Employee Stock Purchase Plan

1998 Employee Stock Purchase Plan

by Capital Trust
January 29th, 1999


                                                                    Exhibit 10.3

                               CAPITAL TRUST, INC.

                        1998 EMPLOYEE STOCK PURCHASE PLAN



                  The purpose of this Plan is to provide  eligible  employees of
Capital Trust, Inc., a Maryland corporation,  and any corporate successor to all
or substantially  all of the assets or voting stock of Capital Trust, Inc. which
shall by  appropriate  action adopt the Plan (the  "Company") and certain of its
subsidiaries with opportunities to purchase class A common stock, par value $.01
per share, of the Company (the "Common Stock").

                  1.  Definitions.  For purposes of  administration of the Plan,
the following terms shall have the meanings indicated:

                  "Authorization Form" shall be defined in Section 6 hereof.

                  "Board" shall mean the Board of Directors of the Company.

                  "Code"  shall  mean the  Internal  Revenue  Code of  1986,  as
amended.

                  "Committee"  shall mean the  committee  of the Board,  if any,
appointed to administer the Plan.

                  "Compensation"  means the  amount of money  reportable  on the
employee's Federal Income Tax Withholding  Statement,  excluding  allowances and
reimbursements  for expenses such as relocation  allowances for travel expenses,
income or gains on the  exercise of Company  stock  options  and similar  items,
whether or not shown on the employee's Federal Income Tax Withholding Statement.

                  "Continuity of Control" shall be defined in Section 19 hereof.

                  "Designated Subsidiary" shall be defined in Section 4 hereof.

                  "Exercise Date" shall be defined in Section 11 hereof.

                  "Investment  Account" shall mean the separate account for each
participating employee reflecting the number of shares of Common Stock purchased
under the Plan that have not been withdrawn by the employee.

                  "Offering  Commencement  Date"  shall be  defined in Section 5
hereof.

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                  "Offerings" shall be defined in Section 5 hereof.

                  "Option" shall be defined in Section 11 hereof.

                  "Plan"  shall  mean the  Capital  Trust  1998  Employee  Stock
Purchase Plan.

                  "Plan Period" shall be defined in Section 5 hereof.

                  2. Share Authorization. The maximum number of shares of Common
Stock that may be issued under the Plan is (a) 1,000,000 minus (b) the number of
shares  of  Common  Stock  subject  to  or  issued  under  the  Company's   1998
Non-Employee Stock Purchase Plan.

                  3. Administration.  The Plan will be administered by the Board
or by the Committee.  The Board or the Committee has authority to make rules and
regulations  for the  administration  of the  Plan  and its  interpretation  and
decisions with regard thereto shall be final and conclusive.

                  4.  Eligibility.  Participation  in the Plan will  neither  be
permitted nor denied contrary to the requirements of Section 423 of the Code and
regulations  promulgated  thereunder.  All  employees of the Company,  including
directors who are employees,  and all employees of any subsidiary of the Company
(as  defined  in  Section  424(f)  of the Code)  designated  by the Board or the
Committee  from  time to time  (a  "Designated  Subsidiary"),  are  eligible  to
participate  in any one or more of the  offerings of Options to purchase  Common
Stock under the Plan provided that:

                           (a) they are  regularly  employed by the Company or a
                  Designated  Subsidiary  for more than twenty (20) hours a week
                  and for more than five (5) months in a calendar year, and they
                  have been employed, as of the applicable Offering Commencement
                  Date (as defined below), for at least three (3) months; and

                           (b) they are employees of the Company or a Designated
                  Subsidiary on the first day of the applicable  Plan Period (as
                  defined below).

                  No  employee  may be  granted  an  Option  hereunder  if  such
employee,  immediately  after the option is granted,  owns five (5%)  percent or
more of the total combined  voting power or value of the stock of the Company or
any subsidiary. For purposes of the preceding sentence, the attribution rules of
Section 424(d) of the Code shall apply in determining  the stock ownership of an
employee,  and all stock which the employee has a contractual  right to purchase
shall be treated as stock owned by the employee.

                  5. Offerings. Common Stock shall be offered for purchase under
the Plan through a series of successive offerings  ("Offerings") until such time
as (i) the maximum number of shares of Common Stock available for issuance under
the Plan shall have been issued pursuant

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to  purchase  rights  granted  under the Plan or (ii) the Plan  shall  have been
sooner  terminated in accordance  with Section 22 hereof.  The initial  Offering
will begin upon the later of (i) January 1, 1999 or (ii) the  effective  date of
the  Registration  Statement  on Form S-8  covering  the shares of Common  Stock
issuable under the Plan, and will end on June 30, 1999. The second Offering will
begin on July 1, 1999 and end on December 31, 1999.  Subsequent  Offerings  will
begin on the  successive  January 1 or July 1 (each,  an "Offering  Commencement
Date").  Each  Offering  Commencement  Date will begin a six (6) month period (a
"Plan  Period")  during which payroll  deductions  will be made and held for the
purchase  of  Common  Stock  at the end of the  Plan  Period.  The  Board or the
Committee may, at its discretion,  choose a different Plan Period of twelve (12)
months or less for subsequent Offerings.

                  6.  Participation.   An  employee  eligible  on  the  Offering
Commencement Date of any Offering may participate in such Offering by completing
and forwarding a payroll deduction  authorization form ("Authorization Form") to
the employee's appropriate payroll office at least thirty (30) days prior to the
applicable  Offering  Commencement Date. The Authorization Form will authorize a
regular payroll deduction from the Compensation  received by the employee during
the Plan Period. Unless an employee files a new form or withdraws from the Plan,
the  employee's  deductions  and  purchases  will  continue at the same rate for
future Offerings under the Plan as long as the Plan remains in effect.

                  7.  Deductions.  The Company will maintain  payroll  deduction
accounts for participating employees.  Payroll deductions may be at a set dollar
amount not less than $10.00 or a rate of any whole  percentage of  Compensation,
subject to the limitations in Section 11 hereof, with any change in Compensation
during the Plan  Period to result in an  automatic  corresponding  change in the
dollar amount withheld.

                  No employee may be granted an Option (as defined in Section 11
hereof) which permits the employee's  rights to purchase Common Stock under this
Plan and any other stock purchase plan of the Company and its  subsidiaries,  to
accrue at a rate which  exceeds  $25,000 of the fair market value of such Common
Stock (determined at the Offering Commencement Date of the Plan Period) for each
calendar year in which the Option is outstanding at any time.

                  8. Deduction Changes.  An employee may decrease or discontinue
payroll  deductions once during any Plan Period,  by filing a new  Authorization
Form.  However, an employee may not increase his payroll deduction during a Plan
Period.  If an employee  elects to discontinue his payroll  deductions  during a
Plan Period,  but does not elect to withdraw the  employee's  funds  pursuant to
Section 10 hereof,  funds deducted prior to the election to discontinue  will be
applied to the purchase of Common Stock on the Exercise Date.

                  9.  Interest.  Interest  will  not be  paid  on  any  employee
accounts,  except to the  extent  that the Board or the  Committee,  in its sole
discretion,  elects to credit employee  accounts with interest at such per annum
rate as it may from time to time determine.


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                  10.  Withdrawal of Funds. An employee may at any time prior to
the close of  business  on the last  business  day in a Plan  Period and for any
reason  permanently draw out the balance  accumulated in the employee's  account
and thereby withdraw from participation in an Offering.  Partial withdrawals are
not  permitted.  The  employee  may not begin  participation  again  during  the
remainder of the Plan Period.  The employee may  participate  in any  subsequent
Offering in accordance with terms and conditions established by the Board or the
Committee.

                  11.  Purchase of Stock. On the Offering  Commencement  Date of
each Plan Period, the Company will grant to each eligible employee who is then a
participant  in the Plan an option  ("Option")  to purchase on the last business
day of such Plan Period (the "Exercise  Date"),  at the Option Price hereinafter
provided for,  such number of shares of whole Common Stock  obtained by dividing
the amount collected from the participant  through payroll deductions during the
Plan  Period  for which such  Option is  outstanding,  together  with any amount
carried over from the preceding Plan Period  pursuant to this Section 11, by the
Option  Price in effect for the Plan  Period.  However,  the  maximum  number of
shares of Common Stock purchasable by any participant during any one Plan Period
shall not exceed  $12,500  divided by the fair market value of a share of Common
Stock on the first business day of the applicable Plan Period.

                  The purchase  price for each share of Common  Stock  purchased
shall be 85% of the  average of the closing  prices of the Common  Stock on each
business day of the applicable  Offering,  provided the purchase price shall not
be less than the lesser of (i) 85% of the  closing  price on the first  business
day of such Plan  Period or (ii) 85% of the closing  price on the last  business
day of the Plan Period (the "Option  Price").  Such closing  prices shall be (a)
the closing price on any national  securities exchange on which the Common Stock
is listed,  (b) the  closing  price of the Common  Stock on the Nasdaq  National
Market  or  (c)  the  average  of  the  closing  bid  and  asked  prices  in the
over-the-counter-market,  whichever  is  applicable,  as  published  in The Wall
Street Journal.

                  Each employee who continues to be a participant in the Plan on
the Exercise Date shall be deemed to have exercised the employee's Option at the
Option Price on such date and shall be deemed to have purchased from the Company
the number of full shares of Common  Stock  reserved for the purpose of the Plan
that the  employee's  accumulated  payroll  deductions on such date will pay for
pursuant to the formula set forth above (but not in excess of the maximum number
determined in the manner set forth above). The Company, or its designated agent,
shall hold in its name or in the name of its  nominee all  certificates  for the
Common Stock  purchased  until the Common Stock is  withdrawn  under  Section 13
hereof.

                  Any  balance  remaining  in an  employee's  payroll  deduction
account  at the end of a Plan  Period  will  be  automatically  refunded  to the
employee,  except that any balance which is less than the purchase  price of one
share of Common  Stock  will be  carried  forward  into the  employee's  payroll
deduction account for the following Offering,  unless the employee elects not to
participate in the following  Offering under the Plan, in which case the balance
in the employee's account shall be refunded.


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                  12.  Employee's  Rights  as a  Stockholder.  No  participating
employee  shall have any right as a  stockholder  with  respect to any shares of
Common  Stock  under the Plan  until the  Common  Stock  has been  purchased  in
accordance with Section 11 hereof.

                  All cash  dividends paid with respect to the Common Stock in a
employee's  Investment Account shall,  unless otherwise directed by the Board or
Committee,  be used to purchase  additional  shares of Common  Stock on the next
date such stock is  purchased  pursuant  to  Section  11 hereof,  subject to the
limitations in Section 11 hereof.  Such shares of Common Stock shall be added to
the employee's Investment Account.

                  Each employee shall be entitled to direct the Company,  or its
designated  agent,  as to the voting of any Common Stock held in the  employee's
Investment Account.

                  13. Withdrawal from Investment Account. An employee shall have
the  right  to  request,  not  more  than  once  per  calendar  quarter,  that a
certificate  be issued for all or a portion of the Common Stock  credited to his
Investment Account by giving notice to the Company;  provided that if any of the
Common Stock with respect to which a  certificate  has been  requested  has been
credited to the  employee's  Investment  Account for less than one (1) year, the
employee  shall not be permitted to  participate  in the Offering that commences
immediately after such certificate is issued.

                  Each  certificate  withdrawn by a employee  may be  registered
only in the name of the employee, or if the employee so directs, in the names of
the employee and one other person,  as joint tenants with right of survivorship,
tenants  in  common,  or as  community  property,  or  (in  the  Company's  sole
discretion) in the street name of a brokerage firm, bank or other nominee holder
designated  by the  employee  to the  extent  and in  the  manner  permitted  by
applicable law.

                  14. Rights Not Transferable. No employee shall be permitted to
sell, assign,  transfer,  pledge, or otherwise dispose of or encumber either the
payroll  deductions  credited to his or her payroll  deduction  account,  Common
Stock  credited to his or her Investment  Account,  or any rights with regard to
the exercise of an Option or to receive  stock under the Plan other than by will
or the laws of descent and  distribution,  and such right and interest shall not
be liable  for,  or subject  to, the debts,  contracts,  or  liabilities  of the
employee.  If any such action is taken by the employee, or any claim is asserted
by any other party in respect of such right and interest whether by garnishment,
levy,  attachment  or  otherwise,  such  action or claim  will be  treated as an
election  to  withdraw  in  accordance  with  Section  10 or  Section 13 hereof,
whichever is applicable.

                  15. Rights on Retirement,  Death or Termination of Employment.
In the event an  employee's  employment  shall be  terminated  prior to the last
business day of a Plan Period by reason of resignation,  layoff or discharge, no
payroll  deduction  shall be taken from any pay due and owing to an employee and
the balance in the employee's payroll deduction account and the shares of Common
Stock in the  employee's  Investment  Account shall be paid in cash or issued to
the employee, as the case may be. In the event an employee's employment shall be
terminated  (a) within ninety (90) days of the last day of the current  Offering
by reason of retirement or disability, or (b)

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at any time during the current Offering by reason of death, the employee (or the
employee's a beneficiary  previously  designated in a revocable notice signed by
the  employee  (with any spousal  consent  required  under state law) or, in the
absence of such a designated  beneficiary,  the executor or administrator of the
employee's estate or, if no such executor or administrator has been appointed to
the knowledge of the Company, to such other person(s) as the Company may, in its
discretion,  designate)  shall  have the right  prior to the end of the  current
Offering to elect to have the balance of his or her  payroll  deduction  account
either  paid  to the  employee  in  cash or  applied  at the end of the  current
Offering  toward the  purchase of Common Stock and the Company  shall  otherwise
issue to the  employee the Stock in his  Investment  Account.  If an  employee's
employment  shall be terminated  more than ninety (90) days from the last day of
the current  Offering by reason of retirement or disability,  the balance of the
employee's payroll deduction account and the shares in the employee's Investment
Account shall be paid in cash or issued to the employee, as the case may be. If,
prior to the last business day of the Plan Period, the Designated  Subsidiary by
which an employee is employed shall cease to be a subsidiary of the Company,  or
if the  employee is  transferred  to a  subsidiary  of the Company that is not a
Designated  Subsidiary,   the  employee  shall  be  deemed  to  have  terminated
employment for the purposes of this Plan.

                  16.  Optionees  Not  Stockholders.  Neither the granting of an
Option to an employee  nor the  deductions  from his pay shall  constitute  such
employee a stockholder  of the shares of Common Stock covered by an Option under
this Plan until such stock has been purchased by the employee.

                  17.  Application  of Funds.  All funds received or held by the
Company  under this Plan may be combined with other  corporate  funds and may be
used for any corporate purpose.

                  18.  Adjustment in Case of Changes  Affecting Common Stock. In
the event of a subdivision of outstanding shares of Common Stock, or the payment
of a dividend in Common Stock,  the number of shares of Stock  approved for this
Plan,  and the  share  limitation  set  forth in  Section  11  hereof,  shall be
increased  proportionately,  and such other  adjustment  shall be made as may be
deemed equitable by the Board or the Committee. In the event of any other change
affecting  the  Common  Stock  such  adjustment  shall be made as may be  deemed
equitable by the Board or the Committee to give proper effect to such event.

                  19.  Merger.  If the  Company  shall  at  any  time  merge  or
consolidate with another corporation and the holders of the capital stock of the
Company  immediately  prior to such merger or consolidation  continue to hold at
least 80% by voting  power of the  capital  stock of the  surviving  corporation
("Continuity  of  Control"),  the holder of each  Option then  outstanding  will
thereafter be entitled to receive at the next Exercise Date upon the exercise of
such  Option for each share of Common  Stock as to which  such  Option  shall be
exercised the securities or property which a holder of Common Stock was entitled
to receive at the time of such merger,  and the Committee  shall take such steps
in connection  with such merger as the Committee  shall deem necessary to assure
that the  provisions  of Section 18 hereof shall  thereafter be  applicable,  as
nearly as reasonably may be, in

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relation  to the said  securities  or  property  as to which such holder of such
Option might thereafter be entitled to receive thereunder.

                  In the event of a merger or  consolidation of the Company with
or into another  corporation which does not involve Continuity of Control, or of
a  sale  of all  or  substantially  all of  the  assets  of  the  Company  while
unexercised  Options  remain  outstanding  under the Plan,  (a)  subject  to the
provisions of clauses (b) and (c), after the effective date of such transaction,
each holder of an  outstanding  Option shall be entitled,  upon exercise of such
Option,  to  receive  in lieu of  Common  Stock  shares  of such  stock or other
securities as the holders of Common Stock received pursuant to the terms of such
transaction;  or (b) all outstanding Options may be canceled by the Board or the
Committee as of a date prior to the effective date of any such  transaction  and
all payroll deductions shall be paid out to the participating  employees; or (c)
all outstanding  Options may be canceled by the Board or the Committee as of the
effective  date  of  any  such   transaction,   provided  that  notice  of  such
cancellation  shall be given to each holder of an Option,  and each holder of an
Option  shall have the right to  exercise  such  Option in full based on payroll
deductions  then credited to his account as of a date determined by the Board or
the  Committee,  which date shall not be less than ten (10) days  preceding  the
effective date of such transaction.

                  20. Amendment of the Plan. The Board may at any time, and from
time to time, amend this Plan in any respect, except that (a) if the approval of
any such amendment by the stockholders of the Company is required by Section 423
of the Code, such amendment shall not be effected without such approval, and (b)
in no event may any  amendment  be made  which  would  cause the Plan to fail to
comply with Section 423 of the Code.

                  21.  Insufficient Stock. In the event that the total number of
shares of Common Stock specified in elections to be purchased under any Offering
plus the number of shares of Common Stock  purchased  under  previous  Offerings
under this Plan exceeds the maximum  number of shares of Common  Stock  issuable
under this Plan,  the Board or the  Committee  will allot the Common  Stock then
available on a pro rata basis.

                  22.  Termination  of the Plan.  This Plan may be terminated at
any time by the Board or the  Committee.  The Plan will terminate in any case on
the date on which all or substantially all of the unissued Common Stock reserved
for issuance under the Plan have been purchased.  Upon  termination of this Plan
all amounts in the payroll deduction  accounts of participating  employees shall
be promptly refunded.

                  23. Governmental Regulations. The Company's obligation to sell
and  deliver  Common  Stock  under this Plan is subject to listing on a national
stock  exchange or quotation on the Nasdaq  National  Market and the approval of
all  governmental  authorities  required in connection  with the  authorization,
issuance or sale of such Common Stock.

                  The Plan  shall be  governed  by New  York law  except  to the
extent that such law is preempted by federal law.

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                  The Plan is intended to  constitute  a "Stock  Purchase  Plan"
within the meaning of Rule 16b-3(b)(5) promulgated under the Securities Exchange
Act of 1934.

                  24. Issuance of Stock. Stock may be issued upon exercise of an
Option  from  authorized  but  unissued  Common  Stock,  from  stock held in the
treasury of the Company, or from any other proper source.

                  25.  Notification upon Sale of Stock. Each employee agrees, by
entering the Plan, to promptly  give the Company  notice of any  disposition  of
Common Stock purchased under the Plan where such  disposition  occurs within two
(2) years  after the date of grant of the Option  pursuant  to which such Common
Stock were purchased.

                  26. Effective Date and Approval of Stockholders.  The Plan was
adopted by the Board of Trustees of Capital Trust,  a California  business trust
(the  "Predecessor"),  the predecessor of the Company to become  effective as of
April 24,  1998,  subject to approval of the  Predecessor's  shareholders  on or
before April 23, 1999. The shareholders of the Predecessor  approved the Plan on
January 28, 1999 and the Plan thereupon became  effective.  Upon consummation of
the reorganization of the Predecessor into the Company on January 28, 1999 after
such shareholder approval was obtained, the Company succeeded to and assumed the
Plan.  On January 28,  1999,  the Plan was  amended,  effective  on that date to
change all  references  to  "Capital  Trust" to "Capital  Trust,  Inc." and make
additional technical revisions that reflect the different capital and governance
structure of the Company.


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