	59
SECTION 12.9	Reliance on Judicial Order or Certificate of Liquidating Agent	60
SECTION 12.10	Trustee Not Fiduciary for Holders of Senior Debt	60
SECTION 12.11	Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights.	61
SECTION 12.12	Article Applicable to Paying Agents	61
SECTION 12.13		61

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SCHEDULES

Schedule A—Determination of LIBOR

Exhibit A—Form of Officer’s Financial Certificate

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Junior Subordinated Indenture, dated as of May 14, 2009, between Capital Trust, Inc., a Maryland corporation (the “Company”), and The Bank of New York Mellon Trust Company, National Association, a national banking association, as Trustee (in such capacity, the “Trustee”).

Recitals of the Company

Whereas, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its unsecured junior subordinated notes (the “Securities”), and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; and

Whereas, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

Now, Therefore, this Indenture Witnesseth:

For and in consideration of the premises herein it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:

ARTICLE I

Definitions and Other Provisions of General Application

SECTION 1.1 Definitions.

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a) the terms defined in this Article I have the meanings assigned to them in this Article I;

(b) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;

(c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;

(d) unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Indenture;

(e) the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;

(f) a reference to the singular includes the plural and vice versa; and

(g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.

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“Act” when used with respect to any Holder, has the meaning specified in Section 1.4.

“Additional Interest” means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security, in each case to the extent legally enforceable.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Applicable Depositary Procedures” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.

“Authenticating Agent” means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate the Securities.

“Board of Directors” means the board of directors of the Company or any duly authorized committee of that board.

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.

“Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.

“Calculation Agent” has the meaning specified in Section 10.4.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules, procedures and guidance promulgated thereunder or by the Internal Revenue Service from time to time.

“Commission” has the meaning specified in Section 7.3(b).

“Company” means the Person named as the “Company” in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.

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“Company Request” and “Company Order” mean, respectively, the written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its Chief Executive Officer, President or a Vice President, and by its Chief Financial Officer, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.

“Corporate Trust Office” means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Indenture is located at 601 Travis Street, 16th Floor, Houston, Texas 77002 Attn: Global Corporate Trust — CDO Group. Initially, all notices and correspondence shall be addressed to Mudassir Mohamed, telephone number (713) 483-6029.

“Debt” means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary cours e of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).

“Defaulted Interest” has the meaning specified in Section 3.1.

“Depositary” means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Company or any successor thereto.

“Depositary Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.

“Dollar” or “$” means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts.

“EDGAR” has the meaning specified in Section 7.3(c).

“Equity Interests” means (a) the partnership interests (general or limited) in a partnership, (b) the membership interests in a limited liability company and (c) the shares or stock interests (both common stock and preferred stock) in a corporation.

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“Event of Default” has the meaning specified in Section 5.1.

“Exchange Act” means the Securities Exchange Act of 1934 or any statute successor thereto and the rules promulgated thereunder, in each case as amended from time to time.

“Exchange Agreement” means that certain Exchange Agreement executed and delivered contemporaneously with this Indenture by the Company, Kodiak CDO II, Ltd., Talon Total Return QP Partners LP, Talon Total Return Partners LP, GPC 69, LLC, HFR RVA Opal Master Trust and Paul Strebel, as the same may be amended from time to time.

“Expiration Date” has the meaning specified in Section 1.4(h).

“Fixed Rate” means a rate equal to (a) for the Interest Period commencing on May 14, 2009, and for each Interest Period thereafter through and including April 29, 2012, a fixed rate equal to one percent (1%) per annum and (b) for the Interest Period commencing on April 30, 2012 and for each Interest Period thereafter through and including April 29, 2016, a fixed rate equal to 7.23%.

“Fixed Rate Period” has the meaning specified in Section 3.1(a).

“GAAP” means United States generally accepted accounting principles, consistently applied, from time to time in effect.

“Global Security” means a Security that evidences all or part of the Securities, the ownership and transfers of which shall be made through book entries by a Depositary.

“Government Obligation” means (a) any security that is (i) a direct obligation of the United States of America of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation that is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with res pect to any specific payment of principal of or interest on any Government Obligation that is so specified and held, provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.

“Holder” means a Person in whose name a Security is registered in the Securities Register.

“Indenture” means this instrument as originally executed or as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof.

- 4 -

“Interest Payment Date” means January 30, April 30, July 30 and October 30 of each year, commencing on July 30, 2009, during the term of this Indenture.

“Interest Period” means the period commencing on an Interest Payment Date and continuing through and including the day prior to the next succeeding Interest Payment Date.

“Investment Company Act” means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.

“LIBOR” has the meaning specified in Schedule A.

“LIBOR Business Day” has the meaning specified in Schedule A.

“LIBOR Determination Date” has the meaning specified in Schedule A.

“Maturity” means, when used with respect to any Security, the date on which the principal of such Security or any installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

“Notice of Default” means a written notice of the kind specified in Section 5.1(c).

“Officers’ Certificate” means a certificate signed by the Chief Executive Officer, the President, a Managing Director, a Director or a Vice President, or by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company and delivered to the Trustee.

“Opinion of Counsel” means a written opinion of counsel, who may be counsel for or an employee of the Company or any Affiliate of the Company.

“Optional Redemption Price” has the meaning set forth in Section 11.1.

“Original Issue Date” means the date of original issuance of each Security.

“Outstanding” means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

(i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

(ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securities; provided, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and

(iii) Securities that have been paid or in substitution for or in lieu of which other Securities have been authenticated and delivered pursuant to the provisions of this Indenture, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company;

- 5 -

provided, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding unless the Company shall hold all Outstanding Securities, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to ac t with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor.

“Paying Agent” means the Trustee or any Person (other than the Company or any Affiliate of the Company) authorized by the Company to pay the principal of or any premium or interest on, or other amounts in respect of, any Securities on behalf of the Company.

“Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, company, limited liability company, trust, unincorporated association, or government, or any agency or political subdivision thereof, or any other entity of whatever nature.

“Place of Payment” means, with respect to the Securities, the Corporate Trust Office of the Trustee.

“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For the purposes of this definition, any security authenticated and delivered under Section 3.6 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

“Proceeding” has the meaning specified in Section 12.2(b).

“Redemption Date” means, when used with respect to any Security to be redeemed, the date fixed for such redemption by or pursuant to this Indenture.

“Redemption Price” means, when used with respect to any Security to be redeemed, in whole or in part, the Optional Redemption Price at which such Security or portion thereof is to be redeemed as fixed by or pursuant to this Indenture.

“Reference Banks” has the meaning specified in Schedule A.

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“Regular Record Date” for the interest payable on any Interest Payment Date with respect to the Securities means the date that is fifteen (15) days preceding such Interest Payment Date (whether or not a Business Day).

“REIT” has the meaning set forth in Section 10.6(b).

“Responsible Officer” means, when used with respect to the Trustee, the officer in the Worldwide Securities Services department of the Trustee having direct responsibility for the administration of this Indenture.

“Rights Plan” means a plan of the Company providing for the issuance by the Company to all holders of its Equity Interests of rights entitling the holders thereof to subscribe for or purchase Equity Interests or any class or series of Equity Interests in the Company which rights (i) are deemed to be transferred with such Equity Interests and (ii) are also issued in respect of future issuances of such Equity Interests, in each case until the occurrence of a specified event or events.

“Securities” or “Security” means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture.

“Securities Act” means the Securities Act of 1933 or any successor statute thereto and the rules promulgated thereunder, in each case as amended from time to time.

“Securities Register” and “Securities Registrar” have the respective meanings specified in Section 3.5.

“Senior Debt” means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Company, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Securities issued under this Indenture; provided, that Senior Debt shall not be deemed to include (i) any Debt issued under or pursuant to the Junior Subordinated Indenture, dated as of March 16, 2009, between the Company and The Bank of New York Mellon Trust Company, National Association, as trustee, or (ii) any debt (and guarantees, if any, in respect of any such debt) issued to any trust (or a trustee of any such trust) affiliated with the Company that is a financing vehicle of the Company (a “financing entity”) in connection with the issuance by such financing entity of equity securities or other securities, in each case pursuant to an instrument that ranks pari passu with or junior in right of payment to this Indenture. For the avoidance of doubt, the proviso in clause (ii) of the previous sentence (x) only refers to the Company’s issuance of debt in connection with trust preferred securities substantially similar to the Original Preferred Securities (which debt and trust preferred securities may be pari passu with, or junior to, the Securities but will not be entitled to the subordination provisions of Article XII) and (y) in no way (i) affects the subordination of the Securities to other Senior Debt pursuant to the provisions of Article&# 160;XII or (ii) is a limitation on the Company’s ability to issue additional Debt or other securities.

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“Shareholders Act” means the Shareholders Communication Act of 1985 (as amended from time to time).

“Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.1.

“Stated Maturity” means April 30, 2036.

“Subsidiary” of a Person means (a) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries or (b) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries. Unless otherwise expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of the Company.

“Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument, solely in its capacity as such and not in its individual capacity, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, “Trustee” shall mean or include each Person who is then a Trustee hereunder.

“Trust Indenture Act” means the Trust Indenture Act of 1939 and the rules promulgated thereunder, in each case as amended and as in effect on the date as of this Indenture.

SECTION 1.2 Compliance Certificate and Opinions.

(a) Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall, if requested by the Trustee, furnish to the Trustee an Officers’ Certificate stating that all conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with.

(b) Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificate provided pursuant to Section 10.3) shall include:

(i) a statement by each individual signing such certificate or opinion that such individual has read such covenant or condition and the definitions herein relating thereto;

(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions of such individual contained in such certificate or opinion are based;

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(iii) a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv) a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with.

SECTION 1.3 Forms of Documents Delivered to Trustee.

(a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

(b) Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to such matters are erroneous.

(c) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

(d) Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officers’ Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally received in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities.

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SECTION 1.4 Acts of Holders.

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments (including any appointment of an agent) is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be su fficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.4.

(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such execution is by a Person acting in other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine.

(c) The ownership of Securities shall be proved by the Securities Register.

(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.

(e) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.

(f) Except as set forth in paragraph (g) of this Section 1.4, the Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as defined in Section 1.4(h)) by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in Section 1.6.

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(g) The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration or rescission or annulment thereof referred to in Section 5.2, (iii) any request to institute proceedings referred to in Section 5.7(b) or (iv) any direction referred to in Section 5.12. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in Section 1.6.

(h) With respect to any record date set pursuant to paragraph (f) or (g) of this Section 1.4, the party hereto that sets such record date may designate any day as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided, that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities in the manner set forth in Section 1.6, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section 1.4, the party hereto that set such record date shall be deemed to have initially designated the ninetieth (90th) day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the one hundred eightieth (180th) day after the applicable record date.

SECTION 1.5 Notices, Etc. to Trustee and Company.

(a) Any request, demand, authorization, direction, notice, consent, waiver, Act of Holders, or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:

(i) the Trustee by any Holder or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with and received by the Trustee at its Corporate Trust Office, or

(ii) the Company by the Trustee or any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at 410 Park Avenue, 14th Floor, New York, New York 10022 or at any other address previously furnished in writing to the Trustee by the Company.

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(b) The Trustee may, but is not required to, rely upon and comply with instructions and directions sent by email or facsimile, (or any other reasonable means of communication) by persons believed by the Trustee in good faith to be authorized to provide such instructions or direction; provided, however, that the Trustee may require such additional evidence, confirmation or certification from any such party or parties as the Trustee, in its reasonable discretion, deems necessary or advisable before acting or refraining from acting upon any such instruction or direction.

(c) Subject to Section 1.5(b) above, the Trustee agrees to accept and act upon instructions or directions pursuant to this Agreement sent by unsecured email, facsimile transmission or other similar unsecured electronic methods; provided, however, that any Person providing such instructions or directions shall provide to the Trustee an incumbency certificate listing such designated persons, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing. If such Person elects to give the Trustee email or facsimile instructions (or instructions by a similar electronic method) the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are i nconsistent with a subsequent written instruction. Each Person providing instructions or directions to the Trustee hereunder agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting, in good faith, on unauthorized instructions, and the risk of interception and misuse by third parties.

SECTION 1.6 Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class, postage prepaid, to each Holder affected by such event to the address of such Holder as it appears in the Securities Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. If, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such noti ce, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

SECTION 1.7 Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction of this Indenture.

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SECTION 1.8 Successors and Assigns.

This Indenture shall be binding upon and shall inure to the benefit of any successor to the Company and the Trustee, including any successor by operation of law. Except in connection with a transaction involving the Company that is permitted under Article VIII and pursuant to which the assignee agrees in writing to perform the Company’s obligations hereunder, the Company shall not assign its obligations hereunder.

SECTION 1.9 Separability Clause.

If any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.

SECTION 1.10 Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Debt, and the Holders of the Securities any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 1.11 Governing Law.

This Indenture and the rights and obligations of each of the Holders, the Company and the Trustee shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).

SECTION 1.12 Submission to Jurisdiction.

ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE.

SECTION 1.13 Non-Business Days.

If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest, premium, if any, or principal or other amounts in respect of such Security shall not be made on such date, but shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity.

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ARTICLE II

Security Forms

SECTION 2.1 Form of Security.

Any Security issued hereunder shall be in substantially the following form:

CAPITAL TRUST, INC.

Junior Subordinated Note due 2036

No. $

Capital Trust, Inc., a corporation organized and existing under the laws of Maryland (hereinafter called the “Company,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to  _____, or registered assigns, the principal sum of  _____  Dollars ($_____) [if the Security is a Global Security, then insert— or such other principal amount represented hereby as may be set forth in the records of the Securities Registrar hereinafter referred to in accordance with the Indenture] on April 30, 2036. The Company further promises to pay interest on said principal sum from May  _____, 2009 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly in arrears on Ja nuary 30, April 30, July 30 and October 30 of each year, commencing July 30, 2009, or if any such day is not a Business Day, on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date until such next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on the Interest Payment Date, at a fixed rate equal to the applicable Fixed Rate through the Interest Payment Date occurring in April, 2016 (the “Fixed Rate Period”) and thereafter at a variable rate equal to LIBOR plus 2.44% per annum until the principal hereof is paid or duly provided for or made available for payment; provided , further, that any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at a fixed rate equal to the applicable Fixed Rate then in effect through the Interest Payment Date occurring in April, 2016 and thereafter at a variable rate equal to LIBOR plus 2.44% per annum (to the extent that the payment of such interest shall be legally enforceable), compounded quarterly, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand.

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During the Fixed Rate Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360 day year of twelve 30 day months. Upon expiration of the Fixed Rate Period, the amount of interest payable for any Interest Period will be computed on the basis of a 360 day year and the actual number of days elapsed in the relevant Interest Period. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Hol der on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

Payment of principal of, premium, if any, and interest on this Security shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of this Security shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent, and payments of interest shall be made, subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address sha ll appear in the Security Register.

The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. < /div>

Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

[FORM OF REVERSE OF SECURITY]

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This Security is one of a duly authorized issue of securities of the Company (the “Securities”) issued under the Junior Subordinated Indenture, dated as of May 14, 2009 (the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, National Association, as Trustee (in such capacity, the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Debt and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authentica ted and delivered.

All terms used in this Security that are not defined herein shall have the meanings assigned to them in the Indenture.

The Company may, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee) and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time at a Redemption Price equal to one hundred percent (100%) of the principal amount hereof, (or of the redeemed portion hereof, as applicable), together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.

In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security.

The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities, on behalf of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium, if any, and interest, including any Additional Interest (to the extent legally enforceable), on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

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As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is restricted to transfers to (i) the Company, (ii) “Qualified Institutional Buyers” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”)), (iii) outside the United States in an offshore transaction in accordance with Regulation S under the Securities Act, (iv) pursuant to an effective registration statement under the Securities Act or (v) pursuant to another exemption from registration under the Securities Act and, in the case of clauses (ii), (iii), (iv) or (v), a person whom the Company reasonably believes also is a “Qualified Purchaser” (as defined in Section 2(a)(51) of the Investment Company Act of 1940, as amended, and is registrable in the S ecurities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

The Securities are issuable only in registered form without coupons in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

The Company and, by its acceptance of this Security or a beneficial interest herein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that, for United States federal, state and local tax purposes, it is intended that this Security constitute indebtedness.

This Security shall be construed and enforced in accordance with and governed by the laws of the State of New York, without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on this  _____  day of  _____, 20_.

By:
	Name:
	Title:

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SECTION 2.2 Restricted Legend.

(a) Any Security issued hereunder shall bear a legend in substantially the following form:

“[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.

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THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A OF THE SECURITIES ACT), (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (V) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND, IN THE CASE OF CLAUSES II, III, IV, OR V, TO A PERSON WHOM THE ISSUER REASONABLY BELIEVES ALSO IS A “QUALIFIED PURCHASER” (AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITI ES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.

THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WIL L BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE.”

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(b) The above legends shall not be removed from any Security unless there is delivered to the Company satisfactory evidence, which may include an Opinion of Counsel, as may be reasonably required to ensure that any future transfers thereof may be made without restriction under or violation of the provisions of the Securities Act and other applicable law. Upon provision of such satisfactory evidence, the Company shall execute and deliver to the Trustee, and the Trustee shall deliver, upon receipt of a Company Order directing it to do so, a Security that does not bear the legend.

SECTION 2.3 Form of Trustee’s Certificate of Authentication.

The Trustee’s certificate of authentication shall be in substantially the following form:

This is one of the Securities referred to in the within-mentioned Indenture.

Dated:	[TRUSTEE], not in its individual capacity, but solely as Trustee
	By:
		Authorized Signatory

SECTION 2.4 Temporary Securities.

(a) Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.

(b) If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.

SECTION 2.5 Definitive Securities.

The Securities issued on the Original Issue Date shall be in definitive form. The definitive Securities shall be printed, lithographed or engraved, or produced by any combination of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.

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ARTICLE III

The Securities

SECTION 3.1 Payment of Principal and Interest.

(a) The unpaid principal amount of the Securities shall bear interest at the applicable Fixed Rate through the Interest Payment Date occurring in April 2016 (the “Fixed Rate Period”), and thereafter at a variable rate equal to LIBOR plus 2.44% per annum, until paid as duly provided for such interest to accrue from the Original Issue Date or from the most recent Interest Payment Date to which interest has been paid or duly provided for. Any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at a fixed rate equal to the applicable Fixed Rate through the Interest Payment Date in April, 2016, and thereafter at a variable rate equal to LIBOR plus 2.44% per annum, compounded quarterly from the dates such amounts are due until they are paid or funds for the payment thereof are made available for payment.

(b) Interest and Additional Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, except that interest and any Additional Interest payable on the Stated Maturity (or any date of principal repayment upon early maturity) of the principal of a Security or on a Redemption Date shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security that is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security.

(c) Any interest on any Security that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below:

(i) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest (a “Special Record Date”), which shall be fixed in the following manner. At least thirty (30) days prior to the date of the proposed payment, the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed

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payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security at the address of such Holder as it appears in the Securities Register not less than ten (10) days prior to such Special Record Date. Notice of the proposed payment of suc h Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date; or

(ii) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities may be listed, traded or quoted and, upon such notice as may be required by such exchange or automated quotation system (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee.

(d) Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. During the Fixed Rate Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Upon expiration of the Fixed Rate Period, the amount of interest payable for any Interest Period will be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant Interest Period.

(e) Payment of principal of, premium, if any, and interest on the Securities shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of such Securities shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent and payments of interest shall be made subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such a ddress shall appear in the Security Register.

(f) Subject to the foregoing provisions of this Section 3.1, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.

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SECTION 3.2 Denominations.

The Securities shall be in registered form without coupons and shall be issuable in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.

SECTION 3.3 Execution, Authentication, Delivery and Dating.

(a) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities in an aggregate principal amount (including all then Outstanding Securities) not in excess of Twenty Five Million, One Hundred Fifty-Nine Thousand Dollars ($25,159,000) executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon:

(i) a copy of any Board Resolution relating thereto; and

(ii) an Opinion of Counsel stating that: (1) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute, and the Indenture constitutes, valid and legally binding obligations of the Company, each enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; (2) the Securities have been duly authorized and executed by the Company and have been delivered to the Trustee for authentication in accordance with this Indenture; (3) the Securities are not required to be registered under the Securities Act; and (4) the Indenture is not required to be qualified under the Trust Indenture A ct.

(b) The Securities shall be executed on behalf of the Company by its Chief Executive Officer, its President, a Managing Director, a Director or one of its Vice Presidents or by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

(c) No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.8, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be e ntitled to the benefits of this Indenture.

(d) Each Security shall be dated the date of its authentication.

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SECTION 3.4 Global Securities.

(a) Upon the election of the Holder after the Original Issue Date, which election need not be in writing, the Securities owned by such Holder shall be issued in the form of one or more Global Securities registered in the name of the Depositary or its nominee. Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.

(b) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for registered Securities, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Security, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii) the Company executes and delivers to the Trustee a Company Order stating that the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default shall have occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and instruct the Depositary to notify all owners of beneficial interests in such Global Security of the occurrence of such event and of the availability of Securities to such owners of beneficial interests requesting the same. The Trustee may conclusively rely, and be protected in relying, upon the written identification of the owners of beneficial interests furnished by the Depositary, and shall not be liable for any delay resulting from a delay by the Depositary. Upon the issuance of such Securities and the registration in the Securities Register of such Securities in the names of the Holders of the beneficial interests therein, the Trustees shall recognize such holders of beneficial interests as Holders.

(c) If any Global Security is to be exchanged for other Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this Article III or (ii) the principal amount thereof shall be reduced or increased by an amount equal to (x) the portion thereof to be so exchanged or canceled, or (y) the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding ad justment to its records. Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions, the Company shall execute and the Trustee shall authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.

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(d) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.

(e) The Depositary or its nominee, as the registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Depositary Procedures. Accordingly, any such owner’s beneficial interest in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary Participants. The Securities Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this Indenture relating to a Global Security (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole Holder of the Security and shall have no obligations to the owners of beneficial interests therein. Neither the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary.

(f) The rights of owners of beneficial interests in a Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Depositary Participants.

(g) No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Trustee nor any agent of the Company or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impa ir, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.

SECTION 3.5 Registration, Transfer and Exchange Generally.

(a) The Trustee shall cause to be kept at the Corporate Trust Office a register (the “Securities Register”) in which the registrar and transfer agent with respect to the Securities (the “Securities Registrar”), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Securities and of transfers and exchanges of Securities. The Trustee shall at all times also be the Securities Registrar. The provisions of Article VI shall apply to the Trustee in its role as Securities Registrar.

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(b) Subject to compliance with Section 2.2(b), upon surrender for registration of transfer of any Security at the offices or agencies of the Company designated for that purpose the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations of like tenor and aggregate principal amount.

(c) At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations, of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive.

(d) All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.

(e) Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.

(f) No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities.

(g) Neither the Company nor the Trustee shall be required pursuant to the provisions of this Section 3.5(g): (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of Securities pursuant to Article XI and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any such Security to be redeemed in part, any portion thereof not to be redeemed.

(h) The Company shall designate an office or offices or agency or agencies where Securities may be surrendered for registration or transfer or exchange. The Company initially designates the Corporate Trust Office as its office and agency for such purposes. The Company shall give prompt written notice to the Trustee and to the Holders of any change in the location of any such office or agency.

(i) The Securities may only be transferred to (i) the Company, (ii) a “qualified institutional buyer” (as defined in Rule 144A of the Securities Act), (iii) outside the United States in an offshore transaction in accordance with Regulation S under the Securities Act, (iv) pursuant to an effective registration statement under the Securities Act or (v) pursuant to another exemption from registration under the Securities Act and, in the case of clauses (ii), (iii), (iv) or (v), to a Person whom the Company reasonably believes is also a “Qualified Purchaser”, as such term is defined in Section 2(a)(51) of the Investment Company Act.

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(j) Neither the Trustee nor the Securities Registrar shall be responsible for ascertaining whether any transfer hereunder complies with the registration provisions of or any exemptions from the Securities Act, applicable state securities laws or the applicable laws of any other jurisdiction, ERISA, the Code, or the Investment Company Act; provided, that if a certificate is specifically required by the express terms of this Section 3.5 to be delivered to the Trustee or the Securities Registrar by a Holder or transferee of a Security, the Trustee and the Securities Registrar shall be under a duty to receive and examine the same to determine whether or not the certificate substantially conforms on its face to the requirements of this Indenture and shall promptly notify the party delivering the same if s uch certificate does not comply with such terms.

SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Securities.

(a) If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Trustee to save the Company and the Trustee harmless, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding.

(b) If there shall be delivered to the Trustee (i) evidence to its satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by it to save each of the Company and the Trustee harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding.

(c) If any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

(d) Upon the issuance of any new Security under this Section 3.6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

(e) Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.

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(f) The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 3.7 Persons Deemed Owners.

The Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest on such Security and for all other purposes whatsoever, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

SECTION 3.8 Cancellation.

All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section 3.8, except as expressly permitted by this Indenture. All canceled Securities shall be retained or disposed of by the Trustee in accordance with its customary practices and the Trustee shall deliver to the Company a certificate of such disposition.

SECTION 3.9 Reserved.

SECTION 3.10 Reserved.

SECTION 3.11 Agreed Tax Treatment.

Each Security issued hereunder shall provide that the Company and, by its acceptance or acquisition of a Security or a beneficial interest therein, each Holder of, and any Person that acquires a direct or indirect beneficial interest in, such Security, intend and agree to treat such Security as indebtedness of the Company for United States Federal, state and local and foreign tax purposes. The provisions of this Indenture shall be interpreted to further this intention and agreement of the parties.

SECTION 3.12 CUSIP Numbers.

The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption and other similar or related materials as a convenience to Holders; provided, that any such notice or other materials may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.

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ARTICLE IV

Satisfaction and Discharge

SECTION 4.1 Satisfaction and Discharge of Indenture.

This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this Section 4.1) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

(a) either

(i) all Securities theretofore authenticated and delivered (other than (A) Securities that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.6 and (B) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 10.2) have been delivered to the Trustee for cancellation; or

(ii) all such Securities not theretofore delivered to the Trustee for cancellation

(A) have become due and payable, or

(B) will become due and payable at their Stated Maturity within one year of the date of deposit, or

(C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency or currencies in which the Securities are payable, (y) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount or (z) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest (including any Additional Interest) to the date of such deposit (in the case of S ecurities that have become due and payable) or to the Stated Maturity (or any date of principal repayment upon early maturity) or Redemption Date, as the case may be;

(b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

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(c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.6, the obligations of the Company to any Authenticating Agent under Section 6.11 and, if money shall have been deposited with the Trustee pursuant to subclause (a)(ii) of this Section 4.1, the obligations of the Trustee under Section 4.2 and Section 10.2(e) shall survive.

SECTION 4.2 Application of Trust Money.

Subject to the provisions of Section 10.2(d), all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment in accordance with Section 3.1, either directly or through any Paying Agent as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest (including any Additional Interest) for the payment of which such money or obligations have been deposited with or received by the Trustee. Moneys held by the Trustee under this Section 4.2 shall not be subject to the claims of holde rs of Senior Debt under Article XII.

ARTICLE V

Remedies

SECTION 5.1 Events of Default.

“Event of Default” means, wherever used herein with respect to the Securities, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a) default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of thirty (30) days; or

(b) default in the payment of the principal of or any premium on any Security at its Maturity; or

(c) default in the performance, or breach, of any covenant or warranty in any material respect of the Company in this Indenture and continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder;

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(d) the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of ninety (90) consecutive days; or

(e) the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt or insolvent, or the taking of corporate action by the Company in furtherance of a ny such action.

SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.

(a) If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable.

(b) At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article V, the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Trustee, may rescind and annul such declaration and its consequences if:

(i) the Company has paid or deposited with the Trustee a sum sufficient to pay:

(A) all overdue installments of interest on all Securities,

(B) any accrued Additional Interest on all Securities,

(C) the principal of and any premium on any Securities that have become due otherwise than by such declaration of acceleration and interest (including any Additional Interest) thereon at the rate borne by the Securities, and

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(D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, and its agents and counsel; and

(ii) all Events of Default with respect to Securities, other than the non-payment of the principal of Securities that has become due solely by such acceleration, have been cured or waived as provided in Section 5.13;

No such rescission shall affect any subsequent default or impair any right consequent thereon.

SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.

(a) The Company covenants that (subject to Section 5.2(b) hereof) if:

(i) default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of thirty (30) days, or

(ii) default is made in the payment of the principal of and any premium on any Security at the Maturity thereof,

the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest (including any Additional Interest) and, in addition thereto, all amounts owing the Trustee under Section 6.6.

(b) If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated.

(c) If an Event of Default with respect to Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

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SECTION 5.4 Trustee May File Proofs of Claim.

In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or similar judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized hereunder in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to first pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6.

SECTION 5.5 Trustee May Enforce Claim Without Possession of Securities.

All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, subject to Article XII and after provision for the payment of all the amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

SECTION 5.6 Application of Money Collected.

Any money or property collected or to be applied by the Trustee with respect to the Securities pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee, any predecessor Trustee and other Persons under Section 6.6;

SECOND: To the payment of all Senior Debt of the Company if and to the extent required by Article XII;

THIRD: Subject to Article XII, to the payment of the amounts then due and unpaid upon the Securities for principal and any premium and interest (including any Additional Interest) in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and any premium and interest (including any Additional Interest), respectively; and

FOURTH: The balance, if any, to the Person or Persons entitled thereto.

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SECTION 5.7 Limitation on Suits.

Subject to Section 5.8, no Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless:

(a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities;

(b) the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

(d) the Trustee after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding for sixty (60) days; and

(e) no direction inconsistent with such written request has been given to the Trustee during such sixty (60) day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities;

it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.

SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest.

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium on such Security at its Maturity and payment of interest (including any Additional Interest) on such Security when due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.

SECTION 5.9 Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or such Holder then and in every such case the Company, the Trustee and such Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and such Holder shall continue as though no such proceeding had been instituted.

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SECTION 5.10 Rights and Remedies Cumulative.

Except as otherwise provided in Section 3.6(f), no right or remedy herein conferred upon or reserved to the Trustee or the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 5.11 Delay or Omission Not Waiver.

No delay or omission of the Trustee or any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or the Holders, as the case may be.

SECTION 5.12 Control by Holders.

The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided, that:

(a) such direction shall not be in conflict with any rule of law or with this Indenture,

(b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction, and

(c) subject to the provisions of Section 6.2, the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, reasonably determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability.

SECTION 5.13 Waiver of Past Defaults.

(a) The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities may waive any past Event of Default hereunder and its consequences except an Event of Default:

(i) in the payment of the principal of or any premium or interest (including any Additional Interest) on any Outstanding Security (unless such Event of Default has been cured and the Company has paid to or deposited with the Trustee a sum sufficient to pay all installments of interest (including any Additional Interest) due and past due and all principal of and any premium on all Securities due otherwise than by acceleration), or

(ii) in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of each Holder of any Outstanding Security.

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(b) Any such waiver shall be deemed to be on behalf of the Holders of all the Outstanding Securities.

(c) Upon any such waiver, such Event of Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.

SECTION 5.14 Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium on the Security after the Stated Maturity or any interest (including any Additional Interest) on any Security after it is due and payable.

SECTION 5.15 Waiver of Usury, Stay or Extension Laws.

The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE VI

The Trustee

SECTION 6.1 Corporate Trustee Required.

There shall at all times be a Trustee hereunder with respect to the Securities. The Trustee shall be a corporation or national banking association organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or state authority and having an office within the United States. If such entity publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then, for the purposes of this Section 6.1, the combined capital and surplus of such entity shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligi ble in accordance with the provisions of this Section 6.1, it shall resign immediately in the manner and with the effect hereinafter specified in this Article VI.

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SECTION 6.2 Certain Duties and Responsibilities.

Except during the continuance of an Event of Default:

(i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided, that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Indenture.

(b) If an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(c) Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.2. To the extent that, at law or in equity, the Trustee has duties and liabilities relating to the Holders, the Trustee shall not be liable to any Holder for the Trustee’s good faith reliance on the pro visions of this Indenture. The provisions of this Indenture, to the extent that they restrict the duties and liabilities of the Trustee otherwise existing at law or in equity, are agreed by the Company and the Holders to replace such other duties and liabilities of the Trustee.

(d) No provisions of this Indenture shall be construed to relieve the Trustee from liability with respect to matters that are within the authority of the Trustee under this Indenture for its own negligent action, negligent failure to act or willful misconduct, except that:

(i) the Trustee shall not be liable for any error or judgment made in good faith by an authorized officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

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(ii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities; and

(iii) the Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company and money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.

SECTION 6.3 Notice of Defaults.

Within ninety (90) days after the occurrence of any default actually known to the Trustee, the Trustee shall give the Holders notice of such default unless such default shall have been cured or waived; provided, that except in the case of a default in the payment of the principal of or any premium or interest on any Securities, the Trustee shall be fully protected in withholding the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of holders of Securities; and provided, further, that in the case of any default of the character specified in Section 5.1(c), no such notice to H olders shall be given until at least thirty (30) days after the occurrence thereof. For the purpose of this Section 6.3, the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.

SECTION 6.4 Certain Rights of Trustee.

Subject to the provisions of Section 6.2:

(a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) if (i) in performing its duties under this Indenture the Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Indenture the Trustee finds ambiguous or inconsistent with any other provisions contained herein or (iii) the Trustee is unsure of the application of any provision of this Indenture, then, except as to any matter as to which the Holders are entitled to decide under the terms of this Indenture, the Trustee shall deliver a notice to the Company requesting the Company’s written instruction as to the course of action to be taken and the Trustee shall take such action, or refrain from taking such action, as the Trustee shall be instructed in writing to take, or to refrain from taking, by the Company; provided, that if the Trustee does not receive such instructions from the Company within ten (10) Business Days after it has deliv ered such notice or such reasonably shorter period of time set forth in such notice the Trustee may, but shall be under no duty to, take such action, or refrain from taking such action, as the Trustee shall deem advisable and in the best interests of the Holders, in which event the Trustee shall have no liability except for its own negligence, bad faith or willful misconduct;

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(c) any request or direction of the Company shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

(d) the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the Company or any of its Affiliates, and may include any of its employees) and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Trustee;

(f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, note or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;

(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;

(h) whenever in the administration of this Indenture the Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action with respect to enforcing any remedy or right hereunder, the Trustee (i) may request instructions from the Holders (which instructions may only be given by the Holders of the same aggregate principal amount of Outstanding Securities as would be entitled to direct the Trustee under this Indenture in respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or taking such action until such instructions are received and (iii) shall be protected in acting in accordance with such instructions;

(i) except as otherwise expressly provided by this Indenture, the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Indenture;

(j) without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with any bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e) of the definition of Event of Default, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy laws or law relating to creditors rights generally;

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(k) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officers’ Certificate addressing such matter, which, upon receipt of such request, shall be promptly delivered by the Company;

(l) the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge or (ii) the Trustee shall have received written notice thereof from the Company or a Holder; and

(m) in the event that the Trustee is also acting as Paying Agent, Authenticating Agent or Securities Registrar hereunder, the rights and protections afforded to the Trustee pursuant to this Article VI shall also be afforded such Paying Agent, Authenticating Agent, or Securities Registrar.

SECTION 6.5 May Hold Securities.

The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent.

SECTION 6.6 Compensation; Reimbursement; Indemnity.

(a) The Company agrees:

(i) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time; (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(ii) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances actually incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct; and

(iii) to the fullest extent permitted by applicable law, to indemnify the Trustee and its Affiliates, and their officers, directors, shareholders, agents, representatives and employees for, and to hold them harmless against, any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part arising out of or in connection with the acceptance or administration of this trust or the performance of the Trustee’s duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

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(b) To secure the Company’s payment obligations in this Section 6.6, the Company hereby grants and pledges to the Trustee and the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, other than money or property held in trust to pay principal and interest on particular Securities. Such lien shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.

(c) The obligations of the Company under this Section 6.6 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee.

(d) In no event shall the Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(e) In no event shall the Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Indenture.

SECTION 6.7 Resignation and Removal; Appointment of Successor.

(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective until the acceptance of appointment by the successor Trustee under Section 6.8.

(b) The Trustee may resign at any time by giving written notice thereof to the Company.

(c) The Trustee may be removed only by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and to the Company.

(d) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason the Holders, by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8. If no successor Trustee shall have been so appointed by the Holders and accepted appointment within sixty (60) days after the giving of a notice of resignation by the Trustee or the removal of the Trustee in the manner required by Section 6.8, any Holder who has been a bona fide Holder of a Security for at least six months (or, if the Securities have been Outstanding for less tha n six (6) months, the entire period of such lesser time) may, on behalf of such Holder and all others similarly situated, and any resigning Trustee may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.

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(e) The Company shall give notice to all Holders in the manner provided in Section 1.6 of each resignation and each removal of the Trustee and each appointment of a successor Trustee. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.

SECTION 6.8 Acceptance of Appointment by Successor.

(a) In case of the appointment hereunder of a successor Trustee, each successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.

(b) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) of this Section 6.8.

(c) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article VI.

SECTION 6.9 Merger, Conversion, Consolidation or Succession to Business.

Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided, that such Person shall be otherwise qualified and eligible under this Article VI. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation or as otherwise provided above in this Section  6.9 to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have.

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SECTION 6.10 Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof.

SECTION 6.11 Appointment of Authenticating Agent.

(a) The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corp oration or national banking association organized and doing business under the laws of the United States of America, or of any State or Territory thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or state authority. If such Authenticating Agent publishes reports of condition at least annually pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 6.11 the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11< /font>, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section 6.11.

(b) Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such Person shall be otherwise eligible under this Section 6.11, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

(c) An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11, the Trustee may appoint a successor Authenticating Agent eligible under the provisions of this Section 6.11, which shall be acceptable to the Company, and shall give notice of such appointment to all Holders. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.

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(d) The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.11 in such amounts as the Company and the Authenticating Agent shall agree from time to time.

(e) If an appointment of an Authenticating Agent is made pursuant to this Section 6.11, the Securities may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:

This is one of the Securities referred to in the within mentioned Indenture.

Dated:	[Trustee], not in its individual capacity, but solely as Trustee
	By:
		Authenticating Agent
	By:
		Authorized Signatory

ARTICLE VII

Holder’s Lists and Reports by Company

SECTION 7.1 Company to Furnish Trustee Names and Addresses of Holders.

The Company will furnish or cause to be furnished to the Trustee:

(a) semiannually, on or before June 30 and December 31 of each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than fifteen (15) days prior to the delivery thereof, and

(b) at such other times as the Trustee may request in writing, within thirty (30) days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than fifteen (15) days prior to the time such list is furnished,

in each case to the extent such information is in the possession or control of the Company and has not otherwise been received by the Trustee in its capacity as Securities Registrar.

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SECTION 7.2 Preservation of Information, Communications to Holders.

(a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished.

(b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act.

(c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act.

SECTION 7.3 Reports by Company.

(a) The Company shall furnish to the Holders and to prospective purchasers of Securities, upon their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the Securities Act. The delivery requirement set forth in the preceding sentence may be satisfied by compliance with Section 7.3(b) hereof.

(b) Unless filed with the Securities and Exchange Commission (the “Commission”) as contemplated in Section 7.3(c) below, the Company shall furnish to the Trustee and, upon request from any Holder, to such Holder, and any beneficial owner of the Securities reasonably identified to the Company and the Trustee, a duly completed and executed certificate substantially and substantively in the form attached hereto as Exhibit A, including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Company (x) so long as the Company is registered with the Commission, not later than the time periods in which such quarterly reports would be required to be filed with the Commission after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than the time periods within which such annual report would be required to be filed with the Commission after the end of each fiscal year of the Company or (y) at any time that the Company is not registered with the Commission, not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.

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(c) If the Company intends to file its annual and quarterly information with the Commission in electronic form pursuant to Regulation S-T of the Commission using the Commission’s Electronic Data Gathering, Analysis and Retrieval (“EDGAR”) system, the Company shall notify the Trustee in the manner prescribed herein of each such annual and quarterly filing. The Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving the financial information so filed. Compliance with the foregoing shall constitute delivery by the Company of its financial statements to the Trustee in compliance with the provisions of Section 314(a) of the Trust Indenture Act, if applicable, and shall satisfy its obligations to the Trustee and the Holders of the Securities under Section& #160;7.3(b). The Trustee shall have no duty to search for or obtain any electronic or other filings that the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of reports, information and documents to the Trustee pursuant to this Section 7.3(c) shall be solely for purposes of compliance with this Section 7.3(c) and, if applicable, with Section 314(a) of the Trust Indenture Act. The Trustee’s receipt of such reports, information and documents shall not constitute notice to it of the content thereof or any matter determinable from the content thereof, including the Company’s compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely upon Officers’ Certificates.

ARTICLE VIII

Consolidation, Merger, Conveyance, Transfer or Lease

SECTION 8.1 Company May Consolidate, Etc., Only on Certain Terms.

The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless:

(a) if the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall (i) be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and (ii) expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;

(b) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and

(c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this Article VIII and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1.

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SECTION 8.2 Successor Company Substituted.

(a) Upon any consolidation or merger by the Company with or into any other Person, or any conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with Section 8.1 and the execution and delivery to the Trustee of the supplemental indenture described in Section 8.1(a), the successor entity formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and in the event of any such conveyance or transfer, following the execution and delivery of such supplementa l indenture, the Company shall be discharged from all obligations and covenants under the Indenture and the Securities.

(b) Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture.

(c) In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to reflect such occurrence.

ARTICLE IX

Supplemental Indentures

SECTION 9.1 Supplemental Indentures without Consent of Holders.

Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, and upon request by the Company (provided that all conditions precedent thereto have been met), the Trustee shall enter into such indenture supplemental hereto for any of the following purposes:

(a) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities; or

(b) to evidence and provide for the acceptance of appointment hereunder by a successor trustee; or

(c) to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Indenture, which shall not be inconsistent with the other provisions of this Indenture, provided, that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or

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(d) to comply with the rules and regulations of any securities exchange or automated quotation system on which any of the Securities may be listed, traded or quoted; or

(e) to add to the covenants, restrictions or obligations of the Company or to add to the Events of Default, provided, that such action pursuant to this clause (e) shall not adversely affect in any material respect the interests of any Holders; or

(f) to modify, eliminate or add to any provisions of the Indenture or the Securities to such extent as shall be necessary to ensure that the Securities are treated as indebtedness of the Company for United States Federal income tax purposes, provided, that such action pursuant to this clause (f) shall not adversely affect in any material respect the interests of any Holders.

SECTION 9.2 Supplemental Indentures with Consent of Holders.

(a) Subject to Section 9.1, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security,

(i) change the Stated Maturity of the principal or any premium of any Security or change the date of payment of any installment of interest (including any Additional Interest) on any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or restrict or impair the right to institute suit for the enforcement of any such payment on or after such date, or

(ii) reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provision of this Indenture or of defaults hereunder and their consequences provided for in this Indenture, or

(iii) modify any of the provisions of this Section 9.2, Section 5.13 or Section 10.7, except to increase any percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any reason, or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security;

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(b) It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

SECTION 9.3 Execution of Supplemental Indentures.

In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent herein provided for relating to such action have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s own rights, duties, indemnities or immunities under this Indenture or otherwise. Copies of the final form of each supplemental indenture shall be delivered by the Trustee at the expense of the Compan y to each Holder, promptly after the execution thereof.

SECTION 9.4 Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article IX, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

SECTION 9.5 Reference in Securities to Supplemental Indentures.

Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.

ARTICLE X

Covenants

SECTION 10.1 Payment of Principal, Premium, if any, and Interest.

The Company covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay the principal of and any premium and interest (including any Additional Interest) on the Securities in accordance with the terms of the Securities and this Indenture.

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SECTION 10.2 Money for Security Payments to be Held in Trust.

(a) Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m., New York City time, on each due date of the principal of or any premium or interest (including any Additional Interest) on any Securities, deposit with such Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure to so act.

(b) The Company will cause each Paying Agent for the Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee (who by executing and delivering this Indenture agrees to be so bound), subject to the provisions of this Section 10.2, that such Paying Agent will (i) comply with the provisions of this Indenture and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities.

(c) The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

(d) Any money deposited with the Trustee or any Paying Agent for the payment of the principal of and any premium or interest (including any Additional Interest) on any Security and remaining unclaimed for two years after such principal and any premium or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

SECTION 10.3 Statement as to Compliance.

Upon the reasonable request of the Holders of a majority in aggregate principal amount of the Outstanding Securities, the Company shall deliver to the Trustee, within thirty (30) days after such request, an Officers’ Certificate covering the preceding calendar year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. The delivery requirements of this Section 10.3 may be satisfied by compliance with Section 8.16(a) of the Trust Agreement.

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SECTION 10.4 Calculation Agent.

(a) The Company hereby agrees that for so long as any of the Securities remain Outstanding, there will at all times be an agent appointed to calculate LIBOR in respect of each Interest Payment Date in accordance with the terms of Schedule A (the “Calculation Agent”). The Company has initially appointed the Trustee as Calculation Agent for purposes of determining LIBOR for each Interest Payment Date. The Calculation Agent may be removed by the Company at any time. If the Calculation Agent is unable or unwilling to act as such or is removed by the Company, the Company will promptly appoint as a replacement Calculation Agent the London office of a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market and which does not control or is not c ontrolled by or under common control with the Company or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed.

(b) The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date (as defined in Schedule A), but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent will calculate the interest rate (the Interest Payment shall be rounded to the nearest cent, with half a cent being rounded upwards) for the related Interest Payment Date, and will communicate such rate and amount to the Company, the Trustee, each Paying Agent and the Depositary. The Calculation Agent will also specify to the Company the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Company before 5:00 p.m. (London time) on each LIBOR Determination Date that either : (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor. The Calculation Agent’s determination of the foregoing rates and amounts for any Interest Payment Date will (in the absence of manifest error) be final and binding upon all parties. For the sole purpose of calculating the interest rate for the Securities, “Business Day” shall be defined as any day on which dealings in deposits in Dollars are transacted in the London interbank market.

SECTION 10.5 Reserved.

SECTION 10.6 Additional Covenants.

(a) The Company covenants and agrees with each Holder of Securities that if an Event of Default shall have occurred and be continuing, it shall not (x) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company’s Equity Interests, (y) vote in favor of or permit or otherwise allow any of its Subsidiaries to declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to or otherwise retire, any shares of any such Subsidiary’s preferred stock or other Equity Interests entitling the holders thereof to a stated rate of return (for the avoidance of doubt, whether such preferred stock or other Equity Interests are perpetual or otherwise) other than to the Company or (z) make any payment of principal of or any interest or premium, if any, on or repay, repurchas e or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the

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Securities (other than (A) repurchases, redemptions or other acquisitions of Equity Interests of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of Equity Securities of the Company (or securities convertible into or exercisable for such Equity Securities) as consideration in an acquisition transaction entered into prior to the Event of Default, (B) as a result of an exchange or conversion of any class or series of the Company’s Equity Interests (or any Equity Securities of a Subsidiary of the Company) for any class or series of the Company’s Equity Interests or of any class or series of the Company’s indebtedness for any class or series of the Company’s Equity Inte rests, (C) the purchase of fractional interests in shares of the Company’s Equity Interests pursuant to the conversion or exchange provisions of such Equity Interests or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto, (E) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock, or (F) any declaration or payment of a dividend or other distribution in order for the Company to maintain its status as a REIT, provided that any such declaration or payment shall be in the form of stock to the extent permitted by the Cod e or under Internal Revenue Service Revenue Procedure 2008-68 or subsequent guidance and commercially reasonable to do so.

(b) The Company covenants and agrees with each Holder of Securities that during the period commencing on the date hereof and continuing through April 30, 2012, it shall not declare or pay dividends or distributions on, or redeem, purchase, or acquire any of the Company’s Equity Interests (for the avoidance of doubt the Original Preferred Securities (as defined in the Exchange Agreement) shall not be deemed to be Equity Interests of the Company), except for (A) repurchases, redemptions or other acquisitions of Equity Interests of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of Equity Securities of the Company (or securities convertible into or exercisable for such Equity Securities) as consideration in an acquisition transaction, (B) as a result of an exchange or conversion of any class or series of the Company’s Equity Interests (or any Equity Securities of a Subsidiary of the Company) for any class or series of the Company’s Equity Interests or of any class or series of the Company’s indebtedness for any class or series of the Company’s Equity Interests, (C) the purchase of fractional interests in shares of the Company’s Equity Interests pursuant to the conversion or exchange provisions of such Equity Interests or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto, (E) any dividend in the form of Equity Interests, warrants, options or other rights exercisable for Equity Interests, or (F) any declaration or payment of a dividend or other distribution in order for the Company to maintain its status as a REIT, provided that any such declaration or payment shall be in the form of stock to the extent permitted by the Code or under Internal Revenue Service Revenue Procedure 2008-68 or subsequent guidance and commercially reasonable to do so.

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(c) As of the date hereof, the Company is qualified as a real estate investment trust (a “REIT”) under the Code and no circumstance or event has occurred that would disqualify the Company as a REIT. Subject to the Company’s right to merge into an entity that is not a real estate investment trust pursuant to Section 8.1 hereof, the Company agrees to use its commercially reasonable efforts to, at all times meet the requirements to qualify as a REIT unless and until the Board of Directors of the Company determines that it is not in the best interests of the Company to be organized as a REIT.

SECTION 10.7 Waiver of Covenants.

The Company may omit in any particular instance to comply with any covenant or condition contained in Section 10.6 if, before or after the time for such compliance, the Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect.

SECTION 10.8 Treatment of Securities.

The Company will treat the Securities as indebtedness, and the amounts, other than payments of principal, payable in respect of the principal amount of such Securities as interest, for all U.S. federal income tax purposes. All payments in respect of the Securities will be made free and clear of U.S. withholding tax to any beneficial owner thereof that has provided an Internal Revenue Service Form W-9 or W-8BEN (or any substitute or successor form) establishing its U.S. or non-U.S. status for U.S. federal income tax purposes, or any other applicable form establishing a complete exemption from U.S. withholding tax.

SECTION 10.9 Inspection of Books and Records.

If the Company is no longer subject to the reporting requirements of the Exchange Act and if an Event of Default has occurred and is continuing under his Indenture, the Company shall permit the Holders to examine the books and records of account of the Company and its Subsidiaries (and to make copies thereof and extracts therefrom) and to discuss the affairs, finances and accounts of such Persons with, and to be advised as to the same by, its officers, all at such reasonable times and intervals during normal business hours as the Holders may reasonably request, provided, that prior to any such examination by the Holders, the Company and the Holders shall have entered into a commercially reasonable confidentiality agreement. The Holders shall use good faith efforts to coordinate such inspections so as to minimize the interference with and disruption to the Company’s no rmal business operations.

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ARTICLE XI

Redemption of Securities

SECTION 11.1 Optional Redemption.

The Company may, at its option, redeem the Securities in whole at any time or in part from time to time, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion thereof, as applicable), together, in the case of any such redemption, with accrued and unpaid interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date (the “Optional Redemption Price”).

SECTION 11.2 Reserved.

SECTION 11.3 Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Securities, in whole or in part, shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company, the Company shall, not less than forty-five (45) days and not more than seventy-five (75) days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such date and of the principal amount of the Securities to be redeemed and provide the additional information required to be included in the notice or notices contemplated by Section 11.5. In the case of any redemption of Securities, in whole or in part, (a) prior to the expiration of any restriction on such redemption provided in this Indenture or the Securities or (b) pursuant to an election of the Company which is subject to a conditio n specified in this Indenture or the Securities, the Company shall furnish the Trustee with an Officers’ Certificate and an Opinion of Counsel evidencing compliance with such restriction or condition.

SECTION 11.4 Selection of Securities to be Redeemed.

(a) If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, provided, that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

(b) The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.

(c) The provisions of paragraphs (a) and (b) of this Section 11.4 shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

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SECTION 11.5 Notice of Redemption.

(a) Notice of redemption shall be given not later than the thirtieth (30th) day, and not earlier than the sixtieth (60th) day, prior to the Redemption Date to each Holder of Securities to be redeemed, in whole or in part (unless a shorter notice shall be satisfactory to the Trustee).

(b) With respect to Securities to be redeemed, in whole or in part, each notice of redemption shall state:

(i) the Redemption Date;

(ii) the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price, as calculated by the Company, together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the fifth (5th) Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated);

(iii) if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the amount of and particular Securities to be redeemed;

(iv) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that any interest (including any Additional Interest) on such Security or such portion, as the case may be, shall cease to accrue on and after said date; and

(v) the place or places where such Securities are to be surrendered for payment of the Redemption Price.

(c) Notice of redemption of Securities to be redeemed, in whole or in part, at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.

SECTION 11.6 Deposit of Redemption Price.

Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption given as provided in Section 11.5, the Company will deposit with the Trustee or with one or more Paying Agents an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including any Additional Interest) on, all the Securities (or portions thereof) that are to be redeemed on that date.

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SECTION 11.7 Payment of Securities Called for Redemption.

(a) If any notice of redemption has been given as provided in Section 11.5, the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date. On presentation and surrender of such Securities at a Place of Payment specified in such notice, the Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date.

(b) Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms.

(c) If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.

ARTICLE XII

Subordination of Securities

SECTION 12.1 Securities Subordinate to Senior Debt.

The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article XII, the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt.

SECTION 12.2 No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.

(a) In the event and during the continuation of any default by the Company in the payment of any principal of or any premium or interest on any Senior Debt (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.

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(b) In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a “Proceeding”), all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt in accordance with the priorities then existing among such holders until all Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.

(c) In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any Equity Interests or any obligations of the Company ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character on any security, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the T rustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same.

(d) The Trustee and the Holders, at the expense of the Company, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.

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(e) The provisions of this Section 12.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.

(f) The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.

SECTION 12.3 Payment Permitted If No Default.

Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions described in paragraph (a) of Section 12.2 or of any Proceeding referred to in Section 12.2, from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee , it did not have knowledge (in accordance with Section 12.8) that such payment would have been prohibited by the provisions of this Article XII, except as provided in Section 12.8.

SECTION 12.4 Subrogation to Rights of Holders of Senior Debt.

Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this Article XII (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and secu rities applicable to the Senior Debt until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XII, and no payments made pursuant to the provisions of this Article XII to the holders of Senior Debt by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt.

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SECTION 12.5 Provisions Solely to Define Relative Rights.

The provisions of this Article XII are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on the other hand. Nothing contained in this Article XII or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Co mpany other than their rights in relation to the holders of Senior Debt or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article XII of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.

SECTION 12.6 Trustee to Effectuate Subordination.

Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article XII and appoints the Trustee his or her attorney-in-fact for any and all such purposes.

SECTION 12.7 No Waiver of Subordination Provisions.

(a) No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.

(b) Without in any way limiting the generality of paragraph (a) of this Section 12.7, the holders of Senior Debt may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article XII or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt or any instrument evidencing the same or any agreement under which Senior Debt is outstanding, (ii) sell , exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt, (iii) release any Person liable in any manner for the payment of Senior Debt and (iv) exercise or refrain from exercising any rights against the Company and any other Person.

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SECTION 12.8 Notice to Trustee.

(a) The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article XII or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder of Senior Debt or from any trustee, agent or representative therefor; provided, that if the Trustee shall not have received the notice provided for in this Section 12.8 at least two (2) Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two (2) Business Days prior to such date.

(b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article XII, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts perti nent to the rights of such Person under this Article XII, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

SECTION 12.9 Reliance on Judicial Order or Certificate of Liquidating Agent.

Upon any payment or distribution of assets of the Company referred to in this Article XII, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XII.

SECTION 12.10 Trustee Not Fiduciary for Holders of Senior Debt.

The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this Article XII or otherwise.

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SECTION 12.11 Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights.

The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII with respect to any Senior Debt that may at any time be held by it, to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.

SECTION 12.12 Article Applicable to Paying Agents

If at any time any Paying Agent other than the Trustee shall have been appointed by the Trustee and be then acting hereunder, the term “Trustee” as used in this Article XII shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XII in addition to or in place of the Trustee. For the avoidance of doubt, neither the Company nor any Affiliate of the Company shall be permitted to serve as a Paying Agent hereunder.

SECTION 12.13

With respect to Securities issued in the United States, the Shareholders Act requires the Trustee to disclose to the issuers, upon their request, the name, address and securities position of its customers who are (a) the “beneficial owners” (as defined in the Shareholders Act) of the issuer’s Securities, if the beneficial owner does not object to such disclosure, or (b) acting as a “respondent bank” (as defined in the Shareholders Act) with respect to the Securities. (Under the Shareholders Act, “respondent banks” do not have the option of objecting to such disclosure upon the issuers’ request.) The Shareholders Act defines a “beneficial owner” as any person who has, or shares, the power to vote a security (pursuant to an agreement or otherwise), or who directs the voting of a security. The Shareholders Act defines a “respondent bank” as any bank, a ssociation or other entity that exercises fiduciary powers which holds securities on behalf of beneficial owners and deposits such securities for safekeeping with a bank, such as the Trustee. Under the Shareholders Act, each Holder is either the “beneficial owner” or a “respondent bank.”

For Purposes of this Indenture, until the Trustee receives a contrary written instruction from a Holder, the Trustee shall assume that such Holder is the beneficial owner of the Securities.

For purposes of this Indenture, until the Trustee receives a contrary instruction from a Holder, the Trustee shall release the name, address and securities position to any issuer which requests such information pursuant to the Shareholders Act for the specific purpose of direct communications between such issuer and such Holder. With respect to Securities issued outside of the United States, information shall be released to issuers only if required by law or regulation of the particular country in which the Securities are located.

* * * *

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This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

* * * *

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.

By:	/s/ Geoffrey G. Jervis
	Name:	Geoffrey G. Jervis
	Title:	Chief Financial Officer
By:	/s/ Bill Marshall
	Name:	Bill Marshall
	Title:	Vice President

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Schedule A

DETERMINATION OF LIBOR

With respect to the Securities, the London interbank offered rate (“LIBOR”) shall be determined by the Calculation Agent in accordance with the following provisions (in each case rounded to the nearest .000001%):

(1) On the second LIBOR Business Day (as defined below) prior to a Interest Payment Date after the expiration of the Fixed Rate Period (each such day, a “LIBOR Determination Date”), LIBOR for any given security shall for the following Interest Period equal the rate (expressed as a percentage per annum) for U.S. dollar deposits in Europe, for a three (3) month period, that appears on Dow Jones Telerate (as defined in the International Swaps and Derivatives Association, Inc. 2000 Interest Rate and Currency Exchange Definitions) Page 3750, or such other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date, as reported by Bloomberg Financial Market Commodities News or any successor service. If such rate is superseded on Telerate Page 3750 by a corrected rate before 12:00 noon (London time) on such LIBOR Determination Date , the corrected rate as so substituted will be LIBOR for such LIBOR Determination Date.

(2) If on any LIBOR Determination Date such rate does not appear on Dow Jones Telerate Page 3750 or such other page as may replace such Page 3750, the Calculation Agent shall determine the arithmetic mean of the offered quotations (expressed as a percentage per annum) of the Reference Banks (as defined below) to leading banks in the London interbank market for U.S. dollar deposits in Europe, for a three (3) month period, for an amount determined by the Calculation Agent (but not less than U.S. $1,000,000) by reference to requests for quotations as of approximately 11:00 A.M. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If on any LIBOR Determination Date at least two of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. If on any LIBOR Determination Date only one or none of the Reference Banks provide such quotations, LIBOR sh all be deemed to be the arithmetic mean of the offered quotations (expressed as a percentage per annum) that two (2) leading banks in The City of New York selected by the Calculation Agent are quoting on the relevant LIBOR Determination Date for U.S. dollar deposits in Europe, for a three (3) month period, for an amount determined by the Calculation Agent (but not less than U.S. $1,000,000); provided, that if the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination Date.

(3) As used herein: “Reference Banks” means four major banks in the London interbank market selected by the Calculation Agent; and “LIBOR Business Day” means a day (a) on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London and (b) is not a Saturday, Sunday or other day on which commercial banking institutions in New York, New York are authorized or obligated by law or executive order to be closed.

Schedule A-1

Exhibit A

Form of Officer’s Financial Certificate

(See Attached)

Schedule A-2

CAPITAL TRUST, INC.

Chief Financial Officer’s Certificate

May 14, 2009

I, Geoffrey G. Jervis, the Chief Financial Officer of Capital Trust, Inc. (the “Company”), hereby certify that:

(i)           as of March 31, 2009, the Company had total consolidated assets of approximately $2.6 Billion, and no event has occurred nor circumstance exists since such date that materially and adversely affects the total assets of the Company; and

(ii)           the Company (which, for purposes of this certificate, includes any predecessor entity) has been in operation since at least 1997.

[Signature page follows]

IN WITNESS WHEREOF, I have hereunto signed my name to this Chief Financial Officer’s Certificate as of the date first set forth above.

Capital Trust, Inc.
By:	/s/ Geoffrey G. Jervis
	Name:	Geoffrey G. Jervis
	Title:	Chief Financial Officer

EX-10.4 5 e607622_ex10-4.htm

Exhibit 10.4

Confidential Treatment Requested by Capital Trust, Inc.

AMENDMENT NO. 10 TO MASTER REPURCHASE AGREEMENT

AMENDMENT NO. 10, dated as of March 16, 2009 (this “Amendment”), to that certain Master Repurchase Agreement, dated as of July 29, 2005 (as amended, restated, supplemented or otherwise modified and in effect prior to the date hereof, the “Existing Repurchase Agreement,” and as amended hereby and as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Repurchase Agreement”), by and among CAPITAL TRUST, INC. (“CT”), CT RE CDO 2004-1 SUB, LLC (“CDO 2004-1”), CT RE CDO 2005-1 SUB, LLC (“CDO 2005-1”) and CT XLC HOLDING, LLC (“CT XLC”), as sellers (collectively, the “Sellers”) and MORGAN STANLEY BANK, N.A., as buyer (“Buyer”).  Capitalized terms used but not otherwise defined herein shall have the meanings specified therefor in the Repurchase Agreement.

RECITALS

WHEREAS, Sellers and Buyer are parties to the Existing Repurchase Agreement;

WHEREAS, CT is party to that certain Master Repurchase Agreement, dated as of October 24, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMorgan-A Repurchase Agreement”), by and among CT BSI FUNDING CORP. (“CT BSI”) and CT, as sellers (in such capacity, collectively, the “JPM-A Sellers”) and JPMORGAN CHASE BANK, N.A., as buyer (“JPMorgan”);

WHEREAS, CT is party to that certain Master Repurchase Agreement, dated as of November 21, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMorgan-B Repurchase Agreement”; together with the JPMorgan-A Repurchase Agreement, collectively, the “JPMorgan Repurchase Agreements”), by and among CT BSI and CT, as sellers (in such capacity, collectively, the “JPM-B Sellers”; together with the JPM-A Sellers, collectively, the “JPM Sellers”) and JPMORGAN CHASE FUNDING INC., as buyer (“JPMorgan Funding”; and together with JPMorgan, collectively, the “JPM Parties”);

WHEREAS, CT is party to that certain Master Repurchase Agreement, dated as of July 30, 2007 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Citigroup Repurchase Agreement,” and together with the Repurchase Agreement and the JPMorgan Repurchase Agreements, the “Senior Secured Facilities”), by and among CT, as seller (the “Citigroup Seller”; and together with Sellers and the JPMorgan Sellers, the “CT Parties”) and CITIGROUP GLOBAL MARKETS INC. and CITIGROUP FINANCIAL PRODUCTS INC., as buyers (collectively, “Citigroup”, and together with Buyer and the JPM Parties, the “Secured Plan Participants”); and

WHEREAS, Sellers and Buyer have agreed, subject to the terms and conditions hereof, that the Existing Repurchase Agreement shall be amended as set forth in this Amendment.

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, Sellers and Buyer agree as follows:

SECTION 1.  Amendments to Master Repurchase Agreement.

(a)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definitions of “Asset Value”, “Aggregate Margin Maintenance Asset Value”, “Aggregate Margin Maintenance Asset Value Deficiency”, “Installment Date”, “Excluded Transaction Assets”, “Margin Maintenance Asset Value” and “Maximum Concentration Amount” in their entirety.

(b)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Maximum Purchase Amount” in its entirety and inserting in lieu thereof the following:

“Maximum Purchase Amount” shall mean, initially, $181,349,964.18, and such “Maximum Purchase Amount” shall be reduced by any payment or prepayment to Buyer on account of the Repurchase Price (excluding payments of Price Differential and Late Fees) of any Transaction Asset.

(c)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Income” in its entirety and inserting in lieu thereof the following:

“Income” shall mean, with respect to any Transaction Asset at any time, any Principal Income thereof and all Interest Income thereon.

(d)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by adding at the end of the definition of “Subsidiary” the following:

“Notwithstanding the foregoing, Subsidiary shall not include investment funds managed by Seller or subsidiaries of same or investment funds of which Seller controls the general partner or managing member thereof or subsidiaries of same (except for those investment funds or subsidiaries of same of which Seller directly or indirectly owns at least a majority of the securities or other ownership interests therein).”

(e)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Termination Date” in its entirety and inserting in lieu thereof the following:

“Termination Date” shall mean March 16, 2010 or such earlier date on which this Agreement shall terminate in accordance with the provisions thereof or hereof or by operation of law; provided, however, that if the applicable conditions set forth in Section 4.01(a) of this Agreement shall have been satisfied, the Termination Date shall be extended to the applicable date set forth in Section 4.01(a) of this Agreement.

(f)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Transaction Documents” in its entirety and inserting in lieu thereof the following:

“Transaction Documents” shall mean, collectively, this Agreement, the related Confirmations, the Servicing Agreement, the Lockbox Account Control Agreement, the Warrant and the Custodial Agreement.

(g)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by inserting the following new definitions in proper alphabetical order:

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“Additional Restricted Cash” shall mean, to the extent otherwise constituting Unrestricted Cash, any cash or Cash Equivalent of CT and its Subsidiaries (i) that is required to be trapped pursuant to the other Senior Secured Facilities or the terms of any other loan agreement, repurchase agreement, or other extension of credit, (ii) that is received in anticipation of a disbursement by CT or any of its Subsidiaries to a Person other than CT or any Subsidiary within one (1) Business Day, (iii) that is provided as cash collateral to support letters of credit and bank guarantees, customs and other import duties in the ordinary course of business of CT or any of its Subsidiaries or (iv) that, if distributed or paid, would result in the insolvency of CT.

“Amendment No. 10” shall mean that certain Amendment No. 10 to this Agreement, dated as of March 16, 2009, among Sellers and Buyer.

“Amendment No. 10 Effective Date” shall mean the “Amendment Effective Date”, as defined in Section 2 of Amendment No. 10.

“Bonds” shall mean all Transaction Assets designated as “bonds” in Exhibit G.

“Cash Equivalents” shall mean (a) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of 90 days or less from the date of acquisition and overnight bank deposits of Buyer or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of Buyer or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least “A” by S&P or “A” by Moody’s, (e) securities with maturities of 90 days or less from the date of acquisition backed by standby letters of credit issued by Buyer or any commercial bank satisfying the requirements of clause (b) of this definition or (f) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (e) of this definition.

“Citigroup Repurchase Agreement” shall have the meaning specified in Amendment No. 10.

“Collateral” shall have the meaning specified therefor in Section 5.01(d).

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“Collateral Value” shall mean, as of any date of determination, in respect of any Transaction Asset, (a) in the case of Bonds, as determined by Buyer in its sole discretion exercised in good faith and (b) in the case of Transaction Assets other than  Bonds, the Initial Value of such Transaction Assets, adjusted by taking into account credit risk (including, without limitation, information relating to the sponsor or tenant for such Transaction Asset or other information relating to the likelihood of payment of such Transaction Asset; any alleged violation of Environmental Laws; any bankruptcy filings, casualty loss, or condemnation affecting or impacting the applicable Underlying Property or Mortgaged Property; any bankruptcy filing or other act of insolvency with respect to any co-participant or any other Person having an interest in such Transaction Asset or any related Underlying Property or Mortgaged Property that is senior to, or pari passu with, the rights of Buyer in such Transaction Asset; any payment of principal and/or interest are more than 60 days past due under any mortgage note affecting the Mortgaged Property or Mortgaged Properties or such Transaction Asset (without giving effect to any waiver by the lender thereunder); any modification of the Underlying Property or Mortgaged Property or to the related loan documents (or any financing senior thereto); any market comparables for the Mortgaged Property or Mortgaged Properties) applicable to such Transaction Asset; but excluding market risk (e.g., interest rate risk) applicable to the Transaction Asset; provided, however, that Buyer may take into account any performance assumptions with respect to such Transaction Asset (including, without limitation: the sponsorship thereof; projections as to default probabilities and estimated losses; changes in the cash flow generated by the Underlying Property or Mortgaged Property; the ultimate collectibility of the Transaction Asset if held to maturity; for assets held or to be held by the Custodian, the failure to deliver the Transaction Asset Documents to the Custodian in accordance with the terms of this Agreement and the Custodial Agreement; whether the Transaction Asset has been released from the possession of the Custodian under the Custodial Agreement to a Seller for a period in excess of twenty (20) calendar days without the consent of Buyer; and a breach of any of the representations and warranties regarding the Transaction Asset contained in Section 7.09), in each case in its sole discretion exercised in good faith; and provided further, that the Collateral Value, without giving effect to such increase, shall in no event exceed one hundred percent (100%) of the outstanding principal balance of the related Transaction Asset.

“CT Cash Account” shall mean one or more deposit accounts established by CT with Merrill Lynch, Pierce, Fenner & Smith Incorporated or Bank of America, N.A.

“Defaulted Collateral Asset” shall mean a Transaction Asset with respect to which (a) a monetary default has occurred or (b) an acceleration or foreclosure (including, in the case of Subordinate Mortgage Loans, Whole Loans, Mezzanine Loans or B Notes, a foreclosure of the Underlying Property or Mortgaged Property) has been declared or commenced, and, in either case, such Transaction has not been returned to performing status within 90 days; provided that Defaulted Collateral Assets shall not include (a) any Bonds, and (b) any Transaction Asset with a Collateral Value or allocated borrowing of zero.

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“Environmental Laws” shall mean any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or requirements of law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect.

“Excess Cash” shall mean an amount, if any, by which Unrestricted Cash exceeds the sum of (a) $25,000,000 and (b) the aggregate amount of Unfunded Commitments.

“Filings” shall have the meaning specified therefor in Section 5.01(e).

“Future Advances” shall mean CT’s commitment to make future advances on Transaction Assets and assets under other Senior Secured Facilities, as detailed in Exhibit G.

“Initial Advance Rate” shall mean, with respect to each Transaction Asset, a rate as specified therefor on Exhibit G hereto.

“Initial LTCV” shall mean the LTCV, calculated as of the Amendment No. 10 Effective Date.

“Initial Mark” shall mean, with respect to each Transaction Asset, a percentage as specified therefor on Exhibit G hereto.

“Initial Value” shall mean, with respect to each Transaction Asset, a value equal to the product of (i) the “Face Amount” for such Transaction Asset as specified therefor on Exhibit G hereto and (ii) the Initial Mark for such Transaction Asset.

“Interest Allocation Percentage” shall mean, initially, 65%, or, if the Termination Date is extended pursuant to Section 4.01 and beginning on the first day after the original Termination Date, such other percentage as agreed to in good faith among Sellers and the Secured Plan Participants, in each case, in their commercially reasonable discretion.

“Interest Income” shall mean, with respect to any Transaction Asset at any time, all interest, dividends or other distributions thereon.

“JPMorgan Account” shall mean the Sellers’ account held with JPMorgan Chase Bank, N.A.

“JPMorgan Repurchase Agreements” shall have the meaning specified therefor in Amendment No. 10.

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“Lehman Facility” shall mean that certain Amended and Restated Loan and Security Agreement, dated as of September 10, 2008, between CT, as borrower, and Lehman Commercial Paper Inc. as lender.

“Liquidity” shall mean, on any date of determination, the sum of (A) the consolidated amount of Unrestricted Cash of CT and its Subsidiaries on such date, and (B) the incremental amount of borrowings CT and its Subsidiaries are, as of such date, permitted to borrow pursuant to the terms of existing committed Indebtedness of CT or its Subsidiaries in effect on such date, as to which all conditions precedent have been satisfied and which borrowings do not require the discretionary consent of the applicable lender, counterparty, credit provider or any other Person.

“Lockbox Account” shall mean a Collections Account, subject to a Lockbox Account Control Agreement.

“Lockbox Account Control Agreement” shall mean an account control agreement between a depository bank (acceptable to Buyer in its sole discretion), Sellers and Buyer in respect of the Lockbox Account in form and substance acceptable to Buyer in its sole and absolute discretion.

“LTCV” shall mean, as of any date of determination, the ratio (expressed as a percentage) of the aggregate MRA Obligations to the aggregate Collateral Value of all Transaction Assets.

“Maximum Outstanding Amount” shall mean, for all Transactions, an amount equal to $145,079,971.34; provided that solely for purposes of Section 4.01, the Maximum Outstanding Amount may be adjusted pursuant to Section 4.07(e).

“MRA Obligations” shall mean the aggregate amount of each Seller’s obligations under the Transaction Documents and the Transactions entered into under this Agreement, including, without limitation, each Seller’s obligation to repurchase Transaction Assets at the Repurchase Price, or if such obligation were to be recharacterized as a loan, to repay such loan, and to pay any and all other amounts owing under this Agreement and the other Transaction Documents.

“Minimum Release Price” shall mean, for any Transaction Asset, an amount equal to the greater of (a) the lesser of (i) the Initial Value of such Transaction Asset, (ii) the Collateral Value for such Transaction Asset as of the date that CT notifies Buyer of its intent to sell, dispose, transfer or refinance such Transaction Asset pursuant to a Permitted Disposition, and (iii) 110% of the Repurchase Price of such Transaction Asset and (b) the Repurchase Price.

“Net Proceeds” shall mean, with respect to any Permitted Disposition or the incurrence or issuance of any Indebtedness permitted under Section 8.19 hereof, the aggregate amount of cash received by or on behalf of such Person for its own account in connection with any such transaction, after deducting therefrom only:

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(a)           reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder’s fees and other similar fees, costs and commissions that, in each case, are actually paid at the time of receipt of such cash to a Person that is not a Subsidiary or Affiliate of any of the Sellers or any of their respective Subsidiaries or Affiliates;

(b)           the amount of taxes payable in connection with or as a result of such transaction that, in each case, are actually paid at the time of receipt of such cash to the applicable taxation authority or other Governmental Authority or, so long as such Person is not otherwise indemnified therefor, are reserved for in accordance with GAAP, as in effect at the time of receipt of such cash, based upon such Person’s reasonable estimate of such taxes, and paid to the applicable taxation authority or other Governmental Authority within 90 days after the date of receipt of such cash; and

(c)           in the case of any Permitted Disposition, the outstanding principal amount of, the premium or penalty, if any, on, and any accrued and unpaid interest on, any Indebtedness (other than Indebtedness under or in respect of the Transaction Documents) that is secured by a Lien on the property and assets subject to such Permitted Disposition and is required to be repaid under the terms of such Indebtedness as a result of such Permitted Disposition, in each case, to the extent that the amounts so deducted are actually paid at the time of receipt of such cash to a Person that is not an Affiliate of any of the Sellers or any of their Affiliates;

provided that, any and all amounts so deducted by any such Person pursuant to clauses (a) through (c) of this definition shall be properly attributable to such transaction or to the property or asset that is the subject thereof; provided, further, that if, at the time any of the taxes referred to in clause (b) are actually paid or otherwise satisfied, and the reserve therefor exceeds the amount paid or otherwise satisfied, then the amount of such excess reserve shall constitute “Net Proceeds” on and as of the date of such payment or other satisfaction for all purposes of this Agreement.

“Permitted Disposition” shall mean the sale, transfer, disposition or refinancing of any Transaction Asset by CT in accordance with Section 8.10; provided that (a) the Net Proceeds from such sale, transfer, disposition or refinancing shall be no less than the Minimum Release Price for such Transaction Asset; (b) 100% of the Net Proceeds from such Permitted Disposition is applied pursuant to Section 4.07(a) hereof; (c) any sale, transfer or disposition of Transaction Assets be made to a bona fide third party or, with Buyer’s prior written approval, to an Affiliate of CT; and (d) no Transaction Asset may be refinanced without the prior written approval of Buyer.

“Principal Income” shall mean, with respect to any Transaction Asset at any time, any principal thereon.

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“Secured Plan Facilities Obligations” shall mean the sum of the MRA Obligations and the aggregate amount of all obligations owed by CT or any Subsidiary of CT under the JPMorgan Repurchase Agreements and the Citigroup Repurchase Agreement.

“Secured Plan Participants” shall have the meaning specified therefor in the recitals to Amendment No. 10.

“Senior Secured Facilities” shall have the meaning specified therefor in the recitals to Amendment No. 10.

“Senior Unsecured Facility” shall mean that certain Credit Agreement, dated as of March 22, 2007, by and among CT as borrower, WestLB AG, New York Branch, as administrative agent, and the lenders party thereto, as the same may be amended, restated, supplemented or otherwise modified and in effect from time to time.

“Senior Unsecured Facility MS Indebtedness” shall mean all Indebtedness from time to time owed by any of the Sellers or any Affiliate of a Seller to Buyer or any Affiliate of Buyer under the Senior Unsecured Facility.

“Servicing Rights” shall mean rights of any Person, to administer, service or subservice, the Transaction Assets or to possess related Servicing Records.

“Unfunded Commitments” shall mean, as of any date, an amount equal to the sum of CT’s unfunded commitments to make Future Advances and meet future capital calls for CT Opportunity Partners I, LP as of such date.

“Unrestricted Cash” shall mean (a) cash and Cash Equivalents that would not appear in the consolidated financial statements of CT, prepared in accordance with GAAP, as a line item on the balance sheet as “restricted cash” or similar caption minus (b) any Additional Restricted Cash.

“Unsecured Lenders” shall mean the lenders party to the Senior Unsecured Facility.

“Valuation Test Date” shall have the meaning specified in Section 3.04.

“Valuation Test Failure” shall have the meaning specified in Section 3.04.

“Valuation Test Period” shall have the meaning specified in Section 3.04.

“Warrant” shall mean that certain Warrant, dated as of March 16, 2009, made by CT in favor of Morgan Stanley Asset Funding Inc.

(h)           Section 3.03(a)(i) of the Existing Repurchase Agreement is hereby amended by deleting the phrase “and to be included in the Aggregate Margin Maintenance Asset Value” therein in its entirety.

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(i)          Sections 3.03(a)(ii), 3.03(b), 8.06(c) and 12.13 of the Existing Repurchase Agreement are hereby amended by deleting each use of the term “Asset Value” therein in its entirety and inserting in lieu thereof the term “Collateral Value.”

(j)           Section 3.04 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“3.04      Margin Maintenance.

On a monthly basis, on the first Business Day of each month beginning on September 1, 2009 (each such date, a “Valuation Test Date”), Buyer will determine the Collateral Value of each Transaction Asset.  If on any Valuation Test Date, the LTCV exceeds 1.15 times the Initial LTCV (a “Valuation Test Failure”), Sellers shall, within five (5) Business Days following such Valuation Test Date, make a prepayment in reduction of the Repurchase Price of such Transaction Asset, such that after giving effect to such prepayment, the LTCV, as re-determined by Buyer, shall not exceed 1.15 times the Initial LTCV.  All prepayments in reduction of such Repurchase Price shall be applied by Buyer in its sole discretion.  If Sellers are not able to cure a Valuation Test Failure within five (5) Business Days after the applicable Valuation Test Date, then Sellers shall cooperate with Buyer to select one or more Transactions Assets to liquidate and will use commercially reasonable efforts, taking into account the rights and interests of Buyer, to expeditiously commence the liquidation process for same.  If the Valuation Test Failure is not cured within 60 days from the initial failure, an Event of Default will occur; provided that if Sellers provide Buyer with a copy of an executed asset sale or refinancing agreement, acceptable to Buyer in its sole discretion, prior to the end of such 60-day period in respect of the selected Transaction Assets, Buyer may, at its option, grant a one-time 15-day extension to cure such Valuation Test Failure (such 60-day period and any 15-day extension, a “Valuation Test Period”).  Notwithstanding the above, in the event that a Transaction Asset becomes a Defaulted Collateral Asset, a Valuation Test will be performed at that time, and the provisions of this Section 3.04 shall apply.”

(k)           Section 3.05 of the Existing Repurchase Agreement is hereby amended by deleting subsection (b) in its entirety and inserting in lieu thereof the following:

“(b)        Reserved.”

(l)           Section 4.01 of the Existing Repurchase Agreement is hereby amended by deleting subsection (a) thereof in its entirety and inserting in lieu thereof the following new subsection (a):

“(a)         Sellers hereby promise to pay in full on the Termination Date, in accordance with the provisions of the definition of Termination Date, the aggregate Repurchase Price with respect to all Transaction Assets then held by Buyer.

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(i)           Notwithstanding the foregoing, Sellers may, in their sole discretion by notice to Buyer between 90 and 20 days prior to the originally scheduled Termination Date, extend the Termination Date with respect to all of the Transactions until the first (1st) anniversary of the originally scheduled Termination Date (all of the other terms and conditions of such Transactions remaining the same) provided that the following conditions precedent are satisfied as of the date of the effectiveness of such extension: (1) the MRA Obligations as of the date of such extension are less than or equal to the Maximum Outstanding Amount, (2) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (3) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that, if conditions (1) through (3) are met and if any extension request is made during a Valuation Test Period, such extension shall be provisionally granted until the end of such Valuation Test Period, and such extension shall be granted only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

(ii)           Notwithstanding the foregoing, if the initial Termination Date shall have been extended pursuant to Section 4.01(a)(i), Sellers may request, between 90 and 20 days prior to the extended Termination Date, and subject to the written approval of Buyer in its sole and absolute discretion given no later than ten (10) days prior to the extended Termination Date (any failure by Buyer to deliver such notice of its approval to an extension to Seller shall be deemed a denial of Seller’s request to extend the Termination Date) provided that in any event, the following conditions precedent are satisfied as of the date of the effectiveness of such second extension: (1) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (2) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that if conditions (1) and (2) or any other conditions then required by Buyer in its sole discretion (including, without limitation, requirements of additional payments, prepayments, revaluations of Collateral Value for any Transaction Asset or delivery of additional documents) are met and if any extension request is made during a Valuation Test Period, such extension may be provisionally granted by Buyer, in its sole and absolute discretion, until the end of such Valuation Test Period, and such extension may be granted by Buyer, in its sole and absolute discretion, only if no Valuation Test Failure exists as of the end of such Valuation Test Period.”

(m)           Section 4.07 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“Section 4.07 Income Payments; Excess Cash.

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(a)           Principal Income.  Sellers shall cause (1) all Principal Income in respect of the Transaction Assets and (2) 100% of all Net Proceeds in respect of Permitted Dispositions of Transaction Assets, in each case, to be deposited directly in the Lockbox Account.  Such Principal Income shall be applied within one (1) Business Day following receipt by Buyer as follows: (i) first, to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Transaction Assets, (ii) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (iii) third, to make a payment to Buyer on account of the Repurchase Price of the Transaction Assets in respect of which such Principal Income is received until the Repurchase Price for each such Transaction Asset has been reduced to zero; (iv) fourth, to make a payment to Buyer on account of the Repurchase Price of all Transaction Assets until the Repurchase Price for all Transaction Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Transaction Assets with respect to which the Repurchase Price has not been reduced to zero; and (v) fifth, to remit to the applicable Seller the remainder.

(b)           Interest Income.  Sellers shall cause all Interest Income in respect of the Transaction Assets to be deposited directly in the Lockbox Account.  Such Interest Income shall be applied monthly by Buyer as follows:

(i) so long as no Event of Default shall have occurred and be continuing, (1) first, to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Transaction Assets, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a payment to Buyer on account of the Repurchase Price of all Transaction Assets, each such payment to be allocated in Buyer’s sole discretion among those Transaction Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to the product of the Interest Allocation Percentage multiplied by the difference between (x) the total Interest Income received by Sellers during such month and (y) the Price Differential otherwise actually paid by Sellers to Buyer during such month, and (4) fourth, to remit to the applicable Seller the remainder; and

(ii) if an Event of Default shall have occurred and be continuing, subject to Section 5.06 hereof, (1) first, to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Transaction Assets, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a payment to Buyer on account of the Repurchase Price of all Transaction Assets until the Repurchase Price for all Transaction Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Transaction Assets with respect to which the Repurchase Price has not been reduced to zero; and (4) fourth, to remit to the applicable Seller the remainder.

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(c)           Control Rights.  So long as no Event of Default shall have occurred and be continuing, and subject to the terms of the Transaction Documents and Section 8.25 hereof, each Seller shall retain the right to take all actions under the Transaction Documents and to retain all contact with the relevant Transaction Asset Obligor.

(d)           Excess Cash.  At the end of each calendar quarter, CT shall make a payment to Buyer on account of the Repurchase Price of all Transaction Assets until the Repurchase Price for all Transaction Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Transaction Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to (i) Excess Cash as of the last day of such calendar quarter, multiplied by Buyer’s pro rata share, based on the MRA Obligations at such date, of the aggregate Secured Plan Facilities Obligations as of such date.

(e) Future Advances.  Notwithstanding anything contained herein or in any other Transaction Document to the contrary, as of the Amendment No. 10 Effective Date, Buyer shall have no obligation to make any Future Advances and CT will fund 100% of all Future Advances.  Solely for purposes of Sections 4.01(a)(i)(1) and 4.01(a)(ii)(1) hereof, after each funding of Future Advances in respect of Transaction Assets by CT, the Maximum Outstanding Amount will be increased by an amount equal to the product of: (a) the amount of such Future Advance actually funded by CT, (b) the Initial Mark for the applicable Transaction Asset, (c) the Initial Advance Rate for such Transaction Asset and (d) 50%.”

(n)           Section 5.01(b) of the Existing Repurchase Agreement is hereby amended by inserting the following new subsection in proper numerical order and renumbering subsequent subsections accordingly:

“(vii) the Lockbox Account and all monies from time to time on deposit in the Lockbox Account,”

(o)           Section 5.01 of the Existing Repurchase Agreement is hereby amended by (i) deleting the phrase “any and all MS Indebtedness from time to time outstanding” and inserting in lieu thereof the phrase “any and all MS Indebtedness, other than the Senior Unsecured Facility MS Indebtedness, from time to time outstanding” and (ii) inserting the following new subsections in proper alphabetical order:

“(d)         Without limiting Sections 5.01(a) and (b) hereto, to secure payment of the Repurchase Obligations owing to Buyer, each Seller hereby grants to Buyer a security interest in all of Seller’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, hereinafter referred to as the “Collateral”:

(i)           the Collection Account and all monies from time to time on deposit in the Collection Account;

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(ii)          the Lockbox Account and all monies from time to time on deposit in the Lockbox Account,

(iii)         the Transaction Asset Items;

(iv)         any and all replacements, substitutions, distributions on, income relating to or proceeds of any and all of the foregoing; and

(v)          each Seller’s right under each Interest Rate Protection Agreements, if any, relating to the Transaction Assets to secure the Repurchase Obligations.

(e)           Buyer’s security interest in the Collateral shall terminate only upon termination of each Seller’s obligations under this Agreement, all Interest Rate Protection Agreements and the documents delivered in connection herewith and therewith.  Upon such termination, Buyer shall deliver to each Seller such UCC termination statements and other release documents as may be commercially reasonable and return the Transaction Assets to the applicable Seller and reconvey the Transaction Asset Items to the applicable Seller and release its security interest in the Collateral.  For purposes of the grant of the security interest pursuant to this Section 5, this Agreement shall be deemed to constitute a security agreement under the Uniform Commercial Code.  Buyer shall have all of the rights and may exercise all of the remedies of a secured creditor under the Uniform Commercial Code and the other laws of the State of New York.  In furtherance of the foregoing, (a) Buyer, at Sellers’ sole cost and expense, shall cause to be filed in such locations as may be necessary to perfect and maintain perfection and priority of the security interest granted hereby, UCC financing statements and continuation statements (collectively, the “Filings”), and shall forward copies of such Filings to Sellers upon completion thereof, and (b) each Seller shall from time to time take such further actions as may be requested by Buyer to maintain and continue the perfection and priority of the security interest granted hereby (including marking its records and files to evidence the interests granted to Buyer hereunder).

(f)           Each Seller acknowledges that it has no right to service the Transaction Assets but only has rights pursuant to Section 12.14, as a party to a Servicing Agreement or any other servicing agreement with respect to the Transaction Assets.  Without limiting the generality of the foregoing and in the event that a Seller is deemed to retain any residual Servicing Rights, and for the avoidance of doubt, each Seller grants, assigns and pledges to Buyer a security interest in the Servicing Rights and proceeds related thereto and in all instances, whether now owned or hereafter acquired, now existing or hereafter created.  The foregoing provision is intended to constitute a security agreement or other arrangement or other credit enhancement related to the Agreement and Transactions hereunder as defined under Sections 101(47)(v) and 741(7)(x) of the Bankruptcy Code.”

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(p)           Section 5.02 of the Existing Repurchase Agreement is hereby amended by deleting subsection (a) thereof in its entirety and inserting in lieu thereof the following new subsection (a):

“(a)           Each Seller shall undertake, with respect to each Transaction Asset sold to Buyer and deemed to be pledged hereunder as security for a Transaction pursuant to Section 5.01(a) and the other Collateral pledged pursuant to Section 5.01(d), any and all actions deemed necessary by Buyer for the transfer by the relevant Seller to Buyer of a valid ownership interest and the granting of a precautionary first priority security interest, as the case may be, in such Transaction Asset and other Collateral.  Without limiting the generality of the foregoing, each Seller shall take such steps as are necessary for (i) the transfer of a valid ownership interest and the granting and perfection of a precautionary first priority security interest in securities and related Transaction Assets and (ii) the granting and perfection of a first priority security interest in the Collateral.”

(q)           Section 5.03 of the Existing Repurchase Agreement is hereby amended by deleting all references therein to “Transaction Assets” and inserting in lieu thereof the phrase “Transaction Assets and other Collateral.”

(r)           Section 5.06 of the Existing Repurchase Agreement is hereby amended by (i) deleting the reference to “Transaction Asset” in the first sentence thereof and inserting in lieu thereof the phrase “Transaction Asset and other Collateral,” and (ii) by deleting the last sentence thereof in its entirety and inserting in lieu thereof the following:

“For purposes hereof, proceeds shall include, but not be limited to, all principal and interest payments, all prepayments and payoffs, insurance condemnation awards, sale proceeds, real estate owned rents and any other income and all other amounts received with respect to the Transaction Assets and other Collateral.”

(s)           Section 5.07 of the Existing Repurchase Agreement is hereby amended by inserting the following at the end thereof:

“Notwithstanding anything contained herein to the contrary and without limiting the generality of any of the foregoing, if an Event of Default shall occur and be continuing, Buyer may, at its option, notify any bank or other depository institution to liquidate the applicable Collections Account and Lockbox Account maintained or held thereby and remit all funds and proceeds thereof to an account specified by Buyer, for application in accordance with this Agreement.”

(t)           Section 5.10 of the Existing Repurchase Agreement is hereby amended by deleting the reference therein to “Transaction Assets” and inserting in lieu thereof the phrase “Transaction Assets and other Collateral.”

(u)           Section 5.11 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

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“5.11       Release of Transaction Assets.  Provided that no Default or Event of Default shall exist (other than a Default or Event of Default that (a) relates solely to the Transaction Assets to be released and (b) will no longer exist after giving effect to such release) and either (x) Seller shall have paid all sums then due under the Transaction relating thereto or (y) Buyer shall have applied 100% of the Net Proceeds from a Permitted Disposition pursuant to Section 4.07(a) hereof, then upon (i) the relevant Seller’s payment in full of the Asset Specific Transaction Balance with respect to a portion of the Transaction Assets or the application of such Net Proceeds pursuant to Section 4.07(a) hereof, and (ii) receipt by Buyer of a written request from such Seller for the release of such Transaction Asset, Buyer shall as soon as practicable release (and Buyer shall reasonably cooperate with such Seller to facilitate reasonable escrow arrangements to facilitate a simultaneous release of) the related Transaction Asset Documents and the related Transaction Asset and any liens related thereto to such Seller or, to the extent necessary to facilitate future savings of mortgage tax in states that impose mortgage taxes, assign such liens as such Seller shall request, provided that any such assignments shall be without expense, recourse, representation or warranty of any kind except that Buyer shall represent and warrant that such Transaction Asset has not been previously assigned by Buyer.  At Sellers’ expense, Buyer shall with reasonable promptness, after a written request from Seller, execute any document or instrument necessary to effectuate such release or assignment.

(v)           Section 5.12 of the Existing Repurchase Agreement is hereby amended by (i) deleting all references therein to “Margin Maintenance Asset Value” and inserting in lieu thereof the term “Collateral Value” and (ii) by deleting all references therein to “Aggregate Margin Maintenance Asset Value” and inserting in lieu thereof the phrase “aggregate Collateral Value of all Transaction Assets.”

(w)           Section 6.02(b) of the Existing Repurchase Agreement is hereby amended by deleting the parenthetical “(in the case of the representations and warranties in Section 7.09, solely with respect to Eligible Transaction Assets included in the Aggregate Margin Maintenance Asset Value)” therein in its entirety and inserting in lieu thereof the following:

“(in the case of the representation and warranties in Section 7.09, solely with respect to Eligible Transaction Assets sold to Buyer in connection with such Transaction)”

(x)          Section 6.02(c) of the Existing Repurchase Agreement is hereby amended by deleting all references therein to “Aggregate Margin Maintenance Asset Value” and inserting in lieu thereof the phrase “aggregate Collateral Value of all Transaction Assets.”

(y)           Section 6.02 of the Existing Repurchase Agreement is hereby amended by inserting the following new subsection (k) in proper alphabetical order:

-15-

“(k)         “Initial Advance Rate, Initial Mark, Initial Value.  Buyer shall have determined the Initial Advance Rate, Initial Mark, Initial Value, Purchase Price, Pricing Rate and any other information listed in Exhibit G hereto with respect to such Eligible Transaction Asset and shall have amended Exhibit G to reflect such determinations.”

(z)           Section 7.11 of the Existing Repurchase Agreement is hereby amended by deleting the phrase “relating to the Transaction Assets” therein in its entirety and inserting in lieu thereof “relating to the Transaction Assets and the Collateral”.

(aa)           Section 8.06(d) of the Existing Repurchase Agreement is hereby amended by (i) deleting all references therein to “Margin Maintenance Asset Value” and inserting in lieu thereof the term “Collateral Value” and (ii) by inserting the following new subsections in proper numerical order and renumbering subsequent subsections accordingly:

“(iii)        any default related to any Senior Secured Facility or the Senior Unsecured Facility, (iv) any proposed waiver, extension, amendment, or modification to any Senior Secured Facility or the Senior Unsecured Facility, (v) any new investments made in compliance with Section 8.18 hereof, (vi) any new Indebtedness incurred in compliance with Section 8.19 hereof,”

(bb)         Section 8.10 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“8.10       Limitation on Liens.  Each Seller will defend the Transaction Assets and the other Collateral against, and will take such other action as is necessary to remove, any Lien, security interest or claim on or to the Transaction Assets and the other Collateral, other than the security interests created, or otherwise specifically permitted in writing by Buyer under this Agreement, and each Seller will defend the right, title and interest of Buyer’s in and to any Transaction Asset and any other Collateral against the claims and demands of all persons whomsoever.  A Seller may request from time to time, subject to Buyer’s approval in Buyer’s sole determination, to sell participation interests in its interests in Transaction Assets in connection with a Permitted Disposition, the sale of which participation interests shall be arm’s length transactions and subject to such terms and conditions as Buyer in its sole discretion shall require; provided that Buyer (a) retains an interest in the tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition, subject to the terms of this Agreement or (b) shall maintain a security interest in such tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition; and provided further, that such Seller complies in all respects with the Transaction Asset Document delivery requirements contained in this Agreement and the Custodial Agreement.”

(cc)         Section 8 of the Existing Repurchase Agreement is hereby amended by

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(i)           deleting Sections 8.05, 8.11, 8.12, 8.13, 8.16 and 8.17 in their entirety and inserting in lieu thereof the following new Sections in proper numerical order:

“8.05       LTCV.  If at any time there exists a Valuation Test Failure, each Seller shall cure same in accordance with Section 3.04 hereof.

8.11         Limitation on Distributions.  No Seller shall make any payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or partnership interest of any Seller, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of any Seller, either directly or indirectly, whether in cash or property or in obligations of any Seller or any of Subsidiary of a Seller, except to the minimum extent required for a Seller to maintain its status as a real estate investment trust and, to the extent permitted, such distribution shall be made in equity in lieu of cash; provided that any Seller may make distributions to CT or any other wholly-owned Subsidiary of CT.

8.12         Reserved.

8.13         Reserved.

8.16         Reserved.

8.17         Reserved.”; and

(ii) by adding the following new sections in proper numerical order:

“8.18        No New Investments.  Without the prior written consent of Buyer, no Seller shall, nor permit any Subsidiary to, originate, acquire or invest in any new stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person except to (a) make co-investments in future funds of which CT (or its Affiliates) is the sponsor or manager, and (b) make protective investments to defend existing Transaction Assets or assets subject to another Senior Secured Facility or that are pledged as collateral security for the Senior Unsecured Facility.  With respect to co-investments, (a) no investments will be permitted in the first six (6) months following the Amendment No. 10 Effective Date, (b) the projected base management fees generated by the proposed future fund over the first 36 months must equal or exceed the co-investment commitment, and (c) the total amount of co-investment capital for all such proposed future funds may not exceed $10,000,000 without the prior written approval of Buyer.  With respect to protective investments made in respect of Transaction Assets or assets subject to another Senior Secured Facility, the amount of each investment may not exceed $5,000,000 per Transaction Asset, transaction or asset.  With respect to protective investments made in respect of assets pledged as collateral security for the Senior Unsecured Facility, the aggregate amount of such investments may not exceed $1,000,000.

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8.19          No New Indebtedness.  No Seller shall, nor permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness other than the Indebtedness already incurred as of the Amendment No. 10 Effective Date; provided, that additional Indebtedness may be incurred by Sellers or any of their Subsidiaries so long as the following conditions are satisfied: (i) to the extent that the Indebtedness is incurred in connection with a Permitted Disposition, the Net Proceeds of such Permitted Disposition are applied in accordance to Section 4.07(a), (ii) to the extent that such new Indebtedness is unsecured (and subordinate to all obligations owed by the applicable Seller under any Secured Plan Facility or the Senior Unsecured Facility) or incurred through the pledge of unencumbered assets, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account and (iii) to the extent that such new Indebtedness is recourse Indebtedness, only to the extent that it replaces existing recourse Indebtedness or is subordinate to all obligations owed to Buyer (and to the extent such new Indebtedness is not subject to clause (i) above, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account).

8.20           FY 2009 Compensation.  For all employees of CT and its Subsidiaries, other than the CEO, COO & CFO, total cash compensation (including base salary and bonus), in the aggregate shall not exceed $5.8 million.  Subject to the limitation in the preceding sentence, compensation for individual employees shall be determined by CT in its sole discretion.  For CT’s CEO, COO & CFO, (i) base salaries shall remain the same as in effect in 2008, and (ii) any cash bonus will be approved based upon performance metrics designed to create alignment with the interests of the Secured Plan Participants and the Unsecured Lenders and must be approved by unanimous consent of a committee comprised of (x) a representative selected by the Secured Plan Participants, (y) the administrative agent of the Senior Unsecured Facility and (z) a representative selected by the board of directors of CT.

8.21           Key Man Clause.  John Klopp and/or Stephen Plavin will continue their current employment with their current respective responsibilities throughout the term of this Agreement; provided that if both John Klopp and Stephen Plavin are no longer so employed, replacement(s) acceptable to Buyer in its sole and absolute discretion shall be appointed within 30 days after their departure.

8.22           Liquidity Covenant.  CT shall maintain, at all times, a minimum Liquidity of $7,000,000 in 2009 and $5,000,000 thereafter.

8.23           Additional Reporting; Budgets.  Without duplicating the reports provided under Section 8.01, Sellers will provide Buyer with (a) certified quarterly financial statements and audited annual financial statements prepared in accordance with GAAP, filed within SEC mandated time frames, (b) within thirty (30) Business Days following the end of each calendar month commencing with April 2009, unaudited monthly financial statements, (c) within ten (10) Business Days following the end of each calendar month, reports on asset level performance for each Transaction Asset, and (d) promptly, following any reasonable request therefor, reports of such other information regarding each Seller’s operations, business affairs and financial condition, or compliance with the terms of this Agreement.  Any reports provided above will include, without limitation, details of Sellers’ cash accounts at each quarter end and a schedule of each Seller’s Excess Cash, Unrestricted Cash and Unfunded Commitments.  Sellers agree to provide Buyer with an annual budget no later than 60 days after the end of each fiscal year.

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8.24           Bankruptcy.  No Seller will (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Seller or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing.

8.25           Consent Rights.  No Seller will amend, modify or otherwise agree to any change in the applicable documents for any Transaction Asset, the Underlying Property or other underlying collateral thereunder or the Mortgaged Property thereunder, without the prior written consent of Buyer.

8.26           Amendments.  No Seller shall agree to any amendment or modification to any Senior Secured Facility nor the Senior Unsecured Facility that relates to the subject matter of Amendment No. 10 or would adversely impair the interests Buyer without the prior written consent of Buyer.

8.27           Lockbox Account.  Sellers acknowledge that Buyer shall, until all MRA Obligations are satisfied and this Agreement terminates pursuant to its terms, maintain control over the Lockbox Account subject to the terms of the Lockbox Account Control Agreement.  At Sellers’ expense, Buyer may require that Sellers establish a new Lockbox Account at a depository institution selected by Buyer in its sole discretion and such new Lockbox Account shall be the “Lockbox Account” for all purposes hereunder.

8.28           Lehman Facility.  No Seller shall agree to any amendment or modification to the Lehman Facility without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed.

8.29           Deposit Accounts.  All deposit accounts (other than (i) the Lockbox Account and (ii) any other deposit accounts specifically relating to the Transaction Assets or any asset or collateral subject to any Senior Secured Facility or the Senior Unsecured Facility) shall be established and maintained with financial institutions that are not Secured Plan Participants nor Unsecured Lenders; provided that the Sellers may maintain the JPMorgan Account so long as (w) no more than $1,000,000 may remain in the JPMorgan Account at any time, (x) no Seller may transfer any funds into the JPMorgan Account from any CT Cash Account, (y) any funds deposited in the JPMorgan Account will be transferred to a CT Cash Account within two (2) Business Days from receipt of such funds in the JPMorgan Account and (z) all funds in the JPMorgan Account will be transferred to a CT Cash Account and the JPMorgan Account will be closed on or before December 31, 2009.  For the avoidance of doubt, the Lockbox Account, any other Collection Account and any other deposit account relating to Transaction Assets may be established and maintained at any financial institution selected by Buyer in its sole discretion.”

-19-

(dd)           Section 9 of the Existing Repurchase Agreement is hereby amended by deleting subsection (e) in its entirety and inserting in lieu thereof the following new subsection (e):

“(e)           (i) any Seller shall fail to comply with the requirements of Section 8.03(a), Section 8.04, Section 8.05, Section 8.06, Sections 8.08 through 8.22, or Sections 8.24 through 8.26 hereof, (ii) or any Seller shall otherwise fail to comply with the requirements of Section 8.03 hereof and such default shall continue unremedied for a period of ten (10) Business Days, or (iii) any Seller shall fail to observe or perform any other covenant or agreement contained in this Agreement or any other Transaction Document and such failure to observe or perform shall continue unremedied for a period of ten (10) Business Days, or”.

(ee)           Section 9 of the Existing Repurchase Agreement is hereby amended by deleting subsection (l) in its entirety and inserting in lieu thereof the following new subsection (l):

“(l)           any event or condition occurs that results in (i) any obligation or liability of any Seller under any note, indenture, loan agreement, guaranty, swap agreement or any other contract to which it is a party (other than MS Indebtedness), whether singly or in the aggregate, in excess of $1,000,000 becoming due prior to its scheduled maturity or that enables or permits (after the expiration of all grace or cure periods) the beneficiaries of, the holder or holders of, or any other party to any such indebtedness or contract, or any trustee or agent on its or their behalf, to cause any such obligation or liability to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or (ii) any monetary default under any note, indenture, loan agreement, guaranty, swap agreement or any other contract, credit facility or other obligation of a Seller (other than MS Indebtedness) if the aggregate amount of such credit facility, contract or other obligation in respect of which such monetary default shall have occurred is at least $1,000,000; provided that this Event of Default shall not apply to secured indebtedness that becomes due as a result of the sale or transfer of the property or assets securing such indebtedness, or”

-20-

(ff)          Section 12.03(b)(ii) of the Existing Repurchase Agreement is hereby amended by deleting the phrase “with respect to Transaction Asset” in its entirety and inserting in lieu thereof “with respect to Transaction Assets and other Collateral”.

(gg)           Section 12.15 of the Existing Repurchase Agreement is hereby amended by deleting the phrase “Aggregate Margin Maintenance Asset Value under Section 3.04(a) hereof” therein in its entirety and inserting in lieu thereof the term “Collateral Value.”

(hh)         The Existing Repurchase Agreement is hereby amended by inserting Exhibit A attached hereto as a new Exhibit G in proper alphabetical order.

SECTION 2.  Agreement.  Each Seller hereby agrees that, as of the date hereof, no additional Transactions shall be permitted under the Repurchase Agreement.

SECTION 3.  Conditions Precedent.  This Amendment shall become effective on the date (the “Amendment Effective Date”) on which (1) all the representations and warranties made by Sellers in this Amendment are true and correct and (2) Buyer shall have received:

(a)           this Amendment, executed and delivered by a duly authorized officer of each of Sellers and Buyer;

(b)           a payment to Buyer on account of the Repurchase Price of all Transaction Assets, such payment to be allocated in Buyer’s sole discretion among the Transaction Assets, in an amount equal to $5,440,498.93;

(c)           evidence satisfactory to Buyer in its sole discretion that the Lockbox Account has been established with a depository bank acceptable to Buyer in its sole discretion;

(d)           the initial Lockbox Account Control Agreement, executed and delivered by a duly authorized officer of the parties thereto;

(e)           the Warrant, executed and delivered by a duly authorized officer of CT;

(f)           legal opinions from counsel to the Sellers dated as of the date hereof addressed to Buyers and its successors and assigns (i) as to the enforceability of the Repurchase Agreement, as amended by this Amendment, and (ii) as to each Seller’s authority to execute, deliver and perform its obligations under the Repurchase Agreement as amended hereby, in each case, in form and substance acceptable to Buyer in its reasonable discretion;

(g)           evidence, satisfactory to the Buyer in its sole discretion, of the payment in full of all obligations owed by any Seller under, and the termination of, the credit facilities identified on Schedule I hereto;

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(h)          a copy of an amendment to the Senior Unsecured Facility, executed and delivered by a duly authorized officer of the parties thereto, in form and substance acceptable to Buyer in its sole discretion; and

(i)           for the account of Buyer, payment and reimbursement for all of Buyer’s corresponding costs and expenses incurred in connection with this Amendment, all prior amendments and modifications to the Repurchase Agreement, any other documents prepared in connection herewith and therewith and the transactions contemplated hereby and thereby.

SECTION 4.  Representations and Warranties.  On and as of the date first above written, each of Sellers hereby represents and warrants to Buyer that (a) it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, (b) after giving effect to this Amendment, no Default or Event of Default under the Repurchase Agreement has occurred and is continuing, and (c) after giving effect to this Amendment, the representations and warranties contained in Section 7 of the Repurchase Agreement are true and correct in all material respects as though made on such date (except for any such representation or warranty that by its terms refers to a specific date other than the date first above written, in which case it shall be true and correct in all material respects as of such other date).

SECTION 5.  General Release.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Seller, for: (i) itself, (ii) any parent or Subsidiary thereof, and (iii) the respective partners, officers, directors, shareholders, successors and assigns of all of the foregoing persons and entities,

(a)           hereby releases and forever discharges Buyer and each of its subsidiaries, affiliates, its past, present and future officers, directors, agents, employees, partners, managers, shareholders, servants, attorneys and representatives, as well as their, successors, assigns, their respective heirs, legal representatives, legatees, predecessors-in-interest, successors and assigns, of and from any and all actions, claims, demands, damages, debts, suits, contracts, agreements, losses, liabilities, indebtedness, causes of action either at law or in equity, obligations of whatever kind or nature, accounts, defenses, and offsets against liabilities and obligations, whether known or unknown, direct or indirect, new or existing, by reason of any matter, cause or thing whatsoever occurring on or prior to the date hereof arising out of or relating to any matter or thing whatever, including without limitation, such claims and defenses as fraud, misrepresentation, breach of duty, mistake, duress, usury, claims pertaining to so-called “lender liability,” and claims pertaining to creditor’s rights, which such party ever had, now has, or might hereafter have against the other, jointly or severally, for or by reason of any matter, act, omission, cause or thing whatsoever occurring, on or prior to the date of this Amendment, that is related to, in whole or in part, directly or indirectly, the Transactions, the Repurchase Agreement, the Transaction Documents and this Amendment; and

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(b)           warrants, represents and acknowledges that it has no defenses to the payment of, nor any right to set off against, all or any of the MRA Obligations set forth in the Transaction Documents, nor any counterclaims or other rights of action against Buyer of any kind whatsoever, including, without limitation, any right to contest any of the following: the enforceability, applicability or validity of any provisions of the Transaction Documents, Buyer’s right to all proceeds of the Transaction Assets, the existence, validity, enforceability, or perfection of any security interest or mortgage in favor of Buyer, the conduct of Buyer in administering the Transaction Documents and any legal fees and expenses incurred by the Buyer under the Repurchase Agreement, the other Transaction Documents or this Amendment.

SECTION 6.  Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with their respective terms; provided, however, that upon the Amendment Effective Date, all references in the Repurchase Agreement to the “Transaction Documents” shall be deemed to include, in any event, this Amendment.  Each reference to Repurchase Agreement in any of the Transaction Documents shall be deemed to be a reference to the Repurchase Agreement as amended hereby.

SECTION 7.  Override Provision.  Notwithstanding any provision in the Repurchase Agreement to the contrary, which are hereby pro tanto superseded and modified or replaced mutatis mutandis to the extent of any inconsistency, the provisions in this Amendment shall apply from and after the date hereof.

SECTION 8.  Counterparts.  This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.

SECTION 9.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[SIGNATURES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

CAPITAL TRUST, INC.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT RE CDO 2004-1 SUB, LLC
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT RE CDO 2005-1 SUB, LLC
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT XLC HOLDING, LLC
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

Signature Page to Amendment No. 10 to Master Repurchase Agreement

MORGAN STANLEY BANK, N.A.
By:	/s/ Cynthia Eckes
	Name: Cynthia Eckes
	Title: Authorized Signatory

Signature Page to Amendment No. 10 to Master Repurchase Agreement

Schedule I

Closeout Facilities

1.           Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, between Capital Trust, as seller, and Goldman Sachs Mortgage Company (“Goldman”), as buyer, as supplemented by that certain Amended and Restated Annex I to Amended and Restated Master Repurchase Agreement, dated as of October 30, 2007.

2.           Master Repurchase Agreement, dated as of October 30, 2007, between Capital Trust, as seller, and Goldman, as buyer, as supplemented by that certain Annex I to Master Repurchase Agreement, dated as of October 30, 2007.

Schedule I

Exhibit A

Exhibit G

Collateral Schedules

JPMorgan

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

25,100,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

25,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

31,523,408.99

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

27,402,996.32

597,004.25

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

35,500,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

13,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

29,024,471.31

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

11,500,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

21,800,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

8,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,435,162.79

964,837.21

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-1

[

***]

23,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

22,571,220.21

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,927,002.75

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

4,689,303.73

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,398,078.96

394,993.29

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

51,384,616.35

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

16,125,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

30,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

54,823,957.29

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

13,448,358.83

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

21,042,320.62

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

15,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,015,297.15

PPP 1st

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-2

[

***]

5,511,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,978,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,042,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

1,116,976.76

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,189,147.00

Bond

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

ISDA liability

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-3

Morgan Stanley

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

16,204,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,963,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,755,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

10,133,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

36,432,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

32,556,639.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

89,057,579.00

1,942,420.40

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

46,966,945.16

3,783,054.34

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

42,637,221.65

4,841,662.74

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

32,492,156.00

2,507,844.08

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

14,444,220.02

5,555,779.98

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

20,700,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

50,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-4

Citigroup

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

14,100,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

22,500,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,770,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

6,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,220,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-5

EX-10.5 6 e607622_ex10-5.htm

Exhibit 10.5

Confidential Treatment Requested by Capital Trust, Inc.

AMENDMENT NO. 1 TO MASTER REPURCHASE AGREEMENT

AMENDMENT NO. 1, dated as of March 16, 2009 (this “Amendment”), to that certain Master Repurchase Agreement, dated as of October 24, 2008 (as amended, restated, supplemented or otherwise modified and in effect prior to the date hereof, the “Existing Repurchase Agreement,” and as amended hereby and as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Repurchase Agreement”), by and among CT BSI FUNDING CORP. (“CT BSI”) and CAPITAL TRUST, INC. (“Capital Trust”), as sellers (collectively, the “Sellers”), JPMORGAN CHASE BANK, N.A., as buyer (“Buyer”) and JPMORGAN CHASE BANK, N.A., as affiliated hedge counterparty (the “Affiliated Hedge Counterparty”).  Capitalized terms used but not otherwise defined herein shall have the meanings specified therefor in the Repurchase Agreement.

RECITALS

WHEREAS, Sellers and Buyer are parties to the Existing Repurchase Agreement;

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of July 29, 2005 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “MS Repurchase Agreement”), by and among Capital Trust, CT RE CDO 2004-1 SUB, LLC, CT RE CDO 2005-1 SUB, LLC and CT XLC HOLDING, LLC, as sellers (in such capacity, collectively, the “MS Sellers”) and MORGAN STANLEY BANK, as buyer (“Morgan Stanley”);

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of November 21, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMCF Repurchase Agreement”; together with the Repurchase Agreement, collectively, the “JPM Repurchase Agreements”), by and among CT BSI and Capital Trust, as sellers (in such capacity, collectively, the “JPMCF Sellers”; together with the Sellers, collectively, the “JPM Sellers”) and JPMORGAN CHASE FUNDING INC., as buyer (“JPMCF”; and together with Buyer, collectively, the “JPM Parties”);

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of July 30, 2007 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Citigroup Repurchase Agreement,” and together with the  JPMorgan Repurchase Agreements and the MS Repurchase Agreement, the “Senior Secured Facilities”), by and among Capital Trust, as seller (together with JPM Sellers and the MS Sellers, the “CT Parties”) and CITIGROUP GLOBAL MARKETS INC. and CITIGROUP FINANCIAL PRODUCTS INC., as buyers (collectively, “Citigroup”, and together with the JPM Parties and Morgan Stanley, the “Secured Plan Participants”);

WHEREAS, Sellers and Buyer have agreed, subject to the terms and conditions hereof, that the Existing Repurchase Agreement shall be amended as set forth in this Amendment.

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, Sellers and Buyer agree as follows:

SECTION 1.  Amendments to Master Repurchase Agreement.

(a)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definitions of “Buyer’s Margin Amount”, “EBITDA”, “EBITDA to Fixed Charge Ratio”, “Fixed Charges”, “Interest Expense”, “Leverage”, “Net Assets”, “Net Income”, “Margin Deadline”, “Margin Deficit”, “Margin Deficit Notice”, “Minimum Transfer Amount”, “Senior Recourse Indebtedness”, “Tangible Net Worth”, “Total Indebtedness” and “Total Non-Securitized Indebtedness” in their entirety.

(b)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Income” in its entirety and inserting in lieu thereof the following:

“Income” shall mean, with respect to any Purchased Asset at any time, any Principal Income thereof and all Interest Income thereon.

(c)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Maturity Date” in its entirety and inserting in lieu thereof the following:

“Maturity Date” shall mean March 16, 2010 or such earlier date on which this Agreement shall terminate in accordance with the provisions thereof or hereof or by operation of law; provided, however, that if the applicable conditions set forth in Article 3(m) shall have been satisfied, the Maturity Date shall be extended to the applicable date set forth in Article 3(m) of this Agreement.

(d)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Repurchase Price” in its entirety and inserting in lieu thereof the following:

“Repurchase Price” shall mean, with respect to any Purchased Asset as of any Repurchase Date or any date on which the Repurchase Price is required to be determined hereunder, the price at which such Purchased Asset is to be transferred from Buyer to a Seller; such price will be determined in each case as the sum of the (i) Purchase Price of such Purchased Asset (as increased by any other additional funds advanced in connection with such Purchased Asset); (ii) the accreted and unpaid Price Differential with respect to such Purchased Asset as of the date of such determination; (iii) any other amounts due and owing by any Seller to Buyer and its Affiliates pursuant to the terms of this Agreement as of such date; ( iv) if such Repurchase Date is not a Remittance Date, any Breakage Costs payable in connection with such repurchase; (v) any amounts that would be payable to (a positive amount) a Qualified Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination, if such determination is in connection with any calculation of LTCV; and (vi) any amounts that would be payable to (a positive amount) an Affiliated Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination, if such determination is in connection with any calculation of LTCV (and not in connection with an actual repurchase of a Purchased Asset).  In addition to the forgoing, the Repurchase Price shall be increased by any other additional funds advanced in connection with such Purchased Asset and decreased by (A) the portion of any Principal Payments on such Purchased Asset that is applied pursuant to Article 5 to reduce such Repurchase Price and (B) any other amounts paid to Buyer by a Seller to reduce such Repurchase Price.

(e)           Article 2 of the Existing Repurchase Agreement is hereby amended by appending the following sentence to the definition of “Subsidiary”:

“Notwithstanding the foregoing, Subsidiary shall not include investment funds managed by a Seller or subsidiaries of same or investment funds of which a Seller controls the general partner or managing member thereof or subsidiaries of same (except for those investment funds or subsidiaries of same of which a Seller directly or indirectly owns at least a majority of the securities or other ownership interests therein).”

-2-

(f)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Transaction Documents” in its entirety and inserting in lieu thereof the following:

“Transaction Documents” shall mean, collectively, this Agreement, any applicable Annexes to this Agreement, the Custodial Agreement, the Interim Servicing Agreement, the Depository Agreement, the Warrant, all Hedging Transactions and all Confirmations and assignment documentation executed pursuant to this Agreement in connection with specific Transactions.

(g)           Article 2 of the Existing Repurchase Agreement is hereby amended by inserting the following new definitions in proper alphabetical order:

“Additional Restricted Cash” shall mean, to the extent otherwise constituting Unrestricted Cash, any cash or Cash Equivalent of Capital Trust and its Subsidiaries (i) that is required to be trapped pursuant to the other Senior Secured Facilities or the terms of any other loan agreement, repurchase agreement, or other extension of credit, (ii) that is received in anticipation of a disbursement by Capital Trust or any of its Subsidiaries to a Person other than Capital Trust or any Subsidiary within one (1) Business Day, (iii) that is provided as cash collateral to support letters of credit and bank guarantees, customs and other import duties in the ordinary course of business of Capital Trust or any of its Subsidiaries or (iv) that, if distributed or paid, wou ld result in the insolvency of Capital Trust.

“Amendment No. 1” shall mean that certain Amendment No. 1 to this Agreement, dated as of March 16, 2009, among Sellers and Buyer.

“Amendment No. 1 Effective Date” shall mean the “Amendment Effective Date”, as defined in Section 2 of Amendment No. 1.

“Bonds” shall mean all Purchased Assets designated as “bonds” in Exhibit XV.

“Capital Trust” shall mean Capital Trust, Inc.

-3-

“Cash Equivalents” shall mean (a) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of 90 days or less from the date of acquisition and overnight bank deposits of Buyer or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of Buyer or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least “A” by S&P or “A” by Moody’s, (e) securities with maturities of 90 days or less from the date of acquisition backed by standby letters of credit issued by Buyer or any commercial bank satisfying the requirements of clause (b) of this definition or (f) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (e) of this definition.

“Citigroup Repurchase Agreement” shall have the meaning specified in Amendment No. 1.

“Collateral Value” shall mean, as of any date of determination, in respect of any Purchased Asset, (a) in the case of Bonds, as determined by Buyer in its sole discretion exercised in good faith and (b) in the case of Purchased Assets other than  Bonds, the Initial Value of such Purchased Assets, adjusted by taking into account credit risk (including, without limitation, information relating to the sponsor or tenant for such Purchased Asset or other information relating to the likelihood of payment of such Purchased Asset; any alleged violation of Environmental Laws; any bankruptcy filings, casualty loss, or condemnation affecting or impacting the Underlying Mortgaged Property; any bankruptcy filing or other act of insolvency with respect to any co - -participant or any other Person having an interest in such Purchased Asset or any Underlying Mortgaged Property that is senior to, or pari passu with, the rights of Buyer in such Purchased Asset; any payment of principal and/or interest are more than 60 days past due under any mortgage note affecting any Underlying Mortgaged Property or such Purchased Asset (without giving effect to any waiver by the lender thereunder); any modification of the Underlying Mortgaged Property or to the related loan documents (or any financing senior thereto); any market comparables for any Underlying Mortgaged Property) applicable to such Purchased Asset; but excluding market risk (e.g., interest rate risk) applicable to the Purchased Asset; provided, however, that Buyer may take into account any performance assumptions with respect to such Pu rchased Asset (including, without limitation: the sponsorship thereof; projections as to default probabilities and estimated losses; changes in the cash flow generated by the Underlying Mortgaged Property; the ultimate collectibility of the Purchased Asset if held to maturity; for assets held or to be held by the Custodian, the failure to deliver the Purchased Asset Documents to the Custodian in accordance with the terms of this Agreement and the Custodial Agreement; whether the Purchased Asset has been released from the possession of the Custodian under the Custodial Agreement to a Seller for a period in excess of twenty (20) calendar days without the consent of Buyer; and a breach of any of the representations and warranties regarding the Purchased Asset contained in Article 10(b)(x)(D) or Exhibit VI, in each case in its sole discretion exercised in good faith; and provided further, that the Collateral Value, without giving effect to such increase, shall in no event exceed one hundred percent (100%) of the outstanding principal balance of the related Purchased Asset.

-4-

“CT Cash Account” shall mean one or more deposit accounts established by Capital Trust with Merrill Lynch, Pierce, Fenner & Smith Incorporated or Bank of America, N.A.

“Defaulted Collateral Asset” shall mean a Purchased Asset with respect to which (a) a monetary default has occurred or (b) an acceleration or foreclosure (including, in the case of Senior Mortgage Loans, Mezzanine Loans, B-Notes or Junior Interests, a foreclosure of the Underlying Mortgaged Property) has been declared or commenced, and, in either case, such Transaction has not been returned to performing status within 90 days; provided that Defaulted Collateral Assets shall not include (a) any Bonds, and (b) any Purchased Asset with a Collateral Value or allocated borrowing of zero.

“Excess Cash” shall mean an amount, if any, by which Unrestricted Cash exceeds the sum of (a) $25,000,000 and (b) the aggregate amount of Unfunded Commitments.

“Future Advances” shall mean Capital Trust’s commitment to make future advances on Purchased Assets and assets under other Senior Secured Facilities as specified therefor on Exhibit XV.

“Initial Advance Rate” shall mean, with respect to each Purchased Asset, a rate as specified therefor on Exhibit XV hereto.

“Initial LTCV” shall mean the LTCV, calculated as of the Amendment No. 1 Effective Date.

“Initial Mark” shall mean, with respect to each Purchased Asset, a percentage as specified therefor on Exhibit XV hereto.

“Initial Value” shall mean, with respect to each Purchased Asset, a value equal to the product of (i) the “Face Amount” for such Purchased Asset as specified therefor on Exhibit XV hereto and (ii) the Initial Mark for such Purchased Asset.

“Interest Allocation Percentage” shall mean, initially, 65%, or, if the Maturity Date is extended pursuant to Article 3(m) and beginning on the first day after the original Maturity Date, such other percentage as agreed to in good faith among Sellers and the Secured Plan Participants, in each case, in their commercially reasonable discretion.

-5-

“Interest Income” shall mean, with respect to any Purchased Asset at any time, all interest, dividends or other distributions thereon.

“JPM Indebtedness” shall mean all Indebtedness from time to time owed by Seller to Buyer or any Affiliate of Buyer including, without limitation, under this Agreement, the JPMCF Repurchase Agreement, Hedging Transaction or any repurchase, loan or other agreement between Buyer, or an Affiliate of Buyer, and any of the Sellers.

“JPMorgan Account” shall mean the Sellers’ account number 230-254-632, held with JPMorgan Chase Bank, N.A.

“JPMorgan Repurchase Agreements” shall have the meaning specified therefor in Amendment No. 1.

“Lehman Facility” shall mean that certain Amended and Restated Loan and Security Agreement, dated as of September 10, 2008, between Capital Trust, as borrower, and Lehman Commercial Paper Inc. as lender.

“Liquidity” shall mean, on any date of determination, the sum of (A) the consolidated amount of Unrestricted Cash of Capital Trust and its Subsidiaries on such date, and (B) the incremental amount of borrowings Capital Trust and its Subsidiaries are, as of such date, permitted to borrow pursuant to the terms of existing committed Indebtedness of Capital Trust or its Subsidiaries in effect on such date, as to which all conditions precedent have been satisfied and which borrowings do not require the discretionary consent of the applicable lender, counterparty, credit provider or any other Person.

“LTCV” shall mean, as of any date of determination, the ratio (expressed as a percentage) of the aggregate Repurchase Price for all Purchased Assets to the aggregate Collateral Value of all Purchased Assets.

“Maximum Outstanding Amount” shall mean, for all Transactions related to the JPM Repurchase Agreements, an amount equal to $276,005,779.85; provided that solely for purposes of Article 3(m), the Maximum Outstanding Amount may be adjusted pursuant to Article 5.

“Minimum Release Price” shall mean, for any Purchased Asset, an amount equal to the greater of (a) the lesser of (i) the Initial Value of such Purchased Asset, (ii) the Collateral Value for such Purchased Asset as of the date that Capital Trust notifies Buyer of its intent to sell, dispose, transfer or refinance such Purchased Asset pursuant to a Permitted Disposition, and (iii) 110% of the Repurchase Price of such Purchased Asset and (b) the Repurchase Price.

“Net Proceeds” shall mean, with respect to any Permitted Disposition, or the incurrence or issuance of any Indebtedness permitted by Article 11(n), the aggregate amount of cash received by or on behalf of such Person for its own account in connection with any such transaction, after deducting therefrom only:

-6-

(a)           reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder’s fees and other similar fees, costs and commissions that, in each case, are actually paid at the time of receipt of such cash to a Person that is not a Subsidiary or Affiliate of any of the Sellers or any of their respective Subsidiaries or Affiliates;

(b)           the amount of taxes payable in connection with or as a result of such transaction that, in each case, are actually paid at the time of receipt of such cash to the applicable taxation authority or other Governmental Authority or, so long as such Person is not otherwise indemnified therefor, are reserved for in accordance with GAAP, as in effect at the time of receipt of such cash, based upon such Person’s reasonable estimate of such taxes, and paid to the applicable taxation authority or other Governmental Authority within 90 days after the date of receipt of such cash; and

(c)           in the case of any Permitted Disposition, the outstanding principal amount of, the premium or penalty, if any, on, and any accrued and unpaid interest on, any Indebtedness (other than Indebtedness under or in respect of the Transaction Documents) that is secured by a Lien on the property and assets subject to such Permitted Disposition and is required to be repaid under the terms of such Indebtedness as a result of such Permitted Disposition, in each case, to the extent that the amounts so deducted are actually paid at the time of receipt of such cash to a Person that is not an Affiliate of any of the Sellers or any of their Affiliates;

provided that, any and all amounts so deducted by any such Person pursuant to clauses (a) through (c) of this definition shall be properly attributable to such transaction or to the property or asset that is the subject thereof; provided, further, that if, at the time any of the taxes referred to in clause (b) are actually paid or otherwise satisfied, and the reserve therefor exceeds the amount paid or otherwise satisfied, then the amount of such excess reserve shall constitute “Net Proceeds” on and as of the date of such payment or other satisfaction for all purposes of this Agreement.

“Permitted Disposition” shall mean the sale, transfer, disposition or refinancing of any Purchased Asset by Capital Trust in accordance with Article 11(d); provided that (a) the Net Proceeds from such sale, transfer, disposition or refinancing shall be no less than the Minimum Release Price for such Purchased Asset; (b) 100% of the Net Proceeds from such Permitted Disposition is applied pursuant to Article 5 hereof; (c) any sale, transfer or disposition of Purchased Assets be made to a bona fide third party or, with Buyer’s prior written approval, to an Af filiate of Capital Trust; and (d) no Purchased Asset may be refinanced without the prior written approval of Buyer.

-7-

“Principal Income” shall mean, with respect to any Purchased Asset at any time, any principal thereon and all payments actually received by Buyer on account of Hedging Transactions.

“Secured Plan Facilities Obligations” shall mean the sum of the aggregate amount of all obligations owed by Capital Trust or any Affiliate of Capital Trust under the JPM Repurchase Agreements, the MS Repurchase Agreement and the Citigroup Repurchase Agreement.

“Secured Plan Participants” shall have the meaning specified therefor in the recitals to Amendment No. 1.

“Senior Secured Facilities” shall have the meaning specified therefor in the recitals to Amendment No. 1.

“Senior Unsecured Facility” shall mean that certain Credit Agreement, dated as of March 22, 2007, by and among Capital Trust as borrower, WestLB AG, New York Branch, as administrative agent, and the lenders party thereto, as the same may be amended, restated, supplemented or otherwise modified and in effect from time to time.

“Unfunded Commitments” shall mean, as of any date, an amount equal to the sum of Capital Trust’s unfunded commitments to make Future Advances and meet future capital calls for CT Opportunity Partners I, LP as of such date.

“Unrestricted Cash” shall mean (a) cash and Cash Equivalents that would not appear in the consolidated financial statements of Capital Trust, prepared in accordance with GAAP, as a line item on the balance sheet as “restricted cash” or similar caption minus (b) any Additional Restricted Cash.

“Unsecured Lenders” shall mean the lenders party to the Senior Unsecured Facility.

“Valuation Test Date” shall have the meaning specified in Article 4.

“Valuation Test Failure” shall have the meaning specified in Article 4.

“Valuation Test Period” shall have the meaning specified in Article 4.

“Warrant” shall mean that certain Warrant, dated as of March 16, 2009, made by Capital Trust in favor of JPMorgan Chase Funding, Inc.

(h)           Article 4 of the Existing Repurchase Agreement is hereby amended by deleting Article 4(a) in its entirety and inserting in lieu thereof the following:

-8-

“(a)          On the first Business Day of each month, beginning on September 1, 2009 (each such date, a “Valuation Test Date”), Buyer will determine the Collateral Value of each Purchased Asset.  If on any Valuation Test Date, the LTCV exceeds 1.15 times the Initial LTCV (a “Valuation Test Failure”), Sellers shall, within five (5) Business Days following such Valuation Test Date, make a prepayment in reduction of the Repurchase Price of such Purchased Asset, such that after giving effect to such prepayment, the LTCV, as re-determined by Buyer, shall not exceed 1.15 times the Initial LTCV.  All prepayments i n reduction of such Repurchase Price shall be applied by Buyer in its sole discretion.  If Sellers are not able to cure a Valuation Test Failure within five (5) Business Days after the applicable Valuation Test Date, then Sellers shall cooperate with Buyer to select one or more Purchased Assets to liquidate and will use commercially reasonable efforts, taking into account the rights and interests of Buyer, to expeditiously commence the liquidation process for same.  If the Valuation Test Failure is not cured within 60 days from the initial failure, an Event of Default will occur; provided that if Sellers provide Buyer with a copy of an executed asset sale or refinancing agreement, acceptable to Buyer in its sole discretion, prior to the end of such 60-day period in respect of the selected Purchased Assets, Buyer may, at its option, grant a one-time 15-day extension to cure such Valuation Test Failure (such 60-day period and any 15-day extension, a “Valuation Test Period”).  Notwithstanding the above, in the event that a Purchased Asset becomes a Defaulted Collateral Asset, a Valuation Test will be performed at that time, and the provisions of this Article 4 shall apply.”

(i)           Article 3(m) of the Existing Repurchase Agreement is hereby amended by deleting subsection (a) thereof in its entirety and inserting in lieu thereof the following new subsection (a):

“(m)         (i) Notwithstanding the definition of Maturity Date herein, Sellers may, in their sole discretion by notice to Buyer between 90 and 20 days prior to the originally scheduled Maturity Date, extend the Maturity Date with respect to all of the Transactions until the first (1st) anniversary of the originally scheduled Maturity Date (all of the other terms and conditions of such Transactions remaining the same) provided that the following conditions precedent are satisfied as of the date of the effectiveness of such extension: (1) the aggregate Repurchase Price for all Purchased Assets under the JPM Repurchase Agreements as of the dat e of such extension are less than or equal to the Maximum Outstanding Amount, (2) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (3) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that, if conditions (1) through (3) are met and if any extension request is made during a Valuation Test Period, such extension shall be provisionally granted until the end of such Valuation Test Period, and such extension shall be granted only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

-9-

(ii)           Notwithstanding the foregoing, if the initial Maturity Date shall have been extended pursuant to Article 3(m)(i), Sellers may request, between 90 and 20 days prior to the extended Maturity Date, and subject to the written approval of Buyer in its sole and absolute discretion given no later than ten (10) days prior to the extended Maturity Date (any failure by Buyer to deliver such notice of its approval to an extension to Sellers shall be deemed a denial of Sellers’ request to extend the Maturity Date) provided that in any event, the following conditions precedent are satisfied as of the date of the effectiveness of such second extension: (1) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (2) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that if conditions (1) and (2) or any other conditions then required by Buyer in its sole discretion (including, without limitation, requirements of additional payments, prepayments, revaluations of Collateral Value for any Purchased Asset or delivery of additional documents) are met and if any extension request is made during a Valuation Test Period, such extension may be provisionally granted by Buyer, in its sole and absolute discretion, until the end of such Valuation Test Period, and such extension may be granted by Buyer, in its sole and absolute discretion, only if no Valua tion Test Failure exists as of the end of such Valuation Test Period.

(iii)           Notwithstanding any extension to the Maturity Date as described in this Article 3(m), if the Repurchase Date for a Transaction is extended by agreement of the Buyer and Sellers, Buyer and Sellers shall execute a new Confirmation containing the same pricing terms as the original Confirmation and the extended Repurchase Date for the Transaction.”

(j)           Article 5 of the Existing Repurchase Agreement is hereby amended by deleting the phrase “Articles 5(c) through 5(f) of this Agreement” in Article 5(a) in its entirety and inserting “Articles 5(c) and (d) of this Agreement”.

(k)           Article 5 of the Existing Repurchase Agreement is hereby amended by deleting Articles 5(c) through (f) in their entirety and inserting in lieu thereof the following:

“(c)           Principal Income.  Sellers shall cause (1) all Principal Income in respect of the Purchased Assets and (2) 100% of all Net Proceeds in respect of Permitted Dispositions of Purchased Assets, in each case, to be deposited directly in the Depository Account.  Such Principal Income shall be applied within one (1) Business Day following receipt by Buyer as follows: (i) first, pro rata, (A) to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Assets and (B) solely with respect to any Hedging Transaction with an Affiliated Hedge Counterparty related to such Purchased Asset, to such Affiliated Hedge Counterparty an amount equal to any accrued and unpaid amounts due to such Affiliated Hedge Counterparty under such Hedging Transaction related to such Purchased Asset, (ii) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (iii) third, to make a payment to Buyer on account of the Repurchase Price of the Purchased Assets in respect of which such Principal Income is received, until the Repurchase Price for each such Purchased Asset has been reduced to zero, (iv) fourth, to make a payment to Buyer on account of the Repurchase Price of all other Purchased Assets until the Repurchase Price for such other Purcha sed Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero; (v) fifth, to make a payment to JPMCF on account of the Repurchase Price of all other Purchased Assets related to the JPMCF Repurchase Agreement until the Repurchase Price for such Purchased Assets has been reduced to zero, each such payment to be allocated in JPMCF’s sole discretion; and (vi) sixth, to remit to the applicable Seller the remainder.

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(d)           Interest Income.  Sellers shall cause all Interest Income in respect of the Purchased Assets to be deposited directly in the Depository Account.  Such Interest Income shall be applied monthly by Buyer as follows:

(i) so long as no Event of Default shall have occurred and be continuing, (1) first, pro rata, (A) to Buyer, an amount equal to the Price Differential that has accreted and is outstanding in respect of all the Purchased Assets and (B) to any Affiliated Hedge Counterparty, any amount then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to a Purchased Asset, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a payment to B uyer on account of the Repurchase Price of all Purchased Assets, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to the product of the Interest Allocation Percentage multiplied by the difference between (x) the total Interest Income received by Sellers during such month and (y) the Price Differential otherwise actually paid by Sellers to Buyer during such month, and (4) fourth, to remit to the applicable Seller the remainder; and

(ii) if an Event of Default shall have occurred and be continuing, (1) first, pro rata, (A) to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Assets and (B) to any Affiliated Hedge Counterparty, any amounts then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to such Purchased Asset, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a pay ment to Buyer on account of the Repurchase Price of all Purchased Assets until the Repurchase Price for all Purchased Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero; (4) fourth, to make a payment to JPMCF on account of the Repurchase Price of all other Purchased Assets related to the JPMCF Repurchase Agreement until the Repurchase Price for such Purchased Assets has been reduced to zero, each such payment to be allocated in JPMCF’s sole discretion and (5) fifth, to remit to the applicable Seller the remainder.

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(e)           Control Rights.  So long as no Event of Default shall have occurred and be continuing, and subject to the terms of the Transaction Documents and Article 11(g) hereof, each Seller shall retain the right to take all actions under the Transaction Documents and to retain all contact with the relevant Mortgagor.

(f)           Excess Cash.  At the end of each calendar quarter, Capital Trust shall make a payment to Buyer on account of the Repurchase Price of all Purchased Assets until the Repurchase Price for all Purchased Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to (i) Excess Cash as of the last day of such calendar quarter, multiplied by (ii) the ratio of the aggregate outstanding Repurchase Price for all Purchased Assets to the aggregate Secured Plan Facilities Obligations as of such date.

(g)           Future Advances.  Notwithstanding anything contained herein or in any other Transaction Document to the contrary, as of the Amendment No. 1 Effective Date, Buyer shall have no obligation to make any Future Advances and Capital Trust will fund 100% of all Future Advances.  Solely for purposes of Article 3(m) hereof, after each funding of Future Advances in respect of Purchased Assets by Capital Trust, the Maximum Outstanding Amount will be increased by an amount equal to the product of: (a) the amount of such Future Advance actually funded by Capital Trust, (b) the Initial Mark for the applicable Purchased Asset, (c) th e Initial Advance Rate for such Purchased Asset and (d) 50%.”

(l)           Article 3(b)(ii)(K) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“(K)        Buyer shall have determined, in its sole and absolute discretion, that no Valuation Test Failure shall exist, either immediately prior to or after giving effect to the requested Transaction, calculated as of the date of such Transaction;”

(m)            Article 3(b)(ii) of the Existing Repurchase Agreement is hereby amended by deleting the word “and” at the end of subparagraph (T), replacing the period at the end of subparagraph (U) with the words “; and” and inserting the following as a new Article (V):

“(V)         Buyer shall have determined the Initial Advance Rate, Initial Mark, Initial Value, Purchase Price and Purchasing Rate and any other information listed in Exhibit XV hereto with respect to such Eligible Asset and shall have amended Exhibit XV to reflect such determinations.”

(n)           Article 3(f) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

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“(f)           Each Seller shall be entitled to terminate a Transaction on demand and repurchase the Purchased Asset subject to a Transaction on any Business Day prior to the Repurchase Date (an “Early Repurchase Date”); provided, however, that no Default or Event of Default shall exist (other than a Default or Event of Default that (a) relates solely to the Purchased Assets to be released and (b) will no longer exist after giving effect to such release) and either (x) Seller shall have paid all sums then due under the Transaction relating thereto (including any sums rel ated to Hedging Transactions with respect to such Purchased Asset) or (y) Buyer shall have applied 100% of the Net Proceeds from a Permitted Disposition pursuant to Article 5 hereof, then upon (i) the relevant Seller’s payment in full of the Repurchase Price or the application of such Net Proceeds pursuant to Article 5 hereof, and (ii) receipt by Buyer of a written request from such Seller for the release of such Purchased Asset, Buyer shall as soon as practicable release (and Buyer shall reasonably cooperate with such Seller to facilitate reasonable escrow arrangements to facilitate a simultaneous release of) the related Purchased Asset Documents and the related Purchased Asset and any liens related thereto to such Seller or, to the extent necessary to facilitate future savings of mortgage tax in states that impose mortgage taxes, assign such liens as such Seller shall requ est, provided that any such assignments shall be without expense, recourse, representation or warranty of any kind except that Buyer shall represent and warrant that such Purchased Asset has not been previously assigned by Buyer.  At Sellers’ expense, Buyer shall with reasonable promptness, after a written request from Seller, execute any document or instrument necessary to effectuate such release or assignment.

(o)           Article 7(c) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:  “[Reserved]”.

(p)           Article 10(b)(viii) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“No Valuation Test Failure; No Defaults.  No Valuation Test Failure exists and no Default or Event of Default has occurred or exists under or with respect to the Transaction Documents.”

(q)           Article 11(d) of the Existing Repurchase Agreement is hereby amended by appending the following proviso at the end thereof:

“; provided, however, that a Seller may request from time to time, subject to Buyer’s approval in Buyer’s sole determination, to sell participation interests in its interests in the Purchased Assets in connection with a Permitted Disposition, the sale of which participation interests shall be arm’s length transactions and subject to such terms and conditions as Buyer in its sole discretion shall require; provided further, that Buyer (i) retains an interest in the tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition, subject to the terms of this Agreement or (ii) shall maintain a security interest in such tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition; and provided further, that such Seller complies in all respects with the Purchased Asset Document delivery requirements contained in this Agreement and the Custodial Agreement;”

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(r)           Article 11(g) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“(g)         amend, modify or otherwise agree to any change in the applicable documents for any Purchased Asset, the Underlying Mortgaged Property or other underlying collateral thereunder, without the prior written consent of Buyer other than in accordance with Article 28.”

(s)           Article 11 of the Existing Repurchase Agreement is hereby amended by deleting Articles 11(l) through (p) in their entirety and inserting in lieu thereof the following new Articles 11(l) through (t):

“(l)           No Seller shall make any payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or partnership interest of any Seller, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of any Seller, either directly or indirectly, whether in cash or property or in obligations of any Seller or any of Subsidiary of a Seller, except to the minimum extent required for a Seller to maintain its status as a real estate investment trust and, to the extent permitted, such distribution shall be made in equity in lieu of cash; provided, that any Seller may make distributions to Capital Trust or any other wholly-owned Subsidiary of Capital Trust;

(m)           without the prior written consent of Buyer, no Seller shall, nor permit any Subsidiary to, originate, acquire or invest in any new stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person except to (i) make co-investments in future funds of which Capital Trust (or its Affiliates) is the sponsor or manager, and (ii) make protective investments to defend existing Purchased Assets or assets subject to another Senior Secured Facility or that are pledged as collateral security for the Senior Unsecured Facility.  With respect to co-investments, (i) no investments will be permitted in the first six (6) months following the Amendment No. 1 Effective Date, (ii) the projected ba se management fees generated by the proposed future fund over the first 36 months must equal or exceed the co-investment commitment, and (iii) the total amount of co-investment capital for all such proposed future funds may not exceed $10,000,000 without the prior written approval of Buyer.  With respect to protective investments made in respect of Purchased Assets or assets subject to another Senior Secured Facility, the amount of each investment may not exceed $5,000,000 per Purchased Asset, transaction or asset.  With respect to protective investments made in respect of assets pledged as collateral security for the Senior Unsecured Facility, the aggregate amount of such investments may not exceed $1,000,000;

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(n)           no Seller shall, nor permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness other than the Indebtedness already incurred as of the Amendment No. 1 Effective Date; provided, that additional Indebtedness may be incurred by Sellers or any of their Subsidiaries so long as the following conditions are satisfied: (i) to the extent that the Indebtedness is incurred in connection with a Permitted Disposition, the Net Proceeds of such Permitted Disposition are applied in accordance to Article 5, (ii) to the extent that such new Indebtedness is unsecured (and subordinate to all obligations owed by the applicable Seller under any Secured Plan Facility or the Senior Unsecured Facility) or incurred through the pledge of unencumbered assets, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account and (iii) to the extent that such new Indebtedness is recourse Indebtedness, only to the extent that it replaces existing recourse Indebtedness or is subordinate to all obligations owed to Buyer (and to the extent such Indebtedness is not subject to clause (i) above, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account);

(o)           permit, for all employees of Capital Trust and its Subsidiaries, other than the CEO, COO & CFO, total cash compensation (including base salary and bonus), in the aggregate to exceed $5.8 million.  Subject to the limitation in the preceding sentence, compensation for individual employees shall be determined by Capital Trust in its sole discretion.  For Capital Trust’s CEO, COO & CFO, (i) base salaries shall remain the same as in effect in 2008, and (ii) any cash bonus will be approved based upon performance metrics designed to create alignment with the interests of the Secured Plan Participants and the Unsecured Lenders and must be approved by unanimous consent of a committee comprised of (x) a representative selected by the Secured Plan Participants, (y) the administrative agent of the Senior Unsecured Facility and (z) a representative selected by the board of directors of Capital Trust;

(p)           permit John Klopp and Stephen Plavin to discontinue their current employment with their current respective responsibilities throughout the term of this Agreement; provided that if both John Klopp and Stephen Plavin are no longer so employed, replacement(s) acceptable to Buyer in its sole and absolute discretion shall be appointed within 30 days after their departure;

(q)           permit the Liquidity of Capital Trust, at all times, to be less than $7,000,000 in 2009 or less than $5,000,000 thereafter;

(r)           (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Seller or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effectin g any of the foregoing;

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(s)           agree to (i) any amendment or modification to any Senior Secured Facility or the Senior Unsecured Facility that relates to the subject matter of Amendment No. 1 or would materially and adversely impair the interests of the Buyer without the prior written consent of Buyer or (ii) any proposed waiver to any Senior Secured Facility or the Senior Unsecured Facility without providing prior written notice to Buyer;

(t)           agree to any amendment or modification to the Lehman Facility without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed; and

(u)           establish and/or maintain any deposit account (other than any deposit accounts specifically relating to the Purchased Assets or any asset or collateral subject to any Senior Secured Facility or the Senior Unsecured Facility) with financial institutions that are Secured Plan Participants or Unsecured Lenders; provided that the Sellers may maintain the JPMorgan Account so long as (i) no more than $1,000,000 may remain in the JPMorgan Account at any time, (ii) no Seller may transfer any funds into the JPMorgan Account from any CT Cash Account, (iii) any funds deposited in the JPMorgan Account will be transferred to a CT Cash Account within two (2) Business Days from receipt of such funds in the JPMorgan Account and (iv) all funds in the JPMorgan Account will be transfe rred to a CT Cash Account and the JPMorgan Account will be closed on or before December 31, 2009.  For the avoidance of doubt, the Depository Account and Collection Account and any other deposit account relating to Purchased Assets may be established and maintained at any financial institution selected by Buyer in its sole discretion.”

(t)           Article 11 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety the final paragraph thereto and inserting in lieu thereof the following:

“Compliance with covenants (m), (o) and (q) this Article 11 must be evidenced by financial statements and by a compliance certificate furnished together therewith as further provided in Article 12(j)(ii) below, and compliance with all such covenants are subject to verification by Buyer.  All of the financial tests and covenants in this Agreement will be measured based on the consolidated position of Capital Trust, Inc. and its Subsidiaries.”

(u)           Article 12(j) of the Existing Repurchase Agreement is hereby amended by deleting the word “and” at the end of subparagraph (iii), replacing the period at the end of subparagraph (iv) with the words “; and”, renumbering the existing Article 12(j)(v) as Article 12(j)(vi) and inserting the following as a new Article 12(j)(v):

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“(v)        Without duplicating the reports provided under Articles 12(j)(i) through (iv), (A) certified quarterly financial statements and audited annual financial statements prepared in accordance with GAAP filed within SEC mandated time frames, (B) within thirty (30) Business Days following the end of each calendar month commencing with April 2009, unaudited monthly financial statements, (C) within ten (10) Business Days following the end of each calendar month, reports on asset level performance for each Purchased Asset, and (D) promptly, following any reasonable request therefor, reports of such other informa tion regarding each Seller’s operations, business affairs and financial condition, or compliance with the terms of this Agreement.  Any reports provided above will include, without limitation, details of Sellers’ cash accounts at each quarter end and a schedule of each Seller’s Excess Cash, Unrestricted Cash and Unfunded Commitments.  Sellers agree to provide Buyer with an annual budget no later than 60 days after the end of each fiscal year.”

(v)          Article 12(t) of the Existing Repurchase Agreement is hereby amended by (i) deleting the phrase “margin call in excess of $7,500,000 that is delivered to it under any other repurchase agreement” and replacing it with the phrase “Valuation Test Failure under any other Senior Secured Facility” and (ii) deleting the phrase “knowledge of such margin call” and replacing it with the phrase “knowledge of such Valuation Test Failure”.

(w)          Article 12 of the Existing Repurchase Agreement is hereby amended by inserting the following as a new Article 12(u) and (v):

“(u)        Seller shall cure any Valuation Test Failure in accordance with Article 4 hereof.

(v)          Sellers acknowledge that Buyer shall, until all Repurchase Obligations are satisfied and this Agreement terminates pursuant to its terms, maintain control over the Depository Account subject to the terms of the Depository Agreement.  At Sellers’ expense, Buyer may require that Sellers establish a new Depository Account at a depository institution selected by Buyer in its sole discretion and such new Depository Account shall be the “Depository Account” for all purposes hereunder.”

(x)          Article 13 of the Existing Repurchase Agreement is hereby amended by deleting Article 13(a)(iii) in its entirety and inserting in lieu thereof the following new subsection (iii):

“any Seller shall fail to cure any Valuation Test Failure in accordance with Article 4 of this Agreement;”

(y)           Article 13(a) of the Existing Repurchase Agreement is hereby amended by deleting subsection (ix) and (x) in their entirety and inserting in lieu thereof the following new subsections:

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“(ix)         any event or condition occurs that results in (i) any obligation or liability of any Seller under any note, indenture, loan agreement, guaranty, swap agreement or any other contract to which it is a party (other than JPM Indebtedness), whether singly or in the aggregate, in excess of $1,000,000 becoming due prior to its scheduled maturity or that enables or permits (after the expiration of all grace or cure periods) the beneficiaries of, the holder or holders of, or any other party to any such indebtedness or contract, or any trustee or agent on its or their behalf, to cause any such obligation or liability to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or (ii) any monetary default under any not e, indenture, loan agreement, guaranty, swap agreement or any other contract, credit facility or other obligation of a Seller (other than JPM Indebtedness) if the aggregate amount of such credit facility, contract or other obligation in respect of which such monetary default shall have occurred is at least $1,000,000; provided that this Event of Default shall not apply to secured indebtedness that becomes due as a result of the sale or transfer of the property or assets securing such indebtedness;

(x)           any Seller shall be in default under any JPM Indebtedness of such Seller to Buyer or any of its present or future Affiliates, which default (1) involves the failure to pay a matured obligation, or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary with respect to such Indebtedness;”

(z)           The Existing Repurchase Agreement is hereby amended by inserting Exhibit A attached hereto as a new Exhibit XV in proper alphabetical order.

SECTION 2.  Other Agreements.

(a)           From and after the Amendment Effective Date (as defined below), JPMorgan Chase Bank, N.A. will be deemed to be a party to the Existing Repurchase Agreement in its capacity as the Affiliated Hedge Counterparty.  In its capacity as the Affiliated Hedge Counterparty, JPMorgan Chase Bank, N.A. shall have all the rights, powers and obligations of an Affiliated Hedge Counterparty under the Existing Repurchase Agreement as if it had executed the Existing Repurchase Agreement.  All references to the Affiliated Hedge Counterparty in the Existing Repurchase Agreement and the other Transaction Documents shall be deemed to be references to JPMorgan Chase Bank, N.A. in its capacity as the Affiliated Hedge Counterparty.

(b)           The Affiliated Hedge Counterparty acknowledges that it has received a copy of the Existing Repurchase Agreement and each other Transaction Document.

(c)           All notices and other communications provided for in the Existing Repurchase Agreement and each other Transaction Document shall be delivered to it at its address set forth below its signature to this Amendment.  All such notices and other communications shall be delivered in the manner and be effective as described in Article 16 of the Existing Repurchase Agreement.

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SECTION 3.  Conditions Precedent.  This Amendment shall become effective on the date (the “Amendment Effective Date”) on which (1) all the representations and warranties made by Sellers in this Amendment are true and correct and (2) Buyer shall have received:

(a)           this Amendment, executed and delivered by a duly authorized officer of each of Sellers and Buyer;

(b)           a payment to Buyer on account of the Repurchase Price of all Purchased Assets under the JPM Repurchase Agreements, such payment to be allocated in Buyer’s sole discretion among such Purchased Assets, in an amount equal to $10,350,216.74 (the "Upfront Paydown");

(c)           the Warrant, executed and delivered by a duly authorized officer of Capital Trust;

(d)           legal opinions from counsel to the Sellers dated as of the date hereof addressed to Buyer and its successors and assigns (i) as to the enforceability of the Repurchase Agreement, as amended by this Amendment, and (ii) as to each Seller’s authority to execute, deliver and perform its obligations under the Repurchase Agreement as amended hereby, in each case, in form and substance acceptable to Buyer in its reasonable discretion;

(e)           evidence, satisfactory to the Buyer in its sole discretion, of the payment in full of all obligations owed by any Seller under, and the termination of, the credit facilities identified on Schedule I hereto;

(f)           a copy of an amendment to the Senior Unsecured Facility, executed and delivered by a duly authorized officer of the parties thereto, in form and substance acceptable to Buyer in its sole discretion; and

(g)           for the account of Buyer, payment and reimbursement for all of Buyer’s corresponding costs and expenses incurred in connection with this Amendment, all prior amendments and modifications to the Repurchase Agreement, any other documents prepared in connection herewith and therewith and the transactions contemplated hereby and thereby.

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SECTION 4.  Representations and Warranties.  On and as of the date first above written, each of Sellers hereby represents and warrants to Buyer that (a) it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, (b) after giving effect to this Amendment, no Default or Event of Default under the Repurchase Agreement has occurred and is continuing, and (c) after giving effect to this Amendment, the representations and warranties contained in Article 10 of the Repurchase Agreement are true and correct in all material respects as though made on such date (except for any such representation or warranty that by its terms refers to a s pecific date other than the date first above written, in which case it shall be true and correct in all material respects as of such other date).

SECTION 5.  General Release.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Seller, for: (i) itself, (ii) any parent or Subsidiary thereof, and (iii) the respective partners, officers, directors, shareholders, successors and assigns of all of the foregoing persons and entities,

(a)           hereby releases and forever discharges Buyer and each of its subsidiaries, affiliates, its past, present and future officers, directors, agents, employees, partners, managers, shareholders, servants, attorneys and representatives, as well as their, successors, assigns, their respective heirs, legal representatives, legatees, predecessors-in-interest, successors and assigns, of and from any and all actions, claims, demands, damages, debts, suits, contracts, agreements, losses, liabilities, indebtedness, causes of action either at law or in equity, obligations of whatever kind or nature, accounts, defenses, and offsets against liabilities and obligations, whether known or unknown, direct or indirect, new or existing, by reason of any matter, cause or thing whatsoever occurring on or prior to the date hereof arising out of or relating to any matter or thing whatever, including without limitation, such claims and defenses as fraud, misrepresentation, breach of duty, mistake, duress, usury, claims pertaining to so-called “lender liability,” and claims pertaining to creditor’s rights, which such party ever had, now has, or might hereafter have against the other, jointly or severally, for or by reason of any matter, act, omission, cause or thing whatsoever occurring, on or prior to the date of this Amendment, that is related to, in whole or in part, directly or indirectly, the Transactions, the Repurchase Agreement, the Transaction Documents and this Amendment; and

(b)           warrants, represents and acknowledges that it has no defenses to the payment of, nor any right to set off against, all or any of the amounts due and owing under the Transaction Documents, nor any counterclaims or other rights of action against Buyer of any kind whatsoever, including, without limitation, any right to contest any of the following: the enforceability, applicability or validity of any provisions of the Transaction Documents, Buyer’s right to all proceeds of the Purchased Assets, the existence, validity, enforceability, or perfection of any security interest or mortgage in favor of Buyer, the conduct of Buyer in administering the Transaction Documents and any legal fees and expenses incurred by the Buyer under the Repurchase Agreement, the other Tr ansaction Documents or this Amendment.

SECTION 6.  Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with their respective terms; provided, however, that upon the Amendment Effective Date, all references in the Repurchase Agreement to the “Transaction Documents” shall be deemed to include, in any event, this Amendment.  Each reference to Repurchase Agreement in any of the Transaction Documents shall be deemed to be a reference to the Repurchase Agreemen t as amended hereby.

SECTION 7.  Override Provision.  Notwithstanding any provision in the Repurchase Agreement to the contrary, which are hereby pro tanto superseded and modified or replaced mutatis mutandis to the extent of any inconsistency, the provisions in this Amendment shall apply from and after the date hereof.

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SECTION 8.  Counterparts.  This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.

SECTION 9.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[SIGNATURES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

CAPITAL TRUST, INC.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT BSI FUNDING CORP.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

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JPMORGAN CHASE BANK, N.A., as Buyer
By:	/s/ Gerald M. McCrink
	Name: Gerald M. McCrink
	Title: Executive Director

JPMORGAN CHASE BANK, N.A., as Affiliated Hedge Counterparty
By:	/s/ Kunal K. Singh
	Name: Kunal K. Singh
	Title: Vice President
Address for notices: JPMORGAN CHASE BANK, N.A. 4 New York Plaza, 22nd Floor New York, New York 10004 Attention:  Ms. Nancy S. Alto Telephone:  (212) 623-7109 Telecopy:  (212) 623-7714

Schedule I

Closeout Facilities

1.           Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, between Capital Trust, as seller, and Goldman Sachs Mortgage Company (“Goldman”), as buyer, as supplemented by that certain Amended and Restated Annex I to Amended and Restated Master Repurchase Agreement, dated as of October 30, 2007.

2.           Master Repurchase Agreement, dated as of October 30, 2007, between Capital Trust, as seller, and Goldman, as buyer, as supplemented by that certain Annex I to Master Repurchase Agreement, dated as of October 30, 2007.

Schedule I

Exhibit A

Exhibit XV

Collateral Schedules

JPMorgan

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

25,100,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

25,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

31,523,408.99

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

27,402,996.32

597,004.25

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

35,500,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

13,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

29,024,471.31

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

11,500,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

21,800,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-1

[

***]

8,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,435,162.79

964,837.21

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

23,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

22,571,220.21

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,927,002.75

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

4,689,303.73

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,398,078.96

394,993.29

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

51,384,616.35

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

16,125,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

30,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

54,823,957.29

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

13,448,358.83

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

21,042,320.62

Mezzanine

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-2

[

***]

15,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,015,297.15

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

5,511,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,978,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,042,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

1,116,976.76

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,189,147.00

Bond

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

ISDA liability

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-3

Morgan Stanley

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

16,204,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,963,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,755,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

10,133,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

36,432,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

32,556,639.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

89,057,579.00

1,942,420.40

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

46,966,945.16

3,783,054.34

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

42,637,221.65

4,841,662.74

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

32,492,156.00

2,507,844.08

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

14,444,220.02

5,555,779.98

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

20,700,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

50,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-4

Citigroup

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

14,100,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

22,500,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,770,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

6,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,220,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-5

EX-10.6 7 e607622_ex10-6.htm

Exhibit 10.6

Confidential Treatment Requested by Capital Trust, Inc.

AMENDMENT NO. 1 TO MASTER REPURCHASE AGREEMENT

AMENDMENT NO. 1, dated as of March 16, 2009 (this “Amendment”), to that certain Master Repurchase Agreement, dated as of November 21, 2008 (as amended, restated, supplemented or otherwise modified and in effect prior to the date hereof, the “Existing Repurchase Agreement,” and as amended hereby and as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Repurchase Agreement”), by and among CT BSI FUNDING CORP. (“CT BSI”) and CAPITA L TRUST, INC. (“Capital Trust”), as sellers (collectively, the “Sellers”), JPMORGAN CHASE FUNDING INC., as buyer (“Buyer”) and JPMORGAN CHASE BANK, N.A., as affiliated hedge counterparty (the “Affiliated Hedge Counterparty”).  Capitalized terms used but not otherwise defined herein shall have the meanings specified therefor in the Repurchase Agreement.

RECITALS

WHEREAS, Sellers and Buyer are parties to the Existing Repurchase Agreement;

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of July 29, 2005 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “MS Repurchase Agreement”), by and among Capital Trust, CT RE CDO 2004-1 SUB, LLC, CT RE CDO 2005-1 SUB, LLC and CT XLC HOLDING, LLC, as sellers (in such capacity, collectively, the “MS Sellers”) and MORGAN STANLEY BANK, as buyer (“Morgan Stanley”);

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of October 24, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMCB Repurchase Agreement”; together with the Repurchase Agreement, collectively, the “JPM Repurchase Agreements”), by and among CT BSI and Capital Trust, as sellers (in such capacity, collectively, the “JPMCB Sellers”; together with the Sellers, collectively, the “JPM Sellers”) and JPMORGAN CHASE BANK, N.A., as buyer (“JPMCB”; and together with Buyer, collectively, the “JPM Parties”);

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of July 30, 2007 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Citigroup Repurchase Agreement,” and together with the  JPMorgan Repurchase Agreements and the MS Repurchase Agreement, the “Senior Secured Facilities”), by and among Capital Trust, as seller (together with JPM Sellers and the MS Sellers, the “CT Parties”) and CITIGROUP GLOBAL MARKETS INC. and CITIGROUP FINANCIAL PRODUCTS INC., as buyers (collectively, “Citigroup”, and together with the JPM Parties and Morgan Stanley, the “Secured Plan Participants”);

WHEREAS, Sellers and Buyer have agreed, subject to the terms and conditions hereof, that the Existing Repurchase Agreement shall be amended as set forth in this Amendment.

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, Sellers and Buyer agree as follows:

1

SECTION 1.  Amendments to Master Repurchase Agreement.

(a)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definitions of “Buyer’s Margin Amount”, “EBITDA”, “EBITDA to Fixed Charge Ratio”, “Fixed Charges”, “Interest Expense”, “Leverage”, “Net Assets”, “Net Income”, “Margin Deadline”, “Margin Deficit”, “Margin Deficit Notice”, “Minimum Transfer Amount”, “Senior Recourse Indebtedness”, “Tangible Net Worth”, “Total Indebtedness” and “Total Non-Securitized Indebtedness” in their entirety.

(b)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Income” in its entirety and inserting in lieu thereof the following:

“Income” shall mean, with respect to any Purchased Asset at any time, any Principal Income thereof and all Interest Income thereon.

(c)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Maturity Date” in its entirety and inserting in lieu thereof the following:

“Maturity Date” shall mean March 16, 2010 or such earlier date on which this Agreement shall terminate in accordance with the provisions thereof or hereof or by operation of law; provided, however, that if the applicable conditions set forth in Article 3(m) shall have been satisfied, the Maturity Date shall be extended to the applicable date set forth in Article 3(m) of this Agreement.

(d)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Repurchase Price” in its entirety and inserting in lieu thereof the following:

“Repurchase Price” shall mean, with respect to any Purchased Asset as of any Repurchase Date or any date on which the Repurchase Price is required to be determined hereunder, the price at which such Purchased Asset is to be transferred from Buyer to a Seller; such price will be determined in each case as the sum of the (i) Purchase Price of such Purchased Asset (as increased by any other additional funds advanced in connection with such Purchased Asset); (ii) the accreted and unpaid Price Differential with respect to such Purchased Asset as of the date of such determination; (iii) any other amounts due and owing by any Seller to Buyer and its Affiliates pursuant to the terms of this Agreement as of such date; ( iv) if such Repurchase Date is not a Remittance Date, any Breakage Costs payable in connection with such repurchase; (v) any amounts that would be payable to (a positive amount) a Qualified Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination, if such determination is in connection with any calculation of LTCV; and (vi) any amounts that would be payable to (a positive amount) an Affiliated Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination, if such determination is in connection with any calculation of LTCV (and not in connection with an actual repurchase of a Purchased Asset).  In addition to the forgoing, the Repurchase Price shall be increased by any other additional funds advanced in connection with such Purchased Asset and decreased by (A) the portion of any Principal Payments on such Purchased Asset that is applied pursuant to Article 5 to reduce such Repurchase Price and (B) any other amounts paid to Buyer by a Seller to reduce such Repurchase Price.

(e)           Article 2 of the Existing Repurchase Agreement is hereby amended by appending the following sentence to the definition of “Subsidiary”:

“Notwithstanding the foregoing, Subsidiary shall not include investment funds managed by a Seller or subsidiaries of same or investment funds of which a Seller controls the general partner or managing member thereof or subsidiaries of same (except for those investment funds or subsidiaries of same of which a Seller directly or indirectly owns at least a majority of the securities or other ownership interests therein).”

2

(f)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Transaction Documents” in its entirety and inserting in lieu thereof the following:

“Transaction Documents” shall mean, collectively, this Agreement, any applicable Annexes to this Agreement, the Custodial Agreement, the Interim Servicing Agreement, the Depository Agreement, the Warrant, all Hedging Transactions and all Confirmations and assignment documentation executed pursuant to this Agreement in connection with specific Transactions.

(g)           Article 2 of the Existing Repurchase Agreement is hereby amended by inserting the following new definitions in proper alphabetical order:

“Additional Restricted Cash” shall mean, to the extent otherwise constituting Unrestricted Cash, any cash or Cash Equivalent of Capital Trust and its Subsidiaries (i) that is required to be trapped pursuant to the other Senior Secured Facilities or the terms of any other loan agreement, repurchase agreement, or other extension of credit, (ii) that is received in anticipation of a disbursement by Capital Trust or any of its Subsidiaries to a Person other than Capital Trust or any Subsidiary within one (1) Business Day, (iii) that is provided as cash collateral to support letters of credit and bank guarantees, customs and other import duties in the ordinary course of business of Capital Trust or any of its Subsidiaries or (iv) that, if distributed or paid, wou ld result in the insolvency of Capital Trust.

“Amendment No. 1” shall mean that certain Amendment No. 1 to this Agreement, dated as of March 16, 2009, among Sellers and Buyer.

“Amendment No. 1 Effective Date” shall mean the “Amendment Effective Date”, as defined in Section 2 of Amendment No. 1.

“Bonds” shall mean all Purchased Assets designated as “bonds” in Exhibit XV.

“Capital Trust” shall mean Capital Trust, Inc.

3

“Cash Equivalents” shall mean (a) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of 90 days or less from the date of acquisition and overnight bank deposits of Buyer or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of Buyer or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least “A” by S&P or “A” by Moody’s, (e) securities with maturities of 90 days or less from the date of acquisition backed by standby letters of credit issued by Buyer or any commercial bank satisfying the requirements of clause (b) of this definition or (f) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (e) of this definition.

“Citigroup Repurchase Agreement” shall have the meaning specified in Amendment No. 1.

“Collateral Value” shall mean, as of any date of determination, in respect of any Purchased Asset, (a) in the case of Bonds, as determined by Buyer in its sole discretion exercised in good faith and (b) in the case of Purchased Assets other than  Bonds, the Initial Value of such Purchased Assets, adjusted by taking into account credit risk (including, without limitation, information relating to the sponsor or tenant for such Purchased Asset or other information relating to the likelihood of payment of such Purchased Asset; any alleged violation of Environmental Laws; any bankruptcy filings, casualty loss, or condemnation affecting or impacting the Underlying Mortgaged Property; any bankruptcy filing or other act of insolvency with respect to any co - -participant or any other Person having an interest in such Purchased Asset or any Underlying Mortgaged Property that is senior to, or pari passu with, the rights of Buyer in such Purchased Asset; any payment of principal and/or interest are more than 60 days past due under any mortgage note affecting any Underlying Mortgaged Property or such Purchased Asset (without giving effect to any waiver by the lender thereunder); any modification of the Underlying Mortgaged Property or to the related loan documents (or any financing senior thereto); any market comparables for any Underlying Mortgaged Property) applicable to such Purchased Asset; but excluding market risk (e.g., interest rate risk) applicable to the Purchased Asset; provided, however, that Buyer may take into account any performance assumptions with respect to such Pu rchased Asset (including, without limitation: the sponsorship thereof; projections as to default probabilities and estimated losses; changes in the cash flow generated by the Underlying Mortgaged Property; the ultimate collectibility of the Purchased Asset if held to maturity; for assets held or to be held by the Custodian, the failure to deliver the Purchased Asset Documents to the Custodian in accordance with the terms of this Agreement and the Custodial Agreement; whether the Purchased Asset has been released from the possession of the Custodian under the Custodial Agreement to a Seller for a period in excess of twenty (20) calendar days without the consent of Buyer; and a breach of any of the representations and warranties regarding the Purchased Asset contained in Article 10(b)(x)(D) or Exhibit VI, in each case in its sole discretion exercised in good faith; and provided further, that the Collateral Value, without giving effect to such increase, shall in no event exceed one hundred percent (100%) of the outstanding principal balance of the related Purchased Asset.

4

“CT Cash Account” shall mean one or more deposit accounts established by Capital Trust with Merrill Lynch, Pierce, Fenner & Smith Incorporated or Bank of America, N.A.

“Defaulted Collateral Asset” shall mean a Purchased Asset with respect to which (a) a monetary default has occurred or (b) an acceleration or foreclosure (including, in the case of Senior Mortgage Loans, Mezzanine Loans, B-Notes or Junior Interests, a foreclosure of the Underlying Mortgaged Property) has been declared or commenced, and, in either case, such Transaction has not been returned to performing status within 90 days; provided that Defaulted Collateral Assets shall not include (a) any Bonds, and (b) any Purchased Asset with a Collateral Value or allocated borrowing of zero.

“Excess Cash” shall mean an amount, if any, by which Unrestricted Cash exceeds the sum of (a) $25,000,000 and (b) the aggregate amount of Unfunded Commitments.

“Future Advances” shall mean Capital Trust’s commitment to make future advances on Purchased Assets and assets under other Senior Secured Facilities as specified therefor on Exhibit XV.

“Initial Advance Rate” shall mean, with respect to each Purchased Asset, a rate as specified therefor on Exhibit XV hereto.

“Initial LTCV” shall mean the LTCV, calculated as of the Amendment No. 1 Effective Date.

“Initial Mark” shall mean, with respect to each Purchased Asset, a percentage as specified therefor on Exhibit XV hereto.

“Initial Value” shall mean, with respect to each Purchased Asset, a value equal to the product of (i) the “Face Amount” for such Purchased Asset as specified therefor on Exhibit XV hereto and (ii) the Initial Mark for such Purchased Asset.

“Interest Allocation Percentage” shall mean, initially, 65%, or, if the Maturity Date is extended pursuant to Article 3(m) and beginning on the first day after the original Maturity Date, such other percentage as agreed to in good faith among Sellers and the Secured Plan Participants, in each case, in their commercially reasonable discretion.

5

“Interest Income” shall mean, with respect to any Purchased Asset at any time, all interest, dividends or other distributions thereon.

“JPM Indebtedness” shall mean all Indebtedness from time to time owed by Seller to Buyer or any Affiliate of Buyer including, without limitation, under this Agreement, the JPMCB Repurchase Agreement, Hedging Transaction or any repurchase, loan or other agreement between Buyer, or an Affiliate of Buyer, and any of the Sellers.

“JPMorgan Account” shall mean the Sellers’ account number 230-254-632, held with JPMorgan Chase Bank, N.A.

“JPMorgan Repurchase Agreements” shall have the meaning specified therefor in Amendment No. 1.

“Lehman Facility” shall mean that certain Amended and Restated Loan and Security Agreement, dated as of September 10, 2008, between Capital Trust, as borrower, and Lehman Commercial Paper Inc. as lender.

“Liquidity” shall mean, on any date of determination, the sum of (A) the consolidated amount of Unrestricted Cash of Capital Trust and its Subsidiaries on such date, and (B) the incremental amount of borrowings Capital Trust and its Subsidiaries are, as of such date, permitted to borrow pursuant to the terms of existing committed Indebtedness of Capital Trust or its Subsidiaries in effect on such date, as to which all conditions precedent have been satisfied and which borrowings do not require the discretionary consent of the applicable lender, counterparty, credit provider or any other Person.

“LTCV” shall mean, as of any date of determination, the ratio (expressed as a percentage) of the aggregate Repurchase Price for all Purchased Assets to the aggregate Collateral Value of all Purchased Assets.

“Maximum Outstanding Amount” shall mean, for all Transactions related to the JPM Repurchase Agreements, an amount equal to $276,005,779.85; provided that solely for purposes of Article 3(m), the Maximum Outstanding Amount may be adjusted pursuant to Article 5.

“Minimum Release Price” shall mean, for any Purchased Asset, an amount equal to the greater of (a) the lesser of (i) the Initial Value of such Purchased Asset, (ii) the Collateral Value for such Purchased Asset as of the date that Capital Trust notifies Buyer of its intent to sell, dispose, transfer or refinance such Purchased Asset pursuant to a Permitted Disposition, and (iii) 110% of the Repurchase Price of such Purchased Asset and (b) the Repurchase Price.

“Net Proceeds” shall mean, with respect to any Permitted Disposition, or the incurrence or issuance of any Indebtedness permitted by Article 11(n), the aggregate amount of cash received by or on behalf of such Person for its own account in connection with any such transaction, after deducting therefrom only:

6

(a)           reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder’s fees and other similar fees, costs and commissions that, in each case, are actually paid at the time of receipt of such cash to a Person that is not a Subsidiary or Affiliate of any of the Sellers or any of their respective Subsidiaries or Affiliates;

(b)           the amount of taxes payable in connection with or as a result of such transaction that, in each case, are actually paid at the time of receipt of such cash to the applicable taxation authority or other Governmental Authority or, so long as such Person is not otherwise indemnified therefor, are reserved for in accordance with GAAP, as in effect at the time of receipt of such cash, based upon such Person’s reasonable estimate of such taxes, and paid to the applicable taxation authority or other Governmental Authority within 90 days after the date of receipt of such cash; and

(c)           in the case of any Permitted Disposition, the outstanding principal amount of, the premium or penalty, if any, on, and any accrued and unpaid interest on, any Indebtedness (other than Indebtedness under or in respect of the Transaction Documents) that is secured by a Lien on the property and assets subject to such Permitted Disposition and is required to be repaid under the terms of such Indebtedness as a result of such Permitted Disposition, in each case, to the extent that the amounts so deducted are actually paid at the time of receipt of such cash to a Person that is not an Affiliate of any of the Sellers or any of their Affiliates;

provided that, any and all amounts so deducted by any such Person pursuant to clauses (a) through (c) of this definition shall be properly attributable to such transaction or to the property or asset that is the subject thereof; provided, further, that if, at the time any of the taxes referred to in clause (b) are actually paid or otherwise satisfied, and the reserve therefor exceeds the amount paid or otherwise satisfied, then the amount of such excess reserve shall constitute “Net Proceeds” on and as of the date of such payment or other satisfaction for all purposes of this Agreement.

“Permitted Disposition” shall mean the sale, transfer, disposition or refinancing of any Purchased Asset by Capital Trust in accordance with Article 11(d); provided that (a) the Net Proceeds from such sale, transfer, disposition or refinancing shall be no less than the Minimum Release Price for such Purchased Asset; (b) 100% of the Net Proceeds from such Permitted Disposition is applied pursuant to Article 5 hereof; (c) any sale, transfer or disposition of Purchased Assets be made to a bona fide third party or, with Buyer’s prior written approval, to an Af filiate of Capital Trust; and (d) no Purchased Asset may be refinanced without the prior written approval of Buyer.

7

“Principal Income” shall mean, with respect to any Purchased Asset at any time, any principal thereon and all payments actually received by Buyer on account of Hedging Transactions.

“Secured Plan Facilities Obligations” shall mean the sum of the aggregate amount of all obligations owed by Capital Trust or any Affiliate of Capital Trust under the JPM Repurchase Agreements, the MS Repurchase Agreement and the Citigroup Repurchase Agreement.

“Secured Plan Participants” shall have the meaning specified therefor in the recitals to Amendment No. 1.

“Senior Secured Facilities” shall have the meaning specified therefor in the recitals to Amendment No. 1.

“Senior Unsecured Facility” shall mean that certain Credit Agreement, dated as of March 22, 2007, by and among Capital Trust as borrower, WestLB AG, New York Branch, as administrative agent, and the lenders party thereto, as the same may be amended, restated, supplemented or otherwise modified and in effect from time to time.

“Unfunded Commitments” shall mean, as of any date, an amount equal to the sum of Capital Trust’s unfunded commitments to make Future Advances and meet future capital calls for CT Opportunity Partners I, LP as of such date.

“Unrestricted Cash” shall mean (a) cash and Cash Equivalents that would not appear in the consolidated financial statements of Capital Trust, prepared in accordance with GAAP, as a line item on the balance sheet as “restricted cash” or similar caption minus (b) any Additional Restricted Cash.

“Unsecured Lenders” shall mean the lenders party to the Senior Unsecured Facility.

“Valuation Test Date” shall have the meaning specified in Article 4.

“Valuation Test Failure” shall have the meaning specified in Article 4.

“Valuation Test Period” shall have the meaning specified in Article 4.

“Warrant” shall mean that certain Warrant, dated as of March 16, 2009, made by Capital Trust in favor of JPMorgan Chase Funding, Inc.

(h)           Article 4 of the Existing Repurchase Agreement is hereby amended by deleting Article 4(a) in its entirety and inserting in lieu thereof the following:

8

“(a)          On the first Business Day of each month, beginning on September 1, 2009 (each such date, a “Valuation Test Date”), Buyer will determine the Collateral Value of each Purchased Asset.  If on any Valuation Test Date, the LTCV exceeds 1.15 times the Initial LTCV (a “Valuation Test Failure”), Sellers shall, within five (5) Business Days following such Valuation Test Date, make a prepayment in reduction of the Repurchase Price of such Purchased Asset, such that after giving effect to such prepayment, the LTCV, as re-determined by Buyer, shall not exceed 1.15 times the Initial LTCV.  All prepayments i n reduction of such Repurchase Price shall be applied by Buyer in its sole discretion.  If Sellers are not able to cure a Valuation Test Failure within five (5) Business Days after the applicable Valuation Test Date, then Sellers shall cooperate with Buyer to select one or more Purchased Assets to liquidate and will use commercially reasonable efforts, taking into account the rights and interests of Buyer, to expeditiously commence the liquidation process for same.  If the Valuation Test Failure is not cured within 60 days from the initial failure, an Event of Default will occur; provided that if Sellers provide Buyer with a copy of an executed asset sale or refinancing agreement, acceptable to Buyer in its sole discretion, prior to the end of such 60-day period in respect of the selected Purchased Assets, Buyer may, at its option, grant a one-time 15-day extension to cure such Valuation Test Failure (such 60-day period and any 15-day extension, a “Valuation Test Period”).  Notwithstanding the above, in the event that a Purchased Asset becomes a Defaulted Collateral Asset, a Valuation Test will be performed at that time, and the provisions of this Article 4 shall apply.”

(i)           Article 3(m) of the Existing Repurchase Agreement is hereby amended by deleting subsection (a) thereof in its entirety and inserting in lieu thereof the following new subsection (a):

“(m)         (i) Notwithstanding the definition of Maturity Date herein, Sellers may, in their sole discretion by notice to Buyer between 90 and 20 days prior to the originally scheduled Maturity Date, extend the Maturity Date with respect to all of the Transactions until the first (1st) anniversary of the originally scheduled Maturity Date (all of the other terms and conditions of such Transactions remaining the same) provided that the following conditions precedent are satisfied as of the date of the effectiveness of such extension: (1) the aggregate Repurchase Price for all Purchased Assets under the JPM Repurchase Agreements as of the dat e of such extension are less than or equal to the Maximum Outstanding Amount, (2) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (3) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that, if conditions (1) through (3) are met and if any extension request is made during a Valuation Test Period, such extension shall be provisionally granted until the end of such Valuation Test Period, and such extension shall be granted only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

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(ii)           Notwithstanding the foregoing, if the initial Maturity Date shall have been extended pursuant to Article 3(m)(i), Sellers may request, between 90 and 20 days prior to the extended Maturity Date, and subject to the written approval of Buyer in its sole and absolute discretion given no later than ten (10) days prior to the extended Maturity Date (any failure by Buyer to deliver such notice of its approval to an extension to Sellers shall be deemed a denial of Sellers’ request to extend the Maturity Date) provided that in any event, the following conditions precedent are satisfied as of the date of the effectiveness of such second extension: (1) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (2) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that if conditions (1) and (2) or any other conditions then required by Buyer in its sole discretion (including, without limitation, requirements of additional payments, prepayments, revaluations of Collateral Value for any Purchased Asset or delivery of additional documents) are met and if any extension request is made during a Valuation Test Period, such extension may be provisionally granted by Buyer, in its sole and absolute discretion, until the end of such Valuation Test Period, and such extension may be granted by Buyer, in its sole and absolute discretion, only if no Valua tion Test Failure exists as of the end of such Valuation Test Period.

(iii)          Notwithstanding any extension to the Maturity Date as described in this Article 3(m), if the Repurchase Date for a Transaction is extended by agreement of the Buyer and Sellers, Buyer and Sellers shall execute a new Confirmation containing the same pricing terms as the original Confirmation and the extended Repurchase Date for the Transaction.”

(j)           Article 5 of the Existing Repurchase Agreement is hereby amended by deleting the phrase “Articles 5(c) through 5(f) of this Agreement” in Article 5(a) in its entirety and inserting “Articles 5(c) and (d) of this Agreement”.

(k)           Article 5 of the Existing Repurchase Agreement is hereby amended by deleting Articles 5(c) through (f) in their entirety and inserting in lieu thereof the following:

“(c)         Principal Income.  Sellers shall cause (1) all Principal Income in respect of the Purchased Assets and (2) 100% of all Net Proceeds in respect of Permitted Dispositions of Purchased Assets, in each case, to be deposited directly in the Depository Account.  Such Principal Income shall be applied within one (1) Business Day following receipt by Buyer as follows: (i) first, pro rata, (A) to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Assets and (B) solely with respect to any Hedging Transaction with an Affiliated Hedge Counterparty related to such Purchased Asset, to such Affiliated Hedge Counterparty an amount equal to any accrued and unpaid amounts due to such Affiliated Hedge Counterparty under such Hedging Transaction related to such Purchased Asset, (ii) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (iii) third, to make a payment to Buyer on account of the Repurchase Price of the Purchased Assets in respect of which such Principal Income is received, until the Repurchase Price for each such Purchased Asset has been reduced to zero, (iv) fourth, to make a payment to Buyer on account of the Repurchase Price of all other Purchased Assets until the Repurchase Price for such other Purchased Assets h as been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero; (v) fifth, to make a payment to JPMCB on account of the Repurchase Price of all other Purchased Assets related to the JPMCB Repurchase Agreement until the Repurchase Price for such Purchased Assets has been reduced to zero, each such payment to be allocated in JPMCB’s sole discretion; and (vi) sixth, to remit to the applicable Seller the remainder.

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(d)           Interest Income.  Sellers shall cause all Interest Income in respect of the Purchased Assets to be deposited directly in the Depository Account.  Such Interest Income shall be applied monthly by Buyer as follows:

(i) so long as no Event of Default shall have occurred and be continuing, (1) first, pro rata, (A) to Buyer, an amount equal to the Price Differential that has accreted and is outstanding in respect of all the Purchased Assets and (B) to any Affiliated Hedge Counterparty, any amount then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to a Purchased Asset, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a payment to B uyer on account of the Repurchase Price of all Purchased Assets, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to the product of the Interest Allocation Percentage multiplied by the difference between (x) the total Interest Income received by Sellers during such month and (y) the Price Differential otherwise actually paid by Sellers to Buyer during such month, and (4) fourth, to remit to the applicable Seller the remainder; and

(ii) if an Event of Default shall have occurred and be continuing, (1) first, pro rata, (A) to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Assets and (B) to any Affiliated Hedge Counterparty, any amounts then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to such Purchased Asset, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a pay ment to Buyer on account of the Repurchase Price of all Purchased Assets until the Repurchase Price for all Purchased Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero; (4) fourth, to make a payment to JPMCB on account of the Repurchase Price of all other Purchased Assets related to the JPMCB Repurchase Agreement until the Repurchase Price for such Purchased Assets has been reduced to zero, each such payment to be allocated in JPMCB’s sole discretion and (5) fifth, to remit to the applicable Seller the remainder.

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(e)           Control Rights.  So long as no Event of Default shall have occurred and be continuing, and subject to the terms of the Transaction Documents and Article 11(g) hereof, each Seller shall retain the right to take all actions under the Transaction Documents and to retain all contact with the relevant Mortgagor.

(f)           Excess Cash.  At the end of each calendar quarter, Capital Trust shall make a payment to Buyer on account of the Repurchase Price of all Purchased Assets until the Repurchase Price for all Purchased Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to (i) Excess Cash as of the last day of such calendar quarter, multiplied by (ii) the ratio of the aggregate outstanding Repurchase Price for all Purchased Assets to the aggregate Secured Plan Facilities Obligations as of such date.

(g)           Future Advances.  Notwithstanding anything contained herein or in any other Transaction Document to the contrary, as of the Amendment No. 1 Effective Date, Buyer shall have no obligation to make any Future Advances and Capital Trust will fund 100% of all Future Advances.  Solely for purposes of Article 3(m) hereof, after each funding of Future Advances in respect of Purchased Assets by Capital Trust, the Maximum Outstanding Amount will be increased by an amount equal to the product of: (a) the amount of such Future Advance actually funded by Capital Trust, (b) the Initial Mark for the applicable Purchased Asset, (c) th e Initial Advance Rate for such Purchased Asset and (d) 50%.”

(l)           Article 3(b)(ii)(K) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“(K)           Buyer shall have determined, in its sole and absolute discretion, that no Valuation Test Failure shall exist, either immediately prior to or after giving effect to the requested Transaction, calculated as of the date of such Transaction;”

(m)           Article 3(b)(ii) of the Existing Repurchase Agreement is hereby amended by deleting the word “and” at the end of subparagraph (T), replacing the period at the end of subparagraph (U) with the words “; and” and inserting the following as a new Article (V):

“(V)           Buyer shall have determined the Initial Advance Rate, Initial Mark, Initial Value, Purchase Price and Pricing Rate and any other information listed in Exhibit XV hereto with respect to such Eligible Asset and shall have amended Exhibit XV to reflect such determinations.”

(n)           Article 3(f) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

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“(f)           Each Seller shall be entitled to terminate a Transaction on demand and repurchase the Purchased Asset subject to a Transaction on any Business Day prior to the Repurchase Date (an “Early Repurchase Date”); provided, however, that no Default or Event of Default shall exist (other than a Default or Event of Default that (a) relates solely to the Purchased Assets to be released and (b) will no longer exist after giving effect to such release) and either (x) Seller shall have paid all sums then due under the Transaction relating thereto (including any sums rel ated to Hedging Transactions with respect to such Purchased Asset) or (y) Buyer shall have applied 100% of the Net Proceeds from a Permitted Disposition pursuant to Article 5 hereof, then upon (i) the relevant Seller’s payment in full of the Repurchase Price or the application of such Net Proceeds pursuant to Article 5 hereof, and (ii) receipt by Buyer of a written request from such Seller for the release of such Purchased Asset, Buyer shall as soon as practicable release (and Buyer shall reasonably cooperate with such Seller to facilitate reasonable escrow arrangements to facilitate a simultaneous release of) the related Purchased Asset Documents and the related Purchased Asset and any liens related thereto to such Seller or, to the extent necessary to facilitate future savings of mortgage tax in states that impose mortgage taxes, assign such liens as such Seller shall requ est, provided that any such assignments shall be without expense, recourse, representation or warranty of any kind except that Buyer shall represent and warrant that such Purchased Asset has not been previously assigned by Buyer.  At Sellers’ expense, Buyer shall with reasonable promptness, after a written request from Seller, execute any document or instrument necessary to effectuate such release or assignment.

(o)           Article 7(c) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:  “[Reserved]”.

(p)           Article 10(b)(viii) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“No Valuation Test Failure; No Defaults.  No Valuation Test Failure exists and no Default or Event of Default has occurred or exists under or with respect to the Transaction Documents.”

(q)           Article 11(d) of the Existing Repurchase Agreement is hereby amended by appending the following proviso at the end thereof:

“; provided, however, that a Seller may request from time to time, subject to Buyer’s approval in Buyer’s sole determination, to sell participation interests in its interests in the Purchased Assets in connection with a Permitted Disposition, the sale of which participation interests shall be arm’s length transactions and subject to such terms and conditions as Buyer in its sole discretion shall require; provided further, that Buyer (i) retains an interest in the tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition, subject to the terms of this Agreement or (ii) shall maintain a security interest in such tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition; and provided further, that such Seller complies in all respects with the Purchased Asset Document delivery requirements contained in this Agreement and the Custodial Agreement;”

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(r)           Article 11(g) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“(g)         amend, modify or otherwise agree to any change in the applicable documents for any Purchased Asset, the Underlying Mortgaged Property or other underlying collateral thereunder, without the prior written consent of Buyer other than in accordance with Article 28.”

(s)           Article 11 of the Existing Repurchase Agreement is hereby amended by deleting Articles 11(l) through (p) in their entirety and inserting in lieu thereof the following new Articles 11(l) through (t):

“(l)           No Seller shall make any payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or partnership interest of any Seller, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of any Seller, either directly or indirectly, whether in cash or property or in obligations of any Seller or any of Subsidiary of a Seller, except to the minimum extent required for a Seller to maintain its status as a real estate investment trust and, to the extent permitted, such distribution shall be made in equity in lieu of cash; provided, that any Seller may make distributions to Capital Trust or any other wholly-owned Subsidiary of Capital Trust;

(m)           without the prior written consent of Buyer, no Seller shall, nor permit any Subsidiary to, originate, acquire or invest in any new stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person except to (i) make co-investments in future funds of which Capital Trust (or its Affiliates) is the sponsor or manager, and (ii) make protective investments to defend existing Purchased Assets or assets subject to another Senior Secured Facility or that are pledged as collateral security for the Senior Unsecured Facility.  With respect to co-investments, (i) no investments will be permitted in the first six (6) months following the Amendment No. 1 Effective Date, (ii) the projected ba se management fees generated by the proposed future fund over the first 36 months must equal or exceed the co-investment commitment, and (iii) the total amount of co-investment capital for all such proposed future funds may not exceed $10,000,000 without the prior written approval of Buyer.  With respect to protective investments made in respect of Purchased Assets or assets subject to another Senior Secured Facility, the amount of each investment may not exceed $5,000,000 per Purchased Asset, transaction or asset.  With respect to protective investments made in respect of assets pledged as collateral security for the Senior Unsecured Facility, the aggregate amount of such investments may not exceed $1,000,000;

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(n)           no Seller shall, nor permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness other than the Indebtedness already incurred as of the Amendment No. 1 Effective Date; provided, that additional Indebtedness may be incurred by Sellers or any of their Subsidiaries and so long as the following conditions are satisfied: (i) to the extent that the Indebtedness is incurred in connection with a Permitted Disposition, the Net Proceeds of such Permitted Disposition are applied in accordance to Article 5, (ii) to the extent that such new Indebtedness is unsecured (and subordinate to all obligations owed by the applicable Sel ler under any Secured Plan Facility or the Senior Unsecured Facility) or incurred through the pledge of unencumbered assets, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account and (iii) to the extent that such new Indebtedness is recourse Indebtedness, only to the extent that it replaces existing recourse Indebtedness or is subordinate to all obligations owed to Buyer (and to the extent such Indebtedness is not subject to clause (i) above, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account);

(o)           permit, for all employees of Capital Trust and its Subsidiaries, other than the CEO, COO & CFO, total cash compensation (including base salary and bonus), in the aggregate to exceed $5.8 million.  Subject to the limitation in the preceding sentence, compensation for individual employees shall be determined by Capital Trust in its sole discretion.  For Capital Trust’s CEO, COO & CFO, (i) base salaries shall remain the same as in effect in 2008, and (ii) any cash bonus will be approved based upon performance metrics designed to create alignment with the interests of the Secured Plan Participants and the Unsecured Lenders and must be approved by unanimous consent of a committee comprised of (x) a representative selected by the Secured Plan Participants, (y) the administrative agent of the Senior Unsecured Facility and (z) a representative selected by the board of directors of Capital Trust;

(p)           permit John Klopp and Stephen Plavin to discontinue their current employment with their current respective responsibilities throughout the term of this Agreement; provided that if both John Klopp and Stephen Plavin are no longer so employed, replacement(s) acceptable to Buyer in its sole and absolute discretion shall be appointed within 30 days after their departure;

(q)           permit the Liquidity of Capital Trust, at all times, to be less than $7,000,000 in 2009 or less than $5,000,000 thereafter;

(r)           (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Seller or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effectin g any of the foregoing;

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(s)           agree to (i) any amendment or modification to any Senior Secured Facility or the Senior Unsecured Facility that relates to the subject matter of Amendment No. 1 or would materially and adversely impair the interests of the Buyer without the prior written consent of Buyer or (ii) any proposed waiver to any Senior Secured Facility or the Senior Unsecured Facility without providing prior written notice to Buyer;

(t)           agree to any amendment or modification to the Lehman Facility without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed; and

(u)           establish and/or maintain any deposit account (other than any deposit accounts specifically relating to the Purchased Assets or any asset or collateral subject to any Senior Secured Facility or the Senior Unsecured Facility) with financial institutions that are Secured Plan Participants or Unsecured Lenders; provided that the Sellers may maintain the JPMorgan Account so long as (i) no more than $1,000,000 may remain in the JPMorgan Account at any time, (ii) no Seller may transfer any funds into the JPMorgan Account from any CT Cash Account, (iii) any funds deposited in the JPMorgan Account will be transferred to a CT Cash Account within two (2) Business Days from receipt of such funds in the JPMorgan Account and (iv) all funds in the JPMorgan Account will be transfe rred to a CT Cash Account and the JPMorgan Account will be closed on or before December 31, 2009.  For the avoidance of doubt, the Depository Account and Collection Account and any other deposit account relating to Purchased Assets may be established and maintained at any financial institution selected by Buyer in its sole discretion.”

(t)           Article 11 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety the final paragraph thereto and inserting in lieu thereof the following:

“Compliance with covenants (m), (o) and (q) this Article 11 must be evidenced by financial statements and by a compliance certificate furnished together therewith as further provided in Article 12(j)(ii) below, and compliance with all such covenants are subject to verification by Buyer.  All of the financial tests and covenants in this Agreement will be measured based on the consolidated position of Capital Trust, Inc. and its Subsidiaries.”

(u)           Article 12(j) of the Existing Repurchase Agreement is hereby amended by deleting the word “and” at the end of subparagraph (iii), replacing the period at the end of subparagraph (iv) with the words “; and”, renumbering the existing Article 12(j)(v) as Article 12(j)(vi) and inserting the following as a new Article 12(j)(v):

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“(v)         Without duplicating the reports provided under Articles 12(j)(i) through (iv), (A) certified quarterly financial statements and audited annual financial statements prepared in accordance with GAAP filed within SEC mandated time frames, (B) within thirty (30) Business Days following the end of each calendar month commencing with April 2009, unaudited monthly financial statements, (C) within ten (10) Business Days following the end of each calendar month, reports on asset level performance for each Purchased Asset, and (D) promptly, following any reasonable request therefor, reports of such other i nformation regarding each Seller’s operations, business affairs and financial condition, or compliance with the terms of this Agreement.  Any reports provided above will include, without limitation, details of Sellers’ cash accounts at each quarter end and a schedule of each Seller’s Excess Cash, Unrestricted Cash and Unfunded Commitments.  Sellers agree to provide Buyer with an annual budget no later than 60 days after the end of each fiscal year.”

(v)           Article 12(t) of the Existing Repurchase Agreement is hereby amended by (i) deleting the phrase “margin call in excess of $7,500,000 that is delivered to it under any other repurchase agreement” and replacing it with the phrase “Valuation Test Failure under any other Senior Secured Facility” and (ii) deleting the phrase “knowledge of such margin call” and replacing it with the phrase “knowledge of such Valuation Test Failure”.

(w)           Article 12 of the Existing Repurchase Agreement is hereby amended by inserting the following as a new Article 12(u) and (v):

“(u)         Seller shall cure any Valuation Test Failure in accordance with Article 4 hereof.

(v)           Sellers acknowledge that Buyer shall, until all Repurchase Obligations are satisfied and this Agreement terminates pursuant to its terms, maintain control over the Depository Account subject to the terms of the Depository Agreement.  At Sellers’ expense, Buyer may require that Sellers establish a new Depository Account at a depository institution selected by Buyer in its sole discretion and such new Depository Account shall be the “Depository Account” for all purposes hereunder.”

(x)           Article 13 of the Existing Repurchase Agreement is hereby amended by deleting Article 13(a)(iii) in its entirety and inserting in lieu thereof the following new subsection (iii):

“any Seller shall fail to cure any Valuation Test Failure in accordance with Article 4 of this Agreement;”

(y)           Article 13(a) of the Existing Repurchase Agreement is hereby amended by deleting subsection (ix) and (x) in their entirety and inserting in lieu thereof the following new subsections:

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“(ix)         any event or condition occurs that results in (i) any obligation or liability of any Seller under any note, indenture, loan agreement, guaranty, swap agreement or any other contract to which it is a party (other than JPM Indebtedness), whether singly or in the aggregate, in excess of $1,000,000 becoming due prior to its scheduled maturity or that enables or permits (after the expiration of all grace or cure periods) the beneficiaries of, the holder or holders of, or any other party to any such indebtedness or contract, or any trustee or agent on its or their behalf, to cause any such obligation or liability to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or (ii) any monetary default under any not e, indenture, loan agreement, guaranty, swap agreement or any other contract, credit facility or other obligation of a Seller (other than JPM Indebtedness) if the aggregate amount of such credit facility, contract or other obligation in respect of which such monetary default shall have occurred is at least $1,000,000; provided that this Event of Default shall not apply to secured indebtedness that becomes due as a result of the sale or transfer of the property or assets securing such indebtedness;

(x)           any Seller shall be in default under any JPM Indebtedness of such Seller to Buyer or any of its present or future Affiliates, which default (1) involves the failure to pay a matured obligation, or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary with respect to such Indebtedness;”

(z)           The Existing Repurchase Agreement is hereby amended by inserting Exhibit A attached hereto as a new Exhibit XV in proper alphabetical order.

SECTION 2.Other Agreements.

(a)           From and after the Amendment Effective Date (as defined below), JPMorgan Chase Bank, N.A. will be deemed to be a party to the Existing Repurchase Agreement in its capacity as the Affiliated Hedge Counterparty.  In its capacity as the Affiliated Hedge Counterparty, JPMorgan Chase Bank, N.A. shall have all the rights, powers and obligations of an Affiliated Hedge Counterparty under the Existing Repurchase Agreement as if it had executed the Existing Repurchase Agreement.  All references to the Affiliated Hedge Counterparty in the Existing Repurchase Agreement and the other Transaction Documents shall be deemed to be references to JPMorgan Chase Bank, N.A. in its capacity as the Affiliated Hedge Counterparty.

(b)           The Affiliated Hedge Counterparty acknowledges that it has received a copy of the Existing Repurchase Agreement and each other Transaction Document.

(c)           All notices and other communications provided for in the Existing Repurchase Agreement and each other Transaction Document shall be delivered to it at its address set forth below its signature to this Amendment.  All such notices and other communications shall be delivered in the manner and be effective as described in Article 16 of the Existing Repurchase Agreement.

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SECTION 3.  Conditions Precedent.  This Amendment shall become effective on the date (the “Amendment Effective Date”) on which (1) all the representations and warranties made by Sellers in this Amendment are true and correct and (2) Buyer shall have received:

(a)           this Amendment, executed and delivered by a duly authorized officer of each of Sellers and Buyer;

(b)           payment of the Upfront Paydown in accordance with that certain Amendment No.1 to the JPMCB Repurchase Agreements;

(c)           the Warrant, executed and delivered by a duly authorized officer of Capital Trust;

(d)           legal opinions from counsel to the Sellers dated as of the date hereof addressed to Buyer and its successors and assigns (i) as to the enforceability of the Repurchase Agreement, as amended by this Amendment, and (ii) as to each Seller’s authority to execute, deliver and perform its obligations under the Repurchase Agreement as amended hereby, in each case, in form and substance acceptable to Buyer in its reasonable discretion;

(e)           evidence, satisfactory to the Buyer in its sole discretion, of the payment in full of all obligations owed by any Seller under, and the termination of, the credit facilities identified on Schedule I hereto;

(f)           a copy of an amendment to the Senior Unsecured Facility, executed and delivered by a duly authorized officer of the parties thereto, in form and substance acceptable to Buyer in its sole discretion; and

(g)           for the account of Buyer, payment and reimbursement for all of Buyer’s corresponding costs and expenses incurred in connection with this Amendment, all prior amendments and modifications to the Repurchase Agreement, any other documents prepared in connection herewith and therewith and the transactions contemplated hereby and thereby.

SECTION 4.  Representations and Warranties.  On and as of the date first above written, each of Sellers hereby represents and warrants to Buyer that (a) it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, (b) after giving effect to this Amendment, no Default or Event of Default under the Repurchase Agreement has occurred and is continuing, and (c) after giving effect to this Amendment, the representations and warranties contained in Article 10 of the Repurchase Agreement are true and correct in all material respects as though made on such date (except for any such representation or warranty that by its terms refers to a s pecific date other than the date first above written, in which case it shall be true and correct in all material respects as of such other date).

SECTION 5.  General Release.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Seller, for: (i) itself, (ii) any parent or Subsidiary thereof, and (iii) the respective partners, officers, directors, shareholders, successors and assigns of all of the foregoing persons and entities,

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(a)           hereby releases and forever discharges Buyer and each of its subsidiaries, affiliates, its past, present and future officers, directors, agents, employees, partners, managers, shareholders, servants, attorneys and representatives, as well as their, successors, assigns, their respective heirs, legal representatives, legatees, predecessors-in-interest, successors and assigns, of and from any and all actions, claims, demands, damages, debts, suits, contracts, agreements, losses, liabilities, indebtedness, causes of action either at law or in equity, obligations of whatever kind or nature, accounts, defenses, and offsets against liabilities and obligations, whether known or unknown, direct or indirect, new or existing, by reason of any matter, cause or thing whatsoever occurring on or prior to the date hereof arising out of or relating to any matter or thing whatever, including without limitation, such claims and defenses as fraud, misrepresentation, breach of duty, mistake, duress, usury, claims pertaining to so-called “lender liability,” and claims pertaining to creditor’s rights, which such party ever had, now has, or might hereafter have against the other, jointly or severally, for or by reason of any matter, act, omission, cause or thing whatsoever occurring, on or prior to the date of this Amendment, that is related to, in whole or in part, directly or indirectly, the Transactions, the Repurchase Agreement, the Transaction Documents and this Amendment; and

(b)           warrants, represents and acknowledges that it has no defenses to the payment of, nor any right to set off against, all or any of the amounts due and owing under the Transaction Documents, nor any counterclaims or other rights of action against Buyer of any kind whatsoever, including, without limitation, any right to contest any of the following: the enforceability, applicability or validity of any provisions of the Transaction Documents, Buyer’s right to all proceeds of the Purchased Assets, the existence, validity, enforceability, or perfection of any security interest or mortgage in favor of Buyer, the conduct of Buyer in administering the Transaction Documents and any legal fees and expenses incurred by the Buyer under the Repurchase Agreement, the other Tr ansaction Documents or this Amendment.

SECTION 6.  Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with their respective terms; provided, however, that upon the Amendment Effective Date, all references in the Repurchase Agreement to the “Transaction Documents” shall be deemed to include, in any event, this Amendment.  Each reference to Repurchase Agreement in any of the Transaction Documents shall be deemed to be a reference to the Repurchase Agreemen t as amended hereby.

SECTION 7.  Override Provision.  Notwithstanding any provision in the Repurchase Agreement to the contrary, which are hereby pro tanto superseded and modified or replaced mutatis mutandis to the extent of any inconsistency, the provisions in this Amendment shall apply from and after the date hereof.

20

SECTION 8.  Counterparts.  This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.

SECTION 9.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[SIGNATURES FOLLOW]

21

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

CAPITAL TRUST, INC.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT BSI FUNDING CORP.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

Signature Page to Amendment No. 1 to JPMCF Master Repurchase Agreement

JPMORGAN CHASE FUNDING INC., as Buyer
By:	/s/ Gerald M. McCrink
	Name: Gerald M. McCrink
	Title: Authorized Signer

JPMORGAN CHASE BANK, N.A., as Affiliated Hedge Counterparty
By:	/s/ Kunal K. Singh
	Name: Kunal K. Singh
	Title: Vice President
Address for notices: JPMORGAN CHASE BANK, N.A. 4 New York Plaza, 22nd Floor New York, New York 10004 Attention:  Ms. Nancy S. Alto Telephone:  (212) 623-7109 Telecopy:  (212) 623-7714

Signature Page to Amendment No. 1 to JPMCF Master Repurchase Agreement

Schedule I

Closeout Facilities

1.           Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, between Capital Trust, as seller, and Goldman Sachs Mortgage Company (“Goldman”), as buyer, as supplemented by that certain Amended and Restated Annex I to Amended and Restated Master Repurchase Agreement, dated as of October 30, 2007.

2.           Master Repurchase Agreement, dated as of October 30, 2007, between Capital Trust, as seller, and Goldman, as buyer, as supplemented by that certain Annex I to Master Repurchase Agreement, dated as of October 30, 2007.

Schedule I

Exhibit A

Exhibit XV

Collateral Schedules

JPMorgan

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

25,100,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

25,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

31,523,408.99

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

27,402,996.32

597,004.25

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

35,500,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

13,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

29,024,471.31

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

11,500,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

21,800,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-1

[

***]

8,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,435,162.79

964,837.21

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

23,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

22,571,220.21

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,927,002.75

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

4,689,303.73

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,398,078.96

394,993.29

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

51,384,616.35

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

16,125,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

30,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

54,823,957.29

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

13,448,358.83

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

21,042,320.62

Mezzanine

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-2

[

***]

15,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,015,297.15

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

5,511,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,978,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,042,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

1,116,976.76

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,189,147.00

Bond

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

ISDA liability

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-3

Morgan Stanley

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

16,204,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,963,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,755,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

10,133,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

36,432,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

32,556,639.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

89,057,579.00

1,942,420.40

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

46,966,945.16

3,783,054.34

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

42,637,221.65

4,841,662.74

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

32,492,156.00

2,507,844.08

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

14,444,220.02

5,555,779.98

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

20,700,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

50,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-4

Citigroup

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

14,100,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

22,500,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,770,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

6,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,220,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-5

EX-10.7 8 e607622_ex10-7.htm

Exhibit 10.7

Confidential Treatment Requested by Capital Trust, Inc.

AMENDMENT NO. 3 TO MASTER REPURCHASE AGREEMENT

AMENDMENT NO. 3 TO MASTER REPURCHASE AGREEMENT, dated as of March 16, 2009 (this “Amendment”), by and between CAPITAL TRUST, INC., a Maryland corporation (“Seller”) and CITIGROUP GLOBAL MARKETS, INC., a Delaware corporation (“Securities Buyer”), and CITIGROUP FINANCIAL PRODUCTS INC., a Delaware corporation (“Loan Buyer”; each of Loan Buyer and Securities Buyer, a “Buyer” and collectively, the “Buyers”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement (as hereinafter defined).

RECITALS

WHEREAS, Seller and the Buyers are parties to that certain Master Repurchase Agreement dated as of July 30, 2007, which Master Repurchase Agreement was amended by that certain Amendment No. 1 to Master Repurchase Agreement dated as of June 26, 2008, and that  certain Amendment No. 2 to Master Repurchase Agreement dated as of July 24, 2008 (as so amended, the “Existing Repurchase Agreement,” and as amended hereby and as further amended, restated, supplemented or otherwise modified from time to time, the “Repurchase Agreement”);

WHEREAS, Seller is party to that certain Master Repurchase Agreement, dated as of July 29, 2005 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Morgan Stanley Repurchase Agreement”), by and among Seller, CT RE CDO 2004-1 SUB, LLC, CT RE CDO 2005-1 SUB, LLC and CT XLC HOLDINGS, LLC, as sellers (collectively, the “Morgan Stanley Sellers”) and MORGAN STANLEY BANK, N.A., as buyer (“Morgan Stanley”);

WHEREAS, Seller is party to that certain Master Repurchase Agreement, dated as of October 24, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMorgan-A Repurchase Agreement”), by and among CT BSI FUNDING CORP. (“CT BSI”) and Seller, as sellers (in such capacity, collectively, the “JPM-A Sellers”) and JPMORGAN CHASE BANK, N.A., as buyer (“JPMorgan”);

WHEREAS, Seller is party to that certain Master Repurchase Agreement, dated as of November 21, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMorgan-B Repurchase Agreement”; together with the JPMorgan-A Repurchase Agreement, collectively, the “JPMorgan Repurchase Agreements,” and together with the Repurchase Agreement, the Morgan Stanley Repurchase Agreement, the “Senior Secured Facilities”), by and among CT BSI and Seller, as sellers (in such capacity, collectively, the “JPM-B Sellers”; together with the JPM-A Sellers, collectively, the “JPM Sellers”; and together with Seller and the Morgan Stanley Sellers, the “CT Parties”) and JPMORGAN CHASE FUNDING INC., as buyer (“JPMorgan Funding”; and together with JPMorgan, collectively, the “JPM Parties,” and together with the Buyers and Morgan Stanley, the “Secured Plan Participants”); and

WHEREAS, Seller and the Buyers wish to amend the Existing Repurchase Agreement as more particularly set forth herein.

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and the Buyers hereby agree as follows:

SECTION 1.  Amendments.

(a)           The following definitions are hereby added to Section 2 of the Existing Repurchase Agreement in the appropriate alphabetical order:

“Additional Senior Unsecured Payment Amount” shall mean an amount, calculated on a quarterly basis, equal to (x) the total amount of cash paid by Seller or its Affiliates to the Senior Unsecured Facility during the immediately preceding calendar quarter (including interest and amortization payments), less (y) the Baseline Senior Unsecured Payment Amount.

 “Additional Restricted Cash” shall mean, to the extent otherwise constituting Unrestricted Cash, any cash or Cash Equivalent of Seller and its Subsidiaries (i) that is required to be trapped pursuant to the other Senior Secured Facilities or the terms of any other loan agreement, repurchase agreement, or other extension of credit, (ii) that is received in anticipation of a disbursement by Seller or any of its Subsidiaries to a Person other than Seller or any Subsidiary within one (1) Business Day, (iii) that is provided as cash collateral to support letters of credit and bank guarantees, customs and other import duties in the ordinary course of business of Seller or any of its Subsidiaries or (iv) that, if distributed or paid, would result in the insolvency of Seller.

“Amendment No. 3” shall mean that certain Amendment No. 3 to this Agreement, dated as of March 16, 2009, among Seller and the Buyers.

“Amendment No. 3  Effective Date” shall mean the “Amendment Effective Date”, as defined in Section 2 of Amendment No. 3.

“Baseline Senior Unsecured Payment Amount” shall mean an amount, calculated on a quarterly basis, equal to the product of (x) $100,000,000, multiplied by (y) Senior Unsecured Facility LIBOR, plus 175 basis points (1.75%).

“Cash Equivalents” shall mean (a) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of 90 days or less from the date of acquisition and overnight bank deposits of Buyer or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of Buyer or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least “A” by S&P or “A” by Moody’s, (e) securities with maturities of 90 days or less from the date of acquisition backed by standby letters of credit issued by Buyer or any commercial bank satisfying the requirements of clause (b) of this definition or (f) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (e) of this definition.

2

“Citigroup’s Proportionate Share” shall mean, as of any date, a fraction the numerator of which is the outstanding Repurchase Price of all Purchased Loans, and the denominator of which is the Secured Plan Facilities Obligations.

 “Collateral Value” shall mean, as of any date of determination, in respect of any Purchased Loan, the Initial Value of such Purchased Loan, adjusted by taking into account credit risk (including, without limitation, information relating to the sponsor or tenant for such Purchased Loan or other information relating to the likelihood of payment of such Purchased Loan; any alleged violation of Environmental Laws; any bankruptcy filings, casualty loss, or condemnation affecting or impacting the applicable Underlying Mortgaged Property; any bankruptcy filing or other act of insolvency with respect to any co-participant or any other Person having an interest in such Purchased Loan or any related Underlying Mortgaged Property that is senior to, or pari passu with, the rights of Loan Buyer in such Purchased Loan; any payment of principal and/or interest are more than 60 days past due under any mortgage note affecting the Underlying Mortgaged Property or Underlying Mortgaged Properties or such Purchased Loan (without giving effect to any waiver by the lender thereunder); any modification of the Underlying Mortgaged Property or to the related loan documents (or any financing senior thereto); any market comparables for the Underlying Mortgaged Property or Underlying Mortgaged Properties) applicable to such Purchased Loan; but excluding market risk (e.g., interest rate risk) applicable to the Purchased Loan ; provided, however, that Loan Buyer may take into account any performance assumptions with respect to such Purchased Loan (including, without limitation: the sponsorship thereof; projections as to default probabilities and estimated losses; changes in the cash flow generated by the Underlying Mortgaged Property; the ultimate collectibility of the Purchased Loan if held to maturity; for assets held or to be held by the Custodian, the failure to deliver the Purchased Loan Documents to the Custodian in accordance with the terms of this Agreement and the Custodial Agreement; whether the Purchased Loan has been released from the possession of the Custodian under the Custodial Agreement to Seller for a period in excess of twenty (20) calendar days without the consent of Loan Buyer; and a breach of any of the representations and warranties regarding the Purchased Loan contained in Section 10(b)(vi)), in each case in its sole discretion exercised in good faith; and provided further, that the Collateral Value, without giving effect to such increase, shall in no event exceed one hundred percent (100%) of the outstanding principal balance of the related Purchased Loan.

3

 “CT Cash Account” shall mean one or more deposit accounts established by Seller with Merrill Lynch, Pierce, Fenner & Smith Incorporated or Bank of America, N.A.

“Defaulted Purchased Loan” shall mean a Purchased Loan with respect to which (a) a monetary default has occurred or (b) an acceleration or foreclosure (including, in the case of Mezzanine Loans or B-Notes, a foreclosure of the Underlying Mortgaged Property) has been declared or commenced, and, in either case, such Purchased Loan has not been returned to performing status within 90 days; provided that Defaulted Purchased Loans shall not include any Purchased Loan with a Collateral Value or Repurchase Price of zero.

“Depository Agreement” shall mean that certain Depository Agreement, dated as of July 30, 2007, by and between the Buyers, Seller, Depository Bank and Midland Loan Services, Inc.

 “Early Repurchase” shall have the meaning specified in Section 3(d) of this Agreement.

“Excess Cash” shall mean an amount, if any, by which Unrestricted Cash exceeds the sum of (a) $25,000,000 and (b) the aggregate amount of Seller’s Unfunded Commitments.

“Future Advances” shall mean Seller’s commitment to make future advances on assets under other Senior Secured Facilities, as detailed in Exhibit IX.

“Initial LTCV” shall mean the LTCV, calculated as of the Amendment No. 3 Effective Date.

“Initial Mark” shall mean, with respect to each Purchased Loan, a percentage as specified therefor on Exhibit IX hereto.

“Initial Value” shall mean, with respect to each Purchased Loan, a value equal to the product of (i) the “Face Amount” for such Purchased Loan as specified therefor on Exhibit G hereto and (ii) the Initial Mark for such Purchased Loan.

“Interest Allocation Percentage” shall mean, initially, 65%, or, if the Repurchase Date is extended pursuant to Section 3(e) and beginning on the first day after the original Repurchase Date, such other percentage as agreed to in good faith among Seller and the Secured Plan Participants, in each case, in their commercially reasonable discretion.

4

“Interest Income” shall mean, with respect to any Purchased Loan, at any time, all interest, dividends or other distributions thereon.

“JPMorgan Account” shall mean the Seller’s account held with JP Morgan Chase Bank, N.A.

 “JPMorgan Repurchase Agreements” shall have the meaning specified therefor in Amendment No. 3.

“Lehman Facility” shall mean that certain Amended and Restated Loan and Security Agreement, dated as of September 10, 2008, between Seller, as borrower, and Lehman Commercial Paper Inc. as lender.

“Liquidity” shall mean, on any date of determination, the sum of (A) the consolidated amount of Unrestricted Cash of Seller and its Subsidiaries on such date, and (B) the incremental amount of borrowings Seller and its Subsidiaries are, as of such date, permitted to borrow pursuant to the terms of existing committed Indebtedness of Seller or its Subsidiaries in effect on such date, as to which all conditions precedent have been satisfied and which borrowings do not require the discretionary consent of the applicable lender, counterparty, credit provider or any other Person.

 “LTCV” shall mean, as of any date of determination, the ratio (expressed as a percentage) of the aggregate Repurchase Price of all Purchased Loans to the aggregate Collateral Value of all Purchased Loans.

“Maximum Outstanding Amount” shall mean, for all Transactions, an amount equal to $50,893,935.84.

“Minimum Release Price” shall mean, for any Purchased Loan, an amount equal to the greater of (a) the lesser of (i) the Initial Value of such Purchased Loan, (ii) the Collateral Value for such Purchased Loan as of the date that Seller notifies Loan Buyer of its intent to effect an Early Repurchase of such Purchased Loan, and (iii) 110% of the Repurchase Price of such Purchased Loan and (b) the Repurchase Price of such Purchased Loan.

“Morgan Stanley Repurchase Agreement” shall have the meaning specified in Amendment No. 3.

“Net Proceeds” shall mean, with respect to any Early Repurchase, the aggregate amount of cash received by or on behalf of such Person for its own account in connection with any such transaction, after deducting therefrom only:

(a)           reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder’s fees and other similar fees, costs and commissions that, in each case, are actually paid at the time of receipt of such cash to a Person that is not a Subsidiary or Affiliate of the Seller;

5

(b)           the amount of taxes payable in connection with or as a result of such transaction that, in each case, are actually paid at the time of receipt of such cash to the applicable taxation authority or other Governmental Authority or, so long as such Person is not otherwise indemnified therefor, are reserved for in accordance with GAAP, as in effect at the time of receipt of such cash, based upon such Person’s reasonable estimate of such taxes, and paid to the applicable taxation authority or other Governmental Authority within 90 days after the date of receipt of such cash; and

(c)           the outstanding principal amount of, the premium or penalty, if any, on, and any accrued and unpaid interest on, any Indebtedness (other than Indebtedness under or in respect of the Transaction Documents) that is secured by a lien on the property and assets subject to such Early Repurchase and is required to be repaid under the terms of such Indebtedness as a result of such Early Repurchase, in each case, to the extent that the amounts so deducted are actually paid at the time of receipt of such cash to a Person that is not an Affiliate of Seller;

provided that, any and all amounts so deducted by any such Person pursuant to clauses (a) through (c) of this definition shall be properly attributable to such Early Repurchase or to the property or asset that is the subject thereof; provided, further, that if, at the time any of the taxes referred to in clause (b) are actually paid or otherwise satisfied, and the reserve therefor exceeds the amount paid or otherwise satisfied, then the amount of such excess reserve shall constitute “Net Proceeds” on and as of the date of such payment or other satisfaction for all purposes of this Agreement.

“Secured Plan Facilities Obligations” shall mean the sum of (a) the aggregate Repurchase Price of all Purchased Loans, and (b) and the aggregate amount of all obligations owed by Seller or any Subsidiary of Seller under the JPMorgan Repurchase Agreements and the Morgan Stanley Repurchase Agreement.

“Secured Plan Participants” shall have the meaning specified therefor in the recitals to Amendment No. 3.

“Senior Secured Facilities” shall have the meaning specified therefor in the recitals to Amendment No. 3.

“Senior Unsecured Facility” shall mean that certain Credit Agreement, dated as of March 22, 2007, by and among Seller as borrower, WestLB AG, New York Branch, as administrative agent, and the lenders party thereto, as the same may be amended, restated, supplemented or otherwise modified and in effect from time to time.

6

“Senior Unsecured Facility LIBOR” shall mean, for any period, the measure of LIBOR used to calculate the interest payments made under the Senior Unsecured Facility during such period.

“Unfunded Commitments” shall mean, as of any date, an amount equal to the sum of Seller’s unfunded commitments to make Future Advances and meet future capital calls for CT Opportunity Partners I, LP, as of such date.

“Unrestricted Cash” shall mean (a) cash and Cash Equivalents that would not appear in the consolidated financial statements of Seller, prepared in accordance with GAAP, as a line item on the balance sheet as “restricted cash” or similar caption minus (b) any Additional Restricted Cash.

“Unsecured Lenders” shall mean the lenders party to the Senior Unsecured Facility.

“Valuation Test Date” shall have the meaning specified in Section 4.

“Valuation Test Failure” shall have the meaning specified in Section 4.

“Valuation Test Period” shall have the meaning specified in Section 4.

“Warrant” shall mean that certain Warrant, dated as of March 16, 2009, made by Seller in favor of Loan Buyer.

(b)           The definition of “Buyer’s Margin Amount” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(c)           The definition of “Buyer’s Margin Percentage” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(d)           The definition of “EBITDA” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(e)           The definition of “Fixed Charge Ratio” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(f)           The definition of “Margin Deficit” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(g)           The definition of “Margin Excess” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(h)           The definition of “Margin Notice Deadline” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

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(i)           The definition of “Market Value” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(j)           The definition of “Net Income” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(k)           The definition of “Net Worth” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(l)           The definition of “Recourse Debt to Equity Ratio” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(m)           The definition of “Repurchase Date” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

“Repurchase Date” shall mean March 16, 2010 or such earlier date on which this Agreement shall terminate in accordance with the provisions thereof or hereof or by operation of law; provided, however, that if the applicable conditions set forth in such Section 3(e) of this Agreement shall have been satisfied, the Termination Date shall be extended to the applicable date set forth in Section 3(e) of this Agreement.

(n)           The definition of “Subsidiary” contained in Section 2 of the Existing Repurchase Agreement is hereby modified by inserting the following as the last sentence thereof:

Notwithstanding the foregoing, Subsidiary shall not include investment funds managed by Seller or subsidiaries of same or investment funds of which Seller controls the general partner or managing member thereof or subsidiaries of same (except for those investment funds or subsidiaries of same of which Seller directly or indirectly owns at least a majority of the securities or other ownership interests therein).

(o)           The definition of “Tangible Net Worth” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(p)           The definition of “Target Price” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(q)           The definition of “Total Debt to Equity Ratio” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(r)           The definition of “Total Indebtedness” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(s)           The definition of “Total Recourse Indebtedness” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(t)           Section 3(d) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(d)           No Transaction shall be terminable on demand by Loan Buyer (other than upon the occurrence and during the continuance of an Event of Default by Seller).  Seller shall be entitled to terminate a Transaction on demand, in whole or in part, and repurchase any or all of the Purchased Loans subject to a Transaction on any Business Day prior to the Repurchase Date (such repurchase, an “Early Repurchase,” and the date of such Early Repurchase, an “Early Repurchase Date”); provided, however, that:

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(i) Seller notifies Loan Buyer in writing of its intent to terminate such Transaction and repurchase such Purchased Loan no later than two (2) Business Days (or such shorter period of time as Loan Buyer may consent to, such consent not to be unreasonably withheld, delayed or conditioned) prior to such Early Repurchase Date,

(ii) Such Purchased Loan or Purchased Loans are simultaneously sold to a bona fide third-party purchaser, or with Loan Buyer’s approval (which may be withheld in Loan Buyer’s sole discretion) to an Affiliate of Seller,

(iii) All of the Net Proceeds of such sale are deposited directly into the Loan Cash Management Account and applied in accordance with Section 5(d) hereof,  and

(iv) on such Early Repurchase Date Seller pays to Loan Buyer (inclusive of Net Proceeds deposited in the Loan Cash Management Account pursuant to clause (iii) above) an amount equal to the Minimum Release Price for such Purchased Loan or Purchased Loans.

(u)           Section 3(e) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(e)           Seller hereby promises to pay in full on the Repurchase Date, in accordance with the provisions of the definition of Repurchase Date, the aggregate Repurchase Price with respect to all Purchased Loans then held by Loan Buyer.

(i)           Notwithstanding the foregoing, Seller may, in its sole discretion by notice to Loan Buyer between 90 and 20 days prior to the originally scheduled Repurchase Date, extend the Repurchase Date with respect to all of the Transactions until the first (1st) anniversary of the originally scheduled Termination Date (all of the other terms and conditions of such Transactions remaining the same) provided that the following conditions precedent are satisfied as of the date of the effectiveness of such extension: (1) the aggregate Repurchase Price of all Purchased Loans as of the date of such extension is less than or equal to the Maximum Outstanding Amount, (2) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (3) Seller and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that, if conditions (1) through (3) are met and if any extension request is made during a Valuation Test Period, such extension shall be provisionally granted until the end of such Valuation Test Period, and such extension shall be granted only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

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(ii)           Notwithstanding the foregoing, if the initial Repurchase Date shall have been extended pursuant to Section 3(e)(i), Seller may request, between 90 and 20 days prior to the extended Repurchase Date, and subject to the written approval of Loan Buyer in its sole and absolute discretion given no later than ten (10) days prior to the extended Repurchase Date (any failure by Loan Buyer to deliver such notice of its approval to an extension to Seller shall be deemed a denial of Seller’s request to extend the Repurchase Date) provided that in any event, the following conditions precedent are satisfied as of the date of the effectiveness of such second extension: (1) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (2) Seller and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that if conditions (1) and (2) or any other conditions then required by Loan Buyer in its sole discretion (including, without limitation, requirements of additional payments, prepayments, revaluations of Collateral Value for any Purchased Loan or delivery of additional documents) are met and if any extension request is made during a Valuation Test Period, such extension may be provisionally granted by Loan Buyer, in its sole and absolute discretion, until the end of such Valuation Test Period, and such extension may be granted by Loan Buyer, in its sole and absolute discretion, only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

(v)           The following is hereby added to the Existing Repurchase Agreement as Section 3(n):

(n)           Seller may request from time to time, subject to Loan Buyer’s approval in Loan Buyer’s sole determination, to sell participation interests in its interests in any Purchased Loan in connection with an Early Repurchase of such Purchased Asset in accordance with Section 3(d) hereof, the sale of which participation interests shall be arm’s length transactions and subject to such terms and conditions as Loan Buyer in its sole discretion shall require; provided that Loan Buyer (a) retains an interest in the tranche or participation that is not sold or refinanced pursuant to such Early Repurchase, subject to the terms of this Agreement or (b) shall maintain a security interest in such tranche or participation that is not sold or refinanced pursuant to such Early Repurchase.

(w)           Section 4 of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

4.           MARGIN MAINTENANCE

Beginning with September 1, 2009, and on the first Business Day of each calendar month thereafter (each such date, a “Valuation Test Date”), Loan Buyer will determine the Collateral Value of each Purchased Loan.  If on any Valuation Test Date, the LTCV exceeds 1.15 times the Initial LTCV (a “Valuation Test Failure”), Seller shall, within five (5) Business Days following such Valuation Test Date, make a prepayment in reduction of the Repurchase Price, such that after giving effect to such prepayment, the LTCV, as re-determined by Loan Buyer, shall not exceed 1.15 times the Initial LTCV.  All prepayments in reduction of Repurchase Price shall be applied by Loan Buyer in its sole discretion.  If Seller is not able to cure a Valuation Test Failure within five (5) Business Days after the applicable Valuation Test Date, then Seller shall cooperate with Loan Buyer to select one or more Purchased Loans to liquidate and will use its commercially reasonable efforts, taking into account the rights and interests of Loan Buyer, to expeditiously commence the liquidation process for same.  If the Valuation Test Failure is not cured within 60 days from the initial failure, an Event of Default will occur; provided that if Seller provides Loan Buyer with a copy of an executed asset sale or refinancing agreement, acceptable to Loan Buyer in its sole discretion, prior to the end of such 60-day period in respect of the selected Purchased Loans, Loan Buyer may, at its option, grant a one-time 15-day extension to cure such Valuation Test Failure (such 60-day period and any 15-day extension, a “Valuation Test Period”).  Notwithstanding the above, in the event that a Purchased Loan becomes a Defaulted Purchased Loan, a Valuation Test will be performed at that time, and the provisions of this Section 4 shall apply.

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(x)           Section 5(c) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(c)           So long as no Event of Default (other than with respect to a Buyer) shall have occurred and be continuing, all Interest Income received by the Depository in respect of the Purchased Loans during each Collection Period shall be applied by the Depository on the related Remittance Date in the following order of priority:

(i)           first, to remit to Loan Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Loans,

(ii)           second, to make a payment to Loan Buyer on account of any other amounts (other than Repurchase Price) due and payable to Loan Buyer under the Agreement and the other Transaction Documents,

(iii)           third, to make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero, an amount equal to the product of the Interest Allocation Percentage multiplied by the difference between (x) the total Interest Income received by Seller during such month on account of the Purchased Loans and (y) the Price Differential otherwise actually paid by Seller to Loan Buyer during such month, and

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(iv)           fourth, to remit to Seller the remainder.

(y)           Section 5(d) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(d)           So long as no Event of Default (other than with respect to a Buyer) shall have occurred and be continuing, all Income received by the Depository in respect of the Purchased Loans, other than Interest Income, during each Collection Period shall be applied by the Depository within one (1) Business Day following receipt thereof in the following order of priority:

(i)           first, to remit to Loan Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Loans,

(ii)           second, to make a payment to Loan Buyer on account of any other amounts (other than Repurchase Price) due and payable to Loan Buyer under the Agreement and the other Transaction Documents,

(iii)           third, to make a payment to Loan Buyer on account of the Repurchase Price of the Purchased Loan in respect of which such Income is received until the Repurchase Price for such Purchased Loan has been reduced to zero;

(iv)           fourth, to make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans until the Repurchase Price for all Purchased Loans has been reduced to zero, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero; and

(v)           fifth, to remit to Seller the remainder.

(z)           Section 5(e) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(e)           If an Event of Default (other than with respect to a Buyer) shall have occurred and be continuing, all Income received by the Depository in respect of the Purchased Loans shall be applied by the Depository within one (1) Business Days following receipt thereof in the following order of priority:

(i)           first, to remit to Loan Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Loans,

(ii)           second, to make a payment to Loan Buyer on account of any other amounts (other than Repurchase Price) due and payable to Loan Buyer under the Agreement and the other Transaction Documents,

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(iii)           third, to make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans until the Repurchase Price for all Purchased Loans has been reduced to zero, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero; and

 (iv)           fourth, to remit to Seller the remainder.

(aa)            The following is hereby added to the Existing Repurchase Agreement as Section 5(f):

 (f)           At the end of each calendar quarter, Seller shall make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans until the Repurchase Price for all Purchased Loans has been reduced to zero, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to (i) Excess Cash as of the last day of such calendar quarter, multiplied by Loan Buyer’s pro rata share, based on the then outstanding Repurchase Price of all Purchased Loans at such date, of the aggregate Secured Plan Facilities Obligations as of such date.

(bb)           The following is hereby added to the Existing Repurchase Agreement as Section 5(g):

 (g)           On the first Business Day of each calendar quarter, Seller shall make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans until the Repurchase Price for all Purchased Loans has been reduced to zero, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to the lesser of (i) the then outstanding Repurchase Price of all Purchased Loans, and (ii) the product of (x) the Additional Senior Unsecured Payment Amount, multiplied by (y) Citigroup’s Proportionate Share.

(cc)             The fifth through tenth lines of Section 7(a) of the Existing Repurchase Agreement are hereby deleted in their entirety and replaced with following:

Bank:	Bank of America
ABA:	026009593
Account Name:	Capital Trust, Inc.
Account #:	483024227101
Attention:	Geoffrey G. Jervis – 212-655-0247

(dd)           The following are hereby added into the Existing Repurchase Agreement as Sections 12(q) through 12(dd):

(q)           If at any time there exists a Valuation Test Failure, Seller shall cure same in accordance with Section 4 hereof.

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(r)           Seller shall not make any payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or partnership interest of Seller, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of Seller, either directly or indirectly, whether in cash or property or in obligations of Seller or any of Subsidiary of Seller, except to the minimum extent required for Seller to maintain its status as a real estate investment trust and, to the extent permitted, such distribution shall be made in equity in lieu of cash; provided that any Subsidiary of Seller may make distributions to Seller.

 (s)           Without the prior written consent of Loan Buyer, Seller shall not, nor permit any Subsidiary to, originate, acquire or invest in any new stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person except to (a) make co-investments in future funds of which Seller (or its Affiliates) is the sponsor or manager, and (b) make protective investments to defend existing Purchased Assets or assets subject to another Senior Secured Facility or that are pledged as collateral security for the Senior Unsecured Facility.  With respect to co-investments, (a) no investments will be permitted in the first six (6) months following the Amendment No. 3 Effective Date, (b) the projected base management fees generated by the proposed future fund over the first 36 months must equal or exceed the co-investment commitment, and (c) the total amount of co-investment capital for all such proposed future funds may not exceed $10,000,000 without the prior written approval of Loan Buyer.  With respect to protective investments made in respect of Purchased Loans or assets subject to another Senior Secured Facility, the amount of each investment may not exceed $5,000,000 per Purchased Loan, transaction or asset.  With respect to protective investments made in respect of assets pledged as collateral security for the Senior Unsecured Facility, the aggregate amount of such investments may not exceed $1,000,000.

(t)           Seller shall not, nor permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness other than the Indebtedness already incurred as of the Amendment No. 3 Effective Date; provided, that additional Indebtedness may be incurred by Seller or any of their Subsidiaries so long as the following conditions are satisfied: (i) to the extent that the Indebtedness is incurred in connection with an Early Repurchase, the Net Proceeds of which are applied in accordance to Section 3(d), (ii) to the extent that such new Indebtedness is unsecured (and subordinate to all obligations owed by Seller under any Secured Plan Facility or the Senior Unsecured Facility) or incurred through the pledge of unencumbered assets, 100% of the net proceeds of such new Indebtedness are deposited in the CT Cash Account and (iii) to the extent that such new Indebtedness is recourse Indebtedness, only to the extent that it replaces existing recourse Indebtedness or is subordinate to all obligations owed to Loan Buyer (and to the extent such Indebtedness is not subject to clause (i) above, 100% of the net proceeds of such Indebtedness are deposited in the CT Cash Account).

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(u)           For all employees of Seller and its Subsidiaries, other than the CEO, COO & CFO, total cash compensation (including base salary and bonus), in the aggregate shall not exceed $5.8 million.  Subject to the limitation in the preceding sentence, compensation for individual employees shall be determined by Seller in its sole discretion.  For Seller’s CEO, COO & CFO, (i) base salaries shall remain the same as in effect in 2008, and (ii) any cash bonus will be approved based upon performance metrics designed to create alignment with the interests of the Secured Plan Participants and the Unsecured Lenders and must be approved by unanimous consent of a committee comprised of (x) a representative selected by the Secured Plan Participants, (y) the administrative agent of the Senior Unsecured Facility and (z) a representative selected by the board of directors of Seller.

(v)           John Klopp and/or Stephen Plavin will continue their current employment with their current respective responsibilities throughout the term of this Agreement; provided that if both John Klopp and Stephen Plavin are no longer so employed, a replacement(s) acceptable to Loan Buyer in its sole and absolute discretion shall be appointed within 30 days after the departure of such person.

(w)           Seller shall maintain, at all times, a minimum Liquidity of $7,000,000 in 2009 and $5,000,000 thereafter.

(x)           Without duplicating the reports provided under 12(k), Seller will provide Loan Buyer with (a) certified quarterly financial statements and audited annual financial statements prepared in accordance with GAAP, filed within SEC mandated time frames, (b) within thirty (30) Business Days following the end of each calendar month commencing with April 2009, unaudited monthly financial statements, (c) within ten (10) Business Days following the end of each calendar month, reports on asset level performance for each Purchased Loan, and (d) promptly, following any reasonable request therefor, reports of such other information regarding Seller’s operations, business affairs and financial condition, or compliance with the terms of this Agreement.  Any reports provided above will include, without limitation, details of Seller’s cash accounts at each quarter end and a schedule of Seller’s Excess Cash, Unrestricted Cash and Unfunded Commitments.  Seller agrees to provide Loan Buyer with an annual budget no later than 60 days after the end of each fiscal year.

(y)           Seller will not (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Seller or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing.

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(z)           Seller will not amend, modify or otherwise agree to any change in the applicable documents for any Purchased Loan without the prior written consent of Loan Buyer.

(aa)         Seller shall not agree to any amendment or modification to any Senior Secured Facility nor the Senior Unsecured Facility without the prior written consent of Loan Buyer.

(bb)         Notwithstanding anything contained in this Agreement to the contrary, Seller acknowledges that Loan Buyer shall, until all of Seller’s obligations under the Transaction Documents have been satisfied and this Agreement terminates pursuant to its terms, maintain control over the Loan Cash Management Account subject to the terms the Depository Agreement.  At Seller’s expense, Loan Buyer may require that Seller establish a new Loan Cash Management Account at a depository institution selected by Loan Buyer in its sole discretion and such new account shall be the “Loan Cash Management Account” for all purposes hereunder.

(cc)         Seller shall not agree to any amendment or modification to the Lehman Facility without the prior written consent of Loan Buyer, such consent not to be unreasonably withheld, conditioned or delayed.

(dd)         All deposit accounts (other than (i) the Cash Management Accounts and (ii) any other deposit accounts specifically relating to the Purchased Loans or any asset or collateral subject to any Senior Secured Facility or the Senior Unsecured Facility) shall be established and maintained with financial institutions that are not Secured Plan Participants nor Unsecured Lenders; provided that Seller may maintain the JPMorgan Account so long as (w) no more than $1,000,000 may remain in the JPMorgan Account at any time, (x) Seller may not transfer any funds into the JPMorgan Account from any CT Cash Account, (y) any funds deposited in the JPMorgan Account will be transferred to a CT Cash Account within two (2) Business Days from receipt of such funds in the JPMorgan Account and (z) all funds in the JPMorgan Account will be transferred to a CT Cash Account and the JPMorgan Account will be closed on or before December 31, 2009.  For the avoidance of doubt, the Collections Accounts, and any other deposit account relating to the Purchased Loans may be established and maintained at any financial institution selected by Buyer in its sole discretion.

(ee)           Section 14(a)(xiii) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(xiii)          Seller shall fail to comply with the requirements of Sections 12(q) through 12(dd);

(ff)           Section 14(a)(xv) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

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(xv)           any event or condition occurs that results in (i) any obligation or liability of Seller under any note, indenture, loan agreement, guaranty, swap agreement or any other contract to which it is a party, whether singly or in the aggregate, in excess of $1,000,000 becoming due prior to its scheduled maturity or that enables or permits (after the expiration of all grace or cure periods) the beneficiaries of, the holder or holders of, or any other party to any such indebtedness or contract, or any trustee or agent on its or their behalf, to cause any such obligation or liability to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity and (ii) any monetary default under any note, indenture, loan agreement, guaranty, swap agreement or any other contract, credit facility or other obligation of Seller  if the aggregate amount of such credit facility, contract or other obligation in respect of which such monetary default shall have occurred is at least $1,000,000; provided that this Event of Default shall not apply to secured indebtedness that becomes due as a result of the sale or transfer of the property or assets securing such indebtedness;

(gg)           The Existing Repurchase Agreement is hereby amended by inserting Exhibit A attached hereto as a new Exhibit IX.

SECTION 2.  Conditions Precedent.  This Amendment shall become effective on the date (the “Amendment Effective Date”) on which (1) all the representations and warranties made by Seller in this Amendment are true and correct and (2) Loan Buyer shall have received:

(a)           this Amendment, executed and delivered by a duly authorized officer of each of Seller and the Buyers;

(b)           a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans, such payment to be allocated in Loan Buyer’s sole discretion among the Purchased Loans, in an amount equal to $1,914,897.59;

(c)           the Warrant, executed and delivered by a duly authorized officer of Seller;

(d)           evidence, satisfactory to Loan Buyer in its sole discretion, of the payment in full of all obligations owed by Seller under, and the termination of, the credit facilities identified on Schedule I hereto;

(e)           a copy of an amendment to the Senior Unsecured Facility, executed and delivered by a duly authorized officer of the parties thereto, in form and substance acceptable to Loan Buyer in its sole discretion;

(f)           legal opinions from counsel to Seller dated as of the date hereof addressed to Buyers and its successors and assigns (i) as to the enforceability of the Repurchase Agreement, as amended by this Amendment, and (ii) as to Seller’s authority to execute, deliver and perform its obligations under the Repurchase Agreement as amended hereby, in each case, in form and substance acceptable to Buyers in their reasonable discretion; and

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(g)           for the account of Loan Buyer, payment and reimbursement for all of Loan Buyer’s corresponding costs and expenses incurred in connection with this Amendment, all prior amendments and modifications to the Repurchase Agreement, any other documents prepared in connection herewith and therewith and the transactions contemplated hereby and thereby.

SECTION 3.  Representations and Warranties.  On and as of the date first above written, Seller hereby represents and warrants to Loan Buyer that (a) it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, (b) after giving effect to this Amendment, no Default or Event of Default under the Repurchase Agreement has occurred and is continuing, and (c) after giving effect to this Amendment, the representations and warranties contained in Section 10 of the Repurchase Agreement are true and correct in all material respects as though made on such date (except for any such representation or warranty that by its terms refers to a specific date other than the date first above written, in which case it shall be true and correct in all material respects as of such other date).

SECTION 4.  General Release.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller, for: (i) itself, (ii) any parent or Subsidiary thereof, and (iii) the respective partners, officers, directors, shareholders, successors and assigns of all of the foregoing persons and entities,

(a)                      hereby releases and forever discharges the Buyers and each of its subsidiaries, affiliates, its past, present and future officers, directors, agents, employees, partners, managers, shareholders, servants, attorneys and representatives, as well as their, successors, assigns, their respective heirs, legal representatives, legatees, predecessors-in-interest, successors and assigns, of and from any and all actions, claims, demands, damages, debts, suits, contracts, agreements, losses, liabilities, indebtedness, causes of action either at law or in equity, obligations of whatever kind or nature, accounts, defenses, and offsets against liabilities and obligations, whether known or unknown, direct or indirect, new or existing, by reason of any matter, cause or thing whatsoever occurring on or prior to the date hereof arising out of or relating to any matter or thing whatever, including without limitation, such claims and defenses as fraud, misrepresentation, breach of duty, mistake, duress, usury, claims pertaining to so-called “lender liability,” and claims pertaining to creditor’s rights, which such party ever had, now has, or might hereafter have against the other, jointly or severally, for or by reason of any matter, act, omission, cause or thing whatsoever occurring, on or prior to the date of this Amendment, that is related to, in whole or in part, directly or indirectly, the Transactions, the Repurchase Agreement, the Transaction Documents and this Amendment; and

(b)                      warrants, represents and acknowledges that it has no defenses to the payment of, nor any right to set off against, all or any of the obligations set forth in the Transaction Documents, nor any counterclaims or other rights of action against the Buyers of any kind whatsoever, including, without limitation, any right to contest any of the following: the enforceability, applicability or validity of any provisions of the Transaction Documents, Loan Buyer’s right to all proceeds of the Purchased Loans, the existence, validity, enforceability, or perfection of any security interest or mortgage in favor of Loan Buyer, the conduct of the Buyers in administering the Transaction Documents and any legal fees and expenses incurred by the Buyers under the Repurchase Agreement, the other Transaction Documents or this Amendment.

18

SECTION 5.  Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with their respective terms; provided, however, that upon the Amendment Effective Date, all references in the Repurchase Agreement to the “Transaction Documents” shall be deemed to include, in any event, this Amendment.  Each reference to Repurchase Agreement in any of the Transaction Documents shall be deemed to be a reference to the Repurchase Agreement as amended hereby.

SECTION 6.  Override Provision.  Notwithstanding any provision in the Repurchase Agreement to the contrary, which are hereby pro tanto superseded and modified or replaced mutatis mutandis to the extent of any inconsistency, the provisions in this Amendment shall apply from and after the date hereof.

SECTION 7.  Counterparts.  This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.

SECTION 8.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[NO FURTHER TEXT ON THIS PAGE]

19

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

CITIGROUP FINANCIAL PRODUCTS INC., a Delaware corporation
By:	/s/ Richard B. Schlenger
	Name: Richard B. Schlenger
	Title: Authorized Signatory

CITIGROUP GLOBAL MARKETS INC., a Delaware corporation
By:	/s/ Richard B. Schlenger
	Name: Richard B. Schlenger
	Title: Authorized Signatory

SELLER:
CAPITAL TRUST, INC., a Maryland corporation
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

20

SCHEDULE I

Closeout Facilities

1.           Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, between Capital Trust, as seller, and Goldman Sachs Mortgage Company (“Goldman”), as buyer, as supplemented by that certain Amended and Restated Annex I to Amended and Restated Master Repurchase Agreement, dated as of October 30, 2007.

2.           Master Repurchase Agreement, dated as of October 30, 2007, between Capital Trust, as seller, and Goldman, as buyer, as supplemented by that certain Annex I to Master Repurchase Agreement, dated as of October 30, 2007.

Exhibit A

Exhibit IX to Existing Repurchase Agreement

Citigroup

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

14,100,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

22,500,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,770,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

6,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,220,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-1

JPMorgan

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

25,100,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

25,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

31,523,408.99

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

27,402,996.32

597,004.25

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

35,500,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

13,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

29,024,471.31

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

11,500,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

21,800,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

8,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,435,162.79

964,837.21

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

23,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

22,571,220.21

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,927,002.75

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

4,689,303.73

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,398,078.96

394,993.29

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

51,384,616.35

Mezzanine

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-2

[

***]

16,125,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

30,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

54,823,957.29

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

13,448,358.83

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

21,042,320.62

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

15,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,015,297.15

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

5,511,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,978,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,042,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

1,116,976.76

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,189,147.00

Bond

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

ISDA liability

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-3

Morgan Stanley

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

16,204,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,963,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,755,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

10,133,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

36,432,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

32,556,639.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

89,057,579.00

1,942,420.40

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

46,966,945.16

3,783,054.34

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

42,637,221.65

4,841,662.74

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

32,492,156.00

2,507,844.08

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

14,444,220.02

5,555,779.98

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

20,700,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

50,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-4

EX-10.8 9 e607622_ex10-8.htm

Exhibit 10.8

Confidential Treatment Requested by Capital Trust, Inc.

PLEDGE AND SECURITY AGREEMENT

This PLEDGE AND SECURITY AGREEMENT (this “Agreement”) dated as of March 16, 2009 by CAPITAL TRUST, INC., a Maryland corporation (the“Pledgor”), for the benefit of WESTLB AG, NEW YORK BRANCH, as collateral agent on behalf of the lenders party to the Credit Agreement (as hereinafter defined) (in such capacity, together with its successors in such capacity, the “Collateral Agent”).

RECITALS

A.           The Pledgor, the Collateral Agent and certain other lenders (collectively, “Lenders”) are parties to that certain Amended and Restated Credit Agreement, dated as of the date hereof (as may be further amended or modified, collectively, the “Credit Agreement”).

B.           For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Pledgor has agreed to pledge and grant, and, pursuant to this Agreement, does hereby pledge and grant, a first priority security interest in the Collateral (as defined below) as security for the Obligations.

Accordingly, the parties hereto agree as follows:

Section 1.               Definitions.

“Certificated Securities” shall mean the Pledged Securities identified on Schedule 2 attached hereto.

“Collateral” shall have the meaning ascribed thereto in Section 2 hereof.

“Obligations” shall have the meaning ascribed thereto in the Credit Agreement.

“Pledged Securities” shall mean the assets as described on Schedule 1 attached hereto.

“Secured Parties” shall have the meaning ascribed thereto in the Credit Agreement.

“Securities Account Control Agreement” shall mean that certain Securities Account Control Agreement in respect of account number 725839.1 held with the Securities Intermediary, among the Pledgor, the Collateral Agent and the Securities Intermediary, dated as of the date hereof.

“Securities Account” shall have the meaning ascribed thereto in the Credit Agreement.

“Securities Intermediary” shall mean Bank of America, National Association

“Securities Rights” means all voting and other rights and remedies in respect of any of the Pledged Securities, and all securities, interest or other distributions and any other right or property which the Pledgor shall receive or shall become entitled to receive for any reason whatsoever with respect to, in replacement for, in substitution for or in exchange for any of the Pledged Securities, in which the Pledgor now has or hereafter acquires any right.

“UCC-1 Financing Statements” shall mean the UCC-1 Financing Statements filed to perfect the security interests granted herein.

“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York.

Capitalized terms used but not defined herein have the meanings assigned to such terms in the Credit Agreement.

Section 2.               Pledge and Delivery of Collateral.

2.1           The Pledge.  As security for the prompt payment in full when due of the Obligations, the Pledgor hereby pledges, assigns and grants to the Collateral Agent, for the benefit of the Secured Parties, a security interest in all of the Pledgor’s right, title and interest in the following property wherever located (all being collectively referred to herein as “Collateral”):

(i)           all Pledged Securities;

(ii)          the Securities Account, all “financial assets” (as defined in the Uniform Commercial Code) and cash credited to the Securities Account;

(iii)         all “investment property”, “instruments”, “general intangibles”, “accounts”, “chattel paper” and “supporting obligations” (each, as defined in the Uniform Commercial Code) and all Securities Rights, in each case, relating to or constituting any and all of the foregoing set forth in items (i) and (ii) of this Section 2.1; and

(iv)         any and all interest on, and proceeds (including, without limitation, condemnation proceeds) of, any and all of the foregoing set forth in items (i) through (iii) of this Section 2.1;

in each case whether now owned or hereafter acquired, now existing or hereafter created and wherever located.

2.2           Delivery of the Collateral.  All Pledged Securities (including without limitation, all Certificated Securities), shall be credited to and held at all times in the Securities Account on behalf of the Collateral Agent for the benefit of the Secured Parties, and evidence of such credit and holding shall be delivered to the Collateral Agent from the Securities Intermediary.

Section 3.               Representations and Warranties.  The Pledgor represents and warrants as of the date hereof that:

(a)           The execution and delivery of this Agreement and the performance of the obligations hereunder (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any Person, except such as have been obtained or made and are in full force and effect, (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Pledgor or any order of any Governmental Authority, and (iii) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Pledgor or any of its Sub sidiaries or its assets, or give rise to a right thereunder to require any payment to be made by the Pledgor or any of its Subsidiaries;

2

(b)           Schedule I sets forth an accurate description of the Pledged Securities.  The Pledgor has not assigned, pledged or otherwise conveyed or encumbered the Collateral to any other Person other than the Collateral Agent under this Agreement, and the Pledgor is the record and beneficial owner of, and has good and marketable title to, the Collateral free and clear of any and all Liens or options in favor of, or claims of, any other Person, except the Lien created by this Agreement;

(c)           the provisions of this Agreement are effective to create in favor of the Collateral Agent a valid security interest in all right, title and interest of the Pledgor in, to and under the Collateral;

(d)           upon receipt by the Securities Intermediary of the Pledged Securities pursuant to Section 2.2 of this Agreement, by virtue of this Agreement and the Control Agreement, the Lien granted pursuant to this Agreement will constitute a valid, perfected first-priority Lien on the Collateral, enforceable as such against all creditors of the Pledgor and any persons purporting to purchase any of such Collateral;

(e)           the principal place of business and chief executive office of the Pledgor is 410 Park Avenue, 14th Floor, New York, New York 10022-9442; and

(f)           the exact legal name of the Pledgor is Capital Trust, Inc.

Section 4.               Covenants.  In furtherance of the grant of the pledge and security interest pursuant to Section 2 hereof, the Pledgor hereby agrees with the Collateral Agent, for the benefit of the Secured Parties, as follows:

4.1           Delivery and Other Perfection.  The Pledgor shall, and hereby authorizes the Collateral Agent to, give, execute, deliver, file and/or record any financing statement, notice, instrument, document, agreement or other papers that may be necessary (in the reasonable judgment of the Collateral Agent) to create, preserve or perfect the security interest granted pursuant hereto or, upon the occurrence and during the continuance of an Event of Default, to enable the Collateral Agent to exercise and enforce its rights hereunder with respect to such pledge and security interest, including, without limitation, causing any or all of the Co llateral to be transferred of record into the name of the Collateral Agent or its nominee.  The Pledgor hereby authorizes the Collateral Agent to file any financing statement or continuation statement without the signature of the Pledgor to the extent permitted by law.

4.2           Sale of Collateral; Liens.  Without the prior written consent of the Collateral Agent, the Pledgor shall not, directly or indirectly, except as otherwise permitted by this Agreement (i) sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to, the Collateral, or (ii) create, incur, authorize or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Collateral, or any interest therein, except for the Lien provided for by this Agreement.  The Pledgor shall defend the right, title and interest of the Collateral Agent in and to the Collat eral against the claims and demands of all persons whomsoever.

3

4.3           Use of Collateral.  The Pledgor will not remove any Collateral from the Securities Account once such Collateral is credited thereto, except Distributions (as defined in the Control Agreement) in accordance with the terms of the Control Agreement.

4.4           Pledged Securities.

(a)           So long as no Event of Default has occurred and is continuing Pledgor shall have the right to receive any payments with respect to any Pledged Securities and apply such payments on its own account and to its benefit.

(b)           So long as no Event of Default has occurred and is continuing, all payments received by the Pledgor with respect to the Collateral shall be deposited directly into the Securities Account or such other account as designated by the Pledgor and, absent any Event of Default, shall be swept to Debtor’s account at the Securities Intermediary within two (2) Business Days.

(c)           The Pledgor will not make or agree to make any discount, credit or other reduction in the original amount owing on any Pledged Securities or accept in satisfaction of any Pledged Securities less than the original amount thereof.

(d)           Except as otherwise provided in this Security Agreement, the Pledgor will collect and enforce, at the Pledgor’s sole expense, all amounts due or hereafter due to the Pledgor under the Pledged Securities.

(e)           If to the knowledge of the Pledgor, any dispute, setoff, claim, counterclaim or defense exists or has been asserted or threatened with respect to any Pledged Securities, the Pledgor will promptly disclose such fact to the Collateral Agent in writing, electronic or otherwise.

4.5           Change in Corporate Existence, Type or Jurisdiction of Organization, Location, Name.  The Pledgor will:

(a)           preserve its existence and corporate structure as in effect on the Restatement Effective Date;

(b)           not change its jurisdiction of organization;

(c)           not maintain its place of business (if it has only one) or its chief executive office (if it has more than one place of business) at a location other than the location specified in the Credit Agreement; and

(d)           not change its name or its mailing address;

unless, in each such case, the Pledgor shall have given the Collateral Agent not less than thirty (30) days’ prior written notice of such event or occurrence and the Collateral Agent shall have either (x) reasonably determined that such event or occurrence will not adversely affect the validity, perfection or priority of the Collateral Agent’s security interest in the Collateral, or (y) taken such steps (with the cooperation of such Pledgor to the extent necessary or advisable) as are necessary or advisable to properly maintain the validity, perfection and priority of the Collateral Agent’s security interest in the Collateral owned by the Pledgor.

4

Section 5.               Events of Default, Remedies, etc.  During the period during which an Event of Default shall have occurred and be continuing, in addition to the rights and remedies set forth in the Credit Agreement:

(a)           The Collateral Agent, for the benefit of the Secured Parties, in addition to the rights and remedies set forth in the Credit Agreement, shall have all of the rights and remedies with respect to the Collateral of a secured party under the Uniform Commercial Code (whether or not said Uniform Commercial Code is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted, including, without limitation, the right, to the maximum extent permitted by law, to exercise all voting, consensual and other powers of ownership pertaining to the Collateral as if the Collateral Agent, for the benefit of the Secured Parties, were the sole and absolute owner thereof (and the Pledgor agrees to take all such action as may be appropriate to give effect to such right);

(b)           The Collateral Agent in its discretion may, in its name or in the name of the Pledgor or otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for any of the Collateral, but shall be under no obligation to do so;

(c)           The Collateral Agent may, upon ten (10) days’ prior written notice to the Pledgor of the time and place (which notice the Pledgor acknowledges as reasonable and sufficient), with respect to the Collateral or any part thereof which shall then be or shall thereafter come into the possession, custody or control of the Collateral Agent or any of its agents, sell, assign or otherwise dispose of all or any part of such Collateral, at such place or places as the Collateral Agent deems best, and for cash or on credit or for future delivery, at public or private sale, without demand of performance or notice of intention to effect any such disposition or of time or place thereof (except such notice as is required above or by applicable statute and cannot be waived) and the Collateral Agent or anyone else may be the purchaser, assignee or recipient of any or all of the Collateral so disposed of at any public sale (or, to the extent permitted by law, at any private sale), and thereafter hold the same absolutely, free from any claim or right of whatsoever kind, including any right or equity of redemption (statutory or otherwise), of the Pledgor, any such demand, notice or right and equity being hereby expressly waived and released.  Unless prohibited by applicable law, the Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned;

(d)           If the Collateral Agent shall so request in writing, the Pledgor agrees to execute and deliver to the Collateral Agent appropriate payment direction and other orders and documents to provide for all Collateral, including without limitation any amounts in the Securities Account, to be applied as directed by the Collateral Agent in its sole discretion.  The foregoing authorization and instructions are irrevocable and may not be modified in any manner other than by the Collateral Agent sending to the Pledgor a notice terminating such authorization and direction;

5

(e)           The Collateral Agent may exercise all rights, powers and privileges to the same extent as the Pledgor is entitled to exercise such rights, powers and privileges with respect to the Pledged Securities;

(f)           Except as required applicable law, the Collateral Agent shall not be required to take steps necessary to preserve any rights against prior parties to any of the Collateral;

(g)           In enforcing any rights hereunder, the Collateral Agent shall not be required to resort to any particular security, right or remedy through foreclosure or otherwise or to proceed in any particular order of priority, or otherwise act or refrain from acting, and, to the extent permitted by law, the Pledgor hereby waives and releases any right to a marshaling of assets or a sale in inverse order of alienation;

(h)           The Collateral Agent may register any or all of the Pledged Securities in the name of the Collateral Agent or its nominee without any further consent of the Pledgor;

(i)            The Collateral Agent or its nominee at any time, without notice, to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Collateral owned by the Pledgor or any part thereof, and to receive all interest and distributions in respect of such Collateral;

(j)            The Pledgor shall assemble and make available to the Collateral Agent the Collateral and all records relating thereto at any place or places specified by the Collateral Agent;

(k)           The Collateral Agent may at any time, by giving the Pledgor written notice, elect to require that the Pledged Securities be paid directly to the Collateral Agent for the benefit of the Secured Parties.  In such event, the Pledgor shall, and shall permit the Collateral Agent to, promptly notify the obligors under the Pledged Securities of the Collateral Agent’s interest therein and direct such obligors to make payment of all amounts then or thereafter due under such Pledged Securities directly to the Collateral Agent.  Upon receipt of any such notice from the Collateral Agent, the Pledgor shall thereafter hold in trust for the Collateral Agent, on behalf of the Secured Partie s, all amounts and proceeds received by it with respect to the Pledged Securities and other Collateral and immediately and at all times thereafter deliver to the Collateral Agent all such amounts and proceeds in the same form as so received, whether by cash, check, draft or otherwise, with any necessary endorsements;

(l)            The Collateral Agent may require all cash proceeds of the Collateral to be deposited in a special non-interest bearing cash collateral account with the Collateral Agent and held there as security for the Obligations.  The Pledgor shall not have any control whatsoever over said cash collateral account.  The Collateral Agent may (and shall, at the direction of the Required Lenders), from time to time, apply the collected balances in said cash collateral account to the payment of the Obligations whether or not the Obligations shall then be due; and

6

(m)           The Collateral Agent, on behalf of the Secured Parties, may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral, and such compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

The proceeds of each collection, sale or other disposition under this Section 5 shall be applied by the Collateral Agent to the Obligations pursuant to Section 6 hereof.

Section 6.              Application of Proceeds.  Except as otherwise herein expressly provided, the proceeds of any collection, sale or other realization of all or any part of the Collateral pursuant hereto, and any other cash at the time held by the Collateral Agent under this Section 4, shall be applied by the Collateral Agent:

(i)           First, to the payment of the actual and out-of-pocket costs and expenses of such collection, sale or other realization, including, without limitation, reasonable out of pocket costs and expenses of the Collateral Agent and the fees and expenses of its agents and counsel, and all expenses, and advances made or incurred by the Collateral Agent in connection therewith;

(ii)           Next, to the payment in full of the Obligations; and

(iii)           Finally, to the payment to the Pledgor, or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining.

As used in this Section 6, “proceeds” of Collateral shall mean cash, securities and other property realized in respect of, and distributions in kind of, the Collateral.

Section 7.              Attorney in Fact.  Without limiting any rights or powers granted by this Agreement to the Collateral Agent, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall be deemed appointed, which appointment as attorney-in-fact is irrevocable and coupled with an interest, the attorney-in-fact of the Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments which the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof.  Without limiting the generality of the for egoing, so long as the Collateral Agent shall be entitled under this Section 7 to make collections in respect of the Collateral, the Collateral Agent shall have the right and power to receive, endorse and collect all checks made payable to the order of the Pledgor representing any payment in respect of the Collateral or any part thereof and to give full discharge for the same.

Section 8.              Termination.  When the Obligations shall have been indefeasibly paid in full in cash, and the Credit Agreement has terminated, the Collateral Agent shall forthwith cause to be assigned, transferred and delivered, against receipt but without any recourse, warranty or representation whatsoever any remaining Collateral and money received in respect thereof, to or on the order of the Pledgor.

7

Section 9.              Further Assurances.  The Pledgor agrees that, from time to time upon the written request of the Collateral Agent, the Pledgor will execute and deliver such further documents and do such other acts and things as the Collateral Agent may reasonably request in order fully to effect the purposes of this Agreement. Without limiting the foregoing, on or before March 31, 2009, the Pledgor shall deliver to the Collateral Agent executed transfer documents under each indenture or other document governing the securities constituting Colla teral, undated and endorsed “in blank”, as reasonably requested by the Collateral Agent.

Section 10.            Additional Agreements Concerning UCC’s.  The Pledgor authorizes the Collateral Agent to file UCC-1 Financing Statements describing the Collateral and for purposes of perfecting the security interest in the Collateral granted by the Pledgor to the Collateral Agent pursuant to this Agreement.

Section 11.             Miscellaneous.

11.1          No Waiver.  No failure or delay by the Collateral Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Collateral Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have.

11.2           Governing Law; Jurisdiction; Consent to Service of Process.  This Agreement shall be construed in accordance with and governed by the law of the State of New York.  The provisions set forth in Section 9.09(b), (c) and (d) of the Credit Agreement with respect to consent to jurisdiction and service of process are hereby incorporated herein and made applicable hereto, mutatis mut andis.

11.3           Notices.  All notices, consents, approvals and requests required or permitted hereunder shall be given in the manner and to the addresses set forth in Section 9.01 of the Credit Agreement.

11.4           Waivers, etc.  No waiver of any provision of this Agreement or consent to any departure by the Pledgor therefrom shall in any event be effective unless the same shall be permitted in writing by the Pledgor and the Collateral Agent, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, no action or inaction by the Collateral Agent shall be construed as a waiver of any Default or Event of Default, regardless of whether the Collateral Agent or any Lender may have had notice or knowledge of such Default or E vent of Default at the time.

11.5           Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns of the Collateral Agent, except that the Pledgor may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Collateral Agent (and any attempted assignment or transfer by the Pledgor without such consent shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assi gns permitted hereby, and, to the extent expressly contemplated hereby, the Secured Parties and the Related Parties of each of the Collateral Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

8

11.6           Indemnification.  Without limiting the provisions of Section 9.03 of the Credit Agreement, the Pledgor shall indemnify the Collateral Agent and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all actual losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder, (ii) relating to or arising out of the acts or omissions of the Pledgor under this Agreement, (iii) resulting from the ownership of or lien on any Collateral, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

11.7           Taxes and Expenses.  Any taxes (including income taxes) payable or ruled payable by Federal or State authority in respect of this Security Agreement shall be paid by the Pledgor, together with interest and penalties, if any, subject to Pledgor’s right to contest such taxes pursuant to Section 5.04 of the Credit Agreement.  The Pledgor shall reimburse the Collateral Agent for any and all reasonable out-of-pocket expenses (including reasonable attorneys’, auditors’ and accountants’ fees) paid or incurred by the Collateral Agent in connection with the preparation, execution, delivery, administration, collection and enforcement of this Security Agreement and in the administration, collection, preservation or sale of the Collateral.  Any and all costs and expenses incurred by the Pledgor in the performance of actions required pursuant to the terms hereof shall be borne solely by the Pledgor.

11.8           Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

11.9           Counterparts; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement shall become effective when it shall have been executed by the Collateral Agent and when the Collateral Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors an d assigns.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

9

11.10         Trial by Jury.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

11.11         Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

11.12         Secured Party Performance of Pledgor’s Obligations.  Without having any obligation to do so, the Collateral Agent may perform or pay any obligation which the Pledgor has agreed to perform or pay in this Agreement and the Pledgor shall reimburse the Collateral Agent for any reasonable amounts paid by the Collateral Agent pursuant to this Section 11.12.  The Pledgor’s obligation to reimburse the Collateral Agent pursuant to the preceding sentence shall be an Obligation payable on demand.

11.13         Collateral Agent.  WestLB AG, New York Branch has been appointed Collateral Agent for the Secured Parties hereunder pursuant to Article VIII of the Credit Agreement.  It is expressly understood and agreed by the parties to this Security Agreement that any authority conferred upon the Collateral Agent hereunder is subject to the terms of the delegation of authority made by the Secured Parties to the Collateral Agent pursuant to the Credit Agreement, and that the Collateral Agent has agreed to act (and any successor Collateral Agent shall act) as such hereunder only on the express conditions contained in such Article VIII. & #160;Any successor Collateral Agent appointed pursuant to Article VIII of the Credit Agreement shall be entitled to all the rights, interests and benefits of the Collateral Agent hereunder.

[THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK]

10

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

PLEDGOR
CAPITAL TRUST, INC., a Maryland corporation
By:	/s/ Geoffrey G. Jervis
	Name:  Geoffrey G. Jervis
	Title:  Chief Financial Officer

S-1

COLLATERAL AGENT
WESTLB AG, NEW YORK BRANCH
By:	/s/ Christian Reuhmer
	Name:  Christian Reuhmer
	Title:  Managing Director

By:	/s/ Petra Beckert
	Name:  Petra Beckert
	Title:  Executive Director

S-2

Schedule 1

		Face Value
Class	Cusip	Original	Current
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Schedule 2

		Face Value
Class	Cusip	Original	Current
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

EX-31.1 10 e607622_ex31-1.htm

Exhibit 31.1

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen D. Plavin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Capital Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 26, 2010

/s/ Stephen D. Plavin

Stephen D. Plavin

Chief Executive Officer

EX-31.2 11 e607622_ex31-2.htm

Exhibit 31.2

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Geoffrey G. Jervis, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Capital Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 26, 2010

/s/ Geoffrey G. Jervis

Geoffrey G. Jervis

Chief Financial Officer

EX-32.1 12 e607622_ex32-1.htm

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Capital Trust, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Stephen D. Plavin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stephen D. Plavin

Stephen D. Plavin

Chief Executive Officer

October 26, 2010

This certification accompanies each Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2 13 e607622_ex32-2.htm

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Capital Trust, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Geoffrey G. Jervis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Geoffrey G. Jervis

Geoffrey G. Jervis

Chief Financial Officer

October 26, 2010

This certification accompanies each Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1 14 e607622_ex99-1.htm

Exhibit 99.1

RISK FACTORS

Risks Related to Our Investment Activities

We have recently experienced significant loses and given the condition of our balance sheet portfolio we may experience future losses.

We experienced net losses of $195.3 million and $576.4 million in the nine months ended September 30, 2010 and year ended December 31, 2009, respectively, and currently have negative shareholders equity of $426.6 million. Our losses have resulted principally from reserves and impairments recorded on our investments and there can be no assurance that our investments will not further deteriorate and lead us to record further reserves and impairments, which may be significant and lead to future material net losses.

Our current business is subject to a high degree of risk. Our assets and liabilities are subject to increasing risk due to the impact of market turmoil in commercial real estate. Our efforts to stabilize our business with the restructuring of our debt obligations may not be successful as our balance sheet portfolio is subject to the risk of further deterioration and ongoing turmoil in the financial markets.

Our portfolio is comprised of debt and related interests, directly or indirectly secured by commercial real estate. A significant portion of these investments are in subordinate positions, increasing the risk profile of our investments as underlying property performance deteriorates. Furthermore, we have leveraged our portfolio at the corporate level, effectively further increasing our exposure to loss on our investments. The recent financial market turmoil and economic recession has resulted in a material deterioration in the value of commercial real estate and dramatically reduced the amount of capital to finance the commercial real estate industry (both at the property and corporate level). Given the composition of our portfolio, the leverage in our capital structure and the continuing negative impact of the commercial real estate market turmoil, the risks associated with our business have dramatically increased. Even with the March 2009 restructuring of our debt obligations, we may not be able to satisfy our obligations to our lenders. There can be no assurance that further restructuring will not be required and that any such restructuring will be successful. The impact of the economic recession on the commercial real estate sector in general, and our portfolio in particular, cannot be predicted and we expect to experience significant defaults by borrowers and other impairments to our investments. These events may trigger defaults under our restructured debt obligations that may result in the exercise of remedies that cause severe (and potentially complete) losses in the book value of our investments. Therefore, an investment in our class A common stock is subject to a high degree of risk.

Given current conditions, our restructured debt obligations are an unstable source of financing and expose us to further erosions of shareholders equity.

Our secured obligations mature in March 2011. There can be no assurance that we will be able to further extend our liabilities, in which case we may lose substantially all of our assets. Furthermore, any extension of these liabilities would likely require further repayment and changes in economic terms that may have a material adverse impact on us.

Our restructured debt obligations with our lenders prohibit new balance sheet investment activities, which prevents us from growing our balance sheet portfolio.

Under the terms of the restructured debt obligations, we are prohibited from acquiring or originating new investments. This restriction precludes us from growing our balance sheet portfolio at a time when investment opportunities that provide attractive risk-adjusted returns may otherwise be available to us. Our interest earning investments will continue to be reduced which will negatively impact our net investment income. There can be no assurance that we will be able to retire completely or refinance our restructured debt obligations so that we can resume our balance sheet investment activities.

1

Our liquidity will be impacted by our restructured debt obligations and any plans to further restructure our debt obligations or recapitalize our business to improve liquidity may involve a high cost of capital and significant dilution to our shareholders.

Our restructured debt obligations further reduce our current liquidity as a result of ongoing principal payment sweeps and additional interest payments. The reduction in liquidity may impair our ability to meet our obligations and, given the covenants contained in our restructured debt obligations, our ability to improve our liquidity position is constrained. In addition, we must maintain a minimum of $5.0 million in liquidity during the remaining term of our restructuring, a requirement that may limit our ability to make commitments to investment management vehicles and, ultimately, that we may not be able to maintain.

To improve our liquidity, we will need to further restructure our debt obligations and/or recapitalize our business, for which we can provide no assurances. We would expect any such restructuring and/or recapitalization to require us to raise additional capital at a significantly high cost of capital and/or with significant dilution to our shareholders. Our shareholders are subordinate to the claims of our creditors and therefore we can provide no assurance that any transaction to restructure or recapitalize will provide any recovery to our shareholders.

Our restructured debt obligations are subject to debt to collateral value ratio maintenance covenants for which we can provide no assurance as to our future compliance.

Under the terms of our debt restructuring, we eliminated the cash margin call provisions and amended the mark-to-market provisions that were in effect under the original terms of the secured credit facilities. The revised secured credit facilities allow our secured lenders to determine collateral value based upon changes in the performance of the underlying real estate collateral as opposed to changes in market spreads under the original terms. Beginning September 2009, each collateral pool may be valued monthly. If the ratio of a secured lender’s total outstanding secured credit facility balance to total collateral value exceeds 1.15x the ratio calculated as of the effective date of the amended agreements, we may be required to liquidate collateral and reduce the borrowings or post other collateral to bring the ratio back into compliance with the prescribed ratio. There can be no assurances that we will pass these tests and, as the commercial real estate markets continue to deteriorate, we expect that passing these tests will become more difficult. If we fail these tests, sales of assets to return to compliance will be extremely difficult in light of the lack of liquidity for the types of assets that serve as collateral and, even if we locate buyers for the collateral, the sales prices may be insufficient to reduce the ratio of outstanding secured credit facility balance to total collateral value. Failure to remedy these tests is an event of default under our secured credit facilities and would trigger a cross default under other of our financial instruments. Any such action would have a material adverse impact on our business and financial condition and would negatively impact our share price.

The U.S. and other financial markets have been in turmoil and the U.S. and other economies in which we operate are in the midst of an economic recession which can be expected to negatively impact our operations.

The U.S. and other financial markets have been experiencing extreme dislocations and a severe contraction in available liquidity globally as important segments of the credit markets are frozen as lenders are unwilling or unable to originate new credit. Global financial markets have been disrupted by, among other things, volatility in security prices, credit rating downgrades, sovereign debt default concerns, currency devaluation, and the failure and near failure of a number of large financial institutions and declining valuations, and this disruption has been acute in real estate related markets. This disruption has lead to a decline in business and consumer confidence and increased unemployment and has precipitated an economic recession around the globe where recoveries have been weak and may not be sustained. As a consequence, owners and operators of commercial real estate that secure or back our investments have experienced distress and commercial real estate values have declined substantially. We are unable to predict the likely duration or severity of the current disruption in financial markets and adverse economic conditions which could materially and adversely affect our business, financial condition and results of operations, including leading to significant impairment to our assets and our ability to generate income.

2

Our existing loans and investments expose us to a high degree of risk associated with investing in real estate assets.

Real estate historically has experienced significant fluctuations and cycles in performance that may result in reductions in the value of our real estate related investments. The performance and value of our loans and investments once originated or acquired by us depends upon many factors beyond our control. The ultimate performance and value of our investments is subject to the varying degrees of risk generally incident to the ownership and operation of the properties which collateralize or support our investments. The ultimate performance and value of our loans and investments depends upon, in large part, the commercial property owner’s ability to operate the property so that it produces sufficient cash flows necessary either to pay the interest and principal due to us on our loans and investments or pay us as an equity advisor. Revenues and cash flows may be adversely affected by:

· changes in national economic conditions;

· changes in local real estate market conditions due to changes in national or local economic conditions or changes in local property market characteristics;

· the extent of the impact of the current turmoil in the financial markets, including the lack of available debt financing for commercial real estate;

· tenant bankruptcies;

· competition from other properties offering the same or similar services;

· changes in interest rates and in the state of the debt and equity capital markets;

· the ongoing need for capital improvements, particularly in older building structures;

· changes in real estate tax rates and other operating expenses;

· adverse changes in governmental rules and fiscal policies, civil unrest, acts of God, including earthquakes, hurricanes and other natural disasters, and acts of war or terrorism, which may decrease the availability of or increase the cost of insurance or result in uninsured losses;

· adverse changes in zoning laws;

· the impact of present or future environmental legislation and compliance with environmental laws;

· the impact of lawsuits which could cause us to incur significant legal expenses and divert management’s time and attention from our day-to-day operations; and

· other factors that are beyond our control and the control of the commercial property owners.

In the event that any of the properties underlying or collateralizing our loans or investments experiences any of the foregoing events or occurrences, the value of, and return on, such investments, our profitability and the market price of our class A common stock would be negatively impacted. In addition, our restructured debt obligations contain covenants which limit the amount of protective investments we may make to preserve value in collateral securing our investments.

3

A prolonged economic slowdown, a lengthy or severe recession characterized by a weak recovery, a credit crisis, or declining real estate values could harm our operations or may adversely affect our liquidity.

We believe the risks associated with our business are more severe during periods of economic slowdown or recession like those we are currently experiencing, particularly if these periods are accompanied by declining real estate values.The recent dislocation of the global credit markets and anticipated collateral consequences to commercial activity of businesses unable to finance their operations as required has lead to a weakening of general economic conditions and precipitated declines in real estate values and otherwise exacerbate troubled borrowers’ ability to repay loans in our portfolio or backing our CMBS. We have made loans to hotels, an industry whose performance has been severely impacted by the current recession. Declining real estate values would likely reduce the level of new mortgage loan originations, since borrowers often use increases in the value of their existing properties to support the purchase of or investment in additional properties, which in turn could lead to fewer opportunities for our investment. Borrowers may also be less able to pay principal and interest on our loans as the real estate economy continues to weaken. Continued weakened economic conditions could negatively affect occupancy levels and rental rates in the markets in which the collateral supporting our investments are located, which, in turn, may have a material adverse impact on our cash flows and operating results of our borrowers. Further, declining real estate values like those occurring in the commercial real estate sector significantly increase the likelihood that we will incur losses on our loans in the event of default because the value of our collateral may be insufficient to cover our basis in the loan. Any sustained period of increased payment delinquencies, foreclosures or losses could adversely affect both our net interest income from loans in our portfolio as well as our ability to operate our investment management business, which would significantly harm our revenues, results of operations, financial condition, liquidity, business prospects and our share price.

We are exposed to the risks involved with making subordinated investments.

Our subordinated investments involve the risks attendant to investments consisting of subordinated loans and similar positions. Subordinate positions incur losses before the senior positions in a capital structure and, as a result, foreclosures on the underlying collateral can reduce or eliminate the proceeds available to satisfy our investment. Also, in certain cases where we experience appraisal reductions, we may lose our controlling class status, or special servicer designator rights. In many cases, management of our investments and our remedies with respect thereto, including the ability to foreclose on or direct decisions with respect to the collateral securing such investments, is subject to the rights of senior lenders and the rights set forth in inter-creditor or servicing agreements. Our interests and those of the senior lenders and other interested parties may not be aligned.

We are obligated to fund unfunded commitments under our loan agreements.

We are required to fund unfunded obligations to our borrowers. Historically, prior to our restructuring, we relied upon our lenders to fund a portion of these commitments. Going forward, we can rely only on our immediately available liquidity to meet these commitments. If we do not have the liquidity in excess of the minimum amounts required under our restructured debt obligations, and the lenders do not consent to our obtaining additional financing, if available, we would default on these commitments and potentially lose value in these investments and expose ourselves to litigation.

We are subject to counterparty risk associated with our debt obligations and interest rate swaps.

Our counterparties for these critical financial relationships include both domestic and international financial institutions. Many of them have been severely impacted by the credit market turmoil and have been experiencing financial pressures. In some cases, our counterparties have filed bankruptcy.

We are subject to the general risk of a leveraged investment strategy and the specific risks of our restructured indebtedness.

Our restructured secured debt obligations are secured by our investments, which are subject to being revalued by our credit providers. If the value of the underlying property collateralizing our investments declines, we may be required to liquidate our investments, the impact of which could be magnified if such a liquidation is at a commercially inopportune time, such as the market environment we are currently experiencing. In addition, the occurrence of any event or condition which causes any obligation or liability of more than $1.0 million to become due prior to its scheduled maturity or any monetary default under our restructured debt obligations if the amount of such obligation is at least $1.0 million could constitute a cross-default under our restructured debt obligations. If a cross-default occurs, the maturity of almost all of our indebtedness could be accelerated and become immediately due and payable.

4

We guarantee many of our debt and contingent obligations.

We guarantee the performance of many of our obligations, including, but not limited to, our repurchase agreements, derivative agreements, obligations to co-invest in our investment management vehicles and unsecured indebtedness. The non-performance of such obligations may cause losses to us in excess of the capital we initially may have invested or committed under such obligations and there is no assurance that we will have sufficient capital to cover any such losses.

Our secured and unsecured credit agreements may impose restrictions on our operation of the business.

Under our secured and unsecured indebtedness, such as our credit and derivative agreements, we make certain representations, warranties and affirmative and negative covenants that restrict our ability to operate while still utilizing those sources of credit. Currently, our restructured debt obligations prohibit us from acquiring or originating new balance sheet investments except, subject to certain limitations, co-investments in our investment management vehicles or protective investments to defend existing collateral assets on our balance sheet, and from incurring additional indebtedness unless used to pay down suchobligations. In addition, such representations, warranties and covenants include, but are not limited to covenants which:

· limit the total cash compensation to all employees and, specifically with respect to our chief executive officer and chief financial officer, freeze their base salaries at 2008 levels, and require cash bonuses to any of them to be approved by a committee comprised of one representative designated by the secured lenders, the administrative agent under the senior unsecured credit facility and a representative of our board of directors;

· prohibit the payment of cash dividends to our common shareholders except to the minimum extent necessary to maintain our REIT status;

· require us to maintain a minimum amount of liquidity, as defined, of $5.0 million;

· trigger an event of default if our current chief executive officer ceases his current employment with us during the term of the agreement and we fail to hire a replacement acceptable to the lenders; and

· trigger an event of default, if any event or condition occurs which causes any obligation or liability of more than $1.0 million to become due prior to its scheduled maturity or any monetary default under our restructured debt obligations if the amount of such obligation is at least $1.0 million.

Our success depends on the availability of attractive investments and our ability to identify, structure, consummate, leverage, manage and realize returns on attractive investments.

Our operating results are dependent upon the availability of, as well as our ability to identify, structure, consummate, leverage, manage and realize returns on, credit sensitive investment opportunities for our managed vehicles and our balance sheet assuming we are able to resume balance sheet investment activity. In general, the availability of desirable investment opportunities and, consequently, our balance sheet returns and our investment management vehicles’ returns, will be affected by the level and volatility of interest rates, conditions in the financial markets, general economic conditions, the demand for credit sensitive investment opportunities and the supply of capital for such investment opportunities. We cannot make any assurances that we will be successful in identifying and consummating investments which satisfy our rate of return objectives or that such investments, once consummated, will perform as anticipated. In addition, if we are not successful in investing for our investment management vehicles, the potential revenues we earn from management fees and co-investment returns will be reduced. We may expend significant time and resources in identifying and pursuing targeted investments, some of which may not be consummated.

5

The real estate investment business is highly competitive. Our success depends on our ability to compete with other providers of capital for real estate investments.

Our business is highly competitive. Competition may cause us to accept economic or structural features in our investments that we would not have otherwise accepted and it may cause us to search for investments in markets outside of our traditional product expertise. We compete for attractive investments with traditional lending sources, such as insurance companies and banks, as well as other REITs, specialty finance companies and private equity vehicles with similar investment objectives, which may make it more difficult for us to consummate our target investments. Many of our competitors have greater financial resources and lower costs of capital than we do, which provides them with greater operating flexibility and a competitive advantage relative to us.

Our loans and investments may be subject to fluctuations in interest rates which may not be adequately protected, or protected at all, by our hedging strategies.

Our current balance sheet investments include loans with both floating interest rates and fixed interest rates. Floating rate investments earn interest at rates that adjust from time to time (typically monthly) based upon an index (typically one month LIBOR). These floating rate loans are insulated from changes in value specifically due to changes in interest rates, however, the coupons they earn fluctuate based upon interest rates (again, typically one month LIBOR) and, in a declining and/or low interest rate environment, these loans will earn lower rates of interest and this will impact our operating performance. Fixed interest rate investments, however, do not have adjusting interest rates and, as prevailing interest rates change, the relative value of the fixed cash flows from these investments will cause potentially significant changes in value. We may employ various hedging strategies to limit the effects of changes in interest rates (and in some cases credit spreads), including engaging in interest rate swaps, caps, floors and other interest rate derivative products. We believe that no strategy can completely insulate us or our investment management vehicles from the risks associated with interest rate changes and there is a risk that they may provide no protection at all and potentially compound the impact of changes in interest rates. Hedging transactions involve certain additional risks such as counterparty risk, the legal enforceability of hedging contracts, the early repayment of hedged transactions and the risk that unanticipated and significant changes in interest rates may cause a significant loss of basis in the contract and a change in current period expense. We cannot make assurances that we will be able to enter into hedging transactions or that such hedging transactions will adequately protect us or our investment management vehicles against the foregoing risks.

Accounting for derivatives under GAAP is extremely complicated. Any failure by us to account for our derivatives properly in accordance with GAAP in our consolidated financial statements could adversely affect our earnings. In particular, cash flow hedges which are not perfectly correlated (and appropriately designated and/or documented as such) with a variable rate financing will impact our reported income as gains, and losses on the ineffective portion of such hedges.

Our use of leverage may create a mismatch with the duration and index of the investments that we are financing.

We attempt to structure our leverage to minimize the difference between the term of our investments and the leverage we use to finance such an investment. In light of the financial market turmoil, we can no longer rely on a functioning market to be available to us in order to refinance our existing debt. In March 2009, in the face of the financial market dislocation, we restructured our recourse debt obligations; however, there can be no assurances that our restructuring will enable the successful collection of our balance sheet assets or that our liquidity and financial condition will not require us to pursue a further restructuring of our debt and/or recapitalization of our business. The risks of a duration mismatch are further magnified by the trends we are experiencing in our portfolio which results from extending loans made to our borrowers in order to maximize the likelihood and magnitude of our recovery on our assets. This trend effectively extends the duration of our assets, while the ultimate duration of our liabilities is uncertain.

6

Our loans and investments are illiquid, which will constrain our ability to vary our portfolio of investments.

Our real estate investments and structured financial product investments are relatively illiquid and some are highly illiquid. Such illiquidity may limit our ability to vary our portfolio or our investment management vehicles’ portfolios of investments in response to changes in economic and other conditions. Illiquidity may result from the absence of an established market for investments as well as the legal or contractual restrictions on their resale. In addition, illiquidity may result from the decline in value of a property securing these investments. We cannot make assurances that the fair market value of any of the real property serving as security will not decrease in the future, leaving our or our investment management vehicles’ investments under-collateralized or not collateralized at all, which could impair the liquidity and value, as well as our return on such investments.

We may not have control over certain of our loans and investments.

Our ability to manage our portfolio of loans and investments may be limited by the form in which they are made. In certain situations, we or our investment management vehicles may:

· acquire investments subject to rights of senior classes and servicers under inter-creditor or servicing agreements;

· acquire only a minority and/or a non-controlling participation in an underlying investment;

· co-invest with third parties through partnerships, joint ventures or other entities, thereby acquiring non-controlling interests; or

· rely on independent third party management or strategic partners with respect to the management of an asset.

Therefore, we may not be able to exercise control over the loan or investment. Such financial assets may involve risks not present in investments where senior creditors, servicers or third party controlling investors are not involved. Our rights to control the process following a borrower default may be subject to the rights of senior creditors or servicers whose interests may not be aligned with ours. A third party partner or co-venturer may have financial difficulties resulting in a negative impact on such asset, may have economic or business interests or goals which are inconsistent with ours and those of our investment management vehicles, or may be in a position to take action contrary to our or our investment management vehicles’ investment objectives. In addition, we and our investment management vehicles may, in certain circumstances, be liable for the actions of our third party partners or co-venturers.

The use of our CDO financings may have a negative impact on our cash flow.

The terms of CDOs generally provide that the principal amount of investments must exceed the principal balance of the related bonds by a certain amount and that interest income exceeds interest expense by a certain ratio. Certain of our CDOs provide that, if defaults, losses, or rating agency downgrades cause a decline in collateral value or cash flow levels, the cash flow otherwise payable to our retained subordinated classes may be redirected to repay classes of CDOs senior to ours until the tests are returned to compliance. In certain instances, we have breached these tests and cash flow has been redirected, and there can be no assurances that this will not occur on all of our CDOs. Once breached there is no certainty about when or if the cash flow redirection will remedy the tests’ failure or that cash flow will be restored to our subordinated classes. Other than collateral management fees, we currently receive cash payments from only one of our four CDOs, CDO III, which has caused a material deterioration in our cash flow available for operations, debt service, debt repayments and unfunded loan and fund management commitments.

7

We may be required to repurchase loans that we have sold or to indemnify holders of our CDOs.

If any of the loans we originate or acquire and sell or securitize through CDOs do not comply with representations and warranties that we make about certain characteristics of the loans, the borrowers and the underlying properties, we may be required to repurchase those loans or replace them with substitute loans. In addition, in the case of loans that we have sold instead of retained, we may be required to indemnify persons for losses or expenses incurred as a result of a breach of a representation or warranty. Repurchased loans typically require a significant allocation of working capital to carry on our books, and our ability to borrow against such assets is limited. Any significant repurchases or indemnification payments could adversely affect our financial condition and operating results.

The commercial mortgage and mezzanine loans we originate or acquire and the commercial mortgage loans underlying the commercial mortgage backed securities in which we invest are subject to delinquency, foreclosure and loss, which could result in losses to us.

Our commercial mortgage and mezzanine loans are secured by commercial property and are subject to risks of delinquency and foreclosure, and risks of loss that are greater than similar risks associated with loans made on the security of single-family residential property. The ability of a borrower to repay a loan secured by an income-producing property typically is dependent primarily upon the successful operation of the property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower’s ability to repay the loan may be impaired. Net operating income of an income-producing property can be affected by, among other things, tenant mix, success of tenant businesses, property management decisions, property location and condition, competition from comparable types of properties, changes in laws that increase operating expenses or limit rents that may be charged, any need to address environmental contamination at the property, changes in national, regional or local economic conditions and/or specific industry segments, declines in regional or local real estate values, declines in regional or local rental or occupancy rates, increases in interest rates, real estate tax rates and other operating expenses, and changes in governmental rules, regulations and fiscal policies, including environmental legislation, acts of God, terrorism, social unrest and civil disturbances.

Our investments in subordinated commercial mortgage backed securities and similar investments are subject to losses.

In general, losses on an asset securing a mortgage loan included in a securitization will be borne first by the equity holder of the property and then by the most junior security holder, referred to as the “first loss” position. In the event of default and the exhaustion of any equity support and any classes of securities junior to those in which we invest (and in some cases we may be invested in the junior most classes of securitizations), we may not be able to recover all of our investment in the securities we purchase. In addition, if the underlying mortgage portfolio has been overvalued by the originator, or if the values subsequently decline and, as a result, less collateral is available to satisfy interest and principal payments due on the related mortgage backed securities, the securities in which we invest may incur significant losses. Subordinate interests generally are not actively traded and are relatively illiquid investments and recent volatility in CMBS trading markets has caused the value of these investments to decline.

The prices of lower credit quality CMBS are generally less sensitive to interest rate changes than more highly rated investments, but more sensitive to adverse economic downturns and underlying borrower developments. A projection of an economic downturn, for example, could cause a decline in the price of lower credit quality CMBS because the ability of borrowers to make principal and interest payments on the mortgages underlying the mortgage backed securities may be impaired, as has occurred throughout the recent economic recession and weak recovery. In such event, existing credit support in the securitization structure may be insufficient to protect us against the loss of our principal on these securities.

We may have difficulty or be unable to sell some of our loans and commercial mortgage backed securities.

A prolonged period of frozen capital markets, decline in commercial real estate values and an out of favor real estate sector may prevent us from selling our loans and CMBS. Given the terms of our March 2009 restructuring, we may be forced to sell assets in order to meet required debt reduction levels. If the market for real estate loans and CMBS is disrupted or dislocated, this may be difficult or impossible, causing further losses or events of default.

8

The impact of the events of September 11, 2001 and the effect thereon on terrorism insurance expose us to certain risks.

The terrorist attacks on September 11, 2001 disrupted the U.S. financial markets, including the real estate capital markets, and negatively impacted the U.S. economy in general. Any future terrorist attacks, the anticipation of any such attacks, and the consequences of any military or other response by the U.S. and its allies may have a further adverse impact on the U.S. financial markets and the economy generally. We cannot predict the severity of the effect that such future events would have on the U.S. financial markets, the economy or our business.

In addition, the events of September 11, 2001 created significant uncertainty regarding the ability of real estate owners of high profile assets to obtain insurance coverage protecting against terrorist attacks at commercially reasonable rates, if at all. The Terrorism Risk Insurance Act of 2002, or TRIA, was extended in December 2007. Coverage under the new law, the Terrorism Risk Insurance Program Reauthorization Act, or TRIPRA, now expires in 2014. There is no assurance that TRIPRA will be extended beyond 2014. The absence of affordable insurance coverage may adversely affect the general real estate lending market, lending volume and the market’s overall liquidity and may reduce the number of suitable investment opportunities available to us and the pace at which we are able to make investments. If the properties that we invest in are unable to obtain affordable insurance coverage, the value of those investments could decline and in the event of an uninsured loss, we could lose all or a portion of our investment.

The economic impact of any future terrorist attacks could also adversely affect the credit quality of some of our loans and investments. Some of our loans and investments will be more susceptible to such adverse effects than others. We may suffer losses as a result of the adverse impact of any future attacks and these losses may adversely impact our results of operations.

There are increased risks involved with construction lending activities.

We originate loans for the construction of commercial and residential use properties. Construction lending generally is considered to involve a higher degree of risk than other types of lending due to a variety of factors, including generally larger loan balances, the dependency on successful completion of a project, the dependency upon the successful operation of the project (such as achieving satisfactory occupancy and rental rates) for repayment, the difficulties in estimating construction costs and loan terms which often do not require full amortization of the loan over its term and, instead, provide for a balloon payment at stated maturity.

Some of our investments and investment opportunities may be in synthetic form.

Synthetic investments are contracts between parties whereby payments are exchanged based upon the performance of an underlying obligation. In addition to the risks associated with the performance of the obligation, these synthetic interests carry the risk of the counterparty not performing its contractual obligations. Market standards, GAAP accounting methodology, tax and other regulations related to these investments are evolving, and we cannot be certain that their evolution will not adversely impact the value or sustainability of these investments. Furthermore, our ability to invest in synthetic investments, other than through taxable REIT subsidiaries, may be severely limited by the REIT qualification requirements because synthetic investment contracts generally are not qualifying assets and do not produce qualifying income for purposes of the REIT asset and income tests.

Risks Related to Our Investment Management Business and Management of CDOs

Our investment management agreements contain “clawback” provisions which may require repayment of incentive management fees previously received by us.

As part of our investment management business we earn incentive fees based on the performance of certain of our investment management vehicles. The investment management agreements which govern our relationship with these vehicles contain “clawback” provisions which may require the repayment of incentive fees previously received by us. If certain predetermined performance thresholds are not met upon the ultimate dissolution of such entities, we could be required to refund either a portion, or all of incentive fees previously received.

9

Our March 2009 balance sheet restructuring and financial condition may adversely impact our investment management business.

In large part, our ability to raise capital and garner other investment management and advisory business is dependent upon our reputation as a balance sheet manager and credit underwriter, as well as the ability to demonstrate that we have the resources to manage and co-invest in our internal funds. Our recent losses and March 2009 restructuring limit our abilities in this regard. In addition, further credit deterioration in our balance sheet portfolio and our overall financial condition could jeopardize our status as an approved special servicer from the three major rating agencies, which would impair our ability to generate future servicing revenues.

We are subject to risks and uncertainties associated with operating our investment management business, and we may not achieve the investment returns that we expect.

We will encounter risks and difficulties as we operate our investment management business. In order to achieve our goals as an investment manager, we must:

· manage our investment management vehicles successfully by investing their capital in suitable investments that meet their respective investment criteria;

· actively manage the assets in our portfolios in order to realize targeted performance;

· create incentives for our management and professional staff to develop and operate the investment management business; and

· structure, sponsor and capitalize future investment management vehicles that provide investors with attractive investment opportunities.

If we do not successfully operate our investment management business to achieve the investment returns that we or the market anticipates, our results of operations may be adversely impacted.

We may expand our investment management business to involve other investment classes where we do not have prior investment experience. We may find it difficult to attract third party investors without a performance track record involving such investments. Even if we attract third party capital, there can be no assurance that we will be successful in deploying the capital to achieve targeted returns on the investments.

We face substantial competition from established participants in the private equity market as we offer investment management vehicles to third party investors.

We face significant competition from large financial and other institutions that have proven track records in marketing and managing vehicles and otherwise have a competitive advantage over us because they have access to pre-existing third party investor networks into which they can channel competing investment opportunities. If our competitors offer investment products that are competitive with products offered by us, we will find it more difficult to attract investors and to capitalize our investment management vehicles.

Our investment management vehicles are subject to the risk of defaults by third party investors on their capital commitments.

The capital commitments made by third party investors to our investment management vehicles represent unsecured promises by those investors to contribute cash to the investment management vehicles from time to time as investments are made by the investment management vehicles. Accordingly, we are subject to general credit risks that the investors may default on their capital commitments. If defaults occur, we may not be able to close loans and investments we have identified and negotiated which could materially and adversely affect the investment management vehicles’ investment program or make us liable for breach of contract, in either case to the detriment of our franchise in the private equity market.

10

CTIMCO’s role as collateral manager for our CDOs and investment manager for our funds may expose us to liabilities to investors.

We are subject to potential liabilities to investors as a result of CTIMCO’s role as collateral manager for our CDOs and our investment management business generally. In serving in such roles, we could be subject to claims by CDO investors and investors in our funds that we did not act in accordance with our duties under our CDO and investment fund documentation or that we were negligent in taking or refraining from taking actions with respect to the underlying collateral in our CDOs or in making investments. In particular, the discretion that we exercise in managing the collateral for our CDOs and the investments in our investment management business could result in liability due to the current negative conditions in the commercial real estate market and the inherent uncertainties surrounding the course of action that will result in the best long term results with respect to such collateral and investments. This risk could be increased due to the affiliated nature of our roles. If we were found liable for our actions as collateral manager or investment manager and we were required to pay significant damages to our CDO and investment advisory investors, our financial condition could be materially adversely effected.

Risks Related to Our Company

We are dependent upon our senior management team to develop and operate our business.

Our ability to develop and operate our business depends to a substantial extent upon the experience, relationships and expertise of our senior management and key employees. We cannot assure you that these individuals will remain in our employ. Our chief executive officer, Stephen D. Plavin, and our chief credit officer, Thomas C. Ruffing, are currently not employed pursuant to employment agreements and the employment agreement with our chief financial officer, Geoffrey G. Jervis, expires on December 31, 2010. There can be no assurance that Messrs. Plavin and Ruffing, and upon expiration of his agreement, Mr. Jervis, will enter into new employment agreements pursuant to which they agree to long-term employment with us. In addition, the departure of Mr. Plavin from his employment with us constitutes an event of default under our restructured debt obligations unless a suitable replacement acceptable to the lenders is hired by us.

Our ability to compensate our employees is limited by our restructured debt obligations.

Our restructured debt obligations limit the aggregate cash compensation we are able to pay our employees (excluding our chief executive officer and chief financial officer) to 2008 aggregate compensation levels. In the case of our chief executive officer and chief financial officer, cash compensation must be approved by our lenders. This may impact our ability to retain our employees or attract new employees.

There may be conflicts between the interests of our investment management vehicles and us.

We are subject to a number of potential conflicts between our interests and the interests of our investment management vehicles. We are subject to potential conflicts of interest in the allocation of investment opportunities between our balance sheet once our balance sheet investment activity resumes and our investment management vehicles. In addition, we may make investments that are senior or junior to, participations in, or have rights and interests different from or adverse to, the investments made by our investment management vehicles. Our interests in such investments may conflict with the interests of our investment management vehicles in related investments at the time of origination or in the event of a default or restructuring of the investment. Finally, our officers and employees may have conflicts in allocating their time and services among us and our investment management vehicles.

11

We must manage our portfolio in a manner that allows us to rely on an exclusion from registration under the Investment Company Act of 1940 in order to avoid the consequences of regulation under that Act.

We rely on an exclusion from registration as an investment company afforded by Section 3(c)(5)(C) of the Investment Company Act of 1940. Under this exclusion, we are required to maintain, on the basis of positions taken by the SEC staff in interpretive and no-action letters, a minimum of 55% of the value of the total assets of our portfolio in “mortgages and other liens on and interests in real estate,” which we refer to as “Qualifying Interests,” and a minimum of 80% in Qualifying Interests and real estate related assets. Because registration as an investment company would significantly affect our ability to engage in certain transactions or to organize ourselves in the manner we are currently organized, we intend to maintain our qualification for this exclusion from registration. In the past, based on SEC staff positions, when required due to the mix of assets in our balance sheet portfolio, we have purchased all of the outstanding interests in pools of whole residential mortgage loans, which we treat as Qualifying Interests. Investments in such pools of whole residential mortgage loans may not represent an optimum use of our investable capital when compared to the available investments we target pursuant to our investment strategy. These investments present additional risks to us, and these risks are compounded by our inexperience with such investments. We continue to analyze our investments and may acquire other pools of whole loan residential mortgage backed securities when and if required for compliance purposes.

We treat certain of our investments in CMBS, B Notes and mezzanine loans as Qualifying Interests for purposes of determining our eligibility for the exclusion provided by Section 3(c)(5)(C) to the extent such treatment is consistent with guidance provided by the SEC or its staff. In the absence of such guidance that otherwise supports the treatment of these investments as Qualifying Interests, we will treat them, for purposes of determining our eligibility for the exclusion provided by Section 3(c)(5)(C), as real estate related assets or miscellaneous assets, as appropriate.

We understand the SEC staff is currently reconsidering its interpretive policy under Section 3(c)(5)(C) and whether to advance rulemaking to define the basis for the exclusion. We cannot predict the outcome of this reconsideration or potential rulemaking initiative and its impact on our ability to rely on the exclusion.

If our portfolio does not comply with the requirements of the exclusion we rely upon, we could be forced to alter our portfolio by selling or otherwise disposing of a substantial portion of the assets that are not Qualifying Interests or by acquiring a significant position in assets that are Qualifying Interests. Altering our portfolio in this manner may have an adverse effect on our investments if we are forced to dispose of or acquire assets in an unfavorable market and may adversely affect our stock price.

If it were established that we were an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the SEC, that we would be unable to enforce contracts with third parties and that third parties could seek to obtain rescission of transactions undertaken during the period it was established that we were an unregistered investment company and limitations on corporate leverage that would have an adverse impact on our investment returns.

Changes in accounting pronouncements have materially changed the presentation and content of our financial statements.

Beginning January 1, 2010 we adopted new accounting guidance which required us to consolidate certain securitization trust entities in which we have subordinate investments. This consolidation resulted in a significant increase to our GAAP-basis assets and liabilities, which may be misleading to readers of our financial statements. In addition, we are required to record losses under GAAP on consolidated assets which may be in excess of our economic interest in the respective consolidated entities.

We may not have sufficient cash flow to satisfy our tax liability arising from the use of CDO financing.

Due to the redirection provisions of our CDOs, which reallocate principal and interest otherwise distributable to us to repay senior note holders, assets financed through our CDOs may generate current taxable income without a corresponding cash distribution to us. In order to raise the cash necessary to meet our tax and/or distribution requirements, we may be required to borrow funds, sell a portion of our assets at disadvantageous prices or find other alternatives. In any case, there can be no assurances that we will be able to generate sufficient cash from these endeavors to meet our tax and/or distribution requirements.

12

In the event we experience an “ownership change” for purposes of Section 382 of the Internal Revenue Code, our ability to utilize our net operating losses and net capital losses against future taxable income will be limited, increasing our dividend distribution requirement for which we may not have sufficient cash flow.

We have substantial net operating and net capital loss carry forwards which we use to offset our tax and/or distribution requirements. In the event that we experience an “ownership change” for purposes of Section 382 of the Internal Revenue Code, our ability to use these losses will be effectively eliminated. An “ownership change” is determined based upon the changes in ownership that occur in our common stock for a trailing three year period. Such change provisions may be triggered by regular trading activity in our common stock, and are generally beyond our control.

Risks Relating to Our Class A Common Stock

Sales or other dilution of our equity may adversely affect the market price of our class A common stock.

In connection with restructuring our debt obligations, we issued warrants to purchase 3,479,691 shares of our class A common stock, which represents approximately 15.5% of our outstanding common stock and stock units as of October 22, 2010. The market price of our class A common stock could decline as a result of sales of a large number of shares of class A common stock acquired upon exercise of the warrants in the market. If the warrants are exercised, the issuance of additional shares of class A common stock would dilute the ownership interest of our existing shareholders.

Because a limited number of shareholders, including members of our management team, own a substantial number of our shares, they may make decisions or take actions that may be detrimental to your interests.

Our executive officers and directors, along with vehicles for the benefit of their families, collectively own and control 1,550,283 shares of our common stock representing approximately 6.9% of our outstanding common stock and stock units as of October 22, 2010. W. R. Berkley Corporation, or WRBC, which employs one of our directors, owns 3,843,413 shares of our common stock, which represents approximately 17.0% of our outstanding common stock and stock units as of October 22, 2010. By virtue of their voting power, these shareholders have the power to significantly influence our affairs and are able to influence the outcome of matters required to be submitted to shareholders for approval, including the election of our directors, amendments to our charter, mergers, sales of assets and other acquisitions or sales. The influence exerted by these shareholders over our affairs might not be consistent with the interests of some or all of our other shareholders. In addition, the concentration of ownership in our officers or directors or shareholders associated with them may have the effect of delaying or preventing a change in control of our company, including transactions in which you might otherwise receive a premium for your class A common stock, and might negatively affect the market price of our class A common stock.

Some provisions of our charter and bylaws and Maryland law may deter takeover attempts, which may limit the opportunity of our shareholders to sell their shares at a favorable price.

Some of the provisions of our charter and bylaws and Maryland law discussed below could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our shareholders by providing them with the opportunity to sell their shares at a premium to the then current market price.

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Issuance of Preferred Stock Without Shareholder Approval. Our charter authorizes our board of directors to authorize the issuance of up to 100,000,000 shares of preferred stock and up to 100,000,000 shares of class A common stock. Our charter also authorizes our board of directors, without shareholder approval, to classify or reclassify any unissued shares of our class A common stock and preferred stock into other classes or series of stock and to amend our charter to increase or decrease the aggregate number of shares of stock of any class or series that may be issued. Our board of directors, therefore, can exercise its power to reclassify our stock to increase the number of shares of preferred stock we may issue without shareholder approval. Preferred stock may be issued in one or more series, the terms of which may be determined without further action by shareholders. These terms may include preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption. The issuance of any preferred stock, however, could materially adversely affect the rights of holders of our class A common stock and, therefore, could reduce the value of the class A common stock. In addition, specific rights granted to future holders of our preferred stock could be used to restrict our ability to merge with, or sell assets to, a third party. The power of our board of directors to issue preferred stock could make it more difficult, delay, discourage, prevent or make it more costly to acquire or effect a change in control, thereby preserving the current shareholders’ control.

Advance Notice Bylaw. Our bylaws contain advance notice procedures for the introduction of business and the nomination of directors. These provisions could discourage proxy contests and make it more difficult for you and other shareholders to elect shareholder-nominated directors and to propose and approve shareholder proposals opposed by management.

Maryland Takeover Statutes. We are subject to the Maryland Business Combination Act which could delay or prevent an unsolicited takeover of us. The statute substantially restricts the ability of third parties who acquire, or seek to acquire, control of us to complete mergers and other business combinations without the approval of our board of directors even if such transaction would be beneficial to shareholders. “Business combinations” between such a third party acquirer or its affiliate and us are prohibited for five years after the most recent date on which the acquirer or its affiliate becomes an “interested shareholder.” An “interested shareholder” is defined as any person who beneficially owns 10 percent or more of our shareholder voting power or an affiliate or associate of ours who, at any time within the two-year period prior to the date interested shareholder status is determined, was the beneficial owner of 10 percent or more of our shareholder voting power. If our board of directors approved in advance the transaction that would otherwise give rise to the acquirer or its affiliate attaining such status, such as the issuance of shares of our class A common stock to WRBC, the acquirer or its affiliate would not become an interested shareholder and, as a result, it could enter into a business combination with us. Our board of directors could choose not to negotiate with an acquirer if the board determined in its business judgment that considering such an acquisition was not in our strategic interests. Even after the lapse of the five-year prohibition period, any business combination with an interested shareholder must be recommended by our board of directors and approved by the affirmative vote of at least:

· 80% of the votes entitled to be cast by shareholders; and

· two-thirds of the votes entitled to be cast by shareholders other than the interested shareholder and affiliates and associates thereof.

The super-majority vote requirements do not apply if the transaction complies with a minimum price requirement prescribed by the statute.

The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors prior to the time that an interested shareholder becomes an interested shareholder. Our board of directors has exempted any business combination involving family partnerships controlled separately by John R. Klopp, our former chief executive officer, and Craig M. Hatkoff, our director, and a limited liability company indirectly controlled by a trust for the benefit of Samuel Zell, our chairman of the board, and his family. As a result, these persons and WRBC may enter into business combinations with us without compliance with the super-majority vote requirements and the other provisions of the statute.

We are subject to the Maryland Control Share Acquisition Act. With certain exceptions, the Maryland General Corporation Law provides that “control shares” of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares owned by the acquiring person or by our officers or by our directors who are our employees, and may be redeemed by us. “Control shares” are voting shares which, if aggregated with all other shares owned or voted by the acquirer, would entitle the acquirer to exercise voting power in electing directors within one of the specified ranges of voting power. A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions, including an undertaking to pay expenses, may compel our board to call a special meeting of shareholders to be held within 50 days of demand to consider the voting rights of the “control shares” in question. If no request for a meeting is made, we may present the question at any shareholders’ meeting.

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If voting rights are not approved at the shareholders’ meeting or if the acquiring person does not deliver the statement required by Maryland law, then, subject to certain conditions and limitations, we may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. If voting rights for control shares are approved at a shareholders’ meeting and the acquirer may then vote a majority of the shares entitled to vote, then all other shareholders may exercise appraisal rights. The fair value of the shares for purposes of these appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition. The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if we are not a party to the transaction, nor does it apply to acquisitions approved or exempted by our charter or bylaws. Our bylaws contain a provision exempting certain holders identified in our bylaws from this statute, including WRBC, family partnerships controlled separately by two of our former executive officers and directors, and a limited liability company indirectly controlled by a trust for the benefit of Samuel Zell and his family.

We are also subject to the Maryland Unsolicited Takeovers Act which permits our board of directors, among other things and notwithstanding any provision in our charter or bylaws, to elect on our behalf to stagger the terms of directors and to increase the shareholder vote required to remove a director. Such an election would significantly restrict the ability of third parties to wage a proxy fight for control of our board of directors as a means of advancing a takeover offer. If an acquirer was discouraged from offering to acquire us, or prevented from successfully completing a hostile acquisition, you could lose the opportunity to sell your shares at a favorable price.

The price of our class A common stock may be impacted by many factors.

As with any public company, a number of factors may impact the trading price of our class A common stock, many of which are beyond our control. These factors include, in addition to other risk factors mentioned in this section:

· the level of institutional interest in us;

· the perception of REITs generally and REITs with portfolios similar to ours, in particular, by market professionals;

· the attractiveness of securities of REITs in comparison to other companies;

· the market’s perception of our ability to successfully manage our portfolio and our March 2009 restructuring; and;

· the general economic environment and the commercial real estate property and capital markets.

Our restructured debt obligations restrict us from paying cash dividends, which may reduce the attractiveness of an investment in our class A common stock.

The restrictions on our inability to pay cash dividends, except in a limited manner, will reduce the current dividend yield on our class A common stock and this can negatively impact the price of our class A common stock as investors seeking current income pursue alternative investments.

Your ability to sell a substantial number of shares of our class A common stock may be restricted by the low trading volume historically experienced by our class A common stock.

Although our class A common stock is listed on the New York Stock Exchange, the daily trading volume of our shares of class A common stock has historically been lower than the trading volume for certain other companies. As a result, the ability of a holder to sell a substantial number of shares of our class A common stock in a timely manner without causing a substantial decline in the market value of the shares, especially by means of a large block trade, may be restricted by the limited trading volume of the shares of our class A common stock.

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Our shares of class A common stock may be delisted from the NYSE if the price per share trades below $1.00 for an extended period of time, which could negatively affect our business, our financial condition, our results of operations and our ability to service our debt obligations.

Our class A common stock at times has traded below $1.00. In the event the average closing price of our class A common stock for a 30-day period is below $1.00, our stock could be delisted from the NYSE. The threat of delisting and/or a delisting of our class A common stock could have adverse effects by, among other things:

· reducing the trading liquidity and market price of our class A common stock;

· reducing the number of investors willing to hold or acquire our class A common stock, thereby further restricting our ability to obtain equity financing; and

· reducing our ability to retain, attract and motivate directors, officers and employees.

Risks Related to our REIT Status and Certain Other Tax Items

Our charter does not permit any individual to own more than 9.9% of our class A common stock, and attempts to acquire our class A common stock in excess of the 9.9% limit would be void without the prior approval of our board of directors.

For the purpose of preserving our qualification as a REIT for federal income tax purposes, our charter prohibits direct or constructive ownership by any individual of more than a certain percentage, currently 9.9%, of the lesser of the total number or value of the outstanding shares of our class A common stock as a means of preventing ownership of more than 50% of our class A common stock by five or fewer individuals. The charter’s constructive ownership rules are complex and may cause the outstanding class A common stock owned by a group of related individuals or entities to be deemed to be constructively owned by one individual. As a result, the acquisition of less than 9.9% of our outstanding class A common stock by an individual or entity could cause an individual to own constructively in excess of 9.9% of our outstanding class A common stock, and thus be subject to the charter’s ownership limit. There can be no assurance that our board of directors, as permitted in the charter, will increase, or will not decrease, this ownership limit in the future. Any attempt to own or transfer shares of our class A common stock in excess of the ownership limit without the consent of our board of directors will be void, and will result in the shares being transferred by operation of the charter to a charitable trust, and the person who acquired such excess shares will not be entitled to any distributions thereon or to vote such excess shares.

The 9.9% ownership limit may have the effect of precluding a change in control of us by a third party without the consent of our board of directors, even if such change in control would be in the interest of our shareholders or would result in a premium to the price of our class A common stock (and even if such change in control would not reasonably jeopardize our REIT status). The ownership limit exemptions and the reset limits granted to date would limit our board of directors’ ability to reset limits in the future and at the same time maintain compliance with the REIT qualification requirement prohibiting ownership of more than 50% of our class A common stock by five or fewer individuals.

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There are no assurances that we will be able to pay dividends in the future.

We expect in the future when we generate taxable income to pay quarterly dividends and to make distributions to our shareholders in amounts so that all or substantially all of our taxable income in each year, subject to certain adjustments, is distributed. This, along with our compliance with other requirements, should enable us to qualify for the tax benefits accorded to a REIT under the Internal Revenue Code. All distributions will be made at the discretion of our board of directors and will depend on our earnings, our financial condition, maintenance of our REIT status and such other factors as our board of directors may deem relevant from time to time. There are no assurances that we will be able to pay dividends in the future. In addition, some of our distributions may include a return of capital, which would reduce the amount of capital available to operate our business. There have been recent changes to the Internal Revenue Code that would allow us to pay required dividends in the form of additional shares of common stock equal in value up to 90% of the required dividend. We expect that as we undertake efforts to conserve cash and enhance our liquidity and comply with our restructured debt obligations covenants, future required dividends on our class A common stock will be paid in the form of class A common stock to the fullest extent permitted. There can be no assurance as to when we will no longer be subject to debt obligation covenants or will cease our efforts to conserve cash and enhance liquidity to an extent we believe positions us to resume the payment of dividends completely or substantially in cash.

We will be dependent on external sources of capital to finance our growth.

As with other REITs, but unlike corporations generally, our ability to finance our growth must largely be funded by external sources of capital because we generally will have to distribute to our shareholders 90% of our taxable income in order to qualify as a REIT, including taxable income where we do not receive corresponding cash. Our access to external capital will depend upon a number of factors, including general market conditions, the market’s perception of our growth potential, our current and potential future earnings, cash distributions and the market price of our class A common stock.

If we do not maintain our qualification as a REIT, we will be subject to tax as a regular corporation and face a substantial tax liability. Our taxable REIT subsidiaries will be subject to income tax.

We expect to continue to operate so as to qualify as a REIT under the Internal Revenue Code. However, qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which only a limited number of judicial or administrative interpretations exist. Notwithstanding the availability of cure provisions in the tax code, various compliance requirements could be failed and could jeopardize our REIT status. Furthermore, new tax legislation, administrative guidance or court decisions, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to qualify as a REIT. If we fail to qualify as a REIT in any tax year, then:

· we would be taxed as a regular domestic corporation, which under current laws, among other things, means being unable to deduct distributions to shareholders in computing taxable income and being subject to federal income tax on our taxable income at regular corporate rates;

· any resulting tax liability could be substantial, could have a material adverse effect on our book value and would reduce the amount of cash available for distribution to shareholders;

· unless we were entitled to relief under applicable statutory provisions, we would be required to pay taxes, and thus, our cash available for distribution to shareholders would be reduced for each of the years during which we did not qualify as a REIT; and

· we generally would not be eligible to requalify as a REIT for four full taxable years.

Fee income from our investment management business is expected to be realized by one of our taxable REIT subsidiaries, and, accordingly, will be subject to income tax.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities and limit our expansion opportunities.

In order to qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, our sources of income, the nature of our investments in commercial real estate and related assets, the amounts we distribute to our shareholders and the ownership of our stock. We may also be required to make distributions to shareholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

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Complying with REIT requirements may force us to liquidate or restructure otherwise attractive investments.

In order to qualify as a REIT, we must also ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets. The remainder of our investments in securities cannot include more than 10% of the outstanding voting securities of any one issuer or 10% of the total value of the outstanding securities of any one issuer unless we and such issuer jointly elect for such issuer to be treated as a “taxable REIT subsidiary” under the Internal Revenue Code. The total value of all of our investments in taxable REIT subsidiaries cannot exceed 20% of the value of our total assets. In addition, no more than 5% of the value of our assets can consist of the securities of any one issuer. If we fail to comply with these requirements, we must dispose of a portion of our assets within 30 days after the end of the calendar quarter in order to avoid losing our REIT status and suffering adverse tax consequences.

Complying with REIT requirements may force us to borrow to make distributions to shareholders.

From time to time, our taxable income may be greater than our cash flow available for distribution to shareholders. If we do not have other funds available in these situations, we may be unable to distribute substantially all of our taxable income as required by the REIT provisions of the Internal Revenue Code. Thus, we could be required to borrow funds, sell a portion of our assets at disadvantageous prices or find another alternative. These options could increase our costs or reduce our equity. Our restructured debt obligations may cause us to recognize taxable income without any corresponding cash income and we may be required to distribute additional dividends in cash and/or class A common stock.

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-----END PRIVACY-ENHANCED MESSAGE-----

EX-10.4

Exhibit 10.4

Confidential Treatment Requested by Capital Trust, Inc.

AMENDMENT NO. 10 TO MASTER REPURCHASE AGREEMENT

AMENDMENT NO. 10, dated as of March 16, 2009 (this “Amendment”), to that certain Master Repurchase Agreement, dated as of July 29, 2005 (as amended, restated, supplemented or otherwise modified and in effect prior to the date hereof, the “Existing Repurchase Agreement,” and as amended hereby and as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Repurchase Agreement”), by and among CAPITAL TRUST, INC. (“CT”), CT RE CDO 2004-1 SUB, LLC (“CDO 2004-1”), CT RE CDO 2005-1 SUB, LLC (“CDO 2005-1”) and CT XLC HOLDING, LLC (“CT XLC”), as sellers (collectively, the “Sellers”) and MORGAN STANLEY BANK, N.A., as buyer (“Buyer”).  Capitalized terms used but not otherwise defined herein shall have the meanings specified therefor in the Repurchase Agreement.

RECITALS

WHEREAS, Sellers and Buyer are parties to the Existing Repurchase Agreement;

WHEREAS, CT is party to that certain Master Repurchase Agreement, dated as of October 24, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMorgan-A Repurchase Agreement”), by and among CT BSI FUNDING CORP. (“CT BSI”) and CT, as sellers (in such capacity, collectively, the “JPM-A Sellers”) and JPMORGAN CHASE BANK, N.A., as buyer (“JPMorgan”);

WHEREAS, CT is party to that certain Master Repurchase Agreement, dated as of November 21, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMorgan-B Repurchase Agreement”; together with the JPMorgan-A Repurchase Agreement, collectively, the “JPMorgan Repurchase Agreements”), by and among CT BSI and CT, as sellers (in such capacity, collectively, the “JPM-B Sellers”; together with the JPM-A Sellers, collectively, the “JPM Sellers”) and JPMORGAN CHASE FUNDING INC., as buyer (“JPMorgan Funding”; and together with JPMorgan, collectively, the “JPM Parties”);

WHEREAS, CT is party to that certain Master Repurchase Agreement, dated as of July 30, 2007 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Citigroup Repurchase Agreement,” and together with the Repurchase Agreement and the JPMorgan Repurchase Agreements, the “Senior Secured Facilities”), by and among CT, as seller (the “Citigroup Seller”; and together with Sellers and the JPMorgan Sellers, the “CT Parties”) and CITIGROUP GLOBAL MARKETS INC. and CITIGROUP FINANCIAL PRODUCTS INC., as buyers (collectively, “Citigroup”, and together with Buyer and the JPM Parties, the “Secured Plan Participants”); and

WHEREAS, Sellers and Buyer have agreed, subject to the terms and conditions hereof, that the Existing Repurchase Agreement shall be amended as set forth in this Amendment.

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, Sellers and Buyer agree as follows:

SECTION 1.  Amendments to Master Repurchase Agreement.

(a)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definitions of “Asset Value”, “Aggregate Margin Maintenance Asset Value”, “Aggregate Margin Maintenance Asset Value Deficiency”, “Installment Date”, “Excluded Transaction Assets”, “Margin Maintenance Asset Value” and “Maximum Concentration Amount” in their entirety.

(b)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Maximum Purchase Amount” in its entirety and inserting in lieu thereof the following:

“Maximum Purchase Amount” shall mean, initially, $181,349,964.18, and such “Maximum Purchase Amount” shall be reduced by any payment or prepayment to Buyer on account of the Repurchase Price (excluding payments of Price Differential and Late Fees) of any Transaction Asset.

(c)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Income” in its entirety and inserting in lieu thereof the following:

“Income” shall mean, with respect to any Transaction Asset at any time, any Principal Income thereof and all Interest Income thereon.

(d)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by adding at the end of the definition of “Subsidiary” the following:

“Notwithstanding the foregoing, Subsidiary shall not include investment funds managed by Seller or subsidiaries of same or investment funds of which Seller controls the general partner or managing member thereof or subsidiaries of same (except for those investment funds or subsidiaries of same of which Seller directly or indirectly owns at least a majority of the securities or other ownership interests therein).”

(e)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Termination Date” in its entirety and inserting in lieu thereof the following:

“Termination Date” shall mean March 16, 2010 or such earlier date on which this Agreement shall terminate in accordance with the provisions thereof or hereof or by operation of law; provided, however, that if the applicable conditions set forth in Section 4.01(a) of this Agreement shall have been satisfied, the Termination Date shall be extended to the applicable date set forth in Section 4.01(a) of this Agreement.

(f)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Transaction Documents” in its entirety and inserting in lieu thereof the following:

“Transaction Documents” shall mean, collectively, this Agreement, the related Confirmations, the Servicing Agreement, the Lockbox Account Control Agreement, the Warrant and the Custodial Agreement.

(g)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by inserting the following new definitions in proper alphabetical order:

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“Additional Restricted Cash” shall mean, to the extent otherwise constituting Unrestricted Cash, any cash or Cash Equivalent of CT and its Subsidiaries (i) that is required to be trapped pursuant to the other Senior Secured Facilities or the terms of any other loan agreement, repurchase agreement, or other extension of credit, (ii) that is received in anticipation of a disbursement by CT or any of its Subsidiaries to a Person other than CT or any Subsidiary within one (1) Business Day, (iii) that is provided as cash collateral to support letters of credit and bank guarantees, customs and other import duties in the ordinary course of business of CT or any of its Subsidiaries or (iv) that, if distributed or paid, would result in the insolvency of CT.

“Amendment No. 10” shall mean that certain Amendment No. 10 to this Agreement, dated as of March 16, 2009, among Sellers and Buyer.

“Amendment No. 10 Effective Date” shall mean the “Amendment Effective Date”, as defined in Section 2 of Amendment No. 10.

“Bonds” shall mean all Transaction Assets designated as “bonds” in Exhibit G.

“Cash Equivalents” shall mean (a) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of 90 days or less from the date of acquisition and overnight bank deposits of Buyer or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of Buyer or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least “A” by S&P or “A” by Moody’s, (e) securities with maturities of 90 days or less from the date of acquisition backed by standby letters of credit issued by Buyer or any commercial bank satisfying the requirements of clause (b) of this definition or (f) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (e) of this definition.

“Citigroup Repurchase Agreement” shall have the meaning specified in Amendment No. 10.

“Collateral” shall have the meaning specified therefor in Section 5.01(d).

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“Collateral Value” shall mean, as of any date of determination, in respect of any Transaction Asset, (a) in the case of Bonds, as determined by Buyer in its sole discretion exercised in good faith and (b) in the case of Transaction Assets other than  Bonds, the Initial Value of such Transaction Assets, adjusted by taking into account credit risk (including, without limitation, information relating to the sponsor or tenant for such Transaction Asset or other information relating to the likelihood of payment of such Transaction Asset; any alleged violation of Environmental Laws; any bankruptcy filings, casualty loss, or condemnation affecting or impacting the applicable Underlying Property or Mortgaged Property; any bankruptcy filing or other act of insolvency with respect to any co-participant or any other Person having an interest in such Transaction Asset or any related Underlying Property or Mortgaged Property that is senior to, or pari passu with, the rights of Buyer in such Transaction Asset; any payment of principal and/or interest are more than 60 days past due under any mortgage note affecting the Mortgaged Property or Mortgaged Properties or such Transaction Asset (without giving effect to any waiver by the lender thereunder); any modification of the Underlying Property or Mortgaged Property or to the related loan documents (or any financing senior thereto); any market comparables for the Mortgaged Property or Mortgaged Properties) applicable to such Transaction Asset; but excluding market risk (e.g., interest rate risk) applicable to the Transaction Asset; provided, however, that Buyer may take into account any performance assumptions with respect to such Transaction Asset (including, without limitation: the sponsorship thereof; projections as to default probabilities and estimated losses; changes in the cash flow generated by the Underlying Property or Mortgaged Property; the ultimate collectibility of the Transaction Asset if held to maturity; for assets held or to be held by the Custodian, the failure to deliver the Transaction Asset Documents to the Custodian in accordance with the terms of this Agreement and the Custodial Agreement; whether the Transaction Asset has been released from the possession of the Custodian under the Custodial Agreement to a Seller for a period in excess of twenty (20) calendar days without the consent of Buyer; and a breach of any of the representations and warranties regarding the Transaction Asset contained in Section 7.09), in each case in its sole discretion exercised in good faith; and provided further, that the Collateral Value, without giving effect to such increase, shall in no event exceed one hundred percent (100%) of the outstanding principal balance of the related Transaction Asset.

“CT Cash Account” shall mean one or more deposit accounts established by CT with Merrill Lynch, Pierce, Fenner & Smith Incorporated or Bank of America, N.A.

“Defaulted Collateral Asset” shall mean a Transaction Asset with respect to which (a) a monetary default has occurred or (b) an acceleration or foreclosure (including, in the case of Subordinate Mortgage Loans, Whole Loans, Mezzanine Loans or B Notes, a foreclosure of the Underlying Property or Mortgaged Property) has been declared or commenced, and, in either case, such Transaction has not been returned to performing status within 90 days; provided that Defaulted Collateral Assets shall not include (a) any Bonds, and (b) any Transaction Asset with a Collateral Value or allocated borrowing of zero.

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“Environmental Laws” shall mean any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or requirements of law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect.

“Excess Cash” shall mean an amount, if any, by which Unrestricted Cash exceeds the sum of (a) $25,000,000 and (b) the aggregate amount of Unfunded Commitments.

“Filings” shall have the meaning specified therefor in Section 5.01(e).

“Future Advances” shall mean CT’s commitment to make future advances on Transaction Assets and assets under other Senior Secured Facilities, as detailed in Exhibit G.

“Initial Advance Rate” shall mean, with respect to each Transaction Asset, a rate as specified therefor on Exhibit G hereto.

“Initial LTCV” shall mean the LTCV, calculated as of the Amendment No. 10 Effective Date.

“Initial Mark” shall mean, with respect to each Transaction Asset, a percentage as specified therefor on Exhibit G hereto.

“Initial Value” shall mean, with respect to each Transaction Asset, a value equal to the product of (i) the “Face Amount” for such Transaction Asset as specified therefor on Exhibit G hereto and (ii) the Initial Mark for such Transaction Asset.

“Interest Allocation Percentage” shall mean, initially, 65%, or, if the Termination Date is extended pursuant to Section 4.01 and beginning on the first day after the original Termination Date, such other percentage as agreed to in good faith among Sellers and the Secured Plan Participants, in each case, in their commercially reasonable discretion.

“Interest Income” shall mean, with respect to any Transaction Asset at any time, all interest, dividends or other distributions thereon.

“JPMorgan Account” shall mean the Sellers’ account held with JPMorgan Chase Bank, N.A.

“JPMorgan Repurchase Agreements” shall have the meaning specified therefor in Amendment No. 10.

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“Lehman Facility” shall mean that certain Amended and Restated Loan and Security Agreement, dated as of September 10, 2008, between CT, as borrower, and Lehman Commercial Paper Inc. as lender.

“Liquidity” shall mean, on any date of determination, the sum of (A) the consolidated amount of Unrestricted Cash of CT and its Subsidiaries on such date, and (B) the incremental amount of borrowings CT and its Subsidiaries are, as of such date, permitted to borrow pursuant to the terms of existing committed Indebtedness of CT or its Subsidiaries in effect on such date, as to which all conditions precedent have been satisfied and which borrowings do not require the discretionary consent of the applicable lender, counterparty, credit provider or any other Person.

“Lockbox Account” shall mean a Collections Account, subject to a Lockbox Account Control Agreement.

“Lockbox Account Control Agreement” shall mean an account control agreement between a depository bank (acceptable to Buyer in its sole discretion), Sellers and Buyer in respect of the Lockbox Account in form and substance acceptable to Buyer in its sole and absolute discretion.

“LTCV” shall mean, as of any date of determination, the ratio (expressed as a percentage) of the aggregate MRA Obligations to the aggregate Collateral Value of all Transaction Assets.

“Maximum Outstanding Amount” shall mean, for all Transactions, an amount equal to $145,079,971.34; provided that solely for purposes of Section 4.01, the Maximum Outstanding Amount may be adjusted pursuant to Section 4.07(e).

“MRA Obligations” shall mean the aggregate amount of each Seller’s obligations under the Transaction Documents and the Transactions entered into under this Agreement, including, without limitation, each Seller’s obligation to repurchase Transaction Assets at the Repurchase Price, or if such obligation were to be recharacterized as a loan, to repay such loan, and to pay any and all other amounts owing under this Agreement and the other Transaction Documents.

“Minimum Release Price” shall mean, for any Transaction Asset, an amount equal to the greater of (a) the lesser of (i) the Initial Value of such Transaction Asset, (ii) the Collateral Value for such Transaction Asset as of the date that CT notifies Buyer of its intent to sell, dispose, transfer or refinance such Transaction Asset pursuant to a Permitted Disposition, and (iii) 110% of the Repurchase Price of such Transaction Asset and (b) the Repurchase Price.

“Net Proceeds” shall mean, with respect to any Permitted Disposition or the incurrence or issuance of any Indebtedness permitted under Section 8.19 hereof, the aggregate amount of cash received by or on behalf of such Person for its own account in connection with any such transaction, after deducting therefrom only:

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(a)           reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder’s fees and other similar fees, costs and commissions that, in each case, are actually paid at the time of receipt of such cash to a Person that is not a Subsidiary or Affiliate of any of the Sellers or any of their respective Subsidiaries or Affiliates;

(b)           the amount of taxes payable in connection with or as a result of such transaction that, in each case, are actually paid at the time of receipt of such cash to the applicable taxation authority or other Governmental Authority or, so long as such Person is not otherwise indemnified therefor, are reserved for in accordance with GAAP, as in effect at the time of receipt of such cash, based upon such Person’s reasonable estimate of such taxes, and paid to the applicable taxation authority or other Governmental Authority within 90 days after the date of receipt of such cash; and

(c)           in the case of any Permitted Disposition, the outstanding principal amount of, the premium or penalty, if any, on, and any accrued and unpaid interest on, any Indebtedness (other than Indebtedness under or in respect of the Transaction Documents) that is secured by a Lien on the property and assets subject to such Permitted Disposition and is required to be repaid under the terms of such Indebtedness as a result of such Permitted Disposition, in each case, to the extent that the amounts so deducted are actually paid at the time of receipt of such cash to a Person that is not an Affiliate of any of the Sellers or any of their Affiliates;

provided that, any and all amounts so deducted by any such Person pursuant to clauses (a) through (c) of this definition shall be properly attributable to such transaction or to the property or asset that is the subject thereof; provided, further, that if, at the time any of the taxes referred to in clause (b) are actually paid or otherwise satisfied, and the reserve therefor exceeds the amount paid or otherwise satisfied, then the amount of such excess reserve shall constitute “Net Proceeds” on and as of the date of such payment or other satisfaction for all purposes of this Agreement.

“Permitted Disposition” shall mean the sale, transfer, disposition or refinancing of any Transaction Asset by CT in accordance with Section 8.10; provided that (a) the Net Proceeds from such sale, transfer, disposition or refinancing shall be no less than the Minimum Release Price for such Transaction Asset; (b) 100% of the Net Proceeds from such Permitted Disposition is applied pursuant to Section 4.07(a) hereof; (c) any sale, transfer or disposition of Transaction Assets be made to a bona fide third party or, with Buyer’s prior written approval, to an Affiliate of CT; and (d) no Transaction Asset may be refinanced without the prior written approval of Buyer.

“Principal Income” shall mean, with respect to any Transaction Asset at any time, any principal thereon.

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“Secured Plan Facilities Obligations” shall mean the sum of the MRA Obligations and the aggregate amount of all obligations owed by CT or any Subsidiary of CT under the JPMorgan Repurchase Agreements and the Citigroup Repurchase Agreement.

“Secured Plan Participants” shall have the meaning specified therefor in the recitals to Amendment No. 10.

“Senior Secured Facilities” shall have the meaning specified therefor in the recitals to Amendment No. 10.

“Senior Unsecured Facility” shall mean that certain Credit Agreement, dated as of March 22, 2007, by and among CT as borrower, WestLB AG, New York Branch, as administrative agent, and the lenders party thereto, as the same may be amended, restated, supplemented or otherwise modified and in effect from time to time.

“Senior Unsecured Facility MS Indebtedness” shall mean all Indebtedness from time to time owed by any of the Sellers or any Affiliate of a Seller to Buyer or any Affiliate of Buyer under the Senior Unsecured Facility.

“Servicing Rights” shall mean rights of any Person, to administer, service or subservice, the Transaction Assets or to possess related Servicing Records.

“Unfunded Commitments” shall mean, as of any date, an amount equal to the sum of CT’s unfunded commitments to make Future Advances and meet future capital calls for CT Opportunity Partners I, LP as of such date.

“Unrestricted Cash” shall mean (a) cash and Cash Equivalents that would not appear in the consolidated financial statements of CT, prepared in accordance with GAAP, as a line item on the balance sheet as “restricted cash” or similar caption minus (b) any Additional Restricted Cash.

“Unsecured Lenders” shall mean the lenders party to the Senior Unsecured Facility.

“Valuation Test Date” shall have the meaning specified in Section 3.04.

“Valuation Test Failure” shall have the meaning specified in Section 3.04.

“Valuation Test Period” shall have the meaning specified in Section 3.04.

“Warrant” shall mean that certain Warrant, dated as of March 16, 2009, made by CT in favor of Morgan Stanley Asset Funding Inc.

(h)           Section 3.03(a)(i) of the Existing Repurchase Agreement is hereby amended by deleting the phrase “and to be included in the Aggregate Margin Maintenance Asset Value” therein in its entirety.

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(i)          Sections 3.03(a)(ii), 3.03(b), 8.06(c) and 12.13 of the Existing Repurchase Agreement are hereby amended by deleting each use of the term “Asset Value” therein in its entirety and inserting in lieu thereof the term “Collateral Value.”

(j)           Section 3.04 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“3.04      Margin Maintenance.

On a monthly basis, on the first Business Day of each month beginning on September 1, 2009 (each such date, a “Valuation Test Date”), Buyer will determine the Collateral Value of each Transaction Asset.  If on any Valuation Test Date, the LTCV exceeds 1.15 times the Initial LTCV (a “Valuation Test Failure”), Sellers shall, within five (5) Business Days following such Valuation Test Date, make a prepayment in reduction of the Repurchase Price of such Transaction Asset, such that after giving effect to such prepayment, the LTCV, as re-determined by Buyer, shall not exceed 1.15 times the Initial LTCV.  All prepayments in reduction of such Repurchase Price shall be applied by Buyer in its sole discretion.  If Sellers are not able to cure a Valuation Test Failure within five (5) Business Days after the applicable Valuation Test Date, then Sellers shall cooperate with Buyer to select one or more Transactions Assets to liquidate and will use commercially reasonable efforts, taking into account the rights and interests of Buyer, to expeditiously commence the liquidation process for same.  If the Valuation Test Failure is not cured within 60 days from the initial failure, an Event of Default will occur; provided that if Sellers provide Buyer with a copy of an executed asset sale or refinancing agreement, acceptable to Buyer in its sole discretion, prior to the end of such 60-day period in respect of the selected Transaction Assets, Buyer may, at its option, grant a one-time 15-day extension to cure such Valuation Test Failure (such 60-day period and any 15-day extension, a “Valuation Test Period”).  Notwithstanding the above, in the event that a Transaction Asset becomes a Defaulted Collateral Asset, a Valuation Test will be performed at that time, and the provisions of this Section 3.04 shall apply.”

(k)           Section 3.05 of the Existing Repurchase Agreement is hereby amended by deleting subsection (b) in its entirety and inserting in lieu thereof the following:

“(b)        Reserved.”

(l)           Section 4.01 of the Existing Repurchase Agreement is hereby amended by deleting subsection (a) thereof in its entirety and inserting in lieu thereof the following new subsection (a):

“(a)         Sellers hereby promise to pay in full on the Termination Date, in accordance with the provisions of the definition of Termination Date, the aggregate Repurchase Price with respect to all Transaction Assets then held by Buyer.

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(i)           Notwithstanding the foregoing, Sellers may, in their sole discretion by notice to Buyer between 90 and 20 days prior to the originally scheduled Termination Date, extend the Termination Date with respect to all of the Transactions until the first (1st) anniversary of the originally scheduled Termination Date (all of the other terms and conditions of such Transactions remaining the same) provided that the following conditions precedent are satisfied as of the date of the effectiveness of such extension: (1) the MRA Obligations as of the date of such extension are less than or equal to the Maximum Outstanding Amount, (2) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (3) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that, if conditions (1) through (3) are met and if any extension request is made during a Valuation Test Period, such extension shall be provisionally granted until the end of such Valuation Test Period, and such extension shall be granted only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

(ii)           Notwithstanding the foregoing, if the initial Termination Date shall have been extended pursuant to Section 4.01(a)(i), Sellers may request, between 90 and 20 days prior to the extended Termination Date, and subject to the written approval of Buyer in its sole and absolute discretion given no later than ten (10) days prior to the extended Termination Date (any failure by Buyer to deliver such notice of its approval to an extension to Seller shall be deemed a denial of Seller’s request to extend the Termination Date) provided that in any event, the following conditions precedent are satisfied as of the date of the effectiveness of such second extension: (1) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (2) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that if conditions (1) and (2) or any other conditions then required by Buyer in its sole discretion (including, without limitation, requirements of additional payments, prepayments, revaluations of Collateral Value for any Transaction Asset or delivery of additional documents) are met and if any extension request is made during a Valuation Test Period, such extension may be provisionally granted by Buyer, in its sole and absolute discretion, until the end of such Valuation Test Period, and such extension may be granted by Buyer, in its sole and absolute discretion, only if no Valuation Test Failure exists as of the end of such Valuation Test Period.”

(m)           Section 4.07 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“Section 4.07 Income Payments; Excess Cash.

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(a)           Principal Income.  Sellers shall cause (1) all Principal Income in respect of the Transaction Assets and (2) 100% of all Net Proceeds in respect of Permitted Dispositions of Transaction Assets, in each case, to be deposited directly in the Lockbox Account.  Such Principal Income shall be applied within one (1) Business Day following receipt by Buyer as follows: (i) first, to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Transaction Assets, (ii) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (iii) third, to make a payment to Buyer on account of the Repurchase Price of the Transaction Assets in respect of which such Principal Income is received until the Repurchase Price for each such Transaction Asset has been reduced to zero; (iv) fourth, to make a payment to Buyer on account of the Repurchase Price of all Transaction Assets until the Repurchase Price for all Transaction Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Transaction Assets with respect to which the Repurchase Price has not been reduced to zero; and (v) fifth, to remit to the applicable Seller the remainder.

(b)           Interest Income.  Sellers shall cause all Interest Income in respect of the Transaction Assets to be deposited directly in the Lockbox Account.  Such Interest Income shall be applied monthly by Buyer as follows:

(i) so long as no Event of Default shall have occurred and be continuing, (1) first, to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Transaction Assets, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a payment to Buyer on account of the Repurchase Price of all Transaction Assets, each such payment to be allocated in Buyer’s sole discretion among those Transaction Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to the product of the Interest Allocation Percentage multiplied by the difference between (x) the total Interest Income received by Sellers during such month and (y) the Price Differential otherwise actually paid by Sellers to Buyer during such month, and (4) fourth, to remit to the applicable Seller the remainder; and

(ii) if an Event of Default shall have occurred and be continuing, subject to Section 5.06 hereof, (1) first, to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Transaction Assets, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a payment to Buyer on account of the Repurchase Price of all Transaction Assets until the Repurchase Price for all Transaction Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Transaction Assets with respect to which the Repurchase Price has not been reduced to zero; and (4) fourth, to remit to the applicable Seller the remainder.

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(c)           Control Rights.  So long as no Event of Default shall have occurred and be continuing, and subject to the terms of the Transaction Documents and Section 8.25 hereof, each Seller shall retain the right to take all actions under the Transaction Documents and to retain all contact with the relevant Transaction Asset Obligor.

(d)           Excess Cash.  At the end of each calendar quarter, CT shall make a payment to Buyer on account of the Repurchase Price of all Transaction Assets until the Repurchase Price for all Transaction Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Transaction Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to (i) Excess Cash as of the last day of such calendar quarter, multiplied by Buyer’s pro rata share, based on the MRA Obligations at such date, of the aggregate Secured Plan Facilities Obligations as of such date.

(e) Future Advances.  Notwithstanding anything contained herein or in any other Transaction Document to the contrary, as of the Amendment No. 10 Effective Date, Buyer shall have no obligation to make any Future Advances and CT will fund 100% of all Future Advances.  Solely for purposes of Sections 4.01(a)(i)(1) and 4.01(a)(ii)(1) hereof, after each funding of Future Advances in respect of Transaction Assets by CT, the Maximum Outstanding Amount will be increased by an amount equal to the product of: (a) the amount of such Future Advance actually funded by CT, (b) the Initial Mark for the applicable Transaction Asset, (c) the Initial Advance Rate for such Transaction Asset and (d) 50%.”

(n)           Section 5.01(b) of the Existing Repurchase Agreement is hereby amended by inserting the following new subsection in proper numerical order and renumbering subsequent subsections accordingly:

“(vii) the Lockbox Account and all monies from time to time on deposit in the Lockbox Account,”

(o)           Section 5.01 of the Existing Repurchase Agreement is hereby amended by (i) deleting the phrase “any and all MS Indebtedness from time to time outstanding” and inserting in lieu thereof the phrase “any and all MS Indebtedness, other than the Senior Unsecured Facility MS Indebtedness, from time to time outstanding” and (ii) inserting the following new subsections in proper alphabetical order:

“(d)         Without limiting Sections 5.01(a) and (b) hereto, to secure payment of the Repurchase Obligations owing to Buyer, each Seller hereby grants to Buyer a security interest in all of Seller’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, hereinafter referred to as the “Collateral”:

(i)           the Collection Account and all monies from time to time on deposit in the Collection Account;

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(ii)          the Lockbox Account and all monies from time to time on deposit in the Lockbox Account,

(iii)         the Transaction Asset Items;

(iv)         any and all replacements, substitutions, distributions on, income relating to or proceeds of any and all of the foregoing; and

(v)          each Seller’s right under each Interest Rate Protection Agreements, if any, relating to the Transaction Assets to secure the Repurchase Obligations.

(e)           Buyer’s security interest in the Collateral shall terminate only upon termination of each Seller’s obligations under this Agreement, all Interest Rate Protection Agreements and the documents delivered in connection herewith and therewith.  Upon such termination, Buyer shall deliver to each Seller such UCC termination statements and other release documents as may be commercially reasonable and return the Transaction Assets to the applicable Seller and reconvey the Transaction Asset Items to the applicable Seller and release its security interest in the Collateral.  For purposes of the grant of the security interest pursuant to this Section 5, this Agreement shall be deemed to constitute a security agreement under the Uniform Commercial Code.  Buyer shall have all of the rights and may exercise all of the remedies of a secured creditor under the Uniform Commercial Code and the other laws of the State of New York.  In furtherance of the foregoing, (a) Buyer, at Sellers’ sole cost and expense, shall cause to be filed in such locations as may be necessary to perfect and maintain perfection and priority of the security interest granted hereby, UCC financing statements and continuation statements (collectively, the “Filings”), and shall forward copies of such Filings to Sellers upon completion thereof, and (b) each Seller shall from time to time take such further actions as may be requested by Buyer to maintain and continue the perfection and priority of the security interest granted hereby (including marking its records and files to evidence the interests granted to Buyer hereunder).

(f)           Each Seller acknowledges that it has no right to service the Transaction Assets but only has rights pursuant to Section 12.14, as a party to a Servicing Agreement or any other servicing agreement with respect to the Transaction Assets.  Without limiting the generality of the foregoing and in the event that a Seller is deemed to retain any residual Servicing Rights, and for the avoidance of doubt, each Seller grants, assigns and pledges to Buyer a security interest in the Servicing Rights and proceeds related thereto and in all instances, whether now owned or hereafter acquired, now existing or hereafter created.  The foregoing provision is intended to constitute a security agreement or other arrangement or other credit enhancement related to the Agreement and Transactions hereunder as defined under Sections 101(47)(v) and 741(7)(x) of the Bankruptcy Code.”

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(p)           Section 5.02 of the Existing Repurchase Agreement is hereby amended by deleting subsection (a) thereof in its entirety and inserting in lieu thereof the following new subsection (a):

“(a)           Each Seller shall undertake, with respect to each Transaction Asset sold to Buyer and deemed to be pledged hereunder as security for a Transaction pursuant to Section 5.01(a) and the other Collateral pledged pursuant to Section 5.01(d), any and all actions deemed necessary by Buyer for the transfer by the relevant Seller to Buyer of a valid ownership interest and the granting of a precautionary first priority security interest, as the case may be, in such Transaction Asset and other Collateral.  Without limiting the generality of the foregoing, each Seller shall take such steps as are necessary for (i) the transfer of a valid ownership interest and the granting and perfection of a precautionary first priority security interest in securities and related Transaction Assets and (ii) the granting and perfection of a first priority security interest in the Collateral.”

(q)           Section 5.03 of the Existing Repurchase Agreement is hereby amended by deleting all references therein to “Transaction Assets” and inserting in lieu thereof the phrase “Transaction Assets and other Collateral.”

(r)           Section 5.06 of the Existing Repurchase Agreement is hereby amended by (i) deleting the reference to “Transaction Asset” in the first sentence thereof and inserting in lieu thereof the phrase “Transaction Asset and other Collateral,” and (ii) by deleting the last sentence thereof in its entirety and inserting in lieu thereof the following:

“For purposes hereof, proceeds shall include, but not be limited to, all principal and interest payments, all prepayments and payoffs, insurance condemnation awards, sale proceeds, real estate owned rents and any other income and all other amounts received with respect to the Transaction Assets and other Collateral.”

(s)           Section 5.07 of the Existing Repurchase Agreement is hereby amended by inserting the following at the end thereof:

“Notwithstanding anything contained herein to the contrary and without limiting the generality of any of the foregoing, if an Event of Default shall occur and be continuing, Buyer may, at its option, notify any bank or other depository institution to liquidate the applicable Collections Account and Lockbox Account maintained or held thereby and remit all funds and proceeds thereof to an account specified by Buyer, for application in accordance with this Agreement.”

(t)           Section 5.10 of the Existing Repurchase Agreement is hereby amended by deleting the reference therein to “Transaction Assets” and inserting in lieu thereof the phrase “Transaction Assets and other Collateral.”

(u)           Section 5.11 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

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“5.11       Release of Transaction Assets.  Provided that no Default or Event of Default shall exist (other than a Default or Event of Default that (a) relates solely to the Transaction Assets to be released and (b) will no longer exist after giving effect to such release) and either (x) Seller shall have paid all sums then due under the Transaction relating thereto or (y) Buyer shall have applied 100% of the Net Proceeds from a Permitted Disposition pursuant to Section 4.07(a) hereof, then upon (i) the relevant Seller’s payment in full of the Asset Specific Transaction Balance with respect to a portion of the Transaction Assets or the application of such Net Proceeds pursuant to Section 4.07(a) hereof, and (ii) receipt by Buyer of a written request from such Seller for the release of such Transaction Asset, Buyer shall as soon as practicable release (and Buyer shall reasonably cooperate with such Seller to facilitate reasonable escrow arrangements to facilitate a simultaneous release of) the related Transaction Asset Documents and the related Transaction Asset and any liens related thereto to such Seller or, to the extent necessary to facilitate future savings of mortgage tax in states that impose mortgage taxes, assign such liens as such Seller shall request, provided that any such assignments shall be without expense, recourse, representation or warranty of any kind except that Buyer shall represent and warrant that such Transaction Asset has not been previously assigned by Buyer.  At Sellers’ expense, Buyer shall with reasonable promptness, after a written request from Seller, execute any document or instrument necessary to effectuate such release or assignment.

(v)           Section 5.12 of the Existing Repurchase Agreement is hereby amended by (i) deleting all references therein to “Margin Maintenance Asset Value” and inserting in lieu thereof the term “Collateral Value” and (ii) by deleting all references therein to “Aggregate Margin Maintenance Asset Value” and inserting in lieu thereof the phrase “aggregate Collateral Value of all Transaction Assets.”

(w)           Section 6.02(b) of the Existing Repurchase Agreement is hereby amended by deleting the parenthetical “(in the case of the representations and warranties in Section 7.09, solely with respect to Eligible Transaction Assets included in the Aggregate Margin Maintenance Asset Value)” therein in its entirety and inserting in lieu thereof the following:

“(in the case of the representation and warranties in Section 7.09, solely with respect to Eligible Transaction Assets sold to Buyer in connection with such Transaction)”

(x)          Section 6.02(c) of the Existing Repurchase Agreement is hereby amended by deleting all references therein to “Aggregate Margin Maintenance Asset Value” and inserting in lieu thereof the phrase “aggregate Collateral Value of all Transaction Assets.”

(y)           Section 6.02 of the Existing Repurchase Agreement is hereby amended by inserting the following new subsection (k) in proper alphabetical order:

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“(k)         “Initial Advance Rate, Initial Mark, Initial Value.  Buyer shall have determined the Initial Advance Rate, Initial Mark, Initial Value, Purchase Price, Pricing Rate and any other information listed in Exhibit G hereto with respect to such Eligible Transaction Asset and shall have amended Exhibit G to reflect such determinations.”

(z)           Section 7.11 of the Existing Repurchase Agreement is hereby amended by deleting the phrase “relating to the Transaction Assets” therein in its entirety and inserting in lieu thereof “relating to the Transaction Assets and the Collateral”.

(aa)           Section 8.06(d) of the Existing Repurchase Agreement is hereby amended by (i) deleting all references therein to “Margin Maintenance Asset Value” and inserting in lieu thereof the term “Collateral Value” and (ii) by inserting the following new subsections in proper numerical order and renumbering subsequent subsections accordingly:

“(iii)        any default related to any Senior Secured Facility or the Senior Unsecured Facility, (iv) any proposed waiver, extension, amendment, or modification to any Senior Secured Facility or the Senior Unsecured Facility, (v) any new investments made in compliance with Section 8.18 hereof, (vi) any new Indebtedness incurred in compliance with Section 8.19 hereof,”

(bb)         Section 8.10 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“8.10       Limitation on Liens.  Each Seller will defend the Transaction Assets and the other Collateral against, and will take such other action as is necessary to remove, any Lien, security interest or claim on or to the Transaction Assets and the other Collateral, other than the security interests created, or otherwise specifically permitted in writing by Buyer under this Agreement, and each Seller will defend the right, title and interest of Buyer’s in and to any Transaction Asset and any other Collateral against the claims and demands of all persons whomsoever.  A Seller may request from time to time, subject to Buyer’s approval in Buyer’s sole determination, to sell participation interests in its interests in Transaction Assets in connection with a Permitted Disposition, the sale of which participation interests shall be arm’s length transactions and subject to such terms and conditions as Buyer in its sole discretion shall require; provided that Buyer (a) retains an interest in the tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition, subject to the terms of this Agreement or (b) shall maintain a security interest in such tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition; and provided further, that such Seller complies in all respects with the Transaction Asset Document delivery requirements contained in this Agreement and the Custodial Agreement.”

(cc)         Section 8 of the Existing Repurchase Agreement is hereby amended by

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(i)           deleting Sections 8.05, 8.11, 8.12, 8.13, 8.16 and 8.17 in their entirety and inserting in lieu thereof the following new Sections in proper numerical order:

“8.05       LTCV.  If at any time there exists a Valuation Test Failure, each Seller shall cure same in accordance with Section 3.04 hereof.

8.11         Limitation on Distributions.  No Seller shall make any payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or partnership interest of any Seller, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of any Seller, either directly or indirectly, whether in cash or property or in obligations of any Seller or any of Subsidiary of a Seller, except to the minimum extent required for a Seller to maintain its status as a real estate investment trust and, to the extent permitted, such distribution shall be made in equity in lieu of cash; provided that any Seller may make distributions to CT or any other wholly-owned Subsidiary of CT.

8.12         Reserved.

8.13         Reserved.

8.16         Reserved.

8.17         Reserved.”; and

(ii) by adding the following new sections in proper numerical order:

“8.18        No New Investments.  Without the prior written consent of Buyer, no Seller shall, nor permit any Subsidiary to, originate, acquire or invest in any new stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person except to (a) make co-investments in future funds of which CT (or its Affiliates) is the sponsor or manager, and (b) make protective investments to defend existing Transaction Assets or assets subject to another Senior Secured Facility or that are pledged as collateral security for the Senior Unsecured Facility.  With respect to co-investments, (a) no investments will be permitted in the first six (6) months following the Amendment No. 10 Effective Date, (b) the projected base management fees generated by the proposed future fund over the first 36 months must equal or exceed the co-investment commitment, and (c) the total amount of co-investment capital for all such proposed future funds may not exceed $10,000,000 without the prior written approval of Buyer.  With respect to protective investments made in respect of Transaction Assets or assets subject to another Senior Secured Facility, the amount of each investment may not exceed $5,000,000 per Transaction Asset, transaction or asset.  With respect to protective investments made in respect of assets pledged as collateral security for the Senior Unsecured Facility, the aggregate amount of such investments may not exceed $1,000,000.

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8.19          No New Indebtedness.  No Seller shall, nor permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness other than the Indebtedness already incurred as of the Amendment No. 10 Effective Date; provided, that additional Indebtedness may be incurred by Sellers or any of their Subsidiaries so long as the following conditions are satisfied: (i) to the extent that the Indebtedness is incurred in connection with a Permitted Disposition, the Net Proceeds of such Permitted Disposition are applied in accordance to Section 4.07(a), (ii) to the extent that such new Indebtedness is unsecured (and subordinate to all obligations owed by the applicable Seller under any Secured Plan Facility or the Senior Unsecured Facility) or incurred through the pledge of unencumbered assets, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account and (iii) to the extent that such new Indebtedness is recourse Indebtedness, only to the extent that it replaces existing recourse Indebtedness or is subordinate to all obligations owed to Buyer (and to the extent such new Indebtedness is not subject to clause (i) above, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account).

8.20           FY 2009 Compensation.  For all employees of CT and its Subsidiaries, other than the CEO, COO & CFO, total cash compensation (including base salary and bonus), in the aggregate shall not exceed $5.8 million.  Subject to the limitation in the preceding sentence, compensation for individual employees shall be determined by CT in its sole discretion.  For CT’s CEO, COO & CFO, (i) base salaries shall remain the same as in effect in 2008, and (ii) any cash bonus will be approved based upon performance metrics designed to create alignment with the interests of the Secured Plan Participants and the Unsecured Lenders and must be approved by unanimous consent of a committee comprised of (x) a representative selected by the Secured Plan Participants, (y) the administrative agent of the Senior Unsecured Facility and (z) a representative selected by the board of directors of CT.

8.21           Key Man Clause.  John Klopp and/or Stephen Plavin will continue their current employment with their current respective responsibilities throughout the term of this Agreement; provided that if both John Klopp and Stephen Plavin are no longer so employed, replacement(s) acceptable to Buyer in its sole and absolute discretion shall be appointed within 30 days after their departure.

8.22           Liquidity Covenant.  CT shall maintain, at all times, a minimum Liquidity of $7,000,000 in 2009 and $5,000,000 thereafter.

8.23           Additional Reporting; Budgets.  Without duplicating the reports provided under Section 8.01, Sellers will provide Buyer with (a) certified quarterly financial statements and audited annual financial statements prepared in accordance with GAAP, filed within SEC mandated time frames, (b) within thirty (30) Business Days following the end of each calendar month commencing with April 2009, unaudited monthly financial statements, (c) within ten (10) Business Days following the end of each calendar month, reports on asset level performance for each Transaction Asset, and (d) promptly, following any reasonable request therefor, reports of such other information regarding each Seller’s operations, business affairs and financial condition, or compliance with the terms of this Agreement.  Any reports provided above will include, without limitation, details of Sellers’ cash accounts at each quarter end and a schedule of each Seller’s Excess Cash, Unrestricted Cash and Unfunded Commitments.  Sellers agree to provide Buyer with an annual budget no later than 60 days after the end of each fiscal year.

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8.24           Bankruptcy.  No Seller will (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Seller or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing.

8.25           Consent Rights.  No Seller will amend, modify or otherwise agree to any change in the applicable documents for any Transaction Asset, the Underlying Property or other underlying collateral thereunder or the Mortgaged Property thereunder, without the prior written consent of Buyer.

8.26           Amendments.  No Seller shall agree to any amendment or modification to any Senior Secured Facility nor the Senior Unsecured Facility that relates to the subject matter of Amendment No. 10 or would adversely impair the interests Buyer without the prior written consent of Buyer.

8.27           Lockbox Account.  Sellers acknowledge that Buyer shall, until all MRA Obligations are satisfied and this Agreement terminates pursuant to its terms, maintain control over the Lockbox Account subject to the terms of the Lockbox Account Control Agreement.  At Sellers’ expense, Buyer may require that Sellers establish a new Lockbox Account at a depository institution selected by Buyer in its sole discretion and such new Lockbox Account shall be the “Lockbox Account” for all purposes hereunder.

8.28           Lehman Facility.  No Seller shall agree to any amendment or modification to the Lehman Facility without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed.

8.29           Deposit Accounts.  All deposit accounts (other than (i) the Lockbox Account and (ii) any other deposit accounts specifically relating to the Transaction Assets or any asset or collateral subject to any Senior Secured Facility or the Senior Unsecured Facility) shall be established and maintained with financial institutions that are not Secured Plan Participants nor Unsecured Lenders; provided that the Sellers may maintain the JPMorgan Account so long as (w) no more than $1,000,000 may remain in the JPMorgan Account at any time, (x) no Seller may transfer any funds into the JPMorgan Account from any CT Cash Account, (y) any funds deposited in the JPMorgan Account will be transferred to a CT Cash Account within two (2) Business Days from receipt of such funds in the JPMorgan Account and (z) all funds in the JPMorgan Account will be transferred to a CT Cash Account and the JPMorgan Account will be closed on or before December 31, 2009.  For the avoidance of doubt, the Lockbox Account, any other Collection Account and any other deposit account relating to Transaction Assets may be established and maintained at any financial institution selected by Buyer in its sole discretion.”

-19-

(dd)           Section 9 of the Existing Repurchase Agreement is hereby amended by deleting subsection (e) in its entirety and inserting in lieu thereof the following new subsection (e):

“(e)           (i) any Seller shall fail to comply with the requirements of Section 8.03(a), Section 8.04, Section 8.05, Section 8.06, Sections 8.08 through 8.22, or Sections 8.24 through 8.26 hereof, (ii) or any Seller shall otherwise fail to comply with the requirements of Section 8.03 hereof and such default shall continue unremedied for a period of ten (10) Business Days, or (iii) any Seller shall fail to observe or perform any other covenant or agreement contained in this Agreement or any other Transaction Document and such failure to observe or perform shall continue unremedied for a period of ten (10) Business Days, or”.

(ee)           Section 9 of the Existing Repurchase Agreement is hereby amended by deleting subsection (l) in its entirety and inserting in lieu thereof the following new subsection (l):

“(l)           any event or condition occurs that results in (i) any obligation or liability of any Seller under any note, indenture, loan agreement, guaranty, swap agreement or any other contract to which it is a party (other than MS Indebtedness), whether singly or in the aggregate, in excess of $1,000,000 becoming due prior to its scheduled maturity or that enables or permits (after the expiration of all grace or cure periods) the beneficiaries of, the holder or holders of, or any other party to any such indebtedness or contract, or any trustee or agent on its or their behalf, to cause any such obligation or liability to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or (ii) any monetary default under any note, indenture, loan agreement, guaranty, swap agreement or any other contract, credit facility or other obligation of a Seller (other than MS Indebtedness) if the aggregate amount of such credit facility, contract or other obligation in respect of which such monetary default shall have occurred is at least $1,000,000; provided that this Event of Default shall not apply to secured indebtedness that becomes due as a result of the sale or transfer of the property or assets securing such indebtedness, or”

-20-

(ff)          Section 12.03(b)(ii) of the Existing Repurchase Agreement is hereby amended by deleting the phrase “with respect to Transaction Asset” in its entirety and inserting in lieu thereof “with respect to Transaction Assets and other Collateral”.

(gg)           Section 12.15 of the Existing Repurchase Agreement is hereby amended by deleting the phrase “Aggregate Margin Maintenance Asset Value under Section 3.04(a) hereof” therein in its entirety and inserting in lieu thereof the term “Collateral Value.”

(hh)         The Existing Repurchase Agreement is hereby amended by inserting Exhibit A attached hereto as a new Exhibit G in proper alphabetical order.

SECTION 2.  Agreement.  Each Seller hereby agrees that, as of the date hereof, no additional Transactions shall be permitted under the Repurchase Agreement.

SECTION 3.  Conditions Precedent.  This Amendment shall become effective on the date (the “Amendment Effective Date”) on which (1) all the representations and warranties made by Sellers in this Amendment are true and correct and (2) Buyer shall have received:

(a)           this Amendment, executed and delivered by a duly authorized officer of each of Sellers and Buyer;

(b)           a payment to Buyer on account of the Repurchase Price of all Transaction Assets, such payment to be allocated in Buyer’s sole discretion among the Transaction Assets, in an amount equal to $5,440,498.93;

(c)           evidence satisfactory to Buyer in its sole discretion that the Lockbox Account has been established with a depository bank acceptable to Buyer in its sole discretion;

(d)           the initial Lockbox Account Control Agreement, executed and delivered by a duly authorized officer of the parties thereto;

(e)           the Warrant, executed and delivered by a duly authorized officer of CT;

(f)           legal opinions from counsel to the Sellers dated as of the date hereof addressed to Buyers and its successors and assigns (i) as to the enforceability of the Repurchase Agreement, as amended by this Amendment, and (ii) as to each Seller’s authority to execute, deliver and perform its obligations under the Repurchase Agreement as amended hereby, in each case, in form and substance acceptable to Buyer in its reasonable discretion;

(g)           evidence, satisfactory to the Buyer in its sole discretion, of the payment in full of all obligations owed by any Seller under, and the termination of, the credit facilities identified on Schedule I hereto;

-21-

(h)          a copy of an amendment to the Senior Unsecured Facility, executed and delivered by a duly authorized officer of the parties thereto, in form and substance acceptable to Buyer in its sole discretion; and

(i)           for the account of Buyer, payment and reimbursement for all of Buyer’s corresponding costs and expenses incurred in connection with this Amendment, all prior amendments and modifications to the Repurchase Agreement, any other documents prepared in connection herewith and therewith and the transactions contemplated hereby and thereby.

SECTION 4.  Representations and Warranties.  On and as of the date first above written, each of Sellers hereby represents and warrants to Buyer that (a) it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, (b) after giving effect to this Amendment, no Default or Event of Default under the Repurchase Agreement has occurred and is continuing, and (c) after giving effect to this Amendment, the representations and warranties contained in Section 7 of the Repurchase Agreement are true and correct in all material respects as though made on such date (except for any such representation or warranty that by its terms refers to a specific date other than the date first above written, in which case it shall be true and correct in all material respects as of such other date).

SECTION 5.  General Release.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Seller, for: (i) itself, (ii) any parent or Subsidiary thereof, and (iii) the respective partners, officers, directors, shareholders, successors and assigns of all of the foregoing persons and entities,

(a)           hereby releases and forever discharges Buyer and each of its subsidiaries, affiliates, its past, present and future officers, directors, agents, employees, partners, managers, shareholders, servants, attorneys and representatives, as well as their, successors, assigns, their respective heirs, legal representatives, legatees, predecessors-in-interest, successors and assigns, of and from any and all actions, claims, demands, damages, debts, suits, contracts, agreements, losses, liabilities, indebtedness, causes of action either at law or in equity, obligations of whatever kind or nature, accounts, defenses, and offsets against liabilities and obligations, whether known or unknown, direct or indirect, new or existing, by reason of any matter, cause or thing whatsoever occurring on or prior to the date hereof arising out of or relating to any matter or thing whatever, including without limitation, such claims and defenses as fraud, misrepresentation, breach of duty, mistake, duress, usury, claims pertaining to so-called “lender liability,” and claims pertaining to creditor’s rights, which such party ever had, now has, or might hereafter have against the other, jointly or severally, for or by reason of any matter, act, omission, cause or thing whatsoever occurring, on or prior to the date of this Amendment, that is related to, in whole or in part, directly or indirectly, the Transactions, the Repurchase Agreement, the Transaction Documents and this Amendment; and

-22-

(b)           warrants, represents and acknowledges that it has no defenses to the payment of, nor any right to set off against, all or any of the MRA Obligations set forth in the Transaction Documents, nor any counterclaims or other rights of action against Buyer of any kind whatsoever, including, without limitation, any right to contest any of the following: the enforceability, applicability or validity of any provisions of the Transaction Documents, Buyer’s right to all proceeds of the Transaction Assets, the existence, validity, enforceability, or perfection of any security interest or mortgage in favor of Buyer, the conduct of Buyer in administering the Transaction Documents and any legal fees and expenses incurred by the Buyer under the Repurchase Agreement, the other Transaction Documents or this Amendment.

SECTION 6.  Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with their respective terms; provided, however, that upon the Amendment Effective Date, all references in the Repurchase Agreement to the “Transaction Documents” shall be deemed to include, in any event, this Amendment.  Each reference to Repurchase Agreement in any of the Transaction Documents shall be deemed to be a reference to the Repurchase Agreement as amended hereby.

SECTION 7.  Override Provision.  Notwithstanding any provision in the Repurchase Agreement to the contrary, which are hereby pro tanto superseded and modified or replaced mutatis mutandis to the extent of any inconsistency, the provisions in this Amendment shall apply from and after the date hereof.

SECTION 8.  Counterparts.  This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.

SECTION 9.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[SIGNATURES FOLLOW]

-23-

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

CAPITAL TRUST, INC.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT RE CDO 2004-1 SUB, LLC
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT RE CDO 2005-1 SUB, LLC
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT XLC HOLDING, LLC
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

Signature Page to Amendment No. 10 to Master Repurchase Agreement

MORGAN STANLEY BANK, N.A.
By:	/s/ Cynthia Eckes
	Name: Cynthia Eckes
	Title: Authorized Signatory

Signature Page to Amendment No. 10 to Master Repurchase Agreement

Schedule I

Closeout Facilities

1.           Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, between Capital Trust, as seller, and Goldman Sachs Mortgage Company (“Goldman”), as buyer, as supplemented by that certain Amended and Restated Annex I to Amended and Restated Master Repurchase Agreement, dated as of October 30, 2007.

2.           Master Repurchase Agreement, dated as of October 30, 2007, between Capital Trust, as seller, and Goldman, as buyer, as supplemented by that certain Annex I to Master Repurchase Agreement, dated as of October 30, 2007.

Schedule I

Exhibit A

Exhibit G

Collateral Schedules

JPMorgan

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

25,100,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

25,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

31,523,408.99

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

27,402,996.32

597,004.25

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

35,500,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

13,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

29,024,471.31

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

11,500,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

21,800,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

8,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,435,162.79

964,837.21

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-1

[

***]

23,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

22,571,220.21

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,927,002.75

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

4,689,303.73

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,398,078.96

394,993.29

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

51,384,616.35

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

16,125,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

30,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

54,823,957.29

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

13,448,358.83

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

21,042,320.62

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

15,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,015,297.15

PPP 1st

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-2

[

***]

5,511,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,978,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,042,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

1,116,976.76

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,189,147.00

Bond

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

ISDA liability

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-3

Morgan Stanley

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

16,204,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,963,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,755,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

10,133,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

36,432,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

32,556,639.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

89,057,579.00

1,942,420.40

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

46,966,945.16

3,783,054.34

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

42,637,221.65

4,841,662.74

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

32,492,156.00

2,507,844.08

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

14,444,220.02

5,555,779.98

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

20,700,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

50,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-4

Citigroup

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

14,100,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

22,500,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,770,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

6,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,220,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-5

EX-10.5

    Unassociated Document
    
    
    


  

EX-10.6

Exhibit 10.6

Confidential Treatment Requested by Capital Trust, Inc.

AMENDMENT NO. 1 TO MASTER REPURCHASE AGREEMENT

AMENDMENT NO. 1, dated as of March 16, 2009 (this “Amendment”), to that certain Master Repurchase Agreement, dated as of November 21, 2008 (as amended, restated, supplemented or otherwise modified and in effect prior to the date hereof, the “Existing Repurchase Agreement,” and as amended hereby and as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Repurchase Agreement”), by and among CT BSI FUNDING CORP. (“CT BSI”) and CAPITA L TRUST, INC. (“Capital Trust”), as sellers (collectively, the “Sellers”), JPMORGAN CHASE FUNDING INC., as buyer (“Buyer”) and JPMORGAN CHASE BANK, N.A., as affiliated hedge counterparty (the “Affiliated Hedge Counterparty”).  Capitalized terms used but not otherwise defined herein shall have the meanings specified therefor in the Repurchase Agreement.

RECITALS

WHEREAS, Sellers and Buyer are parties to the Existing Repurchase Agreement;

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of July 29, 2005 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “MS Repurchase Agreement”), by and among Capital Trust, CT RE CDO 2004-1 SUB, LLC, CT RE CDO 2005-1 SUB, LLC and CT XLC HOLDING, LLC, as sellers (in such capacity, collectively, the “MS Sellers”) and MORGAN STANLEY BANK, as buyer (“Morgan Stanley”);

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of October 24, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMCB Repurchase Agreement”; together with the Repurchase Agreement, collectively, the “JPM Repurchase Agreements”), by and among CT BSI and Capital Trust, as sellers (in such capacity, collectively, the “JPMCB Sellers”; together with the Sellers, collectively, the “JPM Sellers”) and JPMORGAN CHASE BANK, N.A., as buyer (“JPMCB”; and together with Buyer, collectively, the “JPM Parties”);

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of July 30, 2007 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Citigroup Repurchase Agreement,” and together with the  JPMorgan Repurchase Agreements and the MS Repurchase Agreement, the “Senior Secured Facilities”), by and among Capital Trust, as seller (together with JPM Sellers and the MS Sellers, the “CT Parties”) and CITIGROUP GLOBAL MARKETS INC. and CITIGROUP FINANCIAL PRODUCTS INC., as buyers (collectively, “Citigroup”, and together with the JPM Parties and Morgan Stanley, the “Secured Plan Participants”);

WHEREAS, Sellers and Buyer have agreed, subject to the terms and conditions hereof, that the Existing Repurchase Agreement shall be amended as set forth in this Amendment.

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, Sellers and Buyer agree as follows:

1

SECTION 1.  Amendments to Master Repurchase Agreement.

(a)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definitions of “Buyer’s Margin Amount”, “EBITDA”, “EBITDA to Fixed Charge Ratio”, “Fixed Charges”, “Interest Expense”, “Leverage”, “Net Assets”, “Net Income”, “Margin Deadline”, “Margin Deficit”, “Margin Deficit Notice”, “Minimum Transfer Amount”, “Senior Recourse Indebtedness”, “Tangible Net Worth”, “Total Indebtedness” and “Total Non-Securitized Indebtedness” in their entirety.

(b)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Income” in its entirety and inserting in lieu thereof the following:

“Income” shall mean, with respect to any Purchased Asset at any time, any Principal Income thereof and all Interest Income thereon.

(c)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Maturity Date” in its entirety and inserting in lieu thereof the following:

“Maturity Date” shall mean March 16, 2010 or such earlier date on which this Agreement shall terminate in accordance with the provisions thereof or hereof or by operation of law; provided, however, that if the applicable conditions set forth in Article 3(m) shall have been satisfied, the Maturity Date shall be extended to the applicable date set forth in Article 3(m) of this Agreement.

(d)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Repurchase Price” in its entirety and inserting in lieu thereof the following:

“Repurchase Price” shall mean, with respect to any Purchased Asset as of any Repurchase Date or any date on which the Repurchase Price is required to be determined hereunder, the price at which such Purchased Asset is to be transferred from Buyer to a Seller; such price will be determined in each case as the sum of the (i) Purchase Price of such Purchased Asset (as increased by any other additional funds advanced in connection with such Purchased Asset); (ii) the accreted and unpaid Price Differential with respect to such Purchased Asset as of the date of such determination; (iii) any other amounts due and owing by any Seller to Buyer and its Affiliates pursuant to the terms of this Agreement as of such date; ( iv) if such Repurchase Date is not a Remittance Date, any Breakage Costs payable in connection with such repurchase; (v) any amounts that would be payable to (a positive amount) a Qualified Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination, if such determination is in connection with any calculation of LTCV; and (vi) any amounts that would be payable to (a positive amount) an Affiliated Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination, if such determination is in connection with any calculation of LTCV (and not in connection with an actual repurchase of a Purchased Asset).  In addition to the forgoing, the Repurchase Price shall be increased by any other additional funds advanced in connection with such Purchased Asset and decreased by (A) the portion of any Principal Payments on such Purchased Asset that is applied pursuant to Article 5 to reduce such Repurchase Price and (B) any other amounts paid to Buyer by a Seller to reduce such Repurchase Price.

(e)           Article 2 of the Existing Repurchase Agreement is hereby amended by appending the following sentence to the definition of “Subsidiary”:

“Notwithstanding the foregoing, Subsidiary shall not include investment funds managed by a Seller or subsidiaries of same or investment funds of which a Seller controls the general partner or managing member thereof or subsidiaries of same (except for those investment funds or subsidiaries of same of which a Seller directly or indirectly owns at least a majority of the securities or other ownership interests therein).”

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(f)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Transaction Documents” in its entirety and inserting in lieu thereof the following:

“Transaction Documents” shall mean, collectively, this Agreement, any applicable Annexes to this Agreement, the Custodial Agreement, the Interim Servicing Agreement, the Depository Agreement, the Warrant, all Hedging Transactions and all Confirmations and assignment documentation executed pursuant to this Agreement in connection with specific Transactions.

(g)           Article 2 of the Existing Repurchase Agreement is hereby amended by inserting the following new definitions in proper alphabetical order:

“Additional Restricted Cash” shall mean, to the extent otherwise constituting Unrestricted Cash, any cash or Cash Equivalent of Capital Trust and its Subsidiaries (i) that is required to be trapped pursuant to the other Senior Secured Facilities or the terms of any other loan agreement, repurchase agreement, or other extension of credit, (ii) that is received in anticipation of a disbursement by Capital Trust or any of its Subsidiaries to a Person other than Capital Trust or any Subsidiary within one (1) Business Day, (iii) that is provided as cash collateral to support letters of credit and bank guarantees, customs and other import duties in the ordinary course of business of Capital Trust or any of its Subsidiaries or (iv) that, if distributed or paid, wou ld result in the insolvency of Capital Trust.

“Amendment No. 1” shall mean that certain Amendment No. 1 to this Agreement, dated as of March 16, 2009, among Sellers and Buyer.

“Amendment No. 1 Effective Date” shall mean the “Amendment Effective Date”, as defined in Section 2 of Amendment No. 1.

“Bonds” shall mean all Purchased Assets designated as “bonds” in Exhibit XV.

“Capital Trust” shall mean Capital Trust, Inc.

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“Cash Equivalents” shall mean (a) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of 90 days or less from the date of acquisition and overnight bank deposits of Buyer or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of Buyer or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least “A” by S&P or “A” by Moody’s, (e) securities with maturities of 90 days or less from the date of acquisition backed by standby letters of credit issued by Buyer or any commercial bank satisfying the requirements of clause (b) of this definition or (f) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (e) of this definition.

“Citigroup Repurchase Agreement” shall have the meaning specified in Amendment No. 1.

“Collateral Value” shall mean, as of any date of determination, in respect of any Purchased Asset, (a) in the case of Bonds, as determined by Buyer in its sole discretion exercised in good faith and (b) in the case of Purchased Assets other than  Bonds, the Initial Value of such Purchased Assets, adjusted by taking into account credit risk (including, without limitation, information relating to the sponsor or tenant for such Purchased Asset or other information relating to the likelihood of payment of such Purchased Asset; any alleged violation of Environmental Laws; any bankruptcy filings, casualty loss, or condemnation affecting or impacting the Underlying Mortgaged Property; any bankruptcy filing or other act of insolvency with respect to any co - -participant or any other Person having an interest in such Purchased Asset or any Underlying Mortgaged Property that is senior to, or pari passu with, the rights of Buyer in such Purchased Asset; any payment of principal and/or interest are more than 60 days past due under any mortgage note affecting any Underlying Mortgaged Property or such Purchased Asset (without giving effect to any waiver by the lender thereunder); any modification of the Underlying Mortgaged Property or to the related loan documents (or any financing senior thereto); any market comparables for any Underlying Mortgaged Property) applicable to such Purchased Asset; but excluding market risk (e.g., interest rate risk) applicable to the Purchased Asset; provided, however, that Buyer may take into account any performance assumptions with respect to such Pu rchased Asset (including, without limitation: the sponsorship thereof; projections as to default probabilities and estimated losses; changes in the cash flow generated by the Underlying Mortgaged Property; the ultimate collectibility of the Purchased Asset if held to maturity; for assets held or to be held by the Custodian, the failure to deliver the Purchased Asset Documents to the Custodian in accordance with the terms of this Agreement and the Custodial Agreement; whether the Purchased Asset has been released from the possession of the Custodian under the Custodial Agreement to a Seller for a period in excess of twenty (20) calendar days without the consent of Buyer; and a breach of any of the representations and warranties regarding the Purchased Asset contained in Article 10(b)(x)(D) or Exhibit VI, in each case in its sole discretion exercised in good faith; and provided further, that the Collateral Value, without giving effect to such increase, shall in no event exceed one hundred percent (100%) of the outstanding principal balance of the related Purchased Asset.

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“CT Cash Account” shall mean one or more deposit accounts established by Capital Trust with Merrill Lynch, Pierce, Fenner & Smith Incorporated or Bank of America, N.A.

“Defaulted Collateral Asset” shall mean a Purchased Asset with respect to which (a) a monetary default has occurred or (b) an acceleration or foreclosure (including, in the case of Senior Mortgage Loans, Mezzanine Loans, B-Notes or Junior Interests, a foreclosure of the Underlying Mortgaged Property) has been declared or commenced, and, in either case, such Transaction has not been returned to performing status within 90 days; provided that Defaulted Collateral Assets shall not include (a) any Bonds, and (b) any Purchased Asset with a Collateral Value or allocated borrowing of zero.

“Excess Cash” shall mean an amount, if any, by which Unrestricted Cash exceeds the sum of (a) $25,000,000 and (b) the aggregate amount of Unfunded Commitments.

“Future Advances” shall mean Capital Trust’s commitment to make future advances on Purchased Assets and assets under other Senior Secured Facilities as specified therefor on Exhibit XV.

“Initial Advance Rate” shall mean, with respect to each Purchased Asset, a rate as specified therefor on Exhibit XV hereto.

“Initial LTCV” shall mean the LTCV, calculated as of the Amendment No. 1 Effective Date.

“Initial Mark” shall mean, with respect to each Purchased Asset, a percentage as specified therefor on Exhibit XV hereto.

“Initial Value” shall mean, with respect to each Purchased Asset, a value equal to the product of (i) the “Face Amount” for such Purchased Asset as specified therefor on Exhibit XV hereto and (ii) the Initial Mark for such Purchased Asset.

“Interest Allocation Percentage” shall mean, initially, 65%, or, if the Maturity Date is extended pursuant to Article 3(m) and beginning on the first day after the original Maturity Date, such other percentage as agreed to in good faith among Sellers and the Secured Plan Participants, in each case, in their commercially reasonable discretion.

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“Interest Income” shall mean, with respect to any Purchased Asset at any time, all interest, dividends or other distributions thereon.

“JPM Indebtedness” shall mean all Indebtedness from time to time owed by Seller to Buyer or any Affiliate of Buyer including, without limitation, under this Agreement, the JPMCB Repurchase Agreement, Hedging Transaction or any repurchase, loan or other agreement between Buyer, or an Affiliate of Buyer, and any of the Sellers.

“JPMorgan Account” shall mean the Sellers’ account number 230-254-632, held with JPMorgan Chase Bank, N.A.

“JPMorgan Repurchase Agreements” shall have the meaning specified therefor in Amendment No. 1.

“Lehman Facility” shall mean that certain Amended and Restated Loan and Security Agreement, dated as of September 10, 2008, between Capital Trust, as borrower, and Lehman Commercial Paper Inc. as lender.

“Liquidity” shall mean, on any date of determination, the sum of (A) the consolidated amount of Unrestricted Cash of Capital Trust and its Subsidiaries on such date, and (B) the incremental amount of borrowings Capital Trust and its Subsidiaries are, as of such date, permitted to borrow pursuant to the terms of existing committed Indebtedness of Capital Trust or its Subsidiaries in effect on such date, as to which all conditions precedent have been satisfied and which borrowings do not require the discretionary consent of the applicable lender, counterparty, credit provider or any other Person.

“LTCV” shall mean, as of any date of determination, the ratio (expressed as a percentage) of the aggregate Repurchase Price for all Purchased Assets to the aggregate Collateral Value of all Purchased Assets.

“Maximum Outstanding Amount” shall mean, for all Transactions related to the JPM Repurchase Agreements, an amount equal to $276,005,779.85; provided that solely for purposes of Article 3(m), the Maximum Outstanding Amount may be adjusted pursuant to Article 5.

“Minimum Release Price” shall mean, for any Purchased Asset, an amount equal to the greater of (a) the lesser of (i) the Initial Value of such Purchased Asset, (ii) the Collateral Value for such Purchased Asset as of the date that Capital Trust notifies Buyer of its intent to sell, dispose, transfer or refinance such Purchased Asset pursuant to a Permitted Disposition, and (iii) 110% of the Repurchase Price of such Purchased Asset and (b) the Repurchase Price.

“Net Proceeds” shall mean, with respect to any Permitted Disposition, or the incurrence or issuance of any Indebtedness permitted by Article 11(n), the aggregate amount of cash received by or on behalf of such Person for its own account in connection with any such transaction, after deducting therefrom only:

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(a)           reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder’s fees and other similar fees, costs and commissions that, in each case, are actually paid at the time of receipt of such cash to a Person that is not a Subsidiary or Affiliate of any of the Sellers or any of their respective Subsidiaries or Affiliates;

(b)           the amount of taxes payable in connection with or as a result of such transaction that, in each case, are actually paid at the time of receipt of such cash to the applicable taxation authority or other Governmental Authority or, so long as such Person is not otherwise indemnified therefor, are reserved for in accordance with GAAP, as in effect at the time of receipt of such cash, based upon such Person’s reasonable estimate of such taxes, and paid to the applicable taxation authority or other Governmental Authority within 90 days after the date of receipt of such cash; and

(c)           in the case of any Permitted Disposition, the outstanding principal amount of, the premium or penalty, if any, on, and any accrued and unpaid interest on, any Indebtedness (other than Indebtedness under or in respect of the Transaction Documents) that is secured by a Lien on the property and assets subject to such Permitted Disposition and is required to be repaid under the terms of such Indebtedness as a result of such Permitted Disposition, in each case, to the extent that the amounts so deducted are actually paid at the time of receipt of such cash to a Person that is not an Affiliate of any of the Sellers or any of their Affiliates;

provided that, any and all amounts so deducted by any such Person pursuant to clauses (a) through (c) of this definition shall be properly attributable to such transaction or to the property or asset that is the subject thereof; provided, further, that if, at the time any of the taxes referred to in clause (b) are actually paid or otherwise satisfied, and the reserve therefor exceeds the amount paid or otherwise satisfied, then the amount of such excess reserve shall constitute “Net Proceeds” on and as of the date of such payment or other satisfaction for all purposes of this Agreement.

“Permitted Disposition” shall mean the sale, transfer, disposition or refinancing of any Purchased Asset by Capital Trust in accordance with Article 11(d); provided that (a) the Net Proceeds from such sale, transfer, disposition or refinancing shall be no less than the Minimum Release Price for such Purchased Asset; (b) 100% of the Net Proceeds from such Permitted Disposition is applied pursuant to Article 5 hereof; (c) any sale, transfer or disposition of Purchased Assets be made to a bona fide third party or, with Buyer’s prior written approval, to an Af filiate of Capital Trust; and (d) no Purchased Asset may be refinanced without the prior written approval of Buyer.

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“Principal Income” shall mean, with respect to any Purchased Asset at any time, any principal thereon and all payments actually received by Buyer on account of Hedging Transactions.

“Secured Plan Facilities Obligations” shall mean the sum of the aggregate amount of all obligations owed by Capital Trust or any Affiliate of Capital Trust under the JPM Repurchase Agreements, the MS Repurchase Agreement and the Citigroup Repurchase Agreement.

“Secured Plan Participants” shall have the meaning specified therefor in the recitals to Amendment No. 1.

“Senior Secured Facilities” shall have the meaning specified therefor in the recitals to Amendment No. 1.

“Senior Unsecured Facility” shall mean that certain Credit Agreement, dated as of March 22, 2007, by and among Capital Trust as borrower, WestLB AG, New York Branch, as administrative agent, and the lenders party thereto, as the same may be amended, restated, supplemented or otherwise modified and in effect from time to time.

“Unfunded Commitments” shall mean, as of any date, an amount equal to the sum of Capital Trust’s unfunded commitments to make Future Advances and meet future capital calls for CT Opportunity Partners I, LP as of such date.

“Unrestricted Cash” shall mean (a) cash and Cash Equivalents that would not appear in the consolidated financial statements of Capital Trust, prepared in accordance with GAAP, as a line item on the balance sheet as “restricted cash” or similar caption minus (b) any Additional Restricted Cash.

“Unsecured Lenders” shall mean the lenders party to the Senior Unsecured Facility.

“Valuation Test Date” shall have the meaning specified in Article 4.

“Valuation Test Failure” shall have the meaning specified in Article 4.

“Valuation Test Period” shall have the meaning specified in Article 4.

“Warrant” shall mean that certain Warrant, dated as of March 16, 2009, made by Capital Trust in favor of JPMorgan Chase Funding, Inc.

(h)           Article 4 of the Existing Repurchase Agreement is hereby amended by deleting Article 4(a) in its entirety and inserting in lieu thereof the following:

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“(a)          On the first Business Day of each month, beginning on September 1, 2009 (each such date, a “Valuation Test Date”), Buyer will determine the Collateral Value of each Purchased Asset.  If on any Valuation Test Date, the LTCV exceeds 1.15 times the Initial LTCV (a “Valuation Test Failure”), Sellers shall, within five (5) Business Days following such Valuation Test Date, make a prepayment in reduction of the Repurchase Price of such Purchased Asset, such that after giving effect to such prepayment, the LTCV, as re-determined by Buyer, shall not exceed 1.15 times the Initial LTCV.  All prepayments i n reduction of such Repurchase Price shall be applied by Buyer in its sole discretion.  If Sellers are not able to cure a Valuation Test Failure within five (5) Business Days after the applicable Valuation Test Date, then Sellers shall cooperate with Buyer to select one or more Purchased Assets to liquidate and will use commercially reasonable efforts, taking into account the rights and interests of Buyer, to expeditiously commence the liquidation process for same.  If the Valuation Test Failure is not cured within 60 days from the initial failure, an Event of Default will occur; provided that if Sellers provide Buyer with a copy of an executed asset sale or refinancing agreement, acceptable to Buyer in its sole discretion, prior to the end of such 60-day period in respect of the selected Purchased Assets, Buyer may, at its option, grant a one-time 15-day extension to cure such Valuation Test Failure (such 60-day period and any 15-day extension, a “Valuation Test Period”).  Notwithstanding the above, in the event that a Purchased Asset becomes a Defaulted Collateral Asset, a Valuation Test will be performed at that time, and the provisions of this Article 4 shall apply.”

(i)           Article 3(m) of the Existing Repurchase Agreement is hereby amended by deleting subsection (a) thereof in its entirety and inserting in lieu thereof the following new subsection (a):

“(m)         (i) Notwithstanding the definition of Maturity Date herein, Sellers may, in their sole discretion by notice to Buyer between 90 and 20 days prior to the originally scheduled Maturity Date, extend the Maturity Date with respect to all of the Transactions until the first (1st) anniversary of the originally scheduled Maturity Date (all of the other terms and conditions of such Transactions remaining the same) provided that the following conditions precedent are satisfied as of the date of the effectiveness of such extension: (1) the aggregate Repurchase Price for all Purchased Assets under the JPM Repurchase Agreements as of the dat e of such extension are less than or equal to the Maximum Outstanding Amount, (2) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (3) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that, if conditions (1) through (3) are met and if any extension request is made during a Valuation Test Period, such extension shall be provisionally granted until the end of such Valuation Test Period, and such extension shall be granted only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

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(ii)           Notwithstanding the foregoing, if the initial Maturity Date shall have been extended pursuant to Article 3(m)(i), Sellers may request, between 90 and 20 days prior to the extended Maturity Date, and subject to the written approval of Buyer in its sole and absolute discretion given no later than ten (10) days prior to the extended Maturity Date (any failure by Buyer to deliver such notice of its approval to an extension to Sellers shall be deemed a denial of Sellers’ request to extend the Maturity Date) provided that in any event, the following conditions precedent are satisfied as of the date of the effectiveness of such second extension: (1) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (2) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that if conditions (1) and (2) or any other conditions then required by Buyer in its sole discretion (including, without limitation, requirements of additional payments, prepayments, revaluations of Collateral Value for any Purchased Asset or delivery of additional documents) are met and if any extension request is made during a Valuation Test Period, such extension may be provisionally granted by Buyer, in its sole and absolute discretion, until the end of such Valuation Test Period, and such extension may be granted by Buyer, in its sole and absolute discretion, only if no Valua tion Test Failure exists as of the end of such Valuation Test Period.

(iii)          Notwithstanding any extension to the Maturity Date as described in this Article 3(m), if the Repurchase Date for a Transaction is extended by agreement of the Buyer and Sellers, Buyer and Sellers shall execute a new Confirmation containing the same pricing terms as the original Confirmation and the extended Repurchase Date for the Transaction.”

(j)           Article 5 of the Existing Repurchase Agreement is hereby amended by deleting the phrase “Articles 5(c) through 5(f) of this Agreement” in Article 5(a) in its entirety and inserting “Articles 5(c) and (d) of this Agreement”.

(k)           Article 5 of the Existing Repurchase Agreement is hereby amended by deleting Articles 5(c) through (f) in their entirety and inserting in lieu thereof the following:

“(c)         Principal Income.  Sellers shall cause (1) all Principal Income in respect of the Purchased Assets and (2) 100% of all Net Proceeds in respect of Permitted Dispositions of Purchased Assets, in each case, to be deposited directly in the Depository Account.  Such Principal Income shall be applied within one (1) Business Day following receipt by Buyer as follows: (i) first, pro rata, (A) to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Assets and (B) solely with respect to any Hedging Transaction with an Affiliated Hedge Counterparty related to such Purchased Asset, to such Affiliated Hedge Counterparty an amount equal to any accrued and unpaid amounts due to such Affiliated Hedge Counterparty under such Hedging Transaction related to such Purchased Asset, (ii) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (iii) third, to make a payment to Buyer on account of the Repurchase Price of the Purchased Assets in respect of which such Principal Income is received, until the Repurchase Price for each such Purchased Asset has been reduced to zero, (iv) fourth, to make a payment to Buyer on account of the Repurchase Price of all other Purchased Assets until the Repurchase Price for such other Purchased Assets h as been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero; (v) fifth, to make a payment to JPMCB on account of the Repurchase Price of all other Purchased Assets related to the JPMCB Repurchase Agreement until the Repurchase Price for such Purchased Assets has been reduced to zero, each such payment to be allocated in JPMCB’s sole discretion; and (vi) sixth, to remit to the applicable Seller the remainder.

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(d)           Interest Income.  Sellers shall cause all Interest Income in respect of the Purchased Assets to be deposited directly in the Depository Account.  Such Interest Income shall be applied monthly by Buyer as follows:

(i) so long as no Event of Default shall have occurred and be continuing, (1) first, pro rata, (A) to Buyer, an amount equal to the Price Differential that has accreted and is outstanding in respect of all the Purchased Assets and (B) to any Affiliated Hedge Counterparty, any amount then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to a Purchased Asset, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a payment to B uyer on account of the Repurchase Price of all Purchased Assets, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to the product of the Interest Allocation Percentage multiplied by the difference between (x) the total Interest Income received by Sellers during such month and (y) the Price Differential otherwise actually paid by Sellers to Buyer during such month, and (4) fourth, to remit to the applicable Seller the remainder; and

(ii) if an Event of Default shall have occurred and be continuing, (1) first, pro rata, (A) to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Assets and (B) to any Affiliated Hedge Counterparty, any amounts then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to such Purchased Asset, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a pay ment to Buyer on account of the Repurchase Price of all Purchased Assets until the Repurchase Price for all Purchased Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero; (4) fourth, to make a payment to JPMCB on account of the Repurchase Price of all other Purchased Assets related to the JPMCB Repurchase Agreement until the Repurchase Price for such Purchased Assets has been reduced to zero, each such payment to be allocated in JPMCB’s sole discretion and (5) fifth, to remit to the applicable Seller the remainder.

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(e)           Control Rights.  So long as no Event of Default shall have occurred and be continuing, and subject to the terms of the Transaction Documents and Article 11(g) hereof, each Seller shall retain the right to take all actions under the Transaction Documents and to retain all contact with the relevant Mortgagor.

(f)           Excess Cash.  At the end of each calendar quarter, Capital Trust shall make a payment to Buyer on account of the Repurchase Price of all Purchased Assets until the Repurchase Price for all Purchased Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to (i) Excess Cash as of the last day of such calendar quarter, multiplied by (ii) the ratio of the aggregate outstanding Repurchase Price for all Purchased Assets to the aggregate Secured Plan Facilities Obligations as of such date.

(g)           Future Advances.  Notwithstanding anything contained herein or in any other Transaction Document to the contrary, as of the Amendment No. 1 Effective Date, Buyer shall have no obligation to make any Future Advances and Capital Trust will fund 100% of all Future Advances.  Solely for purposes of Article 3(m) hereof, after each funding of Future Advances in respect of Purchased Assets by Capital Trust, the Maximum Outstanding Amount will be increased by an amount equal to the product of: (a) the amount of such Future Advance actually funded by Capital Trust, (b) the Initial Mark for the applicable Purchased Asset, (c) th e Initial Advance Rate for such Purchased Asset and (d) 50%.”

(l)           Article 3(b)(ii)(K) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“(K)           Buyer shall have determined, in its sole and absolute discretion, that no Valuation Test Failure shall exist, either immediately prior to or after giving effect to the requested Transaction, calculated as of the date of such Transaction;”

(m)           Article 3(b)(ii) of the Existing Repurchase Agreement is hereby amended by deleting the word “and” at the end of subparagraph (T), replacing the period at the end of subparagraph (U) with the words “; and” and inserting the following as a new Article (V):

“(V)           Buyer shall have determined the Initial Advance Rate, Initial Mark, Initial Value, Purchase Price and Pricing Rate and any other information listed in Exhibit XV hereto with respect to such Eligible Asset and shall have amended Exhibit XV to reflect such determinations.”

(n)           Article 3(f) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

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“(f)           Each Seller shall be entitled to terminate a Transaction on demand and repurchase the Purchased Asset subject to a Transaction on any Business Day prior to the Repurchase Date (an “Early Repurchase Date”); provided, however, that no Default or Event of Default shall exist (other than a Default or Event of Default that (a) relates solely to the Purchased Assets to be released and (b) will no longer exist after giving effect to such release) and either (x) Seller shall have paid all sums then due under the Transaction relating thereto (including any sums rel ated to Hedging Transactions with respect to such Purchased Asset) or (y) Buyer shall have applied 100% of the Net Proceeds from a Permitted Disposition pursuant to Article 5 hereof, then upon (i) the relevant Seller’s payment in full of the Repurchase Price or the application of such Net Proceeds pursuant to Article 5 hereof, and (ii) receipt by Buyer of a written request from such Seller for the release of such Purchased Asset, Buyer shall as soon as practicable release (and Buyer shall reasonably cooperate with such Seller to facilitate reasonable escrow arrangements to facilitate a simultaneous release of) the related Purchased Asset Documents and the related Purchased Asset and any liens related thereto to such Seller or, to the extent necessary to facilitate future savings of mortgage tax in states that impose mortgage taxes, assign such liens as such Seller shall requ est, provided that any such assignments shall be without expense, recourse, representation or warranty of any kind except that Buyer shall represent and warrant that such Purchased Asset has not been previously assigned by Buyer.  At Sellers’ expense, Buyer shall with reasonable promptness, after a written request from Seller, execute any document or instrument necessary to effectuate such release or assignment.

(o)           Article 7(c) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:  “[Reserved]”.

(p)           Article 10(b)(viii) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“No Valuation Test Failure; No Defaults.  No Valuation Test Failure exists and no Default or Event of Default has occurred or exists under or with respect to the Transaction Documents.”

(q)           Article 11(d) of the Existing Repurchase Agreement is hereby amended by appending the following proviso at the end thereof:

“; provided, however, that a Seller may request from time to time, subject to Buyer’s approval in Buyer’s sole determination, to sell participation interests in its interests in the Purchased Assets in connection with a Permitted Disposition, the sale of which participation interests shall be arm’s length transactions and subject to such terms and conditions as Buyer in its sole discretion shall require; provided further, that Buyer (i) retains an interest in the tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition, subject to the terms of this Agreement or (ii) shall maintain a security interest in such tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition; and provided further, that such Seller complies in all respects with the Purchased Asset Document delivery requirements contained in this Agreement and the Custodial Agreement;”

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(r)           Article 11(g) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“(g)         amend, modify or otherwise agree to any change in the applicable documents for any Purchased Asset, the Underlying Mortgaged Property or other underlying collateral thereunder, without the prior written consent of Buyer other than in accordance with Article 28.”

(s)           Article 11 of the Existing Repurchase Agreement is hereby amended by deleting Articles 11(l) through (p) in their entirety and inserting in lieu thereof the following new Articles 11(l) through (t):

“(l)           No Seller shall make any payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or partnership interest of any Seller, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of any Seller, either directly or indirectly, whether in cash or property or in obligations of any Seller or any of Subsidiary of a Seller, except to the minimum extent required for a Seller to maintain its status as a real estate investment trust and, to the extent permitted, such distribution shall be made in equity in lieu of cash; provided, that any Seller may make distributions to Capital Trust or any other wholly-owned Subsidiary of Capital Trust;

(m)           without the prior written consent of Buyer, no Seller shall, nor permit any Subsidiary to, originate, acquire or invest in any new stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person except to (i) make co-investments in future funds of which Capital Trust (or its Affiliates) is the sponsor or manager, and (ii) make protective investments to defend existing Purchased Assets or assets subject to another Senior Secured Facility or that are pledged as collateral security for the Senior Unsecured Facility.  With respect to co-investments, (i) no investments will be permitted in the first six (6) months following the Amendment No. 1 Effective Date, (ii) the projected ba se management fees generated by the proposed future fund over the first 36 months must equal or exceed the co-investment commitment, and (iii) the total amount of co-investment capital for all such proposed future funds may not exceed $10,000,000 without the prior written approval of Buyer.  With respect to protective investments made in respect of Purchased Assets or assets subject to another Senior Secured Facility, the amount of each investment may not exceed $5,000,000 per Purchased Asset, transaction or asset.  With respect to protective investments made in respect of assets pledged as collateral security for the Senior Unsecured Facility, the aggregate amount of such investments may not exceed $1,000,000;

14

(n)           no Seller shall, nor permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness other than the Indebtedness already incurred as of the Amendment No. 1 Effective Date; provided, that additional Indebtedness may be incurred by Sellers or any of their Subsidiaries and so long as the following conditions are satisfied: (i) to the extent that the Indebtedness is incurred in connection with a Permitted Disposition, the Net Proceeds of such Permitted Disposition are applied in accordance to Article 5, (ii) to the extent that such new Indebtedness is unsecured (and subordinate to all obligations owed by the applicable Sel ler under any Secured Plan Facility or the Senior Unsecured Facility) or incurred through the pledge of unencumbered assets, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account and (iii) to the extent that such new Indebtedness is recourse Indebtedness, only to the extent that it replaces existing recourse Indebtedness or is subordinate to all obligations owed to Buyer (and to the extent such Indebtedness is not subject to clause (i) above, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account);

(o)           permit, for all employees of Capital Trust and its Subsidiaries, other than the CEO, COO & CFO, total cash compensation (including base salary and bonus), in the aggregate to exceed $5.8 million.  Subject to the limitation in the preceding sentence, compensation for individual employees shall be determined by Capital Trust in its sole discretion.  For Capital Trust’s CEO, COO & CFO, (i) base salaries shall remain the same as in effect in 2008, and (ii) any cash bonus will be approved based upon performance metrics designed to create alignment with the interests of the Secured Plan Participants and the Unsecured Lenders and must be approved by unanimous consent of a committee comprised of (x) a representative selected by the Secured Plan Participants, (y) the administrative agent of the Senior Unsecured Facility and (z) a representative selected by the board of directors of Capital Trust;

(p)           permit John Klopp and Stephen Plavin to discontinue their current employment with their current respective responsibilities throughout the term of this Agreement; provided that if both John Klopp and Stephen Plavin are no longer so employed, replacement(s) acceptable to Buyer in its sole and absolute discretion shall be appointed within 30 days after their departure;

(q)           permit the Liquidity of Capital Trust, at all times, to be less than $7,000,000 in 2009 or less than $5,000,000 thereafter;

(r)           (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Seller or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effectin g any of the foregoing;

15

(s)           agree to (i) any amendment or modification to any Senior Secured Facility or the Senior Unsecured Facility that relates to the subject matter of Amendment No. 1 or would materially and adversely impair the interests of the Buyer without the prior written consent of Buyer or (ii) any proposed waiver to any Senior Secured Facility or the Senior Unsecured Facility without providing prior written notice to Buyer;

(t)           agree to any amendment or modification to the Lehman Facility without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed; and

(u)           establish and/or maintain any deposit account (other than any deposit accounts specifically relating to the Purchased Assets or any asset or collateral subject to any Senior Secured Facility or the Senior Unsecured Facility) with financial institutions that are Secured Plan Participants or Unsecured Lenders; provided that the Sellers may maintain the JPMorgan Account so long as (i) no more than $1,000,000 may remain in the JPMorgan Account at any time, (ii) no Seller may transfer any funds into the JPMorgan Account from any CT Cash Account, (iii) any funds deposited in the JPMorgan Account will be transferred to a CT Cash Account within two (2) Business Days from receipt of such funds in the JPMorgan Account and (iv) all funds in the JPMorgan Account will be transfe rred to a CT Cash Account and the JPMorgan Account will be closed on or before December 31, 2009.  For the avoidance of doubt, the Depository Account and Collection Account and any other deposit account relating to Purchased Assets may be established and maintained at any financial institution selected by Buyer in its sole discretion.”

(t)           Article 11 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety the final paragraph thereto and inserting in lieu thereof the following:

“Compliance with covenants (m), (o) and (q) this Article 11 must be evidenced by financial statements and by a compliance certificate furnished together therewith as further provided in Article 12(j)(ii) below, and compliance with all such covenants are subject to verification by Buyer.  All of the financial tests and covenants in this Agreement will be measured based on the consolidated position of Capital Trust, Inc. and its Subsidiaries.”

(u)           Article 12(j) of the Existing Repurchase Agreement is hereby amended by deleting the word “and” at the end of subparagraph (iii), replacing the period at the end of subparagraph (iv) with the words “; and”, renumbering the existing Article 12(j)(v) as Article 12(j)(vi) and inserting the following as a new Article 12(j)(v):

16

“(v)         Without duplicating the reports provided under Articles 12(j)(i) through (iv), (A) certified quarterly financial statements and audited annual financial statements prepared in accordance with GAAP filed within SEC mandated time frames, (B) within thirty (30) Business Days following the end of each calendar month commencing with April 2009, unaudited monthly financial statements, (C) within ten (10) Business Days following the end of each calendar month, reports on asset level performance for each Purchased Asset, and (D) promptly, following any reasonable request therefor, reports of such other i nformation regarding each Seller’s operations, business affairs and financial condition, or compliance with the terms of this Agreement.  Any reports provided above will include, without limitation, details of Sellers’ cash accounts at each quarter end and a schedule of each Seller’s Excess Cash, Unrestricted Cash and Unfunded Commitments.  Sellers agree to provide Buyer with an annual budget no later than 60 days after the end of each fiscal year.”

(v)           Article 12(t) of the Existing Repurchase Agreement is hereby amended by (i) deleting the phrase “margin call in excess of $7,500,000 that is delivered to it under any other repurchase agreement” and replacing it with the phrase “Valuation Test Failure under any other Senior Secured Facility” and (ii) deleting the phrase “knowledge of such margin call” and replacing it with the phrase “knowledge of such Valuation Test Failure”.

(w)           Article 12 of the Existing Repurchase Agreement is hereby amended by inserting the following as a new Article 12(u) and (v):

“(u)         Seller shall cure any Valuation Test Failure in accordance with Article 4 hereof.

(v)           Sellers acknowledge that Buyer shall, until all Repurchase Obligations are satisfied and this Agreement terminates pursuant to its terms, maintain control over the Depository Account subject to the terms of the Depository Agreement.  At Sellers’ expense, Buyer may require that Sellers establish a new Depository Account at a depository institution selected by Buyer in its sole discretion and such new Depository Account shall be the “Depository Account” for all purposes hereunder.”

(x)           Article 13 of the Existing Repurchase Agreement is hereby amended by deleting Article 13(a)(iii) in its entirety and inserting in lieu thereof the following new subsection (iii):

“any Seller shall fail to cure any Valuation Test Failure in accordance with Article 4 of this Agreement;”

(y)           Article 13(a) of the Existing Repurchase Agreement is hereby amended by deleting subsection (ix) and (x) in their entirety and inserting in lieu thereof the following new subsections:

17

“(ix)         any event or condition occurs that results in (i) any obligation or liability of any Seller under any note, indenture, loan agreement, guaranty, swap agreement or any other contract to which it is a party (other than JPM Indebtedness), whether singly or in the aggregate, in excess of $1,000,000 becoming due prior to its scheduled maturity or that enables or permits (after the expiration of all grace or cure periods) the beneficiaries of, the holder or holders of, or any other party to any such indebtedness or contract, or any trustee or agent on its or their behalf, to cause any such obligation or liability to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or (ii) any monetary default under any not e, indenture, loan agreement, guaranty, swap agreement or any other contract, credit facility or other obligation of a Seller (other than JPM Indebtedness) if the aggregate amount of such credit facility, contract or other obligation in respect of which such monetary default shall have occurred is at least $1,000,000; provided that this Event of Default shall not apply to secured indebtedness that becomes due as a result of the sale or transfer of the property or assets securing such indebtedness;

(x)           any Seller shall be in default under any JPM Indebtedness of such Seller to Buyer or any of its present or future Affiliates, which default (1) involves the failure to pay a matured obligation, or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary with respect to such Indebtedness;”

(z)           The Existing Repurchase Agreement is hereby amended by inserting Exhibit A attached hereto as a new Exhibit XV in proper alphabetical order.

SECTION 2.Other Agreements.

(a)           From and after the Amendment Effective Date (as defined below), JPMorgan Chase Bank, N.A. will be deemed to be a party to the Existing Repurchase Agreement in its capacity as the Affiliated Hedge Counterparty.  In its capacity as the Affiliated Hedge Counterparty, JPMorgan Chase Bank, N.A. shall have all the rights, powers and obligations of an Affiliated Hedge Counterparty under the Existing Repurchase Agreement as if it had executed the Existing Repurchase Agreement.  All references to the Affiliated Hedge Counterparty in the Existing Repurchase Agreement and the other Transaction Documents shall be deemed to be references to JPMorgan Chase Bank, N.A. in its capacity as the Affiliated Hedge Counterparty.

(b)           The Affiliated Hedge Counterparty acknowledges that it has received a copy of the Existing Repurchase Agreement and each other Transaction Document.

(c)           All notices and other communications provided for in the Existing Repurchase Agreement and each other Transaction Document shall be delivered to it at its address set forth below its signature to this Amendment.  All such notices and other communications shall be delivered in the manner and be effective as described in Article 16 of the Existing Repurchase Agreement.

18

SECTION 3.  Conditions Precedent.  This Amendment shall become effective on the date (the “Amendment Effective Date”) on which (1) all the representations and warranties made by Sellers in this Amendment are true and correct and (2) Buyer shall have received:

(a)           this Amendment, executed and delivered by a duly authorized officer of each of Sellers and Buyer;

(b)           payment of the Upfront Paydown in accordance with that certain Amendment No.1 to the JPMCB Repurchase Agreements;

(c)           the Warrant, executed and delivered by a duly authorized officer of Capital Trust;

(d)           legal opinions from counsel to the Sellers dated as of the date hereof addressed to Buyer and its successors and assigns (i) as to the enforceability of the Repurchase Agreement, as amended by this Amendment, and (ii) as to each Seller’s authority to execute, deliver and perform its obligations under the Repurchase Agreement as amended hereby, in each case, in form and substance acceptable to Buyer in its reasonable discretion;

(e)           evidence, satisfactory to the Buyer in its sole discretion, of the payment in full of all obligations owed by any Seller under, and the termination of, the credit facilities identified on Schedule I hereto;

(f)           a copy of an amendment to the Senior Unsecured Facility, executed and delivered by a duly authorized officer of the parties thereto, in form and substance acceptable to Buyer in its sole discretion; and

(g)           for the account of Buyer, payment and reimbursement for all of Buyer’s corresponding costs and expenses incurred in connection with this Amendment, all prior amendments and modifications to the Repurchase Agreement, any other documents prepared in connection herewith and therewith and the transactions contemplated hereby and thereby.

SECTION 4.  Representations and Warranties.  On and as of the date first above written, each of Sellers hereby represents and warrants to Buyer that (a) it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, (b) after giving effect to this Amendment, no Default or Event of Default under the Repurchase Agreement has occurred and is continuing, and (c) after giving effect to this Amendment, the representations and warranties contained in Article 10 of the Repurchase Agreement are true and correct in all material respects as though made on such date (except for any such representation or warranty that by its terms refers to a s pecific date other than the date first above written, in which case it shall be true and correct in all material respects as of such other date).

SECTION 5.  General Release.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Seller, for: (i) itself, (ii) any parent or Subsidiary thereof, and (iii) the respective partners, officers, directors, shareholders, successors and assigns of all of the foregoing persons and entities,

19

(a)           hereby releases and forever discharges Buyer and each of its subsidiaries, affiliates, its past, present and future officers, directors, agents, employees, partners, managers, shareholders, servants, attorneys and representatives, as well as their, successors, assigns, their respective heirs, legal representatives, legatees, predecessors-in-interest, successors and assigns, of and from any and all actions, claims, demands, damages, debts, suits, contracts, agreements, losses, liabilities, indebtedness, causes of action either at law or in equity, obligations of whatever kind or nature, accounts, defenses, and offsets against liabilities and obligations, whether known or unknown, direct or indirect, new or existing, by reason of any matter, cause or thing whatsoever occurring on or prior to the date hereof arising out of or relating to any matter or thing whatever, including without limitation, such claims and defenses as fraud, misrepresentation, breach of duty, mistake, duress, usury, claims pertaining to so-called “lender liability,” and claims pertaining to creditor’s rights, which such party ever had, now has, or might hereafter have against the other, jointly or severally, for or by reason of any matter, act, omission, cause or thing whatsoever occurring, on or prior to the date of this Amendment, that is related to, in whole or in part, directly or indirectly, the Transactions, the Repurchase Agreement, the Transaction Documents and this Amendment; and

(b)           warrants, represents and acknowledges that it has no defenses to the payment of, nor any right to set off against, all or any of the amounts due and owing under the Transaction Documents, nor any counterclaims or other rights of action against Buyer of any kind whatsoever, including, without limitation, any right to contest any of the following: the enforceability, applicability or validity of any provisions of the Transaction Documents, Buyer’s right to all proceeds of the Purchased Assets, the existence, validity, enforceability, or perfection of any security interest or mortgage in favor of Buyer, the conduct of Buyer in administering the Transaction Documents and any legal fees and expenses incurred by the Buyer under the Repurchase Agreement, the other Tr ansaction Documents or this Amendment.

SECTION 6.  Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with their respective terms; provided, however, that upon the Amendment Effective Date, all references in the Repurchase Agreement to the “Transaction Documents” shall be deemed to include, in any event, this Amendment.  Each reference to Repurchase Agreement in any of the Transaction Documents shall be deemed to be a reference to the Repurchase Agreemen t as amended hereby.

SECTION 7.  Override Provision.  Notwithstanding any provision in the Repurchase Agreement to the contrary, which are hereby pro tanto superseded and modified or replaced mutatis mutandis to the extent of any inconsistency, the provisions in this Amendment shall apply from and after the date hereof.

20

SECTION 8.  Counterparts.  This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.

SECTION 9.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[SIGNATURES FOLLOW]

21

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

CAPITAL TRUST, INC.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT BSI FUNDING CORP.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

Signature Page to Amendment No. 1 to JPMCF Master Repurchase Agreement

JPMORGAN CHASE FUNDING INC., as Buyer
By:	/s/ Gerald M. McCrink
	Name: Gerald M. McCrink
	Title: Authorized Signer

JPMORGAN CHASE BANK, N.A., as Affiliated Hedge Counterparty
By:	/s/ Kunal K. Singh
	Name: Kunal K. Singh
	Title: Vice President
Address for notices: JPMORGAN CHASE BANK, N.A. 4 New York Plaza, 22nd Floor New York, New York 10004 Attention:  Ms. Nancy S. Alto Telephone:  (212) 623-7109 Telecopy:  (212) 623-7714

Signature Page to Amendment No. 1 to JPMCF Master Repurchase Agreement

Schedule I

Closeout Facilities

1.           Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, between Capital Trust, as seller, and Goldman Sachs Mortgage Company (“Goldman”), as buyer, as supplemented by that certain Amended and Restated Annex I to Amended and Restated Master Repurchase Agreement, dated as of October 30, 2007.

2.           Master Repurchase Agreement, dated as of October 30, 2007, between Capital Trust, as seller, and Goldman, as buyer, as supplemented by that certain Annex I to Master Repurchase Agreement, dated as of October 30, 2007.

Schedule I

Exhibit A

Exhibit XV

Collateral Schedules

JPMorgan

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

25,100,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

25,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

31,523,408.99

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

27,402,996.32

597,004.25

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

35,500,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

13,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

29,024,471.31

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

11,500,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

21,800,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-1

[

***]

8,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,435,162.79

964,837.21

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

23,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

22,571,220.21

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,927,002.75

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

4,689,303.73

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,398,078.96

394,993.29

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

51,384,616.35

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

16,125,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

30,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

54,823,957.29

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

13,448,358.83

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

21,042,320.62

Mezzanine

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-2

[

***]

15,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,015,297.15

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

5,511,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,978,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,042,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

1,116,976.76

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,189,147.00

Bond

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

ISDA liability

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-3

Morgan Stanley

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

16,204,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,963,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,755,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

10,133,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

36,432,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

32,556,639.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

89,057,579.00

1,942,420.40

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

46,966,945.16

3,783,054.34

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

42,637,221.65

4,841,662.74

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

32,492,156.00

2,507,844.08

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

14,444,220.02

5,555,779.98

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

20,700,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

50,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-4

Citigroup

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

14,100,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

22,500,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,770,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

6,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,220,000.00

Mezzanine

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Total/weighted average

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[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-5

EX-10.7

Exhibit 10.7

Confidential Treatment Requested by Capital Trust, Inc.

AMENDMENT NO. 3 TO MASTER REPURCHASE AGREEMENT

AMENDMENT NO. 3 TO MASTER REPURCHASE AGREEMENT, dated as of March 16, 2009 (this “Amendment”), by and between CAPITAL TRUST, INC., a Maryland corporation (“Seller”) and CITIGROUP GLOBAL MARKETS, INC., a Delaware corporation (“Securities Buyer”), and CITIGROUP FINANCIAL PRODUCTS INC., a Delaware corporation (“Loan Buyer”; each of Loan Buyer and Securities Buyer, a “Buyer” and collectively, the “Buyers”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement (as hereinafter defined).

RECITALS

WHEREAS, Seller and the Buyers are parties to that certain Master Repurchase Agreement dated as of July 30, 2007, which Master Repurchase Agreement was amended by that certain Amendment No. 1 to Master Repurchase Agreement dated as of June 26, 2008, and that  certain Amendment No. 2 to Master Repurchase Agreement dated as of July 24, 2008 (as so amended, the “Existing Repurchase Agreement,” and as amended hereby and as further amended, restated, supplemented or otherwise modified from time to time, the “Repurchase Agreement”);

WHEREAS, Seller is party to that certain Master Repurchase Agreement, dated as of July 29, 2005 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Morgan Stanley Repurchase Agreement”), by and among Seller, CT RE CDO 2004-1 SUB, LLC, CT RE CDO 2005-1 SUB, LLC and CT XLC HOLDINGS, LLC, as sellers (collectively, the “Morgan Stanley Sellers”) and MORGAN STANLEY BANK, N.A., as buyer (“Morgan Stanley”);

WHEREAS, Seller is party to that certain Master Repurchase Agreement, dated as of October 24, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMorgan-A Repurchase Agreement”), by and among CT BSI FUNDING CORP. (“CT BSI”) and Seller, as sellers (in such capacity, collectively, the “JPM-A Sellers”) and JPMORGAN CHASE BANK, N.A., as buyer (“JPMorgan”);

WHEREAS, Seller is party to that certain Master Repurchase Agreement, dated as of November 21, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMorgan-B Repurchase Agreement”; together with the JPMorgan-A Repurchase Agreement, collectively, the “JPMorgan Repurchase Agreements,” and together with the Repurchase Agreement, the Morgan Stanley Repurchase Agreement, the “Senior Secured Facilities”), by and among CT BSI and Seller, as sellers (in such capacity, collectively, the “JPM-B Sellers”; together with the JPM-A Sellers, collectively, the “JPM Sellers”; and together with Seller and the Morgan Stanley Sellers, the “CT Parties”) and JPMORGAN CHASE FUNDING INC., as buyer (“JPMorgan Funding”; and together with JPMorgan, collectively, the “JPM Parties,” and together with the Buyers and Morgan Stanley, the “Secured Plan Participants”); and

WHEREAS, Seller and the Buyers wish to amend the Existing Repurchase Agreement as more particularly set forth herein.

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and the Buyers hereby agree as follows:

SECTION 1.  Amendments.

(a)           The following definitions are hereby added to Section 2 of the Existing Repurchase Agreement in the appropriate alphabetical order:

“Additional Senior Unsecured Payment Amount” shall mean an amount, calculated on a quarterly basis, equal to (x) the total amount of cash paid by Seller or its Affiliates to the Senior Unsecured Facility during the immediately preceding calendar quarter (including interest and amortization payments), less (y) the Baseline Senior Unsecured Payment Amount.

 “Additional Restricted Cash” shall mean, to the extent otherwise constituting Unrestricted Cash, any cash or Cash Equivalent of Seller and its Subsidiaries (i) that is required to be trapped pursuant to the other Senior Secured Facilities or the terms of any other loan agreement, repurchase agreement, or other extension of credit, (ii) that is received in anticipation of a disbursement by Seller or any of its Subsidiaries to a Person other than Seller or any Subsidiary within one (1) Business Day, (iii) that is provided as cash collateral to support letters of credit and bank guarantees, customs and other import duties in the ordinary course of business of Seller or any of its Subsidiaries or (iv) that, if distributed or paid, would result in the insolvency of Seller.

“Amendment No. 3” shall mean that certain Amendment No. 3 to this Agreement, dated as of March 16, 2009, among Seller and the Buyers.

“Amendment No. 3  Effective Date” shall mean the “Amendment Effective Date”, as defined in Section 2 of Amendment No. 3.

“Baseline Senior Unsecured Payment Amount” shall mean an amount, calculated on a quarterly basis, equal to the product of (x) $100,000,000, multiplied by (y) Senior Unsecured Facility LIBOR, plus 175 basis points (1.75%).

“Cash Equivalents” shall mean (a) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of 90 days or less from the date of acquisition and overnight bank deposits of Buyer or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of Buyer or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) securities with maturities of 90 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least “A” by S&P or “A” by Moody’s, (e) securities with maturities of 90 days or less from the date of acquisition backed by standby letters of credit issued by Buyer or any commercial bank satisfying the requirements of clause (b) of this definition or (f) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (e) of this definition.

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“Citigroup’s Proportionate Share” shall mean, as of any date, a fraction the numerator of which is the outstanding Repurchase Price of all Purchased Loans, and the denominator of which is the Secured Plan Facilities Obligations.

 “Collateral Value” shall mean, as of any date of determination, in respect of any Purchased Loan, the Initial Value of such Purchased Loan, adjusted by taking into account credit risk (including, without limitation, information relating to the sponsor or tenant for such Purchased Loan or other information relating to the likelihood of payment of such Purchased Loan; any alleged violation of Environmental Laws; any bankruptcy filings, casualty loss, or condemnation affecting or impacting the applicable Underlying Mortgaged Property; any bankruptcy filing or other act of insolvency with respect to any co-participant or any other Person having an interest in such Purchased Loan or any related Underlying Mortgaged Property that is senior to, or pari passu with, the rights of Loan Buyer in such Purchased Loan; any payment of principal and/or interest are more than 60 days past due under any mortgage note affecting the Underlying Mortgaged Property or Underlying Mortgaged Properties or such Purchased Loan (without giving effect to any waiver by the lender thereunder); any modification of the Underlying Mortgaged Property or to the related loan documents (or any financing senior thereto); any market comparables for the Underlying Mortgaged Property or Underlying Mortgaged Properties) applicable to such Purchased Loan; but excluding market risk (e.g., interest rate risk) applicable to the Purchased Loan ; provided, however, that Loan Buyer may take into account any performance assumptions with respect to such Purchased Loan (including, without limitation: the sponsorship thereof; projections as to default probabilities and estimated losses; changes in the cash flow generated by the Underlying Mortgaged Property; the ultimate collectibility of the Purchased Loan if held to maturity; for assets held or to be held by the Custodian, the failure to deliver the Purchased Loan Documents to the Custodian in accordance with the terms of this Agreement and the Custodial Agreement; whether the Purchased Loan has been released from the possession of the Custodian under the Custodial Agreement to Seller for a period in excess of twenty (20) calendar days without the consent of Loan Buyer; and a breach of any of the representations and warranties regarding the Purchased Loan contained in Section 10(b)(vi)), in each case in its sole discretion exercised in good faith; and provided further, that the Collateral Value, without giving effect to such increase, shall in no event exceed one hundred percent (100%) of the outstanding principal balance of the related Purchased Loan.

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 “CT Cash Account” shall mean one or more deposit accounts established by Seller with Merrill Lynch, Pierce, Fenner & Smith Incorporated or Bank of America, N.A.

“Defaulted Purchased Loan” shall mean a Purchased Loan with respect to which (a) a monetary default has occurred or (b) an acceleration or foreclosure (including, in the case of Mezzanine Loans or B-Notes, a foreclosure of the Underlying Mortgaged Property) has been declared or commenced, and, in either case, such Purchased Loan has not been returned to performing status within 90 days; provided that Defaulted Purchased Loans shall not include any Purchased Loan with a Collateral Value or Repurchase Price of zero.

“Depository Agreement” shall mean that certain Depository Agreement, dated as of July 30, 2007, by and between the Buyers, Seller, Depository Bank and Midland Loan Services, Inc.

 “Early Repurchase” shall have the meaning specified in Section 3(d) of this Agreement.

“Excess Cash” shall mean an amount, if any, by which Unrestricted Cash exceeds the sum of (a) $25,000,000 and (b) the aggregate amount of Seller’s Unfunded Commitments.

“Future Advances” shall mean Seller’s commitment to make future advances on assets under other Senior Secured Facilities, as detailed in Exhibit IX.

“Initial LTCV” shall mean the LTCV, calculated as of the Amendment No. 3 Effective Date.

“Initial Mark” shall mean, with respect to each Purchased Loan, a percentage as specified therefor on Exhibit IX hereto.

“Initial Value” shall mean, with respect to each Purchased Loan, a value equal to the product of (i) the “Face Amount” for such Purchased Loan as specified therefor on Exhibit G hereto and (ii) the Initial Mark for such Purchased Loan.

“Interest Allocation Percentage” shall mean, initially, 65%, or, if the Repurchase Date is extended pursuant to Section 3(e) and beginning on the first day after the original Repurchase Date, such other percentage as agreed to in good faith among Seller and the Secured Plan Participants, in each case, in their commercially reasonable discretion.

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“Interest Income” shall mean, with respect to any Purchased Loan, at any time, all interest, dividends or other distributions thereon.

“JPMorgan Account” shall mean the Seller’s account held with JP Morgan Chase Bank, N.A.

 “JPMorgan Repurchase Agreements” shall have the meaning specified therefor in Amendment No. 3.

“Lehman Facility” shall mean that certain Amended and Restated Loan and Security Agreement, dated as of September 10, 2008, between Seller, as borrower, and Lehman Commercial Paper Inc. as lender.

“Liquidity” shall mean, on any date of determination, the sum of (A) the consolidated amount of Unrestricted Cash of Seller and its Subsidiaries on such date, and (B) the incremental amount of borrowings Seller and its Subsidiaries are, as of such date, permitted to borrow pursuant to the terms of existing committed Indebtedness of Seller or its Subsidiaries in effect on such date, as to which all conditions precedent have been satisfied and which borrowings do not require the discretionary consent of the applicable lender, counterparty, credit provider or any other Person.

 “LTCV” shall mean, as of any date of determination, the ratio (expressed as a percentage) of the aggregate Repurchase Price of all Purchased Loans to the aggregate Collateral Value of all Purchased Loans.

“Maximum Outstanding Amount” shall mean, for all Transactions, an amount equal to $50,893,935.84.

“Minimum Release Price” shall mean, for any Purchased Loan, an amount equal to the greater of (a) the lesser of (i) the Initial Value of such Purchased Loan, (ii) the Collateral Value for such Purchased Loan as of the date that Seller notifies Loan Buyer of its intent to effect an Early Repurchase of such Purchased Loan, and (iii) 110% of the Repurchase Price of such Purchased Loan and (b) the Repurchase Price of such Purchased Loan.

“Morgan Stanley Repurchase Agreement” shall have the meaning specified in Amendment No. 3.

“Net Proceeds” shall mean, with respect to any Early Repurchase, the aggregate amount of cash received by or on behalf of such Person for its own account in connection with any such transaction, after deducting therefrom only:

(a)           reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder’s fees and other similar fees, costs and commissions that, in each case, are actually paid at the time of receipt of such cash to a Person that is not a Subsidiary or Affiliate of the Seller;

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(b)           the amount of taxes payable in connection with or as a result of such transaction that, in each case, are actually paid at the time of receipt of such cash to the applicable taxation authority or other Governmental Authority or, so long as such Person is not otherwise indemnified therefor, are reserved for in accordance with GAAP, as in effect at the time of receipt of such cash, based upon such Person’s reasonable estimate of such taxes, and paid to the applicable taxation authority or other Governmental Authority within 90 days after the date of receipt of such cash; and

(c)           the outstanding principal amount of, the premium or penalty, if any, on, and any accrued and unpaid interest on, any Indebtedness (other than Indebtedness under or in respect of the Transaction Documents) that is secured by a lien on the property and assets subject to such Early Repurchase and is required to be repaid under the terms of such Indebtedness as a result of such Early Repurchase, in each case, to the extent that the amounts so deducted are actually paid at the time of receipt of such cash to a Person that is not an Affiliate of Seller;

provided that, any and all amounts so deducted by any such Person pursuant to clauses (a) through (c) of this definition shall be properly attributable to such Early Repurchase or to the property or asset that is the subject thereof; provided, further, that if, at the time any of the taxes referred to in clause (b) are actually paid or otherwise satisfied, and the reserve therefor exceeds the amount paid or otherwise satisfied, then the amount of such excess reserve shall constitute “Net Proceeds” on and as of the date of such payment or other satisfaction for all purposes of this Agreement.

“Secured Plan Facilities Obligations” shall mean the sum of (a) the aggregate Repurchase Price of all Purchased Loans, and (b) and the aggregate amount of all obligations owed by Seller or any Subsidiary of Seller under the JPMorgan Repurchase Agreements and the Morgan Stanley Repurchase Agreement.

“Secured Plan Participants” shall have the meaning specified therefor in the recitals to Amendment No. 3.

“Senior Secured Facilities” shall have the meaning specified therefor in the recitals to Amendment No. 3.

“Senior Unsecured Facility” shall mean that certain Credit Agreement, dated as of March 22, 2007, by and among Seller as borrower, WestLB AG, New York Branch, as administrative agent, and the lenders party thereto, as the same may be amended, restated, supplemented or otherwise modified and in effect from time to time.

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“Senior Unsecured Facility LIBOR” shall mean, for any period, the measure of LIBOR used to calculate the interest payments made under the Senior Unsecured Facility during such period.

“Unfunded Commitments” shall mean, as of any date, an amount equal to the sum of Seller’s unfunded commitments to make Future Advances and meet future capital calls for CT Opportunity Partners I, LP, as of such date.

“Unrestricted Cash” shall mean (a) cash and Cash Equivalents that would not appear in the consolidated financial statements of Seller, prepared in accordance with GAAP, as a line item on the balance sheet as “restricted cash” or similar caption minus (b) any Additional Restricted Cash.

“Unsecured Lenders” shall mean the lenders party to the Senior Unsecured Facility.

“Valuation Test Date” shall have the meaning specified in Section 4.

“Valuation Test Failure” shall have the meaning specified in Section 4.

“Valuation Test Period” shall have the meaning specified in Section 4.

“Warrant” shall mean that certain Warrant, dated as of March 16, 2009, made by Seller in favor of Loan Buyer.

(b)           The definition of “Buyer’s Margin Amount” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(c)           The definition of “Buyer’s Margin Percentage” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(d)           The definition of “EBITDA” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(e)           The definition of “Fixed Charge Ratio” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(f)           The definition of “Margin Deficit” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(g)           The definition of “Margin Excess” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(h)           The definition of “Margin Notice Deadline” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

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(i)           The definition of “Market Value” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(j)           The definition of “Net Income” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(k)           The definition of “Net Worth” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(l)           The definition of “Recourse Debt to Equity Ratio” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(m)           The definition of “Repurchase Date” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

“Repurchase Date” shall mean March 16, 2010 or such earlier date on which this Agreement shall terminate in accordance with the provisions thereof or hereof or by operation of law; provided, however, that if the applicable conditions set forth in such Section 3(e) of this Agreement shall have been satisfied, the Termination Date shall be extended to the applicable date set forth in Section 3(e) of this Agreement.

(n)           The definition of “Subsidiary” contained in Section 2 of the Existing Repurchase Agreement is hereby modified by inserting the following as the last sentence thereof:

Notwithstanding the foregoing, Subsidiary shall not include investment funds managed by Seller or subsidiaries of same or investment funds of which Seller controls the general partner or managing member thereof or subsidiaries of same (except for those investment funds or subsidiaries of same of which Seller directly or indirectly owns at least a majority of the securities or other ownership interests therein).

(o)           The definition of “Tangible Net Worth” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(p)           The definition of “Target Price” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(q)           The definition of “Total Debt to Equity Ratio” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(r)           The definition of “Total Indebtedness” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(s)           The definition of “Total Recourse Indebtedness” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(t)           Section 3(d) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(d)           No Transaction shall be terminable on demand by Loan Buyer (other than upon the occurrence and during the continuance of an Event of Default by Seller).  Seller shall be entitled to terminate a Transaction on demand, in whole or in part, and repurchase any or all of the Purchased Loans subject to a Transaction on any Business Day prior to the Repurchase Date (such repurchase, an “Early Repurchase,” and the date of such Early Repurchase, an “Early Repurchase Date”); provided, however, that:

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(i) Seller notifies Loan Buyer in writing of its intent to terminate such Transaction and repurchase such Purchased Loan no later than two (2) Business Days (or such shorter period of time as Loan Buyer may consent to, such consent not to be unreasonably withheld, delayed or conditioned) prior to such Early Repurchase Date,

(ii) Such Purchased Loan or Purchased Loans are simultaneously sold to a bona fide third-party purchaser, or with Loan Buyer’s approval (which may be withheld in Loan Buyer’s sole discretion) to an Affiliate of Seller,

(iii) All of the Net Proceeds of such sale are deposited directly into the Loan Cash Management Account and applied in accordance with Section 5(d) hereof,  and

(iv) on such Early Repurchase Date Seller pays to Loan Buyer (inclusive of Net Proceeds deposited in the Loan Cash Management Account pursuant to clause (iii) above) an amount equal to the Minimum Release Price for such Purchased Loan or Purchased Loans.

(u)           Section 3(e) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(e)           Seller hereby promises to pay in full on the Repurchase Date, in accordance with the provisions of the definition of Repurchase Date, the aggregate Repurchase Price with respect to all Purchased Loans then held by Loan Buyer.

(i)           Notwithstanding the foregoing, Seller may, in its sole discretion by notice to Loan Buyer between 90 and 20 days prior to the originally scheduled Repurchase Date, extend the Repurchase Date with respect to all of the Transactions until the first (1st) anniversary of the originally scheduled Termination Date (all of the other terms and conditions of such Transactions remaining the same) provided that the following conditions precedent are satisfied as of the date of the effectiveness of such extension: (1) the aggregate Repurchase Price of all Purchased Loans as of the date of such extension is less than or equal to the Maximum Outstanding Amount, (2) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (3) Seller and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that, if conditions (1) through (3) are met and if any extension request is made during a Valuation Test Period, such extension shall be provisionally granted until the end of such Valuation Test Period, and such extension shall be granted only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

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(ii)           Notwithstanding the foregoing, if the initial Repurchase Date shall have been extended pursuant to Section 3(e)(i), Seller may request, between 90 and 20 days prior to the extended Repurchase Date, and subject to the written approval of Loan Buyer in its sole and absolute discretion given no later than ten (10) days prior to the extended Repurchase Date (any failure by Loan Buyer to deliver such notice of its approval to an extension to Seller shall be deemed a denial of Seller’s request to extend the Repurchase Date) provided that in any event, the following conditions precedent are satisfied as of the date of the effectiveness of such second extension: (1) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (2) Seller and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that if conditions (1) and (2) or any other conditions then required by Loan Buyer in its sole discretion (including, without limitation, requirements of additional payments, prepayments, revaluations of Collateral Value for any Purchased Loan or delivery of additional documents) are met and if any extension request is made during a Valuation Test Period, such extension may be provisionally granted by Loan Buyer, in its sole and absolute discretion, until the end of such Valuation Test Period, and such extension may be granted by Loan Buyer, in its sole and absolute discretion, only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

(v)           The following is hereby added to the Existing Repurchase Agreement as Section 3(n):

(n)           Seller may request from time to time, subject to Loan Buyer’s approval in Loan Buyer’s sole determination, to sell participation interests in its interests in any Purchased Loan in connection with an Early Repurchase of such Purchased Asset in accordance with Section 3(d) hereof, the sale of which participation interests shall be arm’s length transactions and subject to such terms and conditions as Loan Buyer in its sole discretion shall require; provided that Loan Buyer (a) retains an interest in the tranche or participation that is not sold or refinanced pursuant to such Early Repurchase, subject to the terms of this Agreement or (b) shall maintain a security interest in such tranche or participation that is not sold or refinanced pursuant to such Early Repurchase.

(w)           Section 4 of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

4.           MARGIN MAINTENANCE

Beginning with September 1, 2009, and on the first Business Day of each calendar month thereafter (each such date, a “Valuation Test Date”), Loan Buyer will determine the Collateral Value of each Purchased Loan.  If on any Valuation Test Date, the LTCV exceeds 1.15 times the Initial LTCV (a “Valuation Test Failure”), Seller shall, within five (5) Business Days following such Valuation Test Date, make a prepayment in reduction of the Repurchase Price, such that after giving effect to such prepayment, the LTCV, as re-determined by Loan Buyer, shall not exceed 1.15 times the Initial LTCV.  All prepayments in reduction of Repurchase Price shall be applied by Loan Buyer in its sole discretion.  If Seller is not able to cure a Valuation Test Failure within five (5) Business Days after the applicable Valuation Test Date, then Seller shall cooperate with Loan Buyer to select one or more Purchased Loans to liquidate and will use its commercially reasonable efforts, taking into account the rights and interests of Loan Buyer, to expeditiously commence the liquidation process for same.  If the Valuation Test Failure is not cured within 60 days from the initial failure, an Event of Default will occur; provided that if Seller provides Loan Buyer with a copy of an executed asset sale or refinancing agreement, acceptable to Loan Buyer in its sole discretion, prior to the end of such 60-day period in respect of the selected Purchased Loans, Loan Buyer may, at its option, grant a one-time 15-day extension to cure such Valuation Test Failure (such 60-day period and any 15-day extension, a “Valuation Test Period”).  Notwithstanding the above, in the event that a Purchased Loan becomes a Defaulted Purchased Loan, a Valuation Test will be performed at that time, and the provisions of this Section 4 shall apply.

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(x)           Section 5(c) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(c)           So long as no Event of Default (other than with respect to a Buyer) shall have occurred and be continuing, all Interest Income received by the Depository in respect of the Purchased Loans during each Collection Period shall be applied by the Depository on the related Remittance Date in the following order of priority:

(i)           first, to remit to Loan Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Loans,

(ii)           second, to make a payment to Loan Buyer on account of any other amounts (other than Repurchase Price) due and payable to Loan Buyer under the Agreement and the other Transaction Documents,

(iii)           third, to make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero, an amount equal to the product of the Interest Allocation Percentage multiplied by the difference between (x) the total Interest Income received by Seller during such month on account of the Purchased Loans and (y) the Price Differential otherwise actually paid by Seller to Loan Buyer during such month, and

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(iv)           fourth, to remit to Seller the remainder.

(y)           Section 5(d) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(d)           So long as no Event of Default (other than with respect to a Buyer) shall have occurred and be continuing, all Income received by the Depository in respect of the Purchased Loans, other than Interest Income, during each Collection Period shall be applied by the Depository within one (1) Business Day following receipt thereof in the following order of priority:

(i)           first, to remit to Loan Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Loans,

(ii)           second, to make a payment to Loan Buyer on account of any other amounts (other than Repurchase Price) due and payable to Loan Buyer under the Agreement and the other Transaction Documents,

(iii)           third, to make a payment to Loan Buyer on account of the Repurchase Price of the Purchased Loan in respect of which such Income is received until the Repurchase Price for such Purchased Loan has been reduced to zero;

(iv)           fourth, to make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans until the Repurchase Price for all Purchased Loans has been reduced to zero, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero; and

(v)           fifth, to remit to Seller the remainder.

(z)           Section 5(e) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(e)           If an Event of Default (other than with respect to a Buyer) shall have occurred and be continuing, all Income received by the Depository in respect of the Purchased Loans shall be applied by the Depository within one (1) Business Days following receipt thereof in the following order of priority:

(i)           first, to remit to Loan Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Loans,

(ii)           second, to make a payment to Loan Buyer on account of any other amounts (other than Repurchase Price) due and payable to Loan Buyer under the Agreement and the other Transaction Documents,

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(iii)           third, to make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans until the Repurchase Price for all Purchased Loans has been reduced to zero, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero; and

 (iv)           fourth, to remit to Seller the remainder.

(aa)            The following is hereby added to the Existing Repurchase Agreement as Section 5(f):

 (f)           At the end of each calendar quarter, Seller shall make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans until the Repurchase Price for all Purchased Loans has been reduced to zero, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to (i) Excess Cash as of the last day of such calendar quarter, multiplied by Loan Buyer’s pro rata share, based on the then outstanding Repurchase Price of all Purchased Loans at such date, of the aggregate Secured Plan Facilities Obligations as of such date.

(bb)           The following is hereby added to the Existing Repurchase Agreement as Section 5(g):

 (g)           On the first Business Day of each calendar quarter, Seller shall make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans until the Repurchase Price for all Purchased Loans has been reduced to zero, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to the lesser of (i) the then outstanding Repurchase Price of all Purchased Loans, and (ii) the product of (x) the Additional Senior Unsecured Payment Amount, multiplied by (y) Citigroup’s Proportionate Share.

(cc)             The fifth through tenth lines of Section 7(a) of the Existing Repurchase Agreement are hereby deleted in their entirety and replaced with following:

Bank:	Bank of America
ABA:	026009593
Account Name:	Capital Trust, Inc.
Account #:	483024227101
Attention:	Geoffrey G. Jervis – 212-655-0247

(dd)           The following are hereby added into the Existing Repurchase Agreement as Sections 12(q) through 12(dd):

(q)           If at any time there exists a Valuation Test Failure, Seller shall cure same in accordance with Section 4 hereof.

13

(r)           Seller shall not make any payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or partnership interest of Seller, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of Seller, either directly or indirectly, whether in cash or property or in obligations of Seller or any of Subsidiary of Seller, except to the minimum extent required for Seller to maintain its status as a real estate investment trust and, to the extent permitted, such distribution shall be made in equity in lieu of cash; provided that any Subsidiary of Seller may make distributions to Seller.

 (s)           Without the prior written consent of Loan Buyer, Seller shall not, nor permit any Subsidiary to, originate, acquire or invest in any new stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person except to (a) make co-investments in future funds of which Seller (or its Affiliates) is the sponsor or manager, and (b) make protective investments to defend existing Purchased Assets or assets subject to another Senior Secured Facility or that are pledged as collateral security for the Senior Unsecured Facility.  With respect to co-investments, (a) no investments will be permitted in the first six (6) months following the Amendment No. 3 Effective Date, (b) the projected base management fees generated by the proposed future fund over the first 36 months must equal or exceed the co-investment commitment, and (c) the total amount of co-investment capital for all such proposed future funds may not exceed $10,000,000 without the prior written approval of Loan Buyer.  With respect to protective investments made in respect of Purchased Loans or assets subject to another Senior Secured Facility, the amount of each investment may not exceed $5,000,000 per Purchased Loan, transaction or asset.  With respect to protective investments made in respect of assets pledged as collateral security for the Senior Unsecured Facility, the aggregate amount of such investments may not exceed $1,000,000.

(t)           Seller shall not, nor permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness other than the Indebtedness already incurred as of the Amendment No. 3 Effective Date; provided, that additional Indebtedness may be incurred by Seller or any of their Subsidiaries so long as the following conditions are satisfied: (i) to the extent that the Indebtedness is incurred in connection with an Early Repurchase, the Net Proceeds of which are applied in accordance to Section 3(d), (ii) to the extent that such new Indebtedness is unsecured (and subordinate to all obligations owed by Seller under any Secured Plan Facility or the Senior Unsecured Facility) or incurred through the pledge of unencumbered assets, 100% of the net proceeds of such new Indebtedness are deposited in the CT Cash Account and (iii) to the extent that such new Indebtedness is recourse Indebtedness, only to the extent that it replaces existing recourse Indebtedness or is subordinate to all obligations owed to Loan Buyer (and to the extent such Indebtedness is not subject to clause (i) above, 100% of the net proceeds of such Indebtedness are deposited in the CT Cash Account).

14

(u)           For all employees of Seller and its Subsidiaries, other than the CEO, COO & CFO, total cash compensation (including base salary and bonus), in the aggregate shall not exceed $5.8 million.  Subject to the limitation in the preceding sentence, compensation for individual employees shall be determined by Seller in its sole discretion.  For Seller’s CEO, COO & CFO, (i) base salaries shall remain the same as in effect in 2008, and (ii) any cash bonus will be approved based upon performance metrics designed to create alignment with the interests of the Secured Plan Participants and the Unsecured Lenders and must be approved by unanimous consent of a committee comprised of (x) a representative selected by the Secured Plan Participants, (y) the administrative agent of the Senior Unsecured Facility and (z) a representative selected by the board of directors of Seller.

(v)           John Klopp and/or Stephen Plavin will continue their current employment with their current respective responsibilities throughout the term of this Agreement; provided that if both John Klopp and Stephen Plavin are no longer so employed, a replacement(s) acceptable to Loan Buyer in its sole and absolute discretion shall be appointed within 30 days after the departure of such person.

(w)           Seller shall maintain, at all times, a minimum Liquidity of $7,000,000 in 2009 and $5,000,000 thereafter.

(x)           Without duplicating the reports provided under 12(k), Seller will provide Loan Buyer with (a) certified quarterly financial statements and audited annual financial statements prepared in accordance with GAAP, filed within SEC mandated time frames, (b) within thirty (30) Business Days following the end of each calendar month commencing with April 2009, unaudited monthly financial statements, (c) within ten (10) Business Days following the end of each calendar month, reports on asset level performance for each Purchased Loan, and (d) promptly, following any reasonable request therefor, reports of such other information regarding Seller’s operations, business affairs and financial condition, or compliance with the terms of this Agreement.  Any reports provided above will include, without limitation, details of Seller’s cash accounts at each quarter end and a schedule of Seller’s Excess Cash, Unrestricted Cash and Unfunded Commitments.  Seller agrees to provide Loan Buyer with an annual budget no later than 60 days after the end of each fiscal year.

(y)           Seller will not (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Seller or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing.

15

(z)           Seller will not amend, modify or otherwise agree to any change in the applicable documents for any Purchased Loan without the prior written consent of Loan Buyer.

(aa)         Seller shall not agree to any amendment or modification to any Senior Secured Facility nor the Senior Unsecured Facility without the prior written consent of Loan Buyer.

(bb)         Notwithstanding anything contained in this Agreement to the contrary, Seller acknowledges that Loan Buyer shall, until all of Seller’s obligations under the Transaction Documents have been satisfied and this Agreement terminates pursuant to its terms, maintain control over the Loan Cash Management Account subject to the terms the Depository Agreement.  At Seller’s expense, Loan Buyer may require that Seller establish a new Loan Cash Management Account at a depository institution selected by Loan Buyer in its sole discretion and such new account shall be the “Loan Cash Management Account” for all purposes hereunder.

(cc)         Seller shall not agree to any amendment or modification to the Lehman Facility without the prior written consent of Loan Buyer, such consent not to be unreasonably withheld, conditioned or delayed.

(dd)         All deposit accounts (other than (i) the Cash Management Accounts and (ii) any other deposit accounts specifically relating to the Purchased Loans or any asset or collateral subject to any Senior Secured Facility or the Senior Unsecured Facility) shall be established and maintained with financial institutions that are not Secured Plan Participants nor Unsecured Lenders; provided that Seller may maintain the JPMorgan Account so long as (w) no more than $1,000,000 may remain in the JPMorgan Account at any time, (x) Seller may not transfer any funds into the JPMorgan Account from any CT Cash Account, (y) any funds deposited in the JPMorgan Account will be transferred to a CT Cash Account within two (2) Business Days from receipt of such funds in the JPMorgan Account and (z) all funds in the JPMorgan Account will be transferred to a CT Cash Account and the JPMorgan Account will be closed on or before December 31, 2009.  For the avoidance of doubt, the Collections Accounts, and any other deposit account relating to the Purchased Loans may be established and maintained at any financial institution selected by Buyer in its sole discretion.

(ee)           Section 14(a)(xiii) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(xiii)          Seller shall fail to comply with the requirements of Sections 12(q) through 12(dd);

(ff)           Section 14(a)(xv) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

16

(xv)           any event or condition occurs that results in (i) any obligation or liability of Seller under any note, indenture, loan agreement, guaranty, swap agreement or any other contract to which it is a party, whether singly or in the aggregate, in excess of $1,000,000 becoming due prior to its scheduled maturity or that enables or permits (after the expiration of all grace or cure periods) the beneficiaries of, the holder or holders of, or any other party to any such indebtedness or contract, or any trustee or agent on its or their behalf, to cause any such obligation or liability to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity and (ii) any monetary default under any note, indenture, loan agreement, guaranty, swap agreement or any other contract, credit facility or other obligation of Seller  if the aggregate amount of such credit facility, contract or other obligation in respect of which such monetary default shall have occurred is at least $1,000,000; provided that this Event of Default shall not apply to secured indebtedness that becomes due as a result of the sale or transfer of the property or assets securing such indebtedness;

(gg)           The Existing Repurchase Agreement is hereby amended by inserting Exhibit A attached hereto as a new Exhibit IX.

SECTION 2.  Conditions Precedent.  This Amendment shall become effective on the date (the “Amendment Effective Date”) on which (1) all the representations and warranties made by Seller in this Amendment are true and correct and (2) Loan Buyer shall have received:

(a)           this Amendment, executed and delivered by a duly authorized officer of each of Seller and the Buyers;

(b)           a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans, such payment to be allocated in Loan Buyer’s sole discretion among the Purchased Loans, in an amount equal to $1,914,897.59;

(c)           the Warrant, executed and delivered by a duly authorized officer of Seller;

(d)           evidence, satisfactory to Loan Buyer in its sole discretion, of the payment in full of all obligations owed by Seller under, and the termination of, the credit facilities identified on Schedule I hereto;

(e)           a copy of an amendment to the Senior Unsecured Facility, executed and delivered by a duly authorized officer of the parties thereto, in form and substance acceptable to Loan Buyer in its sole discretion;

(f)           legal opinions from counsel to Seller dated as of the date hereof addressed to Buyers and its successors and assigns (i) as to the enforceability of the Repurchase Agreement, as amended by this Amendment, and (ii) as to Seller’s authority to execute, deliver and perform its obligations under the Repurchase Agreement as amended hereby, in each case, in form and substance acceptable to Buyers in their reasonable discretion; and

17

(g)           for the account of Loan Buyer, payment and reimbursement for all of Loan Buyer’s corresponding costs and expenses incurred in connection with this Amendment, all prior amendments and modifications to the Repurchase Agreement, any other documents prepared in connection herewith and therewith and the transactions contemplated hereby and thereby.

SECTION 3.  Representations and Warranties.  On and as of the date first above written, Seller hereby represents and warrants to Loan Buyer that (a) it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, (b) after giving effect to this Amendment, no Default or Event of Default under the Repurchase Agreement has occurred and is continuing, and (c) after giving effect to this Amendment, the representations and warranties contained in Section 10 of the Repurchase Agreement are true and correct in all material respects as though made on such date (except for any such representation or warranty that by its terms refers to a specific date other than the date first above written, in which case it shall be true and correct in all material respects as of such other date).

SECTION 4.  General Release.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller, for: (i) itself, (ii) any parent or Subsidiary thereof, and (iii) the respective partners, officers, directors, shareholders, successors and assigns of all of the foregoing persons and entities,

(a)                      hereby releases and forever discharges the Buyers and each of its subsidiaries, affiliates, its past, present and future officers, directors, agents, employees, partners, managers, shareholders, servants, attorneys and representatives, as well as their, successors, assigns, their respective heirs, legal representatives, legatees, predecessors-in-interest, successors and assigns, of and from any and all actions, claims, demands, damages, debts, suits, contracts, agreements, losses, liabilities, indebtedness, causes of action either at law or in equity, obligations of whatever kind or nature, accounts, defenses, and offsets against liabilities and obligations, whether known or unknown, direct or indirect, new or existing, by reason of any matter, cause or thing whatsoever occurring on or prior to the date hereof arising out of or relating to any matter or thing whatever, including without limitation, such claims and defenses as fraud, misrepresentation, breach of duty, mistake, duress, usury, claims pertaining to so-called “lender liability,” and claims pertaining to creditor’s rights, which such party ever had, now has, or might hereafter have against the other, jointly or severally, for or by reason of any matter, act, omission, cause or thing whatsoever occurring, on or prior to the date of this Amendment, that is related to, in whole or in part, directly or indirectly, the Transactions, the Repurchase Agreement, the Transaction Documents and this Amendment; and

(b)                      warrants, represents and acknowledges that it has no defenses to the payment of, nor any right to set off against, all or any of the obligations set forth in the Transaction Documents, nor any counterclaims or other rights of action against the Buyers of any kind whatsoever, including, without limitation, any right to contest any of the following: the enforceability, applicability or validity of any provisions of the Transaction Documents, Loan Buyer’s right to all proceeds of the Purchased Loans, the existence, validity, enforceability, or perfection of any security interest or mortgage in favor of Loan Buyer, the conduct of the Buyers in administering the Transaction Documents and any legal fees and expenses incurred by the Buyers under the Repurchase Agreement, the other Transaction Documents or this Amendment.

18

SECTION 5.  Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with their respective terms; provided, however, that upon the Amendment Effective Date, all references in the Repurchase Agreement to the “Transaction Documents” shall be deemed to include, in any event, this Amendment.  Each reference to Repurchase Agreement in any of the Transaction Documents shall be deemed to be a reference to the Repurchase Agreement as amended hereby.

SECTION 6.  Override Provision.  Notwithstanding any provision in the Repurchase Agreement to the contrary, which are hereby pro tanto superseded and modified or replaced mutatis mutandis to the extent of any inconsistency, the provisions in this Amendment shall apply from and after the date hereof.

SECTION 7.  Counterparts.  This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.

SECTION 8.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[NO FURTHER TEXT ON THIS PAGE]

19

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

CITIGROUP FINANCIAL PRODUCTS INC., a Delaware corporation
By:	/s/ Richard B. Schlenger
	Name: Richard B. Schlenger
	Title: Authorized Signatory

CITIGROUP GLOBAL MARKETS INC., a Delaware corporation
By:	/s/ Richard B. Schlenger
	Name: Richard B. Schlenger
	Title: Authorized Signatory

SELLER:
CAPITAL TRUST, INC., a Maryland corporation
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

20

SCHEDULE I

Closeout Facilities

1.           Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, between Capital Trust, as seller, and Goldman Sachs Mortgage Company (“Goldman”), as buyer, as supplemented by that certain Amended and Restated Annex I to Amended and Restated Master Repurchase Agreement, dated as of October 30, 2007.

2.           Master Repurchase Agreement, dated as of October 30, 2007, between Capital Trust, as seller, and Goldman, as buyer, as supplemented by that certain Annex I to Master Repurchase Agreement, dated as of October 30, 2007.

Exhibit A

Exhibit IX to Existing Repurchase Agreement

Citigroup

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

14,100,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

22,500,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,770,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

6,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

18,220,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-1

JPMorgan

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

25,100,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

25,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

31,523,408.99

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

27,402,996.32

597,004.25

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

35,500,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

13,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

29,024,471.31

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

11,500,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

21,800,000.00

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

8,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,435,162.79

964,837.21

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

23,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

22,571,220.21

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,927,002.75

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

4,689,303.73

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

3,398,078.96

394,993.29

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

51,384,616.35

Mezzanine

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-2

[

***]

16,125,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

30,000,000.00

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

54,823,957.29

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

13,448,358.83

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

21,042,320.62

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

15,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

20,015,297.15

PPP 1st

[

***]

[

***]

[

***]

[

***]

[

***]

5,511,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,978,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,042,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

1,116,976.76

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,189,147.00

Bond

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

ISDA liability

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-3

Morgan Stanley

Asset Name

Face Amount

Future Advances

Asset Type

Initial Advance Rate

Initial Mark

Initial Value

Purchase Price

Pricing Rate

[

***]

16,204,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

12,963,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

6,755,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

10,133,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

36,432,000.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

32,556,639.00

Bond

[

***]

[

***]

[

***]

[

***]

[

***]

89,057,579.00

1,942,420.40

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

46,966,945.16

3,783,054.34

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

42,637,221.65

4,841,662.74

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

32,492,156.00

2,507,844.08

Whole loan

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

14,444,220.02

5,555,779.98

Jr Mtg Part

[

***]

[

***]

[

***]

[

***]

[

***]

[

***]

20,700,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

[

***]

50,000,000.00

Mezzanine

[

***]

[

***]

[

***]

[

***]

Total/weighted average

[***]

[***]

[

***]

[

***]

[

***]

[

***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

A-4

EX-10.8

Exhibit 10.8

Confidential Treatment Requested by Capital Trust, Inc.

PLEDGE AND SECURITY AGREEMENT

This PLEDGE AND SECURITY AGREEMENT (this “Agreement”) dated as of March 16, 2009 by CAPITAL TRUST, INC., a Maryland corporation (the“Pledgor”), for the benefit of WESTLB AG, NEW YORK BRANCH, as collateral agent on behalf of the lenders party to the Credit Agreement (as hereinafter defined) (in such capacity, together with its successors in such capacity, the “Collateral Agent”).

RECITALS

A.           The Pledgor, the Collateral Agent and certain other lenders (collectively, “Lenders”) are parties to that certain Amended and Restated Credit Agreement, dated as of the date hereof (as may be further amended or modified, collectively, the “Credit Agreement”).

B.           For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Pledgor has agreed to pledge and grant, and, pursuant to this Agreement, does hereby pledge and grant, a first priority security interest in the Collateral (as defined below) as security for the Obligations.

Accordingly, the parties hereto agree as follows:

Section 1.               Definitions.

“Certificated Securities” shall mean the Pledged Securities identified on Schedule 2 attached hereto.

“Collateral” shall have the meaning ascribed thereto in Section 2 hereof.

“Obligations” shall have the meaning ascribed thereto in the Credit Agreement.

“Pledged Securities” shall mean the assets as described on Schedule 1 attached hereto.

“Secured Parties” shall have the meaning ascribed thereto in the Credit Agreement.

“Securities Account Control Agreement” shall mean that certain Securities Account Control Agreement in respect of account number 725839.1 held with the Securities Intermediary, among the Pledgor, the Collateral Agent and the Securities Intermediary, dated as of the date hereof.

“Securities Account” shall have the meaning ascribed thereto in the Credit Agreement.

“Securities Intermediary” shall mean Bank of America, National Association

“Securities Rights” means all voting and other rights and remedies in respect of any of the Pledged Securities, and all securities, interest or other distributions and any other right or property which the Pledgor shall receive or shall become entitled to receive for any reason whatsoever with respect to, in replacement for, in substitution for or in exchange for any of the Pledged Securities, in which the Pledgor now has or hereafter acquires any right.

“UCC-1 Financing Statements” shall mean the UCC-1 Financing Statements filed to perfect the security interests granted herein.

“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York.

Capitalized terms used but not defined herein have the meanings assigned to such terms in the Credit Agreement.

Section 2.               Pledge and Delivery of Collateral.

2.1           The Pledge.  As security for the prompt payment in full when due of the Obligations, the Pledgor hereby pledges, assigns and grants to the Collateral Agent, for the benefit of the Secured Parties, a security interest in all of the Pledgor’s right, title and interest in the following property wherever located (all being collectively referred to herein as “Collateral”):

(i)           all Pledged Securities;

(ii)          the Securities Account, all “financial assets” (as defined in the Uniform Commercial Code) and cash credited to the Securities Account;

(iii)         all “investment property”, “instruments”, “general intangibles”, “accounts”, “chattel paper” and “supporting obligations” (each, as defined in the Uniform Commercial Code) and all Securities Rights, in each case, relating to or constituting any and all of the foregoing set forth in items (i) and (ii) of this Section 2.1; and

(iv)         any and all interest on, and proceeds (including, without limitation, condemnation proceeds) of, any and all of the foregoing set forth in items (i) through (iii) of this Section 2.1;

in each case whether now owned or hereafter acquired, now existing or hereafter created and wherever located.

2.2           Delivery of the Collateral.  All Pledged Securities (including without limitation, all Certificated Securities), shall be credited to and held at all times in the Securities Account on behalf of the Collateral Agent for the benefit of the Secured Parties, and evidence of such credit and holding shall be delivered to the Collateral Agent from the Securities Intermediary.

Section 3.               Representations and Warranties.  The Pledgor represents and warrants as of the date hereof that:

(a)           The execution and delivery of this Agreement and the performance of the obligations hereunder (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any Person, except such as have been obtained or made and are in full force and effect, (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Pledgor or any order of any Governmental Authority, and (iii) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Pledgor or any of its Sub sidiaries or its assets, or give rise to a right thereunder to require any payment to be made by the Pledgor or any of its Subsidiaries;

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(b)           Schedule I sets forth an accurate description of the Pledged Securities.  The Pledgor has not assigned, pledged or otherwise conveyed or encumbered the Collateral to any other Person other than the Collateral Agent under this Agreement, and the Pledgor is the record and beneficial owner of, and has good and marketable title to, the Collateral free and clear of any and all Liens or options in favor of, or claims of, any other Person, except the Lien created by this Agreement;

(c)           the provisions of this Agreement are effective to create in favor of the Collateral Agent a valid security interest in all right, title and interest of the Pledgor in, to and under the Collateral;

(d)           upon receipt by the Securities Intermediary of the Pledged Securities pursuant to Section 2.2 of this Agreement, by virtue of this Agreement and the Control Agreement, the Lien granted pursuant to this Agreement will constitute a valid, perfected first-priority Lien on the Collateral, enforceable as such against all creditors of the Pledgor and any persons purporting to purchase any of such Collateral;

(e)           the principal place of business and chief executive office of the Pledgor is 410 Park Avenue, 14th Floor, New York, New York 10022-9442; and

(f)           the exact legal name of the Pledgor is Capital Trust, Inc.

Section 4.               Covenants.  In furtherance of the grant of the pledge and security interest pursuant to Section 2 hereof, the Pledgor hereby agrees with the Collateral Agent, for the benefit of the Secured Parties, as follows:

4.1           Delivery and Other Perfection.  The Pledgor shall, and hereby authorizes the Collateral Agent to, give, execute, deliver, file and/or record any financing statement, notice, instrument, document, agreement or other papers that may be necessary (in the reasonable judgment of the Collateral Agent) to create, preserve or perfect the security interest granted pursuant hereto or, upon the occurrence and during the continuance of an Event of Default, to enable the Collateral Agent to exercise and enforce its rights hereunder with respect to such pledge and security interest, including, without limitation, causing any or all of the Co llateral to be transferred of record into the name of the Collateral Agent or its nominee.  The Pledgor hereby authorizes the Collateral Agent to file any financing statement or continuation statement without the signature of the Pledgor to the extent permitted by law.

4.2           Sale of Collateral; Liens.  Without the prior written consent of the Collateral Agent, the Pledgor shall not, directly or indirectly, except as otherwise permitted by this Agreement (i) sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to, the Collateral, or (ii) create, incur, authorize or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Collateral, or any interest therein, except for the Lien provided for by this Agreement.  The Pledgor shall defend the right, title and interest of the Collateral Agent in and to the Collat eral against the claims and demands of all persons whomsoever.

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4.3           Use of Collateral.  The Pledgor will not remove any Collateral from the Securities Account once such Collateral is credited thereto, except Distributions (as defined in the Control Agreement) in accordance with the terms of the Control Agreement.

4.4           Pledged Securities.

(a)           So long as no Event of Default has occurred and is continuing Pledgor shall have the right to receive any payments with respect to any Pledged Securities and apply such payments on its own account and to its benefit.

(b)           So long as no Event of Default has occurred and is continuing, all payments received by the Pledgor with respect to the Collateral shall be deposited directly into the Securities Account or such other account as designated by the Pledgor and, absent any Event of Default, shall be swept to Debtor’s account at the Securities Intermediary within two (2) Business Days.

(c)           The Pledgor will not make or agree to make any discount, credit or other reduction in the original amount owing on any Pledged Securities or accept in satisfaction of any Pledged Securities less than the original amount thereof.

(d)           Except as otherwise provided in this Security Agreement, the Pledgor will collect and enforce, at the Pledgor’s sole expense, all amounts due or hereafter due to the Pledgor under the Pledged Securities.

(e)           If to the knowledge of the Pledgor, any dispute, setoff, claim, counterclaim or defense exists or has been asserted or threatened with respect to any Pledged Securities, the Pledgor will promptly disclose such fact to the Collateral Agent in writing, electronic or otherwise.

4.5           Change in Corporate Existence, Type or Jurisdiction of Organization, Location, Name.  The Pledgor will:

(a)           preserve its existence and corporate structure as in effect on the Restatement Effective Date;

(b)           not change its jurisdiction of organization;

(c)           not maintain its place of business (if it has only one) or its chief executive office (if it has more than one place of business) at a location other than the location specified in the Credit Agreement; and

(d)           not change its name or its mailing address;

unless, in each such case, the Pledgor shall have given the Collateral Agent not less than thirty (30) days’ prior written notice of such event or occurrence and the Collateral Agent shall have either (x) reasonably determined that such event or occurrence will not adversely affect the validity, perfection or priority of the Collateral Agent’s security interest in the Collateral, or (y) taken such steps (with the cooperation of such Pledgor to the extent necessary or advisable) as are necessary or advisable to properly maintain the validity, perfection and priority of the Collateral Agent’s security interest in the Collateral owned by the Pledgor.

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Section 5.               Events of Default, Remedies, etc.  During the period during which an Event of Default shall have occurred and be continuing, in addition to the rights and remedies set forth in the Credit Agreement:

(a)           The Collateral Agent, for the benefit of the Secured Parties, in addition to the rights and remedies set forth in the Credit Agreement, shall have all of the rights and remedies with respect to the Collateral of a secured party under the Uniform Commercial Code (whether or not said Uniform Commercial Code is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted, including, without limitation, the right, to the maximum extent permitted by law, to exercise all voting, consensual and other powers of ownership pertaining to the Collateral as if the Collateral Agent, for the benefit of the Secured Parties, were the sole and absolute owner thereof (and the Pledgor agrees to take all such action as may be appropriate to give effect to such right);

(b)           The Collateral Agent in its discretion may, in its name or in the name of the Pledgor or otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for any of the Collateral, but shall be under no obligation to do so;

(c)           The Collateral Agent may, upon ten (10) days’ prior written notice to the Pledgor of the time and place (which notice the Pledgor acknowledges as reasonable and sufficient), with respect to the Collateral or any part thereof which shall then be or shall thereafter come into the possession, custody or control of the Collateral Agent or any of its agents, sell, assign or otherwise dispose of all or any part of such Collateral, at such place or places as the Collateral Agent deems best, and for cash or on credit or for future delivery, at public or private sale, without demand of performance or notice of intention to effect any such disposition or of time or place thereof (except such notice as is required above or by applicable statute and cannot be waived) and the Collateral Agent or anyone else may be the purchaser, assignee or recipient of any or all of the Collateral so disposed of at any public sale (or, to the extent permitted by law, at any private sale), and thereafter hold the same absolutely, free from any claim or right of whatsoever kind, including any right or equity of redemption (statutory or otherwise), of the Pledgor, any such demand, notice or right and equity being hereby expressly waived and released.  Unless prohibited by applicable law, the Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned;

(d)           If the Collateral Agent shall so request in writing, the Pledgor agrees to execute and deliver to the Collateral Agent appropriate payment direction and other orders and documents to provide for all Collateral, including without limitation any amounts in the Securities Account, to be applied as directed by the Collateral Agent in its sole discretion.  The foregoing authorization and instructions are irrevocable and may not be modified in any manner other than by the Collateral Agent sending to the Pledgor a notice terminating such authorization and direction;

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(e)           The Collateral Agent may exercise all rights, powers and privileges to the same extent as the Pledgor is entitled to exercise such rights, powers and privileges with respect to the Pledged Securities;

(f)           Except as required applicable law, the Collateral Agent shall not be required to take steps necessary to preserve any rights against prior parties to any of the Collateral;

(g)           In enforcing any rights hereunder, the Collateral Agent shall not be required to resort to any particular security, right or remedy through foreclosure or otherwise or to proceed in any particular order of priority, or otherwise act or refrain from acting, and, to the extent permitted by law, the Pledgor hereby waives and releases any right to a marshaling of assets or a sale in inverse order of alienation;

(h)           The Collateral Agent may register any or all of the Pledged Securities in the name of the Collateral Agent or its nominee without any further consent of the Pledgor;

(i)            The Collateral Agent or its nominee at any time, without notice, to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Collateral owned by the Pledgor or any part thereof, and to receive all interest and distributions in respect of such Collateral;

(j)            The Pledgor shall assemble and make available to the Collateral Agent the Collateral and all records relating thereto at any place or places specified by the Collateral Agent;

(k)           The Collateral Agent may at any time, by giving the Pledgor written notice, elect to require that the Pledged Securities be paid directly to the Collateral Agent for the benefit of the Secured Parties.  In such event, the Pledgor shall, and shall permit the Collateral Agent to, promptly notify the obligors under the Pledged Securities of the Collateral Agent’s interest therein and direct such obligors to make payment of all amounts then or thereafter due under such Pledged Securities directly to the Collateral Agent.  Upon receipt of any such notice from the Collateral Agent, the Pledgor shall thereafter hold in trust for the Collateral Agent, on behalf of the Secured Partie s, all amounts and proceeds received by it with respect to the Pledged Securities and other Collateral and immediately and at all times thereafter deliver to the Collateral Agent all such amounts and proceeds in the same form as so received, whether by cash, check, draft or otherwise, with any necessary endorsements;

(l)            The Collateral Agent may require all cash proceeds of the Collateral to be deposited in a special non-interest bearing cash collateral account with the Collateral Agent and held there as security for the Obligations.  The Pledgor shall not have any control whatsoever over said cash collateral account.  The Collateral Agent may (and shall, at the direction of the Required Lenders), from time to time, apply the collected balances in said cash collateral account to the payment of the Obligations whether or not the Obligations shall then be due; and

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(m)           The Collateral Agent, on behalf of the Secured Parties, may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral, and such compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

The proceeds of each collection, sale or other disposition under this Section 5 shall be applied by the Collateral Agent to the Obligations pursuant to Section 6 hereof.

Section 6.              Application of Proceeds.  Except as otherwise herein expressly provided, the proceeds of any collection, sale or other realization of all or any part of the Collateral pursuant hereto, and any other cash at the time held by the Collateral Agent under this Section 4, shall be applied by the Collateral Agent:

(i)           First, to the payment of the actual and out-of-pocket costs and expenses of such collection, sale or other realization, including, without limitation, reasonable out of pocket costs and expenses of the Collateral Agent and the fees and expenses of its agents and counsel, and all expenses, and advances made or incurred by the Collateral Agent in connection therewith;

(ii)           Next, to the payment in full of the Obligations; and

(iii)           Finally, to the payment to the Pledgor, or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining.

As used in this Section 6, “proceeds” of Collateral shall mean cash, securities and other property realized in respect of, and distributions in kind of, the Collateral.

Section 7.              Attorney in Fact.  Without limiting any rights or powers granted by this Agreement to the Collateral Agent, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall be deemed appointed, which appointment as attorney-in-fact is irrevocable and coupled with an interest, the attorney-in-fact of the Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments which the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof.  Without limiting the generality of the for egoing, so long as the Collateral Agent shall be entitled under this Section 7 to make collections in respect of the Collateral, the Collateral Agent shall have the right and power to receive, endorse and collect all checks made payable to the order of the Pledgor representing any payment in respect of the Collateral or any part thereof and to give full discharge for the same.

Section 8.              Termination.  When the Obligations shall have been indefeasibly paid in full in cash, and the Credit Agreement has terminated, the Collateral Agent shall forthwith cause to be assigned, transferred and delivered, against receipt but without any recourse, warranty or representation whatsoever any remaining Collateral and money received in respect thereof, to or on the order of the Pledgor.

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Section 9.              Further Assurances.  The Pledgor agrees that, from time to time upon the written request of the Collateral Agent, the Pledgor will execute and deliver such further documents and do such other acts and things as the Collateral Agent may reasonably request in order fully to effect the purposes of this Agreement. Without limiting the foregoing, on or before March 31, 2009, the Pledgor shall deliver to the Collateral Agent executed transfer documents under each indenture or other document governing the securities constituting Colla teral, undated and endorsed “in blank”, as reasonably requested by the Collateral Agent.

Section 10.            Additional Agreements Concerning UCC’s.  The Pledgor authorizes the Collateral Agent to file UCC-1 Financing Statements describing the Collateral and for purposes of perfecting the security interest in the Collateral granted by the Pledgor to the Collateral Agent pursuant to this Agreement.

Section 11.             Miscellaneous.

11.1          No Waiver.  No failure or delay by the Collateral Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Collateral Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have.

11.2           Governing Law; Jurisdiction; Consent to Service of Process.  This Agreement shall be construed in accordance with and governed by the law of the State of New York.  The provisions set forth in Section 9.09(b), (c) and (d) of the Credit Agreement with respect to consent to jurisdiction and service of process are hereby incorporated herein and made applicable hereto, mutatis mut andis.

11.3           Notices.  All notices, consents, approvals and requests required or permitted hereunder shall be given in the manner and to the addresses set forth in Section 9.01 of the Credit Agreement.

11.4           Waivers, etc.  No waiver of any provision of this Agreement or consent to any departure by the Pledgor therefrom shall in any event be effective unless the same shall be permitted in writing by the Pledgor and the Collateral Agent, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, no action or inaction by the Collateral Agent shall be construed as a waiver of any Default or Event of Default, regardless of whether the Collateral Agent or any Lender may have had notice or knowledge of such Default or E vent of Default at the time.

11.5           Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns of the Collateral Agent, except that the Pledgor may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Collateral Agent (and any attempted assignment or transfer by the Pledgor without such consent shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assi gns permitted hereby, and, to the extent expressly contemplated hereby, the Secured Parties and the Related Parties of each of the Collateral Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

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11.6           Indemnification.  Without limiting the provisions of Section 9.03 of the Credit Agreement, the Pledgor shall indemnify the Collateral Agent and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all actual losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder, (ii) relating to or arising out of the acts or omissions of the Pledgor under this Agreement, (iii) resulting from the ownership of or lien on any Collateral, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

11.7           Taxes and Expenses.  Any taxes (including income taxes) payable or ruled payable by Federal or State authority in respect of this Security Agreement shall be paid by the Pledgor, together with interest and penalties, if any, subject to Pledgor’s right to contest such taxes pursuant to Section 5.04 of the Credit Agreement.  The Pledgor shall reimburse the Collateral Agent for any and all reasonable out-of-pocket expenses (including reasonable attorneys’, auditors’ and accountants’ fees) paid or incurred by the Collateral Agent in connection with the preparation, execution, delivery, administration, collection and enforcement of this Security Agreement and in the administration, collection, preservation or sale of the Collateral.  Any and all costs and expenses incurred by the Pledgor in the performance of actions required pursuant to the terms hereof shall be borne solely by the Pledgor.

11.8           Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

11.9           Counterparts; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement shall become effective when it shall have been executed by the Collateral Agent and when the Collateral Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors an d assigns.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

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11.10         Trial by Jury.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

11.11         Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

11.12         Secured Party Performance of Pledgor’s Obligations.  Without having any obligation to do so, the Collateral Agent may perform or pay any obligation which the Pledgor has agreed to perform or pay in this Agreement and the Pledgor shall reimburse the Collateral Agent for any reasonable amounts paid by the Collateral Agent pursuant to this Section 11.12.  The Pledgor’s obligation to reimburse the Collateral Agent pursuant to the preceding sentence shall be an Obligation payable on demand.

11.13         Collateral Agent.  WestLB AG, New York Branch has been appointed Collateral Agent for the Secured Parties hereunder pursuant to Article VIII of the Credit Agreement.  It is expressly understood and agreed by the parties to this Security Agreement that any authority conferred upon the Collateral Agent hereunder is subject to the terms of the delegation of authority made by the Secured Parties to the Collateral Agent pursuant to the Credit Agreement, and that the Collateral Agent has agreed to act (and any successor Collateral Agent shall act) as such hereunder only on the express conditions contained in such Article VIII. & #160;Any successor Collateral Agent appointed pursuant to Article VIII of the Credit Agreement shall be entitled to all the rights, interests and benefits of the Collateral Agent hereunder.

[THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

PLEDGOR
CAPITAL TRUST, INC., a Maryland corporation
By:	/s/ Geoffrey G. Jervis
	Name:  Geoffrey G. Jervis
	Title:  Chief Financial Officer

S-1

COLLATERAL AGENT
WESTLB AG, NEW YORK BRANCH
By:	/s/ Christian Reuhmer
	Name:  Christian Reuhmer
	Title:  Managing Director

By:	/s/ Petra Beckert
	Name:  Petra Beckert
	Title:  Executive Director

S-2

Schedule 1

		Face Value
Class	Cusip	Original	Current
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Schedule 2

		Face Value
Class	Cusip	Original	Current
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]

[***]   Information has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

EX-31.1

Exhibit 31.1

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen D. Plavin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Capital Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 26, 2010

/s/ Stephen D. Plavin

Stephen D. Plavin

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Geoffrey G. Jervis, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Capital Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 26, 2010

/s/ Geoffrey G. Jervis

Geoffrey G. Jervis

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Capital Trust, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Stephen D. Plavin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stephen D. Plavin

Stephen D. Plavin

Chief Executive Officer

October 26, 2010

This certification accompanies each Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Capital Trust, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Geoffrey G. Jervis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Geoffrey G. Jervis

Geoffrey G. Jervis

Chief Financial Officer

October 26, 2010

This certification accompanies each Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1

Exhibit 99.1

RISK FACTORS

Risks Related to Our Investment Activities

We have recently experienced significant loses and given the condition of our balance sheet portfolio we may experience future losses.

We experienced net losses of $195.3 million and $576.4 million in the nine months ended September 30, 2010 and year ended December 31, 2009, respectively, and currently have negative shareholders equity of $426.6 million. Our losses have resulted principally from reserves and impairments recorded on our investments and there can be no assurance that our investments will not further deteriorate and lead us to record further reserves and impairments, which may be significant and lead to future material net losses.

Our current business is subject to a high degree of risk. Our assets and liabilities are subject to increasing risk due to the impact of market turmoil in commercial real estate. Our efforts to stabilize our business with the restructuring of our debt obligations may not be successful as our balance sheet portfolio is subject to the risk of further deterioration and ongoing turmoil in the financial markets.

Our portfolio is comprised of debt and related interests, directly or indirectly secured by commercial real estate. A significant portion of these investments are in subordinate positions, increasing the risk profile of our investments as underlying property performance deteriorates. Furthermore, we have leveraged our portfolio at the corporate level, effectively further increasing our exposure to loss on our investments. The recent financial market turmoil and economic recession has resulted in a material deterioration in the value of commercial real estate and dramatically reduced the amount of capital to finance the commercial real estate industry (both at the property and corporate level). Given the composition of our portfolio, the leverage in our capital structure and the continuing negative impact of the commercial real estate market turmoil, the risks associated with our business have dramatically increased. Even with the March 2009 restructuring of our debt obligations, we may not be able to satisfy our obligations to our lenders. There can be no assurance that further restructuring will not be required and that any such restructuring will be successful. The impact of the economic recession on the commercial real estate sector in general, and our portfolio in particular, cannot be predicted and we expect to experience significant defaults by borrowers and other impairments to our investments. These events may trigger defaults under our restructured debt obligations that may result in the exercise of remedies that cause severe (and potentially complete) losses in the book value of our investments. Therefore, an investment in our class A common stock is subject to a high degree of risk.

Given current conditions, our restructured debt obligations are an unstable source of financing and expose us to further erosions of shareholders equity.

Our secured obligations mature in March 2011. There can be no assurance that we will be able to further extend our liabilities, in which case we may lose substantially all of our assets. Furthermore, any extension of these liabilities would likely require further repayment and changes in economic terms that may have a material adverse impact on us.

Our restructured debt obligations with our lenders prohibit new balance sheet investment activities, which prevents us from growing our balance sheet portfolio.

Under the terms of the restructured debt obligations, we are prohibited from acquiring or originating new investments. This restriction precludes us from growing our balance sheet portfolio at a time when investment opportunities that provide attractive risk-adjusted returns may otherwise be available to us. Our interest earning investments will continue to be reduced which will negatively impact our net investment income. There can be no assurance that we will be able to retire completely or refinance our restructured debt obligations so that we can resume our balance sheet investment activities.

1

Our liquidity will be impacted by our restructured debt obligations and any plans to further restructure our debt obligations or recapitalize our business to improve liquidity may involve a high cost of capital and significant dilution to our shareholders.

Our restructured debt obligations further reduce our current liquidity as a result of ongoing principal payment sweeps and additional interest payments. The reduction in liquidity may impair our ability to meet our obligations and, given the covenants contained in our restructured debt obligations, our ability to improve our liquidity position is constrained. In addition, we must maintain a minimum of $5.0 million in liquidity during the remaining term of our restructuring, a requirement that may limit our ability to make commitments to investment management vehicles and, ultimately, that we may not be able to maintain.

To improve our liquidity, we will need to further restructure our debt obligations and/or recapitalize our business, for which we can provide no assurances. We would expect any such restructuring and/or recapitalization to require us to raise additional capital at a significantly high cost of capital and/or with significant dilution to our shareholders. Our shareholders are subordinate to the claims of our creditors and therefore we can provide no assurance that any transaction to restructure or recapitalize will provide any recovery to our shareholders.

Our restructured debt obligations are subject to debt to collateral value ratio maintenance covenants for which we can provide no assurance as to our future compliance.

Under the terms of our debt restructuring, we eliminated the cash margin call provisions and amended the mark-to-market provisions that were in effect under the original terms of the secured credit facilities. The revised secured credit facilities allow our secured lenders to determine collateral value based upon changes in the performance of the underlying real estate collateral as opposed to changes in market spreads under the original terms. Beginning September 2009, each collateral pool may be valued monthly. If the ratio of a secured lender’s total outstanding secured credit facility balance to total collateral value exceeds 1.15x the ratio calculated as of the effective date of the amended agreements, we may be required to liquidate collateral and reduce the borrowings or post other collateral to bring the ratio back into compliance with the prescribed ratio. There can be no assurances that we will pass these tests and, as the commercial real estate markets continue to deteriorate, we expect that passing these tests will become more difficult. If we fail these tests, sales of assets to return to compliance will be extremely difficult in light of the lack of liquidity for the types of assets that serve as collateral and, even if we locate buyers for the collateral, the sales prices may be insufficient to reduce the ratio of outstanding secured credit facility balance to total collateral value. Failure to remedy these tests is an event of default under our secured credit facilities and would trigger a cross default under other of our financial instruments. Any such action would have a material adverse impact on our business and financial condition and would negatively impact our share price.

The U.S. and other financial markets have been in turmoil and the U.S. and other economies in which we operate are in the midst of an economic recession which can be expected to negatively impact our operations.

The U.S. and other financial markets have been experiencing extreme dislocations and a severe contraction in available liquidity globally as important segments of the credit markets are frozen as lenders are unwilling or unable to originate new credit. Global financial markets have been disrupted by, among other things, volatility in security prices, credit rating downgrades, sovereign debt default concerns, currency devaluation, and the failure and near failure of a number of large financial institutions and declining valuations, and this disruption has been acute in real estate related markets. This disruption has lead to a decline in business and consumer confidence and increased unemployment and has precipitated an economic recession around the globe where recoveries have been weak and may not be sustained. As a consequence, owners and operators of commercial real estate that secure or back our investments have experienced distress and commercial real estate values have declined substantially. We are unable to predict the likely duration or severity of the current disruption in financial markets and adverse economic conditions which could materially and adversely affect our business, financial condition and results of operations, including leading to significant impairment to our assets and our ability to generate income.

2

Our existing loans and investments expose us to a high degree of risk associated with investing in real estate assets.

Real estate historically has experienced significant fluctuations and cycles in performance that may result in reductions in the value of our real estate related investments. The performance and value of our loans and investments once originated or acquired by us depends upon many factors beyond our control. The ultimate performance and value of our investments is subject to the varying degrees of risk generally incident to the ownership and operation of the properties which collateralize or support our investments. The ultimate performance and value of our loans and investments depends upon, in large part, the commercial property owner’s ability to operate the property so that it produces sufficient cash flows necessary either to pay the interest and principal due to us on our loans and investments or pay us as an equity advisor. Revenues and cash flows may be adversely affected by:

· changes in national economic conditions;

· changes in local real estate market conditions due to changes in national or local economic conditions or changes in local property market characteristics;

· the extent of the impact of the current turmoil in the financial markets, including the lack of available debt financing for commercial real estate;

· tenant bankruptcies;

· competition from other properties offering the same or similar services;

· changes in interest rates and in the state of the debt and equity capital markets;

· the ongoing need for capital improvements, particularly in older building structures;

· changes in real estate tax rates and other operating expenses;

· adverse changes in governmental rules and fiscal policies, civil unrest, acts of God, including earthquakes, hurricanes and other natural disasters, and acts of war or terrorism, which may decrease the availability of or increase the cost of insurance or result in uninsured losses;

· adverse changes in zoning laws;

· the impact of present or future environmental legislation and compliance with environmental laws;

· the impact of lawsuits which could cause us to incur significant legal expenses and divert management’s time and attention from our day-to-day operations; and

· other factors that are beyond our control and the control of the commercial property owners.

In the event that any of the properties underlying or collateralizing our loans or investments experiences any of the foregoing events or occurrences, the value of, and return on, such investments, our profitability and the market price of our class A common stock would be negatively impacted. In addition, our restructured debt obligations contain covenants which limit the amount of protective investments we may make to preserve value in collateral securing our investments.

3

A prolonged economic slowdown, a lengthy or severe recession characterized by a weak recovery, a credit crisis, or declining real estate values could harm our operations or may adversely affect our liquidity.

We believe the risks associated with our business are more severe during periods of economic slowdown or recession like those we are currently experiencing, particularly if these periods are accompanied by declining real estate values.The recent dislocation of the global credit markets and anticipated collateral consequences to commercial activity of businesses unable to finance their operations as required has lead to a weakening of general economic conditions and precipitated declines in real estate values and otherwise exacerbate troubled borrowers’ ability to repay loans in our portfolio or backing our CMBS. We have made loans to hotels, an industry whose performance has been severely impacted by the current recession. Declining real estate values would likely reduce the level of new mortgage loan originations, since borrowers often use increases in the value of their existing properties to support the purchase of or investment in additional properties, which in turn could lead to fewer opportunities for our investment. Borrowers may also be less able to pay principal and interest on our loans as the real estate economy continues to weaken. Continued weakened economic conditions could negatively affect occupancy levels and rental rates in the markets in which the collateral supporting our investments are located, which, in turn, may have a material adverse impact on our cash flows and operating results of our borrowers. Further, declining real estate values like those occurring in the commercial real estate sector significantly increase the likelihood that we will incur losses on our loans in the event of default because the value of our collateral may be insufficient to cover our basis in the loan. Any sustained period of increased payment delinquencies, foreclosures or losses could adversely affect both our net interest income from loans in our portfolio as well as our ability to operate our investment management business, which would significantly harm our revenues, results of operations, financial condition, liquidity, business prospects and our share price.

We are exposed to the risks involved with making subordinated investments.

Our subordinated investments involve the risks attendant to investments consisting of subordinated loans and similar positions. Subordinate positions incur losses before the senior positions in a capital structure and, as a result, foreclosures on the underlying collateral can reduce or eliminate the proceeds available to satisfy our investment. Also, in certain cases where we experience appraisal reductions, we may lose our controlling class status, or special servicer designator rights. In many cases, management of our investments and our remedies with respect thereto, including the ability to foreclose on or direct decisions with respect to the collateral securing such investments, is subject to the rights of senior lenders and the rights set forth in inter-creditor or servicing agreements. Our interests and those of the senior lenders and other interested parties may not be aligned.

We are obligated to fund unfunded commitments under our loan agreements.

We are required to fund unfunded obligations to our borrowers. Historically, prior to our restructuring, we relied upon our lenders to fund a portion of these commitments. Going forward, we can rely only on our immediately available liquidity to meet these commitments. If we do not have the liquidity in excess of the minimum amounts required under our restructured debt obligations, and the lenders do not consent to our obtaining additional financing, if available, we would default on these commitments and potentially lose value in these investments and expose ourselves to litigation.

We are subject to counterparty risk associated with our debt obligations and interest rate swaps.

Our counterparties for these critical financial relationships include both domestic and international financial institutions. Many of them have been severely impacted by the credit market turmoil and have been experiencing financial pressures. In some cases, our counterparties have filed bankruptcy.

We are subject to the general risk of a leveraged investment strategy and the specific risks of our restructured indebtedness.

Our restructured secured debt obligations are secured by our investments, which are subject to being revalued by our credit providers. If the value of the underlying property collateralizing our investments declines, we may be required to liquidate our investments, the impact of which could be magnified if such a liquidation is at a commercially inopportune time, such as the market environment we are currently experiencing. In addition, the occurrence of any event or condition which causes any obligation or liability of more than $1.0 million to become due prior to its scheduled maturity or any monetary default under our restructured debt obligations if the amount of such obligation is at least $1.0 million could constitute a cross-default under our restructured debt obligations. If a cross-default occurs, the maturity of almost all of our indebtedness could be accelerated and become immediately due and payable.

4

We guarantee many of our debt and contingent obligations.

We guarantee the performance of many of our obligations, including, but not limited to, our repurchase agreements, derivative agreements, obligations to co-invest in our investment management vehicles and unsecured indebtedness. The non-performance of such obligations may cause losses to us in excess of the capital we initially may have invested or committed under such obligations and there is no assurance that we will have sufficient capital to cover any such losses.

Our secured and unsecured credit agreements may impose restrictions on our operation of the business.

Under our secured and unsecured indebtedness, such as our credit and derivative agreements, we make certain representations, warranties and affirmative and negative covenants that restrict our ability to operate while still utilizing those sources of credit. Currently, our restructured debt obligations prohibit us from acquiring or originating new balance sheet investments except, subject to certain limitations, co-investments in our investment management vehicles or protective investments to defend existing collateral assets on our balance sheet, and from incurring additional indebtedness unless used to pay down suchobligations. In addition, such representations, warranties and covenants include, but are not limited to covenants which:

· limit the total cash compensation to all employees and, specifically with respect to our chief executive officer and chief financial officer, freeze their base salaries at 2008 levels, and require cash bonuses to any of them to be approved by a committee comprised of one representative designated by the secured lenders, the administrative agent under the senior unsecured credit facility and a representative of our board of directors;

· prohibit the payment of cash dividends to our common shareholders except to the minimum extent necessary to maintain our REIT status;

· require us to maintain a minimum amount of liquidity, as defined, of $5.0 million;

· trigger an event of default if our current chief executive officer ceases his current employment with us during the term of the agreement and we fail to hire a replacement acceptable to the lenders; and

· trigger an event of default, if any event or condition occurs which causes any obligation or liability of more than $1.0 million to become due prior to its scheduled maturity or any monetary default under our restructured debt obligations if the amount of such obligation is at least $1.0 million.

Our success depends on the availability of attractive investments and our ability to identify, structure, consummate, leverage, manage and realize returns on attractive investments.

Our operating results are dependent upon the availability of, as well as our ability to identify, structure, consummate, leverage, manage and realize returns on, credit sensitive investment opportunities for our managed vehicles and our balance sheet assuming we are able to resume balance sheet investment activity. In general, the availability of desirable investment opportunities and, consequently, our balance sheet returns and our investment management vehicles’ returns, will be affected by the level and volatility of interest rates, conditions in the financial markets, general economic conditions, the demand for credit sensitive investment opportunities and the supply of capital for such investment opportunities. We cannot make any assurances that we will be successful in identifying and consummating investments which satisfy our rate of return objectives or that such investments, once consummated, will perform as anticipated. In addition, if we are not successful in investing for our investment management vehicles, the potential revenues we earn from management fees and co-investment returns will be reduced. We may expend significant time and resources in identifying and pursuing targeted investments, some of which may not be consummated.

5

The real estate investment business is highly competitive. Our success depends on our ability to compete with other providers of capital for real estate investments.

Our business is highly competitive. Competition may cause us to accept economic or structural features in our investments that we would not have otherwise accepted and it may cause us to search for investments in markets outside of our traditional product expertise. We compete for attractive investments with traditional lending sources, such as insurance companies and banks, as well as other REITs, specialty finance companies and private equity vehicles with similar investment objectives, which may make it more difficult for us to consummate our target investments. Many of our competitors have greater financial resources and lower costs of capital than we do, which provides them with greater operating flexibility and a competitive advantage relative to us.

Our loans and investments may be subject to fluctuations in interest rates which may not be adequately protected, or protected at all, by our hedging strategies.

Our current balance sheet investments include loans with both floating interest rates and fixed interest rates. Floating rate investments earn interest at rates that adjust from time to time (typically monthly) based upon an index (typically one month LIBOR). These floating rate loans are insulated from changes in value specifically due to changes in interest rates, however, the coupons they earn fluctuate based upon interest rates (again, typically one month LIBOR) and, in a declining and/or low interest rate environment, these loans will earn lower rates of interest and this will impact our operating performance. Fixed interest rate investments, however, do not have adjusting interest rates and, as prevailing interest rates change, the relative value of the fixed cash flows from these investments will cause potentially significant changes in value. We may employ various hedging strategies to limit the effects of changes in interest rates (and in some cases credit spreads), including engaging in interest rate swaps, caps, floors and other interest rate derivative products. We believe that no strategy can completely insulate us or our investment management vehicles from the risks associated with interest rate changes and there is a risk that they may provide no protection at all and potentially compound the impact of changes in interest rates. Hedging transactions involve certain additional risks such as counterparty risk, the legal enforceability of hedging contracts, the early repayment of hedged transactions and the risk that unanticipated and significant changes in interest rates may cause a significant loss of basis in the contract and a change in current period expense. We cannot make assurances that we will be able to enter into hedging transactions or that such hedging transactions will adequately protect us or our investment management vehicles against the foregoing risks.

Accounting for derivatives under GAAP is extremely complicated. Any failure by us to account for our derivatives properly in accordance with GAAP in our consolidated financial statements could adversely affect our earnings. In particular, cash flow hedges which are not perfectly correlated (and appropriately designated and/or documented as such) with a variable rate financing will impact our reported income as gains, and losses on the ineffective portion of such hedges.

Our use of leverage may create a mismatch with the duration and index of the investments that we are financing.

We attempt to structure our leverage to minimize the difference between the term of our investments and the leverage we use to finance such an investment. In light of the financial market turmoil, we can no longer rely on a functioning market to be available to us in order to refinance our existing debt. In March 2009, in the face of the financial market dislocation, we restructured our recourse debt obligations; however, there can be no assurances that our restructuring will enable the successful collection of our balance sheet assets or that our liquidity and financial condition will not require us to pursue a further restructuring of our debt and/or recapitalization of our business. The risks of a duration mismatch are further magnified by the trends we are experiencing in our portfolio which results from extending loans made to our borrowers in order to maximize the likelihood and magnitude of our recovery on our assets. This trend effectively extends the duration of our assets, while the ultimate duration of our liabilities is uncertain.

6

Our loans and investments are illiquid, which will constrain our ability to vary our portfolio of investments.

Our real estate investments and structured financial product investments are relatively illiquid and some are highly illiquid. Such illiquidity may limit our ability to vary our portfolio or our investment management vehicles’ portfolios of investments in response to changes in economic and other conditions. Illiquidity may result from the absence of an established market for investments as well as the legal or contractual restrictions on their resale. In addition, illiquidity may result from the decline in value of a property securing these investments. We cannot make assurances that the fair market value of any of the real property serving as security will not decrease in the future, leaving our or our investment management vehicles’ investments under-collateralized or not collateralized at all, which could impair the liquidity and value, as well as our return on such investments.

We may not have control over certain of our loans and investments.

Our ability to manage our portfolio of loans and investments may be limited by the form in which they are made. In certain situations, we or our investment management vehicles may:

· acquire investments subject to rights of senior classes and servicers under inter-creditor or servicing agreements;

· acquire only a minority and/or a non-controlling participation in an underlying investment;

· co-invest with third parties through partnerships, joint ventures or other entities, thereby acquiring non-controlling interests; or

· rely on independent third party management or strategic partners with respect to the management of an asset.

Therefore, we may not be able to exercise control over the loan or investment. Such financial assets may involve risks not present in investments where senior creditors, servicers or third party controlling investors are not involved. Our rights to control the process following a borrower default may be subject to the rights of senior creditors or servicers whose interests may not be aligned with ours. A third party partner or co-venturer may have financial difficulties resulting in a negative impact on such asset, may have economic or business interests or goals which are inconsistent with ours and those of our investment management vehicles, or may be in a position to take action contrary to our or our investment management vehicles’ investment objectives. In addition, we and our investment management vehicles may, in certain circumstances, be liable for the actions of our third party partners or co-venturers.

The use of our CDO financings may have a negative impact on our cash flow.

The terms of CDOs generally provide that the principal amount of investments must exceed the principal balance of the related bonds by a certain amount and that interest income exceeds interest expense by a certain ratio. Certain of our CDOs provide that, if defaults, losses, or rating agency downgrades cause a decline in collateral value or cash flow levels, the cash flow otherwise payable to our retained subordinated classes may be redirected to repay classes of CDOs senior to ours until the tests are returned to compliance. In certain instances, we have breached these tests and cash flow has been redirected, and there can be no assurances that this will not occur on all of our CDOs. Once breached there is no certainty about when or if the cash flow redirection will remedy the tests’ failure or that cash flow will be restored to our subordinated classes. Other than collateral management fees, we currently receive cash payments from only one of our four CDOs, CDO III, which has caused a material deterioration in our cash flow available for operations, debt service, debt repayments and unfunded loan and fund management commitments.

7

We may be required to repurchase loans that we have sold or to indemnify holders of our CDOs.

If any of the loans we originate or acquire and sell or securitize through CDOs do not comply with representations and warranties that we make about certain characteristics of the loans, the borrowers and the underlying properties, we may be required to repurchase those loans or replace them with substitute loans. In addition, in the case of loans that we have sold instead of retained, we may be required to indemnify persons for losses or expenses incurred as a result of a breach of a representation or warranty. Repurchased loans typically require a significant allocation of working capital to carry on our books, and our ability to borrow against such assets is limited. Any significant repurchases or indemnification payments could adversely affect our financial condition and operating results.

The commercial mortgage and mezzanine loans we originate or acquire and the commercial mortgage loans underlying the commercial mortgage backed securities in which we invest are subject to delinquency, foreclosure and loss, which could result in losses to us.

Our commercial mortgage and mezzanine loans are secured by commercial property and are subject to risks of delinquency and foreclosure, and risks of loss that are greater than similar risks associated with loans made on the security of single-family residential property. The ability of a borrower to repay a loan secured by an income-producing property typically is dependent primarily upon the successful operation of the property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower’s ability to repay the loan may be impaired. Net operating income of an income-producing property can be affected by, among other things, tenant mix, success of tenant businesses, property management decisions, property location and condition, competition from comparable types of properties, changes in laws that increase operating expenses or limit rents that may be charged, any need to address environmental contamination at the property, changes in national, regional or local economic conditions and/or specific industry segments, declines in regional or local real estate values, declines in regional or local rental or occupancy rates, increases in interest rates, real estate tax rates and other operating expenses, and changes in governmental rules, regulations and fiscal policies, including environmental legislation, acts of God, terrorism, social unrest and civil disturbances.

Our investments in subordinated commercial mortgage backed securities and similar investments are subject to losses.

In general, losses on an asset securing a mortgage loan included in a securitization will be borne first by the equity holder of the property and then by the most junior security holder, referred to as the “first loss” position. In the event of default and the exhaustion of any equity support and any classes of securities junior to those in which we invest (and in some cases we may be invested in the junior most classes of securitizations), we may not be able to recover all of our investment in the securities we purchase. In addition, if the underlying mortgage portfolio has been overvalued by the originator, or if the values subsequently decline and, as a result, less collateral is available to satisfy interest and principal payments due on the related mortgage backed securities, the securities in which we invest may incur significant losses. Subordinate interests generally are not actively traded and are relatively illiquid investments and recent volatility in CMBS trading markets has caused the value of these investments to decline.

The prices of lower credit quality CMBS are generally less sensitive to interest rate changes than more highly rated investments, but more sensitive to adverse economic downturns and underlying borrower developments. A projection of an economic downturn, for example, could cause a decline in the price of lower credit quality CMBS because the ability of borrowers to make principal and interest payments on the mortgages underlying the mortgage backed securities may be impaired, as has occurred throughout the recent economic recession and weak recovery. In such event, existing credit support in the securitization structure may be insufficient to protect us against the loss of our principal on these securities.

We may have difficulty or be unable to sell some of our loans and commercial mortgage backed securities.

A prolonged period of frozen capital markets, decline in commercial real estate values and an out of favor real estate sector may prevent us from selling our loans and CMBS. Given the terms of our March 2009 restructuring, we may be forced to sell assets in order to meet required debt reduction levels. If the market for real estate loans and CMBS is disrupted or dislocated, this may be difficult or impossible, causing further losses or events of default.

8

The impact of the events of September 11, 2001 and the effect thereon on terrorism insurance expose us to certain risks.

The terrorist attacks on September 11, 2001 disrupted the U.S. financial markets, including the real estate capital markets, and negatively impacted the U.S. economy in general. Any future terrorist attacks, the anticipation of any such attacks, and the consequences of any military or other response by the U.S. and its allies may have a further adverse impact on the U.S. financial markets and the economy generally. We cannot predict the severity of the effect that such future events would have on the U.S. financial markets, the economy or our business.

In addition, the events of September 11, 2001 created significant uncertainty regarding the ability of real estate owners of high profile assets to obtain insurance coverage protecting against terrorist attacks at commercially reasonable rates, if at all. The Terrorism Risk Insurance Act of 2002, or TRIA, was extended in December 2007. Coverage under the new law, the Terrorism Risk Insurance Program Reauthorization Act, or TRIPRA, now expires in 2014. There is no assurance that TRIPRA will be extended beyond 2014. The absence of affordable insurance coverage may adversely affect the general real estate lending market, lending volume and the market’s overall liquidity and may reduce the number of suitable investment opportunities available to us and the pace at which we are able to make investments. If the properties that we invest in are unable to obtain affordable insurance coverage, the value of those investments could decline and in the event of an uninsured loss, we could lose all or a portion of our investment.

The economic impact of any future terrorist attacks could also adversely affect the credit quality of some of our loans and investments. Some of our loans and investments will be more susceptible to such adverse effects than others. We may suffer losses as a result of the adverse impact of any future attacks and these losses may adversely impact our results of operations.

There are increased risks involved with construction lending activities.

We originate loans for the construction of commercial and residential use properties. Construction lending generally is considered to involve a higher degree of risk than other types of lending due to a variety of factors, including generally larger loan balances, the dependency on successful completion of a project, the dependency upon the successful operation of the project (such as achieving satisfactory occupancy and rental rates) for repayment, the difficulties in estimating construction costs and loan terms which often do not require full amortization of the loan over its term and, instead, provide for a balloon payment at stated maturity.

Some of our investments and investment opportunities may be in synthetic form.

Synthetic investments are contracts between parties whereby payments are exchanged based upon the performance of an underlying obligation. In addition to the risks associated with the performance of the obligation, these synthetic interests carry the risk of the counterparty not performing its contractual obligations. Market standards, GAAP accounting methodology, tax and other regulations related to these investments are evolving, and we cannot be certain that their evolution will not adversely impact the value or sustainability of these investments. Furthermore, our ability to invest in synthetic investments, other than through taxable REIT subsidiaries, may be severely limited by the REIT qualification requirements because synthetic investment contracts generally are not qualifying assets and do not produce qualifying income for purposes of the REIT asset and income tests.

Risks Related to Our Investment Management Business and Management of CDOs

Our investment management agreements contain “clawback” provisions which may require repayment of incentive management fees previously received by us.

As part of our investment management business we earn incentive fees based on the performance of certain of our investment management vehicles. The investment management agreements which govern our relationship with these vehicles contain “clawback” provisions which may require the repayment of incentive fees previously received by us. If certain predetermined performance thresholds are not met upon the ultimate dissolution of such entities, we could be required to refund either a portion, or all of incentive fees previously received.

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Our March 2009 balance sheet restructuring and financial condition may adversely impact our investment management business.

In large part, our ability to raise capital and garner other investment management and advisory business is dependent upon our reputation as a balance sheet manager and credit underwriter, as well as the ability to demonstrate that we have the resources to manage and co-invest in our internal funds. Our recent losses and March 2009 restructuring limit our abilities in this regard. In addition, further credit deterioration in our balance sheet portfolio and our overall financial condition could jeopardize our status as an approved special servicer from the three major rating agencies, which would impair our ability to generate future servicing revenues.

We are subject to risks and uncertainties associated with operating our investment management business, and we may not achieve the investment returns that we expect.

We will encounter risks and difficulties as we operate our investment management business. In order to achieve our goals as an investment manager, we must:

· manage our investment management vehicles successfully by investing their capital in suitable investments that meet their respective investment criteria;

· actively manage the assets in our portfolios in order to realize targeted performance;

· create incentives for our management and professional staff to develop and operate the investment management business; and

· structure, sponsor and capitalize future investment management vehicles that provide investors with attractive investment opportunities.

If we do not successfully operate our investment management business to achieve the investment returns that we or the market anticipates, our results of operations may be adversely impacted.

We may expand our investment management business to involve other investment classes where we do not have prior investment experience. We may find it difficult to attract third party investors without a performance track record involving such investments. Even if we attract third party capital, there can be no assurance that we will be successful in deploying the capital to achieve targeted returns on the investments.

We face substantial competition from established participants in the private equity market as we offer investment management vehicles to third party investors.

We face significant competition from large financial and other institutions that have proven track records in marketing and managing vehicles and otherwise have a competitive advantage over us because they have access to pre-existing third party investor networks into which they can channel competing investment opportunities. If our competitors offer investment products that are competitive with products offered by us, we will find it more difficult to attract investors and to capitalize our investment management vehicles.

Our investment management vehicles are subject to the risk of defaults by third party investors on their capital commitments.

The capital commitments made by third party investors to our investment management vehicles represent unsecured promises by those investors to contribute cash to the investment management vehicles from time to time as investments are made by the investment management vehicles. Accordingly, we are subject to general credit risks that the investors may default on their capital commitments. If defaults occur, we may not be able to close loans and investments we have identified and negotiated which could materially and adversely affect the investment management vehicles’ investment program or make us liable for breach of contract, in either case to the detriment of our franchise in the private equity market.

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CTIMCO’s role as collateral manager for our CDOs and investment manager for our funds may expose us to liabilities to investors.

We are subject to potential liabilities to investors as a result of CTIMCO’s role as collateral manager for our CDOs and our investment management business generally. In serving in such roles, we could be subject to claims by CDO investors and investors in our funds that we did not act in accordance with our duties under our CDO and investment fund documentation or that we were negligent in taking or refraining from taking actions with respect to the underlying collateral in our CDOs or in making investments. In particular, the discretion that we exercise in managing the collateral for our CDOs and the investments in our investment management business could result in liability due to the current negative conditions in the commercial real estate market and the inherent uncertainties surrounding the course of action that will result in the best long term results with respect to such collateral and investments. This risk could be increased due to the affiliated nature of our roles. If we were found liable for our actions as collateral manager or investment manager and we were required to pay significant damages to our CDO and investment advisory investors, our financial condition could be materially adversely effected.

Risks Related to Our Company

We are dependent upon our senior management team to develop and operate our business.

Our ability to develop and operate our business depends to a substantial extent upon the experience, relationships and expertise of our senior management and key employees. We cannot assure you that these individuals will remain in our employ. Our chief executive officer, Stephen D. Plavin, and our chief credit officer, Thomas C. Ruffing, are currently not employed pursuant to employment agreements and the employment agreement with our chief financial officer, Geoffrey G. Jervis, expires on December 31, 2010. There can be no assurance that Messrs. Plavin and Ruffing, and upon expiration of his agreement, Mr. Jervis, will enter into new employment agreements pursuant to which they agree to long-term employment with us. In addition, the departure of Mr. Plavin from his employment with us constitutes an event of default under our restructured debt obligations unless a suitable replacement acceptable to the lenders is hired by us.

Our ability to compensate our employees is limited by our restructured debt obligations.

Our restructured debt obligations limit the aggregate cash compensation we are able to pay our employees (excluding our chief executive officer and chief financial officer) to 2008 aggregate compensation levels. In the case of our chief executive officer and chief financial officer, cash compensation must be approved by our lenders. This may impact our ability to retain our employees or attract new employees.

There may be conflicts between the interests of our investment management vehicles and us.

We are subject to a number of potential conflicts between our interests and the interests of our investment management vehicles. We are subject to potential conflicts of interest in the allocation of investment opportunities between our balance sheet once our balance sheet investment activity resumes and our investment management vehicles. In addition, we may make investments that are senior or junior to, participations in, or have rights and interests different from or adverse to, the investments made by our investment management vehicles. Our interests in such investments may conflict with the interests of our investment management vehicles in related investments at the time of origination or in the event of a default or restructuring of the investment. Finally, our officers and employees may have conflicts in allocating their time and services among us and our investment management vehicles.

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We must manage our portfolio in a manner that allows us to rely on an exclusion from registration under the Investment Company Act of 1940 in order to avoid the consequences of regulation under that Act.

We rely on an exclusion from registration as an investment company afforded by Section 3(c)(5)(C) of the Investment Company Act of 1940. Under this exclusion, we are required to maintain, on the basis of positions taken by the SEC staff in interpretive and no-action letters, a minimum of 55% of the value of the total assets of our portfolio in “mortgages and other liens on and interests in real estate,” which we refer to as “Qualifying Interests,” and a minimum of 80% in Qualifying Interests and real estate related assets. Because registration as an investment company would significantly affect our ability to engage in certain transactions or to organize ourselves in the manner we are currently organized, we intend to maintain our qualification for this exclusion from registration. In the past, based on SEC staff positions, when required due to the mix of assets in our balance sheet portfolio, we have purchased all of the outstanding interests in pools of whole residential mortgage loans, which we treat as Qualifying Interests. Investments in such pools of whole residential mortgage loans may not represent an optimum use of our investable capital when compared to the available investments we target pursuant to our investment strategy. These investments present additional risks to us, and these risks are compounded by our inexperience with such investments. We continue to analyze our investments and may acquire other pools of whole loan residential mortgage backed securities when and if required for compliance purposes.

We treat certain of our investments in CMBS, B Notes and mezzanine loans as Qualifying Interests for purposes of determining our eligibility for the exclusion provided by Section 3(c)(5)(C) to the extent such treatment is consistent with guidance provided by the SEC or its staff. In the absence of such guidance that otherwise supports the treatment of these investments as Qualifying Interests, we will treat them, for purposes of determining our eligibility for the exclusion provided by Section 3(c)(5)(C), as real estate related assets or miscellaneous assets, as appropriate.

We understand the SEC staff is currently reconsidering its interpretive policy under Section 3(c)(5)(C) and whether to advance rulemaking to define the basis for the exclusion. We cannot predict the outcome of this reconsideration or potential rulemaking initiative and its impact on our ability to rely on the exclusion.

If our portfolio does not comply with the requirements of the exclusion we rely upon, we could be forced to alter our portfolio by selling or otherwise disposing of a substantial portion of the assets that are not Qualifying Interests or by acquiring a significant position in assets that are Qualifying Interests. Altering our portfolio in this manner may have an adverse effect on our investments if we are forced to dispose of or acquire assets in an unfavorable market and may adversely affect our stock price.

If it were established that we were an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the SEC, that we would be unable to enforce contracts with third parties and that third parties could seek to obtain rescission of transactions undertaken during the period it was established that we were an unregistered investment company and limitations on corporate leverage that would have an adverse impact on our investment returns.

Changes in accounting pronouncements have materially changed the presentation and content of our financial statements.

Beginning January 1, 2010 we adopted new accounting guidance which required us to consolidate certain securitization trust entities in which we have subordinate investments. This consolidation resulted in a significant increase to our GAAP-basis assets and liabilities, which may be misleading to readers of our financial statements. In addition, we are required to record losses under GAAP on consolidated assets which may be in excess of our economic interest in the respective consolidated entities.

We may not have sufficient cash flow to satisfy our tax liability arising from the use of CDO financing.

Due to the redirection provisions of our CDOs, which reallocate principal and interest otherwise distributable to us to repay senior note holders, assets financed through our CDOs may generate current taxable income without a corresponding cash distribution to us. In order to raise the cash necessary to meet our tax and/or distribution requirements, we may be required to borrow funds, sell a portion of our assets at disadvantageous prices or find other alternatives. In any case, there can be no assurances that we will be able to generate sufficient cash from these endeavors to meet our tax and/or distribution requirements.

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In the event we experience an “ownership change” for purposes of Section 382 of the Internal Revenue Code, our ability to utilize our net operating losses and net capital losses against future taxable income will be limited, increasing our dividend distribution requirement for which we may not have sufficient cash flow.

We have substantial net operating and net capital loss carry forwards which we use to offset our tax and/or distribution requirements. In the event that we experience an “ownership change” for purposes of Section 382 of the Internal Revenue Code, our ability to use these losses will be effectively eliminated. An “ownership change” is determined based upon the changes in ownership that occur in our common stock for a trailing three year period. Such change provisions may be triggered by regular trading activity in our common stock, and are generally beyond our control.

Risks Relating to Our Class A Common Stock

Sales or other dilution of our equity may adversely affect the market price of our class A common stock.

In connection with restructuring our debt obligations, we issued warrants to purchase 3,479,691 shares of our class A common stock, which represents approximately 15.5% of our outstanding common stock and stock units as of October 22, 2010. The market price of our class A common stock could decline as a result of sales of a large number of shares of class A common stock acquired upon exercise of the warrants in the market. If the warrants are exercised, the issuance of additional shares of class A common stock would dilute the ownership interest of our existing shareholders.

Because a limited number of shareholders, including members of our management team, own a substantial number of our shares, they may make decisions or take actions that may be detrimental to your interests.

Our executive officers and directors, along with vehicles for the benefit of their families, collectively own and control 1,550,283 shares of our common stock representing approximately 6.9% of our outstanding common stock and stock units as of October 22, 2010. W. R. Berkley Corporation, or WRBC, which employs one of our directors, owns 3,843,413 shares of our common stock, which represents approximately 17.0% of our outstanding common stock and stock units as of October 22, 2010. By virtue of their voting power, these shareholders have the power to significantly influence our affairs and are able to influence the outcome of matters required to be submitted to shareholders for approval, including the election of our directors, amendments to our charter, mergers, sales of assets and other acquisitions or sales. The influence exerted by these shareholders over our affairs might not be consistent with the interests of some or all of our other shareholders. In addition, the concentration of ownership in our officers or directors or shareholders associated with them may have the effect of delaying or preventing a change in control of our company, including transactions in which you might otherwise receive a premium for your class A common stock, and might negatively affect the market price of our class A common stock.

Some provisions of our charter and bylaws and Maryland law may deter takeover attempts, which may limit the opportunity of our shareholders to sell their shares at a favorable price.

Some of the provisions of our charter and bylaws and Maryland law discussed below could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our shareholders by providing them with the opportunity to sell their shares at a premium to the then current market price.

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Issuance of Preferred Stock Without Shareholder Approval. Our charter authorizes our board of directors to authorize the issuance of up to 100,000,000 shares of preferred stock and up to 100,000,000 shares of class A common stock. Our charter also authorizes our board of directors, without shareholder approval, to classify or reclassify any unissued shares of our class A common stock and preferred stock into other classes or series of stock and to amend our charter to increase or decrease the aggregate number of shares of stock of any class or series that may be issued. Our board of directors, therefore, can exercise its power to reclassify our stock to increase the number of shares of preferred stock we may issue without shareholder approval. Preferred stock may be issued in one or more series, the terms of which may be determined without further action by shareholders. These terms may include preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption. The issuance of any preferred stock, however, could materially adversely affect the rights of holders of our class A common stock and, therefore, could reduce the value of the class A common stock. In addition, specific rights granted to future holders of our preferred stock could be used to restrict our ability to merge with, or sell assets to, a third party. The power of our board of directors to issue preferred stock could make it more difficult, delay, discourage, prevent or make it more costly to acquire or effect a change in control, thereby preserving the current shareholders’ control.

Advance Notice Bylaw. Our bylaws contain advance notice procedures for the introduction of business and the nomination of directors. These provisions could discourage proxy contests and make it more difficult for you and other shareholders to elect shareholder-nominated directors and to propose and approve shareholder proposals opposed by management.

Maryland Takeover Statutes. We are subject to the Maryland Business Combination Act which could delay or prevent an unsolicited takeover of us. The statute substantially restricts the ability of third parties who acquire, or seek to acquire, control of us to complete mergers and other business combinations without the approval of our board of directors even if such transaction would be beneficial to shareholders. “Business combinations” between such a third party acquirer or its affiliate and us are prohibited for five years after the most recent date on which the acquirer or its affiliate becomes an “interested shareholder.” An “interested shareholder” is defined as any person who beneficially owns 10 percent or more of our shareholder voting power or an affiliate or associate of ours who, at any time within the two-year period prior to the date interested shareholder status is determined, was the beneficial owner of 10 percent or more of our shareholder voting power. If our board of directors approved in advance the transaction that would otherwise give rise to the acquirer or its affiliate attaining such status, such as the issuance of shares of our class A common stock to WRBC, the acquirer or its affiliate would not become an interested shareholder and, as a result, it could enter into a business combination with us. Our board of directors could choose not to negotiate with an acquirer if the board determined in its business judgment that considering such an acquisition was not in our strategic interests. Even after the lapse of the five-year prohibition period, any business combination with an interested shareholder must be recommended by our board of directors and approved by the affirmative vote of at least:

· 80% of the votes entitled to be cast by shareholders; and

· two-thirds of the votes entitled to be cast by shareholders other than the interested shareholder and affiliates and associates thereof.

The super-majority vote requirements do not apply if the transaction complies with a minimum price requirement prescribed by the statute.

The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors prior to the time that an interested shareholder becomes an interested shareholder. Our board of directors has exempted any business combination involving family partnerships controlled separately by John R. Klopp, our former chief executive officer, and Craig M. Hatkoff, our director, and a limited liability company indirectly controlled by a trust for the benefit of Samuel Zell, our chairman of the board, and his family. As a result, these persons and WRBC may enter into business combinations with us without compliance with the super-majority vote requirements and the other provisions of the statute.

We are subject to the Maryland Control Share Acquisition Act. With certain exceptions, the Maryland General Corporation Law provides that “control shares” of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares owned by the acquiring person or by our officers or by our directors who are our employees, and may be redeemed by us. “Control shares” are voting shares which, if aggregated with all other shares owned or voted by the acquirer, would entitle the acquirer to exercise voting power in electing directors within one of the specified ranges of voting power. A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions, including an undertaking to pay expenses, may compel our board to call a special meeting of shareholders to be held within 50 days of demand to consider the voting rights of the “control shares” in question. If no request for a meeting is made, we may present the question at any shareholders’ meeting.

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If voting rights are not approved at the shareholders’ meeting or if the acquiring person does not deliver the statement required by Maryland law, then, subject to certain conditions and limitations, we may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. If voting rights for control shares are approved at a shareholders’ meeting and the acquirer may then vote a majority of the shares entitled to vote, then all other shareholders may exercise appraisal rights. The fair value of the shares for purposes of these appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition. The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if we are not a party to the transaction, nor does it apply to acquisitions approved or exempted by our charter or bylaws. Our bylaws contain a provision exempting certain holders identified in our bylaws from this statute, including WRBC, family partnerships controlled separately by two of our former executive officers and directors, and a limited liability company indirectly controlled by a trust for the benefit of Samuel Zell and his family.

We are also subject to the Maryland Unsolicited Takeovers Act which permits our board of directors, among other things and notwithstanding any provision in our charter or bylaws, to elect on our behalf to stagger the terms of directors and to increase the shareholder vote required to remove a director. Such an election would significantly restrict the ability of third parties to wage a proxy fight for control of our board of directors as a means of advancing a takeover offer. If an acquirer was discouraged from offering to acquire us, or prevented from successfully completing a hostile acquisition, you could lose the opportunity to sell your shares at a favorable price.

The price of our class A common stock may be impacted by many factors.

As with any public company, a number of factors may impact the trading price of our class A common stock, many of which are beyond our control. These factors include, in addition to other risk factors mentioned in this section:

· the level of institutional interest in us;

· the perception of REITs generally and REITs with portfolios similar to ours, in particular, by market professionals;

· the attractiveness of securities of REITs in comparison to other companies;

· the market’s perception of our ability to successfully manage our portfolio and our March 2009 restructuring; and;

· the general economic environment and the commercial real estate property and capital markets.

Our restructured debt obligations restrict us from paying cash dividends, which may reduce the attractiveness of an investment in our class A common stock.

The restrictions on our inability to pay cash dividends, except in a limited manner, will reduce the current dividend yield on our class A common stock and this can negatively impact the price of our class A common stock as investors seeking current income pursue alternative investments.

Your ability to sell a substantial number of shares of our class A common stock may be restricted by the low trading volume historically experienced by our class A common stock.

Although our class A common stock is listed on the New York Stock Exchange, the daily trading volume of our shares of class A common stock has historically been lower than the trading volume for certain other companies. As a result, the ability of a holder to sell a substantial number of shares of our class A common stock in a timely manner without causing a substantial decline in the market value of the shares, especially by means of a large block trade, may be restricted by the limited trading volume of the shares of our class A common stock.

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Our shares of class A common stock may be delisted from the NYSE if the price per share trades below $1.00 for an extended period of time, which could negatively affect our business, our financial condition, our results of operations and our ability to service our debt obligations.

Our class A common stock at times has traded below $1.00. In the event the average closing price of our class A common stock for a 30-day period is below $1.00, our stock could be delisted from the NYSE. The threat of delisting and/or a delisting of our class A common stock could have adverse effects by, among other things:

· reducing the trading liquidity and market price of our class A common stock;

· reducing the number of investors willing to hold or acquire our class A common stock, thereby further restricting our ability to obtain equity financing; and

· reducing our ability to retain, attract and motivate directors, officers and employees.

Risks Related to our REIT Status and Certain Other Tax Items

Our charter does not permit any individual to own more than 9.9% of our class A common stock, and attempts to acquire our class A common stock in excess of the 9.9% limit would be void without the prior approval of our board of directors.

For the purpose of preserving our qualification as a REIT for federal income tax purposes, our charter prohibits direct or constructive ownership by any individual of more than a certain percentage, currently 9.9%, of the lesser of the total number or value of the outstanding shares of our class A common stock as a means of preventing ownership of more than 50% of our class A common stock by five or fewer individuals. The charter’s constructive ownership rules are complex and may cause the outstanding class A common stock owned by a group of related individuals or entities to be deemed to be constructively owned by one individual. As a result, the acquisition of less than 9.9% of our outstanding class A common stock by an individual or entity could cause an individual to own constructively in excess of 9.9% of our outstanding class A common stock, and thus be subject to the charter’s ownership limit. There can be no assurance that our board of directors, as permitted in the charter, will increase, or will not decrease, this ownership limit in the future. Any attempt to own or transfer shares of our class A common stock in excess of the ownership limit without the consent of our board of directors will be void, and will result in the shares being transferred by operation of the charter to a charitable trust, and the person who acquired such excess shares will not be entitled to any distributions thereon or to vote such excess shares.

The 9.9% ownership limit may have the effect of precluding a change in control of us by a third party without the consent of our board of directors, even if such change in control would be in the interest of our shareholders or would result in a premium to the price of our class A common stock (and even if such change in control would not reasonably jeopardize our REIT status). The ownership limit exemptions and the reset limits granted to date would limit our board of directors’ ability to reset limits in the future and at the same time maintain compliance with the REIT qualification requirement prohibiting ownership of more than 50% of our class A common stock by five or fewer individuals.

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There are no assurances that we will be able to pay dividends in the future.

We expect in the future when we generate taxable income to pay quarterly dividends and to make distributions to our shareholders in amounts so that all or substantially all of our taxable income in each year, subject to certain adjustments, is distributed. This, along with our compliance with other requirements, should enable us to qualify for the tax benefits accorded to a REIT under the Internal Revenue Code. All distributions will be made at the discretion of our board of directors and will depend on our earnings, our financial condition, maintenance of our REIT status and such other factors as our board of directors may deem relevant from time to time. There are no assurances that we will be able to pay dividends in the future. In addition, some of our distributions may include a return of capital, which would reduce the amount of capital available to operate our business. There have been recent changes to the Internal Revenue Code that would allow us to pay required dividends in the form of additional shares of common stock equal in value up to 90% of the required dividend. We expect that as we undertake efforts to conserve cash and enhance our liquidity and comply with our restructured debt obligations covenants, future required dividends on our class A common stock will be paid in the form of class A common stock to the fullest extent permitted. There can be no assurance as to when we will no longer be subject to debt obligation covenants or will cease our efforts to conserve cash and enhance liquidity to an extent we believe positions us to resume the payment of dividends completely or substantially in cash.

We will be dependent on external sources of capital to finance our growth.

As with other REITs, but unlike corporations generally, our ability to finance our growth must largely be funded by external sources of capital because we generally will have to distribute to our shareholders 90% of our taxable income in order to qualify as a REIT, including taxable income where we do not receive corresponding cash. Our access to external capital will depend upon a number of factors, including general market conditions, the market’s perception of our growth potential, our current and potential future earnings, cash distributions and the market price of our class A common stock.

If we do not maintain our qualification as a REIT, we will be subject to tax as a regular corporation and face a substantial tax liability. Our taxable REIT subsidiaries will be subject to income tax.

We expect to continue to operate so as to qualify as a REIT under the Internal Revenue Code. However, qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which only a limited number of judicial or administrative interpretations exist. Notwithstanding the availability of cure provisions in the tax code, various compliance requirements could be failed and could jeopardize our REIT status. Furthermore, new tax legislation, administrative guidance or court decisions, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to qualify as a REIT. If we fail to qualify as a REIT in any tax year, then:

· we would be taxed as a regular domestic corporation, which under current laws, among other things, means being unable to deduct distributions to shareholders in computing taxable income and being subject to federal income tax on our taxable income at regular corporate rates;

· any resulting tax liability could be substantial, could have a material adverse effect on our book value and would reduce the amount of cash available for distribution to shareholders;

· unless we were entitled to relief under applicable statutory provisions, we would be required to pay taxes, and thus, our cash available for distribution to shareholders would be reduced for each of the years during which we did not qualify as a REIT; and

· we generally would not be eligible to requalify as a REIT for four full taxable years.

Fee income from our investment management business is expected to be realized by one of our taxable REIT subsidiaries, and, accordingly, will be subject to income tax.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities and limit our expansion opportunities.

In order to qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, our sources of income, the nature of our investments in commercial real estate and related assets, the amounts we distribute to our shareholders and the ownership of our stock. We may also be required to make distributions to shareholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

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Complying with REIT requirements may force us to liquidate or restructure otherwise attractive investments.

In order to qualify as a REIT, we must also ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets. The remainder of our investments in securities cannot include more than 10% of the outstanding voting securities of any one issuer or 10% of the total value of the outstanding securities of any one issuer unless we and such issuer jointly elect for such issuer to be treated as a “taxable REIT subsidiary” under the Internal Revenue Code. The total value of all of our investments in taxable REIT subsidiaries cannot exceed 20% of the value of our total assets. In addition, no more than 5% of the value of our assets can consist of the securities of any one issuer. If we fail to comply with these requirements, we must dispose of a portion of our assets within 30 days after the end of the calendar quarter in order to avoid losing our REIT status and suffering adverse tax consequences.

Complying with REIT requirements may force us to borrow to make distributions to shareholders.

From time to time, our taxable income may be greater than our cash flow available for distribution to shareholders. If we do not have other funds available in these situations, we may be unable to distribute substantially all of our taxable income as required by the REIT provisions of the Internal Revenue Code. Thus, we could be required to borrow funds, sell a portion of our assets at disadvantageous prices or find another alternative. These options could increase our costs or reduce our equity. Our restructured debt obligations may cause us to recognize taxable income without any corresponding cash income and we may be required to distribute additional dividends in cash and/or class A common stock.

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