Exhibit 10.36

 

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-1

 

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 $7.50 per
share (the “Exercise Price”), at any time after the date hereof (the
“Commencement Date”) and expiring on October 28, 2019 (the “Expiration Date”),
500,000 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 500,000 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.

 

(j)                                     Redemption.  Notwithstanding any other
provision of this Warrant, the Holder may elect by giving the Company written
notice thereof, at any time during the six-month period following the
Commencement Date, to sell to the Company this Warrant, the Warrant Shares or
any portion thereof and the Company shall be required to purchase such Warrant
Securities or a portion thereof in accordance with the terms hereof.  The Holder
shall give notice of exercise of the option to put the Warrant Securities to the
Company by overnight delivery service or by electronic communication (including
facsimile, e-mail and internet or intranet websites).  Notwithstanding the
provisions contained in Section 16 hereof, all notices sent pursuant to this
Section 8(j) shall be deemed to have been given when sent (the “Put Exercise
Date”), and shall be delivered to the Company at its Principal Office not less
than 5 Business Days prior to the date set forth in the notice as the date fixed
for redemption (the “Put Redemption Date”).  All redemption notices shall set
forth the Put Redemption Date and the Warrant Securities to be redeemed.  The
purchase price of the Warrant Securities or any part thereof to be redeemed by
the Company hereunder shall be calculated as of the Put Exercise Date and shall
be equal to the product of (A) the Fair Market Value Per Share multiplied by
(B) the number of Warrant Securities to be redeemed; provided, that, if this
Warrant is to be redeemed, the purchase price shall be less the Aggregate
Exercise Price.

 

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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 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.

 

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“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.

 

“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.

 

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“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 (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.

 

“Put Exercise Date” has the meaning set forth in Section 8(j).

 

“Put Redemption Date” has the meaning set forth in Section 8(j).

 

“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.

 

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“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), (g) and (j) 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 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:

 

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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

 

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

 

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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.

 

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

 

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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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