Exhibit 10.37

 

THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES THAT MAY BE PURCHASED
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES LAWS OF ANY STATE.  THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES
THAT MAY BE PURCHASED HEREUNDER HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO DISTRIBUTION, AND THIS COMMON STOCK PURCHASE WARRANT AND THE
SHARES THAT MAY BE PURCHASED HEREUNDER MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AND REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS
OR AN OPINION OF COUNSEL THAT THE PROPOSED TRANSACTION DOES NOT REQUIRE
REGISTRATION OR QUALIFICATION UNDER, OR OTHERWISE VIOLATE THE SECURITIES ACT OF
1933, AND APPLICABLE STATE SECURITIES LAWS.

 

NORTHSTAR REALTY FINANCE CORP.

 

COMMON STOCK PURCHASE WARRANT

 

Date of Issuance: October 28, 2009

Certificate No. W-2

 

THIS IS TO CERTIFY that WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association (together with its permitted transferees, successors and assigns,
the “Holder”), for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, is entitled to purchase from NORTHSTAR REALTY
FINANCE CORP., a Maryland corporation (the “Company”), at the price of $8.60 per
share (the “Exercise Price”), at any time after October 28, 2010 (the
“Commencement Date”) and expiring on October 28, 2020 (the “Expiration Date”),
250,000 shares of fully paid and non-assessable common stock, par value $0.01
per share (“Common Stock”), of the Company (as such number may be adjusted as
provided herein).  The 250,000 shares of Common Stock which may be purchased
pursuant to this Warrant are referred to herein as the “Aggregate Number”.  This
common stock purchase warrant (this “Warrant”) is issued under and in connection
with that certain First Amended and Restated Credit Agreement, dated as of
October 28, 2009 (as the same may be amended, modified, restated, replaced,
waived, substituted, supplemented or extended from time to time, the “Credit
Agreement”), among NRFC WA HOLDINGS, LLC, a Delaware limited liability company,
as a borrower, NRFC WA HOLDINGS II, LLC, a Delaware limited liability company,
as a borrower, NRFC WA HOLDINGS VII, LLC, a Delaware limited liability company,
as a borrower, NRFC WA HOLDINGS X, LLC, a Delaware limited liability company, as
a borrower, NRFC WA HOLDINGS XII, LLC, a Delaware limited liability company, as
a borrower,  the Company, as a guarantor, NORTHSTAR REALTY FINANCE L.P., a
Delaware limited partnership, as a guarantor, and the other entities from time
to time party thereto, the several banks and other financial institutions as
are, or may from time to time become parties thereto, and Wachovia Bank,
National Association, a national banking association, as administrative agent
for the lenders thereunder.

 

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The Aggregate Number and Exercise Price set forth above shall also be adjusted
under certain conditions specified in Section 5 of this Warrant, including, but
not limited to, a Stock Dividend, Stock Subdivision or Stock Combination. 
Capitalized terms used herein shall have the meanings ascribed to such terms in
Section 11 hereof unless otherwise defined herein.

 

SECTION 1.         THE WARRANT; TRANSFER AND EXCHANGE.

 

(a)           The Warrant.  This Warrant and the rights and privileges of the
Holder hereunder may be exercised by the Holder in whole or in part as provided
herein, shall survive any termination of the Credit Agreement and, as more fully
set forth in Sections 1(b) and 7 hereof, subject to the terms of this Warrant,
may be transferred by the Holder to any other Person or Persons who meet the
requirements set forth herein at any time or from time to time, in whole or in
part, regardless of whether the Holder retains any or all rights under the
Credit Agreement.

 

(b)           Transfer and Exchanges.  The Company shall initially record this
Warrant on a register to be maintained by the Company and, subject to Section 7
hereof, from time to time thereafter shall reflect the transfer of this Warrant
on such register when surrendered for transfer in accordance with the terms
hereof and properly endorsed, accompanied by appropriate instructions, and
further accompanied by payment in cash or by check, bank draft or money order
payable to the order of the Company, in United States currency, of an amount
equal to any stamp or other tax or governmental charge or fee required to be
paid in connection with the transfer thereof.  Upon any such transfer, a new
warrant or warrants shall be issued to the transferee and the Holder (in the
event this Warrant is only partially transferred) and the surrendered warrant
shall be canceled.  This Warrant may be exchanged at the option of the Holder,
when surrendered at the Principal Office of the Company, for another warrant or
other warrants of like tenor and representing in the aggregate the right to
purchase a like number of shares of Common Stock upon surrender of the warrant
and payment in cash or by check, bank draft or money order payable to the order
of the Company, in United States currency, of an amount equal to any stamp or
other tax or governmental charge or fee required to be paid in connection with
such exchange.

 

SECTION 2.         EXERCISE.

 

(a)           Right to Exercise.  At any time after the Commencement Date and on
or before the Expiration Date, the Holder, in accordance with the terms hereof,
may exercise this Warrant, in whole at any time or in part from time to time, by
delivering this Warrant to the Company during normal business hours on any
Business Day at the Company’s Principal Office, together with the Notice of
Exercise, in the form attached hereto as Exhibit A and made a part hereof (the
“Notice of Exercise”), duly executed, and payment of the Exercise Price per
share for each share purchased, as specified in the Notice of Exercise.  The
aggregate Exercise Price (the “Aggregate Exercise Price”) to be paid for the
shares to be purchased (the “Exercise Amount”) shall equal the product of
(i) the Exercise Amount multiplied by (ii) the Exercise Price.  If the
Expiration Date is not a Business Day, then this Warrant may be exercised on the
next succeeding Business Day.

 

(b)           Payment of the Aggregate Exercise Price.  Payment of the Aggregate
Exercise Price shall be made to the Company in cash or other immediately
available funds or as provided in Section 2(c), or a combination thereof.  In
the case of payment of all or a portion of the Aggregate Exercise Price pursuant
to Section 2(c), the direction by the Holder to make a “Cashless Exercise” shall
serve as accompanying payment for that portion of the Exercise Price.

 

(c)           Cashless Exercise.  The Holder shall have the right to pay all or
a portion of the Aggregate Exercise Price by making a “Cashless Exercise”, in
which case the portion of the Aggregate Exercise Price to be so paid shall be
paid by reducing the number of shares of Common Stock otherwise

 

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issuable pursuant to the Notice of Exercise by an amount equal to (i) the
Aggregate Exercise Price to be so paid divided by (ii) the Fair Market Value Per
Share.

 

(d)           Issuance of Shares of Common Stock.  Upon receipt by the Company
of this Warrant at its Principal Office in proper form for exercise, and
accompanied by the Notice of Exercise and payment of the Aggregate Exercise
Price as aforesaid, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that
certificates representing such shares of Common Stock may not then be actually
delivered.  Within three (3) Business Days after such surrender of this Warrant,
delivery of the Notice of Exercise and payment of the Aggregate Exercise Price
as aforesaid, the Company shall issue and cause to be delivered to, or upon the
written order of, the Holder (and in such name or names as the Holder may
designate) a certificate or certificates for the Exercise Amount, subject to any
reduction as provided in Section 2(c) for a Cashless Exercise.

 

(e)           Fractional Shares.  The Company may, but shall not be required to,
deliver fractions of shares of Common Stock upon exercise of this Warrant.  If
any fraction of a share of Common Stock would be deliverable upon an exercise of
this Warrant, the Company may, in lieu of delivering such fraction of a share of
Common Stock, make a cash payment to the Holder in an amount equal to the same
fraction of the Fair Market Value Per Share determined as of the Business Day
immediately preceding the date of exercise of this Warrant.

 

(f)            Partial Exercise.  In the event of a partial exercise of this
Warrant, the Company shall issue to the Holder a Warrant in like form for the
unexercised portion thereof which has not expired.

 

(g)           No Rights as Stockholders.  Except as provided herein, the Holder
shall have no right as a holder of Common Stock of the Company solely as a
result of being the registered or beneficial owner of this Warrant.  The Holder
shall have no right to vote, consent or otherwise participate with respect to
matters submitted to a vote of the stockholders of the Company solely as a
result of being the registered or beneficial owner of this Warrant.

 

SECTION 3.         Payment of Taxes.  The Company shall pay all stamp taxes
attributable to the initial issuance of shares of Common Stock issuable upon the
exercise of this Warrant or issuable pursuant to Section 5 hereof, excluding any
tax or taxes which may be payable because of the transfer involved in the
issuance or delivery of any certificates for shares of Common Stock in a name
other than that of the registered Holder of this Warrant surrendered upon the
exercise of this Warrant, and the Company shall not be required to issue or
deliver such certificates 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 is not due and owing.

 

SECTION 4.         Replacement Warrant.  In case this Warrant is mutilated,
lost, stolen or destroyed, the Company shall issue and deliver in exchange and
substitution for and upon surrender and cancellation of the mutilated Warrant,
or in lieu of and in substitution for this Warrant lost, stolen or destroyed, a
new Warrant of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction of such Warrant and upon receipt of indemnity by the
Holder reasonably satisfactory to the Company and the Holder; provided, that if
the Holder is a financial institution, its own indemnity agreement shall be
satisfactory and no third party indemnity shall be required.

 

SECTION 5.         Adjustments to the Aggregate Number and the Exercise Price.

 

Under certain conditions, the Aggregate Number and the Exercise Price are
subject to adjustment as set forth in this Section 5.

 

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(a)           Adjustments.  The Aggregate Number, after taking into
consideration any prior adjustments pursuant to this Section 5, shall be subject
to adjustment from time to time as follows and, thereafter, as adjusted, shall
be deemed to be the Aggregate Number hereunder.

 

(i)            Stock Dividends; Subdivisions and Combinations.  In case at any
time or from time to time the Company shall:

 

(A)          issue to the holders of its shares of Common Stock a dividend
payable in, or other distribution of, shares of Common Stock (a “Stock
Dividend”);

 

(B)           subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, including, without limitation, by means of a
stock split (a “Stock Subdivision”); or

 

(C)           combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock (a “Stock Combination”);

 

then the Aggregate Number in effect immediately prior thereto shall be
(1) proportionately increased in the case of a Stock Dividend or a Stock
Subdivision and (2) proportionately decreased in the case of a Stock
Combination, and the Exercise Price shall be proportionately adjusted.  In the
event the Company shall declare or pay, without consideration, any dividend on
the shares of Common Stock payable in any right to acquire shares of Common
Stock for no consideration, then the Company shall be deemed to have made a
Stock Dividend in an amount of shares equal to the maximum number of shares
issuable upon exercise of such rights to acquire shares of Common Stock.

 

(b)           Notices.

 

(i)            Notice of Proposed Actions.  In case the Company shall propose
(A) to offer to the holders of its Common Stock rights to subscribe for or to
purchase any Convertible Securities, rights to acquire Convertible Securities or
capital stock or additional shares of Common Stock or shares of stock of any
class or any other securities, warrants, rights or options, (B) to effect any
reclassification of its Common Stock, (C) to effect any recapitalization, stock
subdivision, stock combination or other capital reorganization, (D) to effect
any consolidation or merger, share exchange, or sale, lease or other disposition
of all or substantially all of its property, assets or business, (E) to effect
the liquidation, dissolution or winding up of the Company, (F) to initiate any
transaction or be a party to any transaction (including, without limitation, a
merger, consolidation, share exchange, sale, lease or other disposition of all
or substantially all of the Company’s assets, liquidation, recapitalization or
reclassification of the Common Stock) in connection with which the previous
Outstanding Common Stock shall be changed into or exchanged for different
securities of the Company or capital stock or other securities of another
corporation or interests in a non-corporate entity or other property (including
cash) or any combination of the foregoing or (G) to effect any action which
would require an adjustment under this Section 5, then in each such case the
Company shall give to the Holder written notice of such proposed action, which
shall specify the proposed date on which a record is to be taken for the
purposes of such stock dividend, distribution or rights, or the proposed date on
which such reclassification, reorganization, consolidation, merger, share
exchange, sale, transfer, disposition, liquidation, dissolution, winding up or
other transaction is to take place and the date of participation therein by the
holders of Common Stock, if any such date is to be fixed, or the proposed date
on which the transfer of Common Stock is to occur, and shall also set forth such
facts with respect thereto as shall be reasonably necessary to indicate the
effect, if any, of such

 

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action on the Common Stock and on the Aggregate Number after giving effect to
any adjustment which will be required as a result of such action.  Such notice
shall be so given in the case of any action covered by clause (A) above at least
twenty (20) calendar days prior to the record date for determining holders of
the Common Stock for purposes of such action and, in the case of any other such
action, at least twenty (20) calendar days prior to the earlier of the date of
the taking of such proposed action or the date of participation therein by the
holders of Common Stock.

 

(ii)           Adjustment Notice.  Whenever the Aggregate Number is to be
adjusted pursuant to this Section 5, unless otherwise agreed by the Holder, the
Company shall promptly (and in any event within ten (10) Business Days after the
event requiring the adjustment) prepare and deliver to the Holder a certificate
signed by the chief financial officer or chief accounting officer of the
Company, setting forth, in reasonable detail, the event requiring the adjustment
and the method by which such adjustment is to be calculated.  The certificate
shall set forth, the new Aggregate Number.

 

(c)           When Adjustment Not Required.  If the Company shall take a record
of the holders of its Common Stock for any purpose requiring an adjustment
pursuant to Section 5(a) 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.

 

(d)           Certain Limitations.  Notwithstanding anything herein to the
contrary, no adjustment to the Exercise Price hereunder shall be made, to the
extent it would cause the Exercise Price to be less than the par value of the
Common Stock, if any.

 

(e)           Tax Adjustments.  The Company may make such reductions in the
Exercise Price or increase the Aggregate Number, in addition to those
adjustments required by Section 5(a) hereof, as it in its sole discretion shall
determine to be advisable in order that any adjustment hereunder shall not be
taxable to such holders; provided, however, any adjustments which could have an
adverse effect on the Holder shall require the consent of the Holder.

 

SECTION 6.         No Dilution or Impairment.  The Company will not, by
amendment of its Articles of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, share exchange,
dissolution or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, including, without
limitation, the adjustments required under Section 5 hereof, and will at all
times in good faith assist in the carrying out of all such terms and in taking
of all such action as may be reasonably necessary or appropriate to protect the
rights of the Holder against dilution or other impairment.  Without limiting the
generality of the foregoing and notwithstanding any other provision of this
Warrant to the contrary (including by way of implication), the Company (a) will
not increase the par value of any shares of Common Stock receivable on the
exercise of this Warrant above the amount payable therefor on such exercise and
(b) will take all such action as may be necessary or appropriate so that the
Company may validly and legally issue fully paid and non-assessable shares of
Common Stock upon the exercise of this Warrant.

 

SECTION 7.         Transfers of this Warrant.

 

(a)           Generally.  Subject to the restrictions set forth in this
Section 7, the Holder may at any time and from time to time freely transfer this
Warrant and the Warrant Shares in whole or in part to any Person.  This Warrant
has not been, and the Warrant Shares at the time of their issuance may not be,
registered under the Securities Act and, nothing herein contained shall be
deemed to require the Company to so register this Warrant or the Warrant
Shares.  This Warrant and the Warrant Shares are issued or

 

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issuable subject to the provisions and conditions contained herein and every
Holder hereof by accepting the same agrees with the Company to such provisions
and conditions, and represents to the Company that this Warrant has been
acquired and the Warrant Shares will be acquired for the account of the Holder
for investment purposes and not with a view to or for sale in connection with
any distribution thereof.

 

(b)           Compliance with Securities Laws.  The Holder agrees that this
Warrant and the Warrant Shares may not be sold or otherwise disposed of except
pursuant to an effective registration statement under the Securities Act and
other applicable Securities Laws or pursuant to an available exemption from the
registration requirements of the Securities Act and such other applicable
Securities Laws.  The Holder of this Warrant by its acceptance hereof,
acknowledges that the Company has no obligation or current intention to register
the transfer of any Warrants or Common Stock issuable upon the exercise thereof
under Section 5 of the Securities Act.  In the event that the Holder transfers
this Warrant or the Warrant Shares pursuant to an applicable exemption from
registration, the Company may request, at its expense, that the Holder deliver
an opinion of counsel reasonably acceptable to the Company that the proposed
transfer does not violate the Securities Act or other applicable Securities
Laws.

 

(c)           Restrictive Securities Legend.  (i)  The certificate representing
the Warrant Shares shall bear the restrictive legends set forth below:

 

THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE.  NO TRANSFER, SALE OR OTHER DISPOSITION OF THE SHARES OF
COMMON STOCK REPRESENTED BY THIS CERTIFICATE MAY BE MADE UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT TO THE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE HAS BECOME EFFECTIVE UNDER SAID ACT, AND SUCH REGISTRATION OR
QUALIFICATION AS MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE HAS
BECOME EFFECTIVE, OR (II) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED AND UNDER
THE SECURITIES LAWS OF ANY STATE, SUBJECT TO THE COMPANY’S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (II) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH
TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933, AS AMENDED, AND THE SECURITIES LAWS OF ANY STATE.

 

(ii)           Certificates evidencing the Warrant Shares shall not contain any
legend: (1) if the Warrant Shares are sold pursuant to an effective registration
statement covering the resale of the Warrant Shares under the Securities Act, or
(2) following any sale of the Warrant Shares pursuant to Rule 144 (other than
sales to an Affiliate of Holder), or (3) if all of such Warrant Shares are then
eligible for sale under Rule 144(b)(l)(i) and Rule 144(d)(l), or (4) if such
legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission).  If the Company shall have received from the Holder an opinion
of counsel satisfactory to the Company to the effect that a legend is not
otherwise required under applicable requirements of the Securities Act
(including judicial interpretations thereof) in order to ensure compliance with
the Securities Act pursuant to clauses (2), (3) or (4) above, then any
certificates representing the Warrant Shares shall be issued free of all
legends.  The Company agrees that at such time as such legend is no longer
required under this Section 7(ii) following receipt by the Company from the
Holder of the opinion of counsel

 

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referred to in the prior sentence, it will, no later than three (3) Business
Days following the delivery by the Holder to the Company’s transfer agent of a
certificate representing the Warrant Shares issued with a restrictive legend,
deliver or cause to be delivered to the Holder a certificate representing such
Warrant Shares that is free from all restrictive and other legends.  Unless
required by law, the Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section 7.

 

SECTION 8.         Covenants.

 

The Company hereby covenants to the Holder that so long as Holder holds any
Warrant Securities:

 

(a)           Limitation on Certain Restrictions.  Without the prior written
consent of the Required Holders, the Company will not, directly or indirectly,
to create or otherwise cause or suffer to exist or become effective any
restriction or encumbrance on the ability of the Company to perform and comply
with its obligations under this Warrant.

 

(b)           Regulatory Requirements and Restrictions.  In the event of any
reasonable determination by the Holder that, by reason of any existing or future
federal or state law, statute, rule, regulation, guideline, order, court or
administrative ruling, request or directive (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful)
(collectively, a “Regulatory Requirement”), the Holder is effectively restricted
or prohibited from holding this Warrant or the Warrant Shares (including any
shares of capital stock or other securities distributable to the Holder in any
merger, reorganization, readjustment or other reclassification), or otherwise
realizing upon or receiving the benefits intended under this Warrant, the
Company shall use its commercially reasonable efforts to take such action as the
Holder and the Company shall jointly agree in good faith to be necessary to
permit the Holder to comply with such Regulatory Requirement.  The reasonable
costs of taking such action, whether by the Company, the Holder or otherwise,
shall be borne by the Holder.

 

(c)           Reservation of Shares.  The Company shall at all times reserve and
keep available out of  the aggregate of its authorized but unissued shares, free
of preemptive rights, such number of its duly authorized shares of Common Stock
as shall be sufficient to enable the Company to issue Common Stock upon exercise
of this Warrant.

 

(d)           Affirmative Actions to Permit Exercise and Realization of
Benefits.  If any Warrant Shares reserved or to be reserved for the purpose of
the exercise of this Warrant require registration with or approval of any
Governmental Authority under any federal or state law (other than securities
laws) before such shares or other securities may be validly delivered upon
exercise of this Warrant, then the Company covenants that it will, at its sole
expense, secure such registration or approval, as the case may be (including but
not limited to approvals or expirations of waiting periods required under the
Hart-Scott-Rodino Antitrust Improvements Act).

 

(e)           Validly Issued Shares.  All shares of Common Stock that may be
issued upon exercise of this Warrant, assuming full payment of the Aggregate
Exercise Price (including those issued pursuant to Section 5 hereof) shall, upon
delivery by the Company, be duly authorized and validly issued, fully paid and
non-assessable, free from all stamp taxes, liens and charges with respect to the
issue or delivery thereof and otherwise free of all other security interests,
encumbrances and claims of any nature whatsoever (other than security interests,
encumbrances and claims created by actions of the Holder or to which the Holder
is subject prior to the issuance of this Warrant and other transfer restrictions
described herein).

 

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(f)            Furnishing of Information; Compliance with Rule 144.  The Company
shall timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act.  So long as the Warrant Shares are
not registered under an effective registration statement, upon the request of
the Holder, the Company shall deliver to the Holder a written certification of a
duly authorized officer as to whether it has complied with the preceding
sentence.  As long as the Holder owns any of the Warrant Shares, if the Company
is not required to file reports pursuant to such laws, it will prepare and
furnish to the Holder and make publicly available in accordance with Rule 144
such information as is required for the Holder to sell the Warrant Shares under
Rule 144.  So long as the Warrant Shares are not registered under an effective
registration statement, the Company further covenants that it will take such
further action as the Holder may reasonably request, all to the extent required
from time to time to enable the Holder to sell such Warrant Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.

 

(g)           Integration.  The Company shall not, and shall use its
commercially reasonable efforts to ensure that no Affiliate of the Company
shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of this Warrant in a manner that
would require the registration under the Securities Act of the sale of the
Warrant to the Holder.

 

(h)           Listing of the Warrant Shares.  The Company shall: (i) take all
commercially reasonable steps necessary to cause the Warrant Shares to be
approved for listing on the Principal Market as soon as possible after such time
as the Warrant Shares are no longer required to contain the legend provided in
Section 7, (ii) provide to the Holder evidence of such listing, and (iii) use
commercially reasonable efforts to maintain the listing of the Warrant Shares on
such Principal Market or another Principal Market.

 

(i)            Costs and Expenses.  The Company agrees to pay upon demand
(including, without limitation, reasonable attorneys’ fees and expenses) (a) all
reasonable out-of-pocket costs and expenses of the Holder in connection with the
preparation, negotiation, execution and delivery of, this Warrant and any
amendment, modification or waiver hereof or consent with respect hereto, and
(b) all reasonable out of pocket costs and expenses of the Holder in connection
with the delivery of any and all opinions required by Section 7 hereof.

 

SECTION 9.  NO EFFECT UPON LENDING RELATIONSHIP.   NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, NOTHING CONTAINED IN THIS WARRANT SHALL AFFECT, LIMIT OR
IMPAIR THE RIGHTS AND REMEDIES OF THE HOLDER OR ANY OF ITS AFFILIATES IN ITS
CAPACITY AS A LENDER TO THE COMPANY PURSUANT TO ANY AGREEMENT UNDER WHICH THE
COMPANY HAS BORROWED MONEY FROM THE HOLDER.  WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, THE HOLDER, IN EXERCISING ITS RIGHTS AS A LENDER, INCLUDING
MAKING ITS DECISION ON WHETHER TO FORECLOSE ON ANY COLLATERAL SECURITY, WILL
HAVE NO DUTY TO CONSIDER (I) ITS STATUS OR THE STATUS OF ANY OF ITS AFFILIATES
AS A DIRECT OR INDIRECT EQUITY HOLDER OF THE COMPANY, (II) THE EQUITY OF THE
COMPANY OR (III) ANY DUTY IT MAY HAVE TO ANY OTHER DIRECT OR INDIRECT EQUITY
HOLDER OF THE COMPANY, EXCEPT AS MAY BE REQUIRED UNDER THE APPLICABLE LOAN
DOCUMENTS OR BY COMMERCIAL LAW APPLICABLE TO CREDITORS GENERALLY.

 

SECTION 10.  Events of Non-Compliance and Remedies.

 

(a)           Events of Non-Compliance.  If the Company fails to keep and fully
and promptly perform and observe in all material respects any of the terms,
covenants or representations contained or referenced herein within twenty (20)
calendar days from the earlier to occur of (i) written notice from the Holder
specifying what failure has occurred, or requesting that a specified failure be
remedied or (ii) the

 

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Company becoming aware of such failure (an “Event of Non-Compliance”), the
Holder shall be entitled to the remedies set forth in subsection (b) hereof.

 

(b)           Remedies.  On the occurrence of an Event of Non-Compliance, in
addition to any remedies the Holder may have under any Requirement of Law, the
Holder may bring any action for injunctive relief or specific performance of any
term or covenant contained herein, the Company hereby acknowledging that an
action for money damages may not be adequate to protect the interests of the
Holder hereunder.

 

SECTION 11.  Definitions.

 

As used herein, in addition to the terms defined elsewhere herein, the following
terms shall have the following meanings.  Capitalized terms not appearing below
and not otherwise defined herein shall have the meaning ascribed to them in the
Credit Agreement.

 

“Affiliate” has the meaning set forth in the Credit Agreement.

 

“Aggregate Exercise Price” has the meaning set forth in Section 2(a).

 

“Aggregate Number” has the meaning set forth in the Preamble.

 

“Articles of Incorporation” means the Articles of Incorporation of the Company,
as the same may be amended or supplemented from time to time.

 

“Business Day” has the meaning set forth in the Credit Agreement.

 

“Commencement Date” has the meaning set forth in the Preamble.

 

“Commission” means the Securities and Exchange Commission or any similar agency
then having jurisdiction to enforce the Securities Act or the Exchange Act.

 

“Common Stock” includes the Common Stock of the Company, par value $0.01 per
share, as described in the Articles of Incorporation.

 

“Company” has the meaning set forth in the Preamble.

 

“Convertible Securities” means evidences of indebtedness, shares of stock or
other securities (including, but not limited to options and warrants) which are
directly or indirectly convertible, exercisable or exchangeable, with or without
payment of additional consideration in cash or property, for shares of Common
Stock, either immediately or upon the onset of a specified date or the happening
of a specified event.

 

“Credit Agreement” has the meaning set forth in the Preamble.

 

“Event of Non-Compliance” has the meaning set forth in Section 10(a).

 

“Exchange Act” has the meaning set forth in the Credit Agreement.

 

“Exercise Amount” has the meaning set forth in Section 2(a).

 

“Exercise Price” has the meaning set forth in the Preamble.

 

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“Expiration Date” has the meaning set forth in the Preamble.

 

“Fair Market Value Per Share” means the value, on a particular date, of a share
of Common Stock determined as follows:

 

(i)            If the Common Stock is listed or admitted to trading on such date
on the Principal Market, the average of the last bid and ask prices on such date
as those prices are reported on the New York Stock Exchange or other such
national securities exchange or automated dealer quotation system, or if the
Common Stock is not listed or authorized for trading on the New York Stock
Exchange or any comparable system, the average of the closing bid and asked
prices on such date as furnished by two members of the Financial Industry
Regulatory Authority, Inc. selected from time to time by the Company for that
purpose; or

 

(ii)           If the Common Stock is not publicly traded, (a) the fair market
value of the Outstanding Common Stock based upon an arm’s length sale of the
Company on such date (including its ownership interest in all Persons) as an
entirety, such sale being between a willing buyer and a willing seller and
determined without reference to any discount for minority interest, restrictions
on transfer, disparate voting rights among classes of capital stock or lack of
marketability with respect to capital stock divided by (b) the aggregate number
of shares of Outstanding Common Stock.  The Fair Market Value Per Share shall be
determined pursuant to this clause (ii) by the disinterested members of the
Board of Directors of the Company in good faith within ten (10) Business Days of
any event for which such determination is required and such determination
(including the basis therefor) shall be promptly provided to the Holder.  Such
determination shall be binding on the Holder unless the Holder objects thereto
in writing within ten (10) Business Days of receipt.  In the event the Holder
objects to the determination of “Fair Market Value Per Share” by the board of
directors of the Company (such objection to be made within ten (10) Business
Days of the Holder’s receipt of written notice of such determination), then the
Fair Market Value Per Share shall be determined by a disinterested appraiser
(which may be a national or regional investment bank or national accounting
firm) mutually selected by the Company and the Holder, the fees and expenses of
which shall be paid by the Company.  Any selection of a disinterested appraiser
shall be made in good faith within five (5) Business Days after the Holder
provides written notice to the Company of its objection to the determination of
Fair Market Value Per Share and any determination of Fair Market Value Per Share
by a disinterested appraiser shall be made within ten (10) Business Days of the
date of selection.

 

“Governmental Authority” has the meaning set forth in the Credit Agreement.

 

“Holder” has the meaning set forth in the Preamble.

 

“Lenders” has the meaning set forth in the Credit Agreement.

 

“Notice of Exercise” has the meaning set forth in Section 2(a).

 

“Outstanding Common Stock” of the Company means, as of the date of
determination, the sum (without duplication) of the following: (a) the number of
shares of Common Stock then outstanding at the date of determination, (b) the
number of shares of Common Stock then issuable upon the exercise of this Warrant
(as such number of shares may be adjusted pursuant to the terms hereof) and
(c) the number of shares of Common Stock then issuable upon the exercise or
conversion of Convertible Securities and any warrants, options or other rights
to subscribe for or purchase Common Stock or Convertible Securities

 

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(but excluding any unvested options and securities not then exercisable for or
convertible into Common Stock).

 

“Person” has the meaning set forth in the Credit Agreement.

 

“Principal Market” initially means the New York Stock Exchange, Inc. and any
successor exchange thereto and shall also include the NASDAQ Global Select
Market, the NASDAQ Global Market, NASDAQ Capital Market, the American Stock
Exchange or the OTC Bulletin Board, whichever is at the time the principal
trading exchange or market for the Common Stock, based upon share volume.

 

“Principal Office” means the Company’s principal office as set forth in
Section 16 hereof or such other principal office of the Company in the United
States of America the address of which first shall have been set forth in a
notice to the Holder.

 

“Regulatory Requirement” has the meaning set forth in Section 8(b).

 

“Required Holders” means the holders of at least 51.0% of the Warrant Shares
then outstanding.

 

“Requirement of Law” has the meaning set forth in the Credit Agreement.

 

“Securities Act” has the meaning set forth in the Credit Agreement.

 

“Securities Laws” has the meaning set forth in the Credit Agreement.

 

“Stock Combination” has the meaning set forth in Section 5(a)(i)(C).

 

“Stock Dividend” has the meaning set forth in Section 5(a)(i)(A).

 

“Stock Subdivision” has the meaning set forth in Section 5(a)(i)(B).

 

“Subsidiary” has the meaning set forth in the Credit Agreement.

 

“Warrant” has the meaning set forth in the Preamble.

 

“Warrant Securities” means this Warrant and the Warrant Shares, collectively.

 

“Warrant Shares” means the shares of Common Stock issued or issuable upon
exercise of this Warrant in accordance with its terms.

 

SECTION 12.  Survival of Provisions.  Notwithstanding the full exercise by the
Holder of its rights to purchase Common Stock hereunder, the provisions of
Sections 8(f) and (g) of this Warrant shall survive such exercise and the
Expiration Date until such time as the Holder no longer holds any Warrant
Shares.

 

SECTION 13.  Delays, Omissions and Indulgences.  It is agreed that no delay or
omission to exercise any right, power or remedy accruing to the Holder upon any
breach or default of the Company under this Warrant shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach or
default, or any acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring.  It is further agreed that any waiver, permit, consent or approval of
any kind or character on the Holder’s part of any breach or default under this
Warrant, or

 

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any waiver on the Holder’s part of any provisions or conditions of this Warrant
must be in writing and that all remedies, either under this Warrant, or by
Requirement of Law or otherwise afforded to the Holder, shall be cumulative and
not alternative.

 

SECTION 14.  Rights of Transferees.  Subject to Section 7, the rights granted to
the Holder hereunder of this Warrant shall pass to and inure to the benefit of
all subsequent transferees of all or any portion of this Warrant (provided that
the Holder and any transferee shall hold such rights in proportion to their
respective ownership of this Warrant and Warrant Shares) until extinguished
pursuant to the terms hereof.

 

SECTION 15.  Section Headings.  The titles and captions of the Sections and
other provisions of this Warrant are for convenience of reference only and are
not to be considered in construing this Warrant.

 

SECTION 16.  Notices.

 

(a)           Except in the case of notices and other communications expressly
permitted to be given by telephone (and except as provided in paragraph
(b) below), all notices and other communications provided for herein shall be in
writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopier as follows:

 

if to the Company:

 

c/o NorthStar Realty Finance Corp.

399 Park Avenue, 18th floor

New York, New York 10022

Attention:

Andy Richardson

 

Al Tylis, Esq.

 

Daniel R. Gilbert

Facsimile No.:

(212) 547–2700

Telephone Nos.:

(212) 547–2650

 

(212) 547–2641

 

(212) 547–2680

Emails:

richardson@nrfc.com

 

tylis@nrfc.com

 

gilbert@nrfc.com

with a copy to:

 

Paul Hastings Janofsky & Walker LLP

75 East 55th Street

New York, New York 10022

Attention:

Robert J. Grados, Esq.

Facsimile No.:

(212) 230–7830

Telephone No.:

(212) 318–6923

Email:

RobertGrados@paulhastings.com

 

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if to the Holder:

 

Wachovia Bank, National Association

One Wachovia Center, NC0166

301 South College Street

Charlotte, North Carolina 28202

Attention:

Lee Goins

Facsimile No.:

(704) 715-0666

Telephone No.:

(704) 715-7655

Email:

lee.goins@wachovia.com

 

 

 

 

with a copy to:

 

Moore & Van Allen PLLC

100 North Tryon Street

Suite 4700

Charlotte, North Carolina 28202

Attention:

Kenneth P. Kerr, Esq.

Facsimile No.:

(704) 378–2097

Telephone No.:

(704) 331–1145

Email:

kenkerr@mvalaw.com

 

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient).  Notices delivered through electronic communications to the extent
provided in paragraph (b) below shall be effective as provided in said
paragraph (b).

 

(b)           Notices and other communications to the Holder hereunder may be
delivered or furnished by electronic communication (including facsimile, e-mail
and internet or intranet websites) pursuant to procedures approved by the
Holder.  The Holder or the Company may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it, provided that approval of such procedures
may be limited to particular notices or communications.

 

Unless the Holder otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of
an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is not
sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

 

(c)           Any party hereto may change its address or telecopier number for
notices and other communications hereunder by notice to the other parties
hereto.

 

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SECTION 17.  Successors and Assigns.  This Warrant shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, provided that the Company shall have no right to assign its
rights, or to delegate its obligations, hereunder without the prior written
consent of the Holder.

 

SECTION 18.  Amendments.  Neither this Warrant nor any term hereof may be
amended, changed, waived, discharged or terminated without the prior written
consent of the Holder and the Company.

 

SECTION 19.  Severability.  Any provision of this Warrant which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

SECTION 20.  Governing Law.  This Warrant shall be governed by, and construed in
accordance with, the law of the State of New York.

 

SECTION 21.  Entire Agreement.  This Warrant and the Credit Agreement are
intended by the parties as a final expression of their agreement and are
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 and therein.

 

SECTION 22.  Rules of Construction.  Unless the context otherwise requires “or”
is not exclusive, and references to sections or subsections refer to sections or
subsections of this Warrant.  All pronouns and any variations thereof refer to
the masculine, feminine or neuter, singular or plural, as the context may
require.

 

 

[Remainder of Page Intentionally Omitted.]

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be issued and
executed in its corporate name by a duly authorized officer or director as of
the date first written above.

 

 

 

NORTHSTAR REALTY FINANCE CORP.,

 

a Maryland corporation

 

 

 

 

 

By:

Daniel R. Gilbert

 

 

Name:

Daniel R. Gilbert

 

 

Title:

Executive Vice President

 

 

 

and Chief Investment Officer

 

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EXHIBIT A

NOTICE OF EXERCISE

 

To:                                                                  

 

 

1.             The undersigned, pursuant to the provisions of the attached
Warrant, hereby elects to exercise this Warrant with respect to                
shares of Common Stock (the “Exercise Amount”).  Capitalized terms used but not
otherwise defined herein have the meanings ascribed thereto in the attached
Warrant.

 

2.             The undersigned herewith tenders payment for such shares in the
following manner (please check type, or types, of payment and indicate the
portion of the Exercise Price to be paid by each type of payment):

 

o            Exercise for Cash

o            Cashless Exercise

 

3.             Please issue a certificate or certificates representing the
shares issuable in respect hereof under the terms of the attached Warrant, as
follows:

 

 

 

 

(Name of Record Holder/Transferee)

 

and deliver such certificate or certificates to the following address:

 

 

 

 

(Address of Record Holder/Transferee)

 

4.             The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment purposes and not with
a view to, or for resale in connection with, the distribution thereof and that
the undersigned has no present intention of distributing or reselling such
shares.

 

5.             If the Exercise Amount is less than all of the shares of Common
Stock purchasable hereunder, please issue a new warrant representing the
remaining balance of such shares, as follows:

 

 

 

 

(Name of Record Holder/Transferee)

 

and deliver such warrant to the following address:

 

 

 

 

 

(Address of Record Holder/Transferee)

 

 

 

 

 

(Signature)

 

 

 

(Date)

 

 

 

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