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                      AMENDED AND RESTATED TRUST AGREEMENT

                                      among

                  NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP,
                                  as Depositor

                    JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
                               as Property Trustee

                      CHASE BANK USA, NATIONAL ASSOCIATION,
                               as Delaware Trustee

                                       and

                    THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
                           as Administrative Trustees

                                   ----------

                          Dated as of November 22, 2005

                                   ----------

                       NORTHSTAR REALTY FINANCE TRUST III

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                                    CONTENTS

CLAUSE                                                                      PAGE
------                                                                      ----
ARTICLE I. Defined Terms.................................................     1

   Section 1.1.   Definitions............................................     1

ARTICLE II. The Trust....................................................    11

   Section 2.1.   Name...................................................    11
   Section 2.2.   Office of the Delaware Trustee; Principal Place of
                  Business...............................................    11
   Section 2.3.   Initial Contribution of Trust Property; Fees,
                  Costs and Expenses.....................................    12
   Section 2.4.   Purposes of Trust......................................    12
   Section 2.5.   Authorization to Enter into Certain Transactions.......    12
   Section 2.6.   Assets of Trust........................................    15
   Section 2.7.   Title to Trust Property................................    15

ARTICLE III. Payment Account; Paying Agents..............................    15

   Section 3.1.   Payment Account........................................    15
   Section 3.2.   Appointment of Paying Agents...........................    16

ARTICLE IV. Distributions; Redemption....................................    16

   Section 4.1.   Distributions..........................................    16
   Section 4.2.   Redemption.............................................    18
   Section 4.3.   Subordination of Common Securities.....................    21
   Section 4.4.   Payment Procedures.....................................    21
   Section 4.5.   Withholding Tax........................................    22
   Section 4.6.   Tax Returns and Other Reports..........................    22
   Section 4.7.   Payment of Taxes, Duties, Etc. of the Trust............    22
   Section 4.8.   Payments under Indenture or Pursuant to Direct
                  Actions................................................    23
   Section 4.9.   Exchanges..............................................    23
   Section 4.10.  Calculation Agent......................................    23
   Section 4.11.  Certain Accounting Matters.............................    24

ARTICLE V. Securities....................................................    25

   Section 5.1.   Initial Ownership......................................    25
   Section 5.2.   Authorized Trust Securities............................    25
   Section 5.3.   Issuance of the Common Securities; Subscription
                  and Purchase of Notes..................................    25
   Section 5.4.   The Securities Certificates............................    26
   Section 5.5.   Rights of Holders......................................    27
   Section 5.6.   Book-Entry Preferred Securities........................    27


                                       i



                                    CONTENTS

CLAUSE                                                                      PAGE
------                                                                      ----
   Section 5.7.   Registration of Transfer and Exchange of
                  Preferred Securities Certificates......................    29
   Section 5.8.   Mutilated, Destroyed, Lost or Stolen Securities
                  Certificates...........................................    30
   Section 5.9.   Persons Deemed Holders.................................    31
   Section 5.10.  Cancellation...........................................    31
   Section 5.11.  Ownership of Common Securities by Depositor............    31
   Section 5.12.  Restricted Legends.....................................    32
   Section 5.13.  Form of Certificate of Authentication..................    34

ARTICLE VI. Meetings; Voting; Acts of Holders............................    35

   Section 6.1.   Notice of Meetings.....................................    35
   Section 6.2.   Meetings of Holders of the Preferred Securities........    35
   Section 6.3.   Voting Rights..........................................    35
   Section 6.4.   Proxies, Etc...........................................    35
   Section 6.5.   Holder Action by Written Consent.......................    36
   Section 6.6.   Record Date for Voting and Other Purposes..............    36
   Section 6.7.   Acts of Holders........................................    36
   Section 6.8.   Inspection of Records..................................    37
   Section 6.9.   Limitations on Voting Rights...........................    37
   Section 6.10.  Acceleration of Maturity; Rescission of Annulment;
                  Waivers of Past Defaults...............................    38

ARTICLE VII. Representations and Warranties..............................    41

   Section 7.1.   Representations and Warranties of the Property
                  Trustee and the Delaware Trustee.......................    41
   Section 7.2.   Representations and Warranties of Depositor............    42

ARTICLE VIII. The Trustees...............................................    43

   Section 8.1.   Number of Trustees.....................................    43
   Section 8.2.   Property Trustee Required..............................    43
   Section 8.3.   Delaware Trustee Required..............................    44
   Section 8.4.   Appointment of Administrative Trustees.................    44
   Section 8.5.   Duties and Responsibilities of the Trustees............    44
   Section 8.6.   Notices of Defaults and Extensions.....................    46
   Section 8.7.   Certain Rights of Property Trustee.....................    47
   Section 8.8.   Delegation of Power....................................    49
   Section 8.9.   May Hold Securities....................................    49


                                       ii



                                    CONTENTS

CLAUSE                                                                      PAGE
------                                                                      ----
   Section 8.10.  Compensation; Reimbursement; Indemnity.................    49
   Section 8.11.  Resignation and Removal; Appointment of Successor......    50
   Section 8.12.  Acceptance of Appointment by Successor.................    52
   Section 8.13.  Merger, Conversion, Consolidation or Succession to
                  Business...............................................    52
   Section 8.14.  Not Responsible for Recitals or Issuance of
                  Securities.............................................    52
   Section 8.15.  Property Trustee May File Proofs of Claim..............    52
   Section 8.16.  Reports to the Property Trustee........................    53

ARTICLE IX. Termination, Liquidation and Merger..........................    54

   Section 9.1.   Dissolution Upon Expiration Date.......................    54
   Section 9.2.   Early Termination......................................    54
   Section 9.3.   Termination............................................    55
   Section 9.4.   Liquidation............................................    55
   Section 9.5.   Mergers, Consolidations, Amalgamations or
                  Replacements of Trust..................................    56

ARTICLE X. Miscellaneous Provisions......................................    58

   Section 10.1.  Limitation of Rights of Holders........................    58
   Section 10.2.  Agreed Tax Treatment of Trust and Trust Securities.....    58
   Section 10.3.  Amendment..............................................    58
   Section 10.4.  Separability...........................................    60
   Section 10.5.  Governing Law..........................................    60
   Section 10.6.  Successors.............................................    60
   Section 10.7.  Headings...............................................    60
   Section 10.8.  Reports, Notices and Demands...........................    60
   Section 10.9.  Agreement Not to Petition..............................    61
   Section 10.10. Counterparts...........................................    61

Exhibit A  Certificate of Trust of NorthStar Realty Finance Trust III
Exhibit B  Form of Common Securities Certificate
Exhibit C  Form of Preferred Securities Certificate
Exhibit D  Junior Subordinated Indenture
Exhibit E  Form of Certificate to be Executed by Transferees
Exhibit F  Form of Officer's Financial Certificate of the Depositor

Schedule A Calculation of LIBOR


                                      iii



     THIS AMENDED AND RESTATED TRUST AGREEMENT, dated as of November 22, 2005
(as amended and restated, the "Trust Agreement"), among (i) NorthStar Realty
Finance Limited Partnership, a Delaware limited partnership (including any
successors or permitted assigns, the "Depositor"), (ii) JPMorgan Chase Bank,
National Association, a national banking association, as property trustee (in
such capacity, the "Property Trustee"), (iii) Chase Bank USA, National
Association, a national banking association, as Delaware trustee (in such
capacity, the "Delaware Trustee"), (iv) David T. Hamamoto, an individual, Mark
E. Chertok, an individual and Richard J. McCready, an individual, each of whose
address is c/o NorthStar Realty Finance Limited Partnership, 527 Madison Avenue,
New York, New York 10022, as administrative trustees (in such capacities, each
an "Administrative Trustee" and, collectively, the "Administrative Trustees"
and, together with the Property Trustee and the Delaware Trustee, the
"Trustees") and (v) the several Holders, as hereinafter defined.

                                   WITNESSETH

     WHEREAS, the Depositor and the Delaware Trustee have heretofore created a
Delaware statutory trust pursuant to the Delaware Statutory Trust Act by
entering into a Trust Agreement, dated as of November 21, 2005 (the "Original
Trust Agreement"), and by executing and filing with the Secretary of State of
the State of Delaware the Certificate of Trust, substantially in the form
attached as Exhibit A;

     WHEREAS, the Depositor and the Trustees desire to amend and restate the
Original Trust Agreement to provide for, among other things, (i) the issuance of
the Common Securities by the Trust to the Depositor (the "Common Securities"),
(ii) the issuance and sale of the Preferred Securities by the Trust pursuant to
the Purchase Agreement (the "Preferred Securities", and together with the Common
Securities, collectively, the "Securities") and (iii) the acquisition by the
Trust from the Depositor of all of the right, title and interest in and to the
Floating Rate Junior Subordinated Notes due 2036 (the "Notes") issued pursuant
to the Junior Subordinated Indenture, dated as of November 22, 2005, between
the Depositor and JPMorgan Chase Bank, National Association, a national banking
association, as Trustee.

     NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Holders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees as follows:

                                   ARTICLE I.

                                  DEFINED TERMS

     SECTION 1.1 Definitions.

     For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:



          (a) the terms defined in this Article I have the meanings assigned to
     them in this Article I;

          (b) the words "include", "includes" and "including" shall be deemed to
     be followed by the phrase "without limitation";

          (c) all accounting terms used but not defined herein have the meanings
     assigned to them in accordance with United States generally accepted
     accounting principles;

          (d) unless the context otherwise requires, any reference to an
     "Article", a "Section", a "Schedule" or an "Exhibit" refers to an Article,
     a Section, a Schedule or an Exhibit, as the case may be, of or to this
     Trust Agreement;

          (e) the words "hereby", "herein", "hereof" and "hereunder" and other
     words of similar import refer to this Trust Agreement as a whole and not to
     any particular Article, Section or other subdivision;

          (f) a reference to the singular includes the plural and vice versa;
     and

          (g) the masculine, feminine or neuter genders used herein shall
     include the masculine, feminine and neuter genders.

     "Act" has the meaning specified in Section 6.7.

     "Additional Interest" has the meaning specified in Section 1.1 of the
Indenture.

     "Additional Interest Amount" means, with respect to Trust Securities of a
given Liquidation Amount and/or a given period, the amount of Additional
Interest paid by the Depositor on a Like Amount of Notes for such period.

     "Additional Taxes" has the meaning specified in Section 1.1 of the
Indenture.

     "Additional Tax Sums" has the meaning specified in Section 10.5 of the
Indenture.

     "Administrative Trustee" means each of the Persons identified as an
"Administrative Trustee" in the preamble to this Trust Agreement, solely in each
such Person's capacity as Administrative Trustee of the Trust and not in such
Person's individual capacity, or any successor Administrative Trustee appointed
as herein provided.

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


                                        2



     "Applicable Depositary Procedures" means, with respect to any transfer or
transaction involving a Book-Entry Preferred Security, the rules and procedures
of the Depositary for such Book-Entry Preferred Security, in each case to the
extent applicable to such transaction and as in effect from time to time.

     "Bankruptcy Event" means, with respect to any Person:

          (a) the entry of a decree or order by a court having jurisdiction in
          the premises (i) judging such Person a bankrupt or insolvent, (ii)
          approving as properly filed a petition seeking reorganization,
          arrangement, adjudication or composition of or in respect of such
          Person under any applicable Federal or state bankruptcy, insolvency,
          reorganization or other similar law, (iii) appointing a custodian,
          receiver, liquidator, assignee, trustee, sequestrator or other similar
          official of such Person or of any substantial part of its property or
          (iv) ordering the winding up or liquidation of its affairs, and the
          continuance of any such decree or order unstayed and in effect for a
          period of sixty (60) consecutive days; or

          (b) the institution by such Person of proceedings to be adjudicated a
          bankrupt or insolvent, or the consent by it to the institution of
          bankruptcy or insolvency proceedings against it, or the filing by it
          of a petition or answer or consent seeking reorganization or relief
          under any applicable Federal or State bankruptcy, insolvency,
          reorganization or other similar law, or the consent by it to the
          filing of any such petition or to the appointment of a custodian,
          receiver, liquidator, assignee, trustee, sequestrator or similar
          official of such Person or of any substantial part of its property, or
          the making by it of an assignment for the benefit of creditors, or the
          admission by it in writing of its inability to pay its debts generally
          as they become due and its willingness to be adjudicated a bankrupt or
          insolvent, or the taking of corporate action by such Person in
          furtherance of any such action.

     "Bankruptcy Laws" means all Federal and state bankruptcy, insolvency,
reorganization and other similar laws, including the United States Bankruptcy
Code.

     "Book-Entry Preferred Security" means a Preferred Security, the ownership
and transfers of which shall be made through book entries by a Depositary.

     "Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the City of New York are authorized or required
by law or executive order to remain closed or (c) a day on which the Corporate
Trust Office is closed for business.

     "Calculation Agent" has the meaning specified in Section 4.10.

     "Closing Date" has the meaning specified in the Purchase Agreement.


                                        3



     "Code" means the United States Internal Revenue Code of 1986, as amended.

     "Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act or, if at any time after the
execution of this Trust Agreement such Commission is not existing and performing
the duties assigned to it, then the body performing such duties at such time.

     "Common Securities" has the meaning specified in the third recital hereto,
and more specifically, means an undivided beneficial interest in the assets of
the Trust, having a Liquidation Amount of $1,000 and having the rights provided
therefor in this Trust Agreement.

     "Common Security" means any one of the Common Securities.

     "Common Securities Certificate" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit B.

     "Corporate Trust Office" means the principal office of the Property Trustee
at which any particular time its corporate trust business shall be administered,
which office at the date of this Trust Agreement is located at 600 Travis, 50th
Floor, Houston, Texas 77002, Attention: Worldwide Securities Services--
NorthStar Realty Finance Trust III.

     "Definitive Preferred Securities Certificates" means Preferred Securities
issued in certificated, fully registered form that are not Global Preferred
Securities.

     "Delaware Statutory Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., or any successor statute thereto, in
each case as amended from time to time.

     "Delaware Trustee" means the Person identified as the "Delaware Trustee" in
the preamble to this Trust Agreement, solely in its capacity as Delaware Trustee
of the Trust and not in its individual capacity, or its successor in interest in
such capacity, or any successor Delaware Trustee appointed as herein provided.

     "Depositary" means an organization registered as a clearing agency under
the Exchange Act that is designated as Depositary by the Depositor or any
successor thereto. DTC will be the initial Depositary.

     "Depositary Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Depositary effects
book-entry transfers and pledges of securities deposited with the Depositary.

     "Depositor" has the meaning specified in the preamble to this Trust
Agreement and any successors and permitted assigns.

     "Depositor Affiliate" has the meaning specified in Section 4.9.

     "Distribution Date" has the meaning specified in Section 4.1(a)(i)


                                        4



     "Distribution Period" means with respect to any Distribution Date, the
period commencing on the immediately preceding Distribution Date (or, in the
case of the first Distribution Date, the period commencing November 22, 2005)
and ending on the day immediately preceding such Distribution Date.

     "Distributions" means amounts payable in respect of the Trust Securities as
provided in Section 4.1.

     "DTC" means The Depository Trust Company, a New York corporation, or any
successor thereto.

     "Early Termination Event" has the meaning specified in Section 9.2.

     "Edgar" has the meaning specified in Section 3.11(c).

     "Event of Default" means any one of the following events (whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):

          (a) the occurrence of a Note Event of Default; or

          (b) default by the Trust in the payment of any Distribution when it
          becomes due and payable, and continuation of such default for a period
          of thirty (30) days; or

          (c) default by the Trust in the payment of any Redemption Price of any
          Trust Security when it becomes due and payable; or

          (d) default in the performance, or breach, in any material respect of
          any covenant or warranty of the Trustees in this Trust Agreement
          (other than those specified in clause (b) or (c) above) and
          continuation of such default or breach for a period of thirty (30)
          days after there has been given, by registered or certified mail, to
          the Trustees and to the Depositor by the Holders of at least twenty
          five percent (25%) in aggregate Liquidation Amount of the Outstanding
          Preferred Securities a written notice specifying such default or
          breach and requiring it to be remedied and stating that such notice is
          a "Notice of Default" hereunder; or

          (e) the occurrence of a Bankruptcy Event with respect to the Property
          Trustee if a successor Property Trustee has not been appointed within
          ninety (90) days thereof.

     "Exchange Act" means the Securities Exchange Act of 1934, and any successor
statute thereto, in each case as amended from time to time.

     "Expiration Date" has the meaning specified in Section 9.1.


                                        5



     "Extension Period" has the meaning specified in Section 4.1(a)(ii).

     "Extension Right" has the meaning specified in Section 4.1(a)(ii).

     "Fiscal Year" shall be the fiscal year of the Trust, which shall be the
calendar year, or such other period as is required by the Code.

     "Fixed Rate Period" shall mean the period through the Interest Payment Date
on January 30, 2016.

     "Global Preferred Security" means a Preferred Securities Certificate
evidencing ownership of Book-Entry Preferred Securities.

     "Holder" means a Person in whose name a Trust Security or Trust Securities
are registered in the Securities Register; any such Person shall be deemed to be
a beneficial owner within the meaning of the Delaware Statutory Trust Act.

     "Indemnified Person" has the meaning specified in Section 8.10(c).

     "Indenture" means the Junior Subordinated Indenture executed and delivered
by the Depositor and the Note Trustee contemporaneously with the execution and
delivery of this Trust Agreement, for the benefit of the holders of the Notes, a
copy of which is attached hereto as Exhibit D, as amended or supplemented from
time to time.

     "Indenture Redemption Price" means the Optional Note Redemption Price or
the Special Note Redemption Price, as applicable.

     "Interest Payment Date(s)" has the meaning specified in Section 1.1 of the
Indenture.

     "Interest Payment Period" has the meaning specified in Section 1.1 of the
Indenture.

     "Investment Company Act" means the Investment Company Act of 1940, or any
successor statute thereto, in each case as amended from time to time.

     "Investment Company Event" has the meaning specified in Section 1.1 of the
Indenture.

     "LIBOR" has the meaning specified in Schedule A.

     "LIBOR Business Day" has the meaning specified in Schedule A.

     "LIBOR Determination Date" has the meaning specified in Schedule A.

     "Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.

     "Like Amount" means (a) with respect to a redemption of any Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Notes to be


                                        6



contemporaneously redeemed or paid at maturity in accordance with the Indenture,
the proceeds of which will be used to pay the Redemption Price of such Trust
Securities, (b) with respect to a distribution of Notes to Holders of Trust
Securities in connection with a dissolution of the Trust, Notes having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
Holder to whom such Notes are distributed and (c) with respect to any
distribution of Additional Interest Amounts to Holders of Trust Securities,
Notes having a principal amount equal to the Liquidation Amount of the Trust
Securities in respect of which such distribution is made.

     "Liquidation Amount" means the stated amount of $1,000 per Trust Security.

     "Liquidation Date" means the date on which assets are to be distributed to
Holders in accordance with Section 9.4(a) hereunder following dissolution of the
Trust.

     "Liquidation Distribution" has the meaning specified in Section 9.4(d).

     "Majority in Liquidation Amount" means Common Securities or Preferred
Securities, as the case may be, representing more than fifty percent (50%) of
the aggregate Liquidation Amount of all (or a specified group of) then
Outstanding Common or Preferred Securities, as the case may be.

     "Note Event of Default" means any "Event of Default" specified in Section
5.1 of the Indenture.

     "Note Redemption Date" means, with respect to any Notes to be redeemed
under the Indenture, the date fixed for redemption of such Notes under the
Indenture.

     "Note Trustee" means the Person identified as the "Trustee" in the
Indenture, solely in its capacity as Trustee pursuant to the Indenture and not
in its individual capacity, or its successor in interest in such capacity, or
any successor Trustee appointed as provided in the Indenture.

     "Notes" means the Depositor's Floating Rate Junior Subordinated Notes
issued pursuant to the Indenture.

     "Officers' Certificate" means a certificate signed by the Chief Executive
Officer, the President or an Executive Vice President, and by the Chief
Financial Officer, Treasurer or an Assistant Treasurer, of the Depositor, and
delivered to the Trustees. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust Agreement
(other than the certificate provided pursuant to Section 8.16 which is not an
Officers' Certificate) shall include:

          (a) a statement by each officer signing the Officers' Certificate that
          such officer has read the covenant or condition and the definitions
          relating thereto;


                                        7



          (b) a brief statement of the nature and scope of the examination or
          investigation undertaken by such officer in rendering the Officers'
          Certificate;

          (c) a statement that such officer has made such examination or
          investigation as, in such officer's opinion, is necessary to enable
          such officer to express an informed opinion as to whether or not such
          covenant or condition has been complied with; and

          (d) a statement as to whether, in the opinion of such officer, such
          condition or covenant has been complied with.

     "Operative Documents" means the Purchase Agreement, the Indenture, the
Trust Agreement, the Notes and the Trust Securities.

     "Opinion of Counsel" means a written opinion of counsel, who may be counsel
for, or an employee of, the Depositor or any Affiliate of the Depositor.

     "Optional Note Redemption Price" means, with respect to any Note to be
redeemed on any Redemption Date under the Indenture, an amount equal to one
hundred percent (100%) of the outstanding principal amount of such Note,
together with accrued interest, including any Additional Interest (to the extent
legally enforceable), thereon through but not including the date fixed as such
Redemption Date.

     "Optional Redemption Price" means, for all Trust Securities, an amount
equal to one hundred percent (100%) of the Liquidation Amount of such Trust
Security on the Redemption Date, plus accumulated and unpaid Distributions to
the Redemption Date, plus the related amount of the premium, if any, and/or
accrued interest, including Additional Interest, if any, thereon paid by the
Depositor upon the concurrent redemption or payment at maturity of a Like Amount
of Notes.

     "Original Trust Agreement" has the meaning specified in the recitals to
this Trust Agreement.

     "Outstanding", when used with respect to any Trust Securities, means, as of
the date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, except:

          (a) Trust Securities theretofore canceled by the Property Trustee or
          delivered to the Property Trustee for cancellation;

          (b) Trust Securities for which payment or redemption money in the
          necessary amount has been theretofore deposited with the Property
          Trustee or any Paying Agent in trust for the Holders of such Trust
          Securities; provided, that if such Trust Securities are to be
          redeemed, notice of such redemption has been duly given pursuant to
          this Trust Agreement; and


                                        8



          (c) Trust Securities that have been paid or in exchange for or in lieu
          of which other Trust Securities have been executed and delivered
          pursuant to the provisions of this Trust Agreement, unless proof
          satisfactory to the Property Trustee is presented that any such Trust
          Securities are held by Holders in whose hands such Trust Securities
          are valid, legal and binding obligations of the Trust;

provided, that in determining whether the Holders of the requisite Liquidation
Amount of the Outstanding Preferred Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Preferred
Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor
or of any Trustee shall be disregarded and deemed not to be Outstanding, except
that (i) in determining whether any Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Preferred Securities that such Trustee knows to be so owned shall be so
disregarded and (ii) the foregoing shall not apply at any time when all of the
Outstanding Preferred Securities are owned by the Depositor, one or more of the
Trustees and/or any such Affiliate. Preferred Securities so owned that have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Administrative Trustees the pledgee's right so to act
with respect to such Preferred Securities and that the pledgee is not the
Depositor, any Trustee or any Affiliate of the Depositor or of any Trustee.

     "Owner" means each Person who is the beneficial owner of Book-Entry
Preferred Securities as reflected in the records of the Depositary or, if a
Depositary Participant is not the beneficial owner, then the beneficial owner as
reflected in the records of the Depositary Participant.

     "Paying Agent" means any Person authorized by the Administrative Trustees
to pay Distributions or other amounts in respect of any Trust Securities on
behalf of the Trust.

     "Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee for the benefit of the Holders in
which all amounts paid in respect of the Notes will be held and from which the
Property Trustee, through the Paying Agent, shall make payments to the Holders
in accordance with Sections 3.1, 4.1 and 4.2.

     "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, company,
limited liability company, trust, unincorporated association or government, or
any agency or political subdivision thereof, or any other entity of whatever
nature.

     "Preferred Securities" has the meaning set forth in the third recital
hereto and, more specifically, means an undivided beneficial interest in the
assets of the Trust, having a Liquidation Amount of $1,000 and having the rights
provided therefor in this Trust Agreement.

     "Preferred Security" means any one of the Preferred Securities.

     "Preferred Securities Certificate" means a certificate evidencing ownership
of Preferred Securities, substantially in the form attached as Exhibit C.


                                        9



     "Property Trustee" means the Person identified as the "Property Trustee" in
the preamble to this Trust Agreement, solely in its capacity as Property Trustee
of the Trust and not in its individual capacity, or its successor in interest in
such capacity, or any successor Property Trustee appointed as herein provided.

     "Purchase Agreement" means the Purchase Agreement, dated November 21, 2005,
executed and delivered by the Trust, the Depositor and Taberna Preferred Funding
III, Ltd. and Merrill Lynch International, as purchasers, as amended from time
to time.

     "QIB" means a "qualified institutional buyer" as defined in Rule 144A under
the Securities Act of 1933, as amended.

     "QP" means a "qualified purchaser" as defined in Section 2(a)(51) of the
Investment Company Act of 1940, as amended.

     "QIB/QP" means a QIB that is also a QP.

     "Redemption Date" means, with respect to any Trust Security to be redeemed,
the date fixed for such redemption by or pursuant to this Trust Agreement;
provided, that each Note Redemption Date and the stated maturity (or any date of
principal repayment upon early maturity) of the Notes shall be a Redemption Date
for a Like Amount of Trust Securities.

     "Redemption Price" means the Special Redemption Price or Optional
Redemption Price, as applicable. If the Depositor has redeemed the Notes at the
Special Note Redemption Price, the Trust shall redeem the Trust Securities at
the Special Redemption Price. If the Depositor has redeemed the Notes at the
Optional Note Redemption Price, the Trust shall redeem the Trust Securities at
the Optional Redemption Price.

     "Reference Banks" has the meaning specified in Schedule A.

     "Responsible Officer" means, with respect to the Property Trustee, the
officer in the Worldwide Securities Services department of the Property Trustee
having direct responsibility for the administration of this Trust Agreement.

     "Securities Act" means the Securities Act of 1933, and any successor
statute thereto, in each case as amended from time to time.

     "Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.

     "Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.7.

     "Special Note Redemption Price" means, with respect to any Note to be
redeemed on any Redemption Date under the Indenture, an amount equal to one
hundred seven and one half percent (107.5%) of the outstanding principal amount
of such Note, together with accrued interest, including any Additional Interest
(to the extent legally enforceable), thereon through but not including the date
fixed as such Redemption Date


                                       10



     "Special Redemption Price" means, for all Trusts Securities, an amount
equal to one hundred seven and one half percent (107.5%) of the Liquidation
Amount of such Trust Security on the Redemption Date, plus accumulated and
unpaid Distributions to the Redemption Date, plus the related amount of the
premium, if any, and/or accrued interest, including Additional Interest, if any,
thereon paid by the Depositor upon the concurrent redemption or payment at
maturity of a Like Amount of Notes.

     "Successor Securities" has the meaning specified in Section 9.5(a).

     "Tax Event" has the meaning specified in Section 1.1 of the Indenture.

     "Trust" means the Delaware statutory trust known as "NorthStar Realty
Finance Trust III," which was created on November 21, 2005 under the Delaware
Statutory Trust Act pursuant to the Original Trust Agreement and the filing of
the Certificate of Trust, and continued pursuant to this Trust Agreement.

     "Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented from time to time in accordance
with the applicable provisions hereof, including all Schedules and Exhibits.

     "Trustees" means the Administrative Trustees, the Property Trustee and the
Delaware Trustee, each as defined in this Article I.

     "Trust Property" means (a) the Notes, (b) any cash on deposit in, or owing
to, the Payment Account and (c) all proceeds and rights in respect of the
foregoing and any other property and assets for the time being held or deemed to
be held by the Property Trustee pursuant to the trusts of this Trust Agreement.

     "Trust Security" means any one of the Common Securities or the Preferred
Securities.

     "Trust Securities" means the Common Securities and the Preferred
Securities, collectively.

                                   ARTICLE II.

                                    THE TRUST

     SECTION 2.1. Name.

     The trust continued hereby shall be known as "NorthStar Realty Finance
Trust III", as such name may be modified from time to time by the Administrative
Trustees following written notice to the Holders of Trust Securities and the
other Trustees, in which name the Trustees may conduct the business of the
Trust, make and execute contracts and other instruments on behalf of the Trust
and sue and be sued.


                                       11



     SECTION 2.2. Office of the Delaware Trustee; Principal Place of Business.

     The address of the Delaware Trustee in the State of Delaware is Chase Bank
USA, National Association, 500 Stanton Christiana Road, Building 4 (3rd Floor),
Newark, DE 19713, Attention: Worldwide Securities Services, or such other
address in the State of Delaware as the Delaware Trustee may designate by
written notice to the Holders, the Depositor, the Property Trustee and the
Administrative Trustees. The principal executive office of the Trust is 527
Madison Avenue, New York, NY 10022, Attention: Richard J. McCready, as such
address may be changed from time to time by the Administrative Trustees
following written notice to the Holders and the other Trustees.

     SECTION 2.3. Initial Contribution of Trust Property; Fees, Costs and
Expenses.

     The Property Trustee acknowledges receipt from the Depositor in connection
with the Original Trust Agreement of the sum of ten dollars ($10), which
constituted the initial Trust Property. The Depositor shall pay all fees, costs
and expenses of the Trust (except with respect to the Trust Securities) as they
arise or shall, upon request of any Trustee, promptly reimburse such Trustee for
any such fees, costs and expenses paid by such Trustee. The Depositor shall make
no claim upon the Trust Property for the payment of such fees, costs or
expenses.

     SECTION 2.4. Purposes of Trust.

     (a) The exclusive purposes and functions of the Trust are to (i) issue and
sell Trust Securities and use the proceeds from such sale to acquire the Notes
and (ii) engage in only those activities necessary or incidental thereto. The
Delaware Trustee, the Property Trustee and the Administrative Trustees are
trustees of the Trust, and have all the rights, powers and duties to the extent
set forth herein. The Trustees hereby acknowledge that they are trustees of the
Trust.

     (b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trust (or the Trustees acting on behalf of the Trust)
shall not (i) acquire any investments or engage in any activities not authorized
by this Trust Agreement, (ii) sell, assign, transfer, exchange, mortgage,
pledge, set-off or otherwise dispose of any of the Trust Property or interests
therein, including to Holders, except as expressly provided herein, (iii) incur
any indebtedness for borrowed money or issue any other debt, (iv) take or
consent to any action that would result in the placement of a Lien on any of the
Trust Property, (v) take or consent to any action that would reasonably be
expected to cause the Trust to become taxable as a corporation or classified as
other than a grantor trust for United States federal income tax purposes, (vi)
take or consent to any action that would cause the Notes to be treated as other
than indebtedness of the Depositor for United States federal income tax purposes
or (vii) take or consent to any action that would cause the Trust to be deemed
to be an "investment company" required to be registered under the Investment
Company Act.

     SECTION 2.5. Authorization to Enter into Certain Transactions.

     (a) The Trustees shall conduct the affairs of the Trust in accordance with
and subject to the terms of this Trust Agreement. In accordance with the
following provisions (i) and (ii), the


                                       12



Trustees shall have the authority to enter into all transactions and agreements
determined by the Trustees to be appropriate in exercising the authority,
express or implied, otherwise granted to the Trustees, under this Trust
Agreement, and to perform all acts in furtherance thereof, including the
following:

          (i) As among the Trustees, each Administrative Trustee shall severally
     have the power and authority to act on behalf of the Trust with respect to
     the following matters:

               (A) the issuance and sale of the Trust Securities;

               (B) to cause the Trust to enter into, and to execute, deliver and
          perform on behalf of the Trust, such agreements as may be necessary or
          desirable in connection with the purposes and function of the Trust,
          including, without limitation, a common securities subscription
          agreement and a junior subordinated note purchase agreement;

               (C) assisting in the sale of the Preferred Securities in one or
          more transactions exempt from registration under the Securities Act,
          and in compliance with applicable state securities or blue sky laws;

               (D) assisting in the sending of notices (other than notices of
          default) and other information regarding the Trust Securities and the
          Notes to the Holders in accordance with this Trust Agreement;

               (E) the appointment of a Paying Agent and Securities Registrar in
          accordance with this Trust Agreement;

               (F) execution of the Trust Securities on behalf of the Trust in
          accordance with this Trust Agreement;

               (G) execution and delivery of closing certificates, if any,
          pursuant to the Purchase Agreement and application for a taxpayer
          identification number for the Trust;

               (H) preparation and filing of all applicable tax returns and tax
          information reports that are required to be filed on behalf of the
          Trust;

               (I) establishing a record date with respect to all actions to be
          taken hereunder that require a record date to be established, except
          as provided in Section 6.10(a);

               (J) unless otherwise required by the Delaware Statutory Trust Act
          to execute on behalf of the Trust (either acting alone or together
          with the other Administrative Trustees) any documents that such
          Administrative Trustee has the power to execute pursuant to this Trust
          Agreement; and


                                       13



               (K) the taking of any action incidental to the foregoing as such
          Administrative Trustee may from time to time determine is necessary or
          advisable to give effect to the terms of this Trust Agreement.

          (ii) As among the Trustees, the Property Trustee shall have the power,
     duty and authority to act on behalf of the Trust with respect to the
     following matters:

               (A) the receipt and holding of legal title of the Notes;

               (B) the establishment of the Payment Account;

               (C) the collection of interest, principal and any other payments
          made in respect of the Notes and the holding of such amounts in the
          Payment Account;

               (D) the distribution through the Paying Agent of amounts
          distributable to the Holders in respect of the Trust Securities;

               (E) the exercise of all of the rights, powers and privileges of a
          holder of the Notes in accordance with the terms of this Trust
          Agreement;

               (F) the sending of notices of default and other information
          regarding the Trust Securities and the Notes to the Holders in
          accordance with this Trust Agreement;

               (G) the distribution of the Trust Property in accordance with the
          terms of this Trust Agreement;

               (H) to the extent provided in this Trust Agreement, the winding
          up of the affairs of and liquidation of the Trust, provided that the
          Administrative Trustees shall have the power, duty and authority to
          act on behalf of the Trust with respect to the preparation, execution
          and filing of the certificate of cancellation of the Trust with the
          Secretary of State of the State of Delaware; and

               (I) the taking of any action incidental to the foregoing as the
          Property Trustee may from time to time determine is necessary or
          advisable to give effect to the terms of this Trust Agreement and
          protect and conserve the Trust Property for the benefit of the Holders
          (without consideration of the effect of any such action on any
          particular Holder).

     (b) In connection with the issue and sale of the Preferred Securities, the
Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of this
Trust Agreement are hereby ratified and confirmed in all respects):

          (i) the negotiation of the terms of, and the execution and delivery
     of, the Purchase Agreement providing for the sale of the Preferred
     Securities in one or more transactions exempt from registration under the
     Securities Act, and in compliance with applicable state securities or blue
     sky laws; and


                                       14



          (ii) the taking of any other actions necessary or desirable to carry
     out any of the foregoing activities.

     (c) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and
authorized to operate the Trust so that the Trust will not be taxable as a
corporation or classified as other than a grantor trust for United States
federal income tax purposes, so that the Notes will be treated as indebtedness
of the Depositor for United States federal income tax purposes and so that the
Trust will not be deemed to be an "investment company" required to be registered
under the Investment Company Act. In respect thereof, each Administrative
Trustee is authorized to take any action, not inconsistent with applicable law,
the Certificate of Trust or this Trust Agreement, that such Administrative
Trustee determines in his or her discretion to be necessary or desirable for
such purposes, as long as such action does not adversely affect in any material
respect the interests of the Holders of the Outstanding Preferred Securities. In
no event shall the Administrative Trustees be liable to the Trust or the Holders
for any failure to comply with this Section 2.5 to the extent that such failure
results solely from a change in law or regulation or in the interpretation
thereof.

     (d) Any action taken by a Trustee in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with any Trustee
acting on behalf of the Trust, no Person shall be required to inquire into the
authority of such Trustee to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of any Trustee as set
forth in this Trust Agreement.

     SECTION 2.6. Assets of Trust.

     The assets of the Trust shall consist of the Trust Property.

     SECTION 2.7. Title to Trust Property.

     (a) Legal title to all Trust Property shall be vested at all times in the
Property Trustee and shall be held and administered by the Property Trustee in
trust for the benefit of the Trust and the Holders in accordance with this Trust
Agreement.

     (b) The Holders shall not have any right or title to the Trust Property
other than the undivided beneficial interest in the assets of the Trust
conferred by their Trust Securities and they shall have no right to call for any
partition or division of property, profits or rights of the Trust except as
described below. The Trust Securities shall be personal property giving only the
rights specifically set forth therein and in this Trust Agreement.


                                       15



                                  ARTICLE III.

                         PAYMENT ACCOUNT; PAYING AGENTS

     SECTION 3.1. Payment Account.

     (a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and the Paying Agent shall have
exclusive control and sole right of withdrawal with respect to the Payment
Account for the purpose of making deposits in and withdrawals from the Payment
Account in accordance with this Trust Agreement. All monies and other property
deposited or held from time to time in the Payment Account shall be held by the
Property Trustee in the Payment Account for the exclusive benefit of the Holders
and for Distribution as herein provided.

     (b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments with respect to, the Notes. Amounts held in the Payment Account shall
not be invested by the Property Trustee pending distribution thereof.

     SECTION 3.2. Appointment of Paying Agents.

     The Paying Agent shall initially be the Property Trustee. The Paying Agent
shall make Distributions to Holders from the Payment Account and shall report
the amounts of such Distributions to the Property Trustee and the Administrative
Trustees. Any Paying Agent shall have the revocable power to withdraw funds from
the Payment Account solely for the purpose of making the Distributions referred
to above. The Administrative Trustees may revoke such power and remove the
Paying Agent in their sole discretion. Any Person acting as Paying Agent shall
be permitted to resign as Paying Agent upon thirty (30) days' written notice to
the Administrative Trustees and the Property Trustee. If the Property Trustee
shall no longer be the Paying Agent or a successor Paying Agent shall resign or
its authority to act be revoked, the Administrative Trustees shall appoint a
successor (which shall be a bank or trust company) to act as Paying Agent. Such
successor Paying Agent appointed by the Administrative Trustees shall execute
and deliver to the Trustees an instrument in which such successor Paying Agent
shall agree with the Trustees that as Paying Agent, such successor Paying Agent
will hold all sums, if any, held by it for payment to the Holders in trust for
the benefit of the Holders entitled thereto until such sums shall be paid to
such Holders. The Paying Agent shall return all unclaimed funds to the Property
Trustee and upon removal of a Paying Agent such Paying Agent shall also return
all funds in its possession to the Property Trustee. The provisions of Article
VIII shall apply to the Property Trustee also in its role as Paying Agent, for
so long as the Property Trustee shall act as Paying Agent and, to the extent
applicable, to any other Paying Agent appointed hereunder. Any reference in this
Trust Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.


                                       16



                                   ARTICLE IV.

                            DISTRIBUTIONS; REDEMPTION

     SECTION 4.1. Distributions.

     (a) The Trust Securities represent undivided beneficial interests in the
Trust Property, and Distributions (including any Additional Interest Amounts)
will be made on the Trust Securities at the rate and on the dates that payments
of interest (including any Additional Interest) are made on the Notes.
Accordingly:

          (i) Distributions on the Trust Securities shall be cumulative, and
     shall accumulate whether or not there are funds of the Trust available for
     the payment of Distributions. Distributions shall accumulate from the
     Closing Date, and, except as provided in clause (ii) below, shall be
     payable quarterly in arrears on January 30, April 30, July 30 and October
     30 of each year, commencing on January 30, 2006. If any date on which a
     Distribution is otherwise payable on the Trust Securities is not a Business
     Day, then the payment of such Distribution shall be made on the next
     succeeding Business Day (and no interest shall accrue in respect of the
     amounts whose payment is so delayed for the period from and after each such
     date until the next succeeding Business Day), in each case, with the same
     force and effect as if made on such date (each date on which Distributions
     are payable in accordance with this Section 4.1(a)(i), a "Distribution
     Date");

          (ii) in the event (and to the extent) that the Depositor exercises its
     right under the Indenture to defer the payment of interest on the Notes,
     Distributions on the Trust Securities shall be deferred. Under the
     Indenture, so long as no Note Event of Default has occurred and is
     continuing, after May 22, 2007, the Depositor shall have the right, at any
     time and from time to time during the term of the Notes, to defer the
     payment of interest on the Notes for a period of up to six (6) consecutive
     quarterly Interest Payment Periods (such right to defer, the "Extension
     Right" and each such extended Interest Payment Period, an "Extension
     Period"), during which Extension Period(s), no interest shall be due and
     payable (except any Additional Tax Sums that may be due and payable);
     provided, that, the Depositor shall not be entitled to exercise its
     Extension Right so that it would be able to defer the payment of interest
     on the Notes for more than six (6) quarterly Interest Payment Periods;
     provided, further, that, after the expiration of any Extension Period, the
     Depositor may not exercise its Extension Right to begin any subsequent
     Extension Period until it pays all interest then accrued and unpaid on the
     Notes, together with such Additional Interest prior to beginning such
     subsequent Extension Period. No interest on the Notes shall be due and
     payable during an Extension Period, except at the end thereof, but each
     installment of interest that would otherwise have been due and payable
     during such Extension Period shall bear Additional Interest (to the extent
     payment of such interest would be legally enforceable) at a fixed rate
     equal to 7.812% per annum through the Interest Payment Date in January 2016
     and thereafter at a variable rate equal to LIBOR plus 2.832% per annum
     compounded quarterly, from the dates on which amounts would have otherwise
     been due and payable until paid or until


                                       17



     funds for the payment thereof have been made available for payment. If
     Distributions are deferred, the deferred Distributions (including
     Additional Interest Amounts) shall be paid on the date that the related
     Extension Period terminates, to Holders of the Trust Securities as they
     appear on the books and records of the Trust on the record date immediately
     preceding such termination date.

          (iii) Distributions shall accumulate in respect of the Trust
     Securities at a fixed rate equal to 7.812% per annum through the Interest
     Payment Date in January 2016 and thereafter at a variable rate equal to
     LIBOR plus 2.832% per annum of the Liquidation Amount of the Trust
     Securities, such rate being the rate of interest payable on the Notes.
     LIBOR shall be determined by the Calculation Agent in accordance with
     Schedule A. During the Fixed Rate Period, the amount of Distributions
     payable for any period less than a full Distribution Period shall be
     computed on the basis of a 360-day year of twelve 30-day months and the
     amount payable for any partial period shall be computed on the basis of the
     number of days elapsed in a 360-day year of twelve 30-day months. Upon
     expiration of the Fixed Rate Period, the amount of interest payable for any
     Distribution Period will be computed on the basis of a 360-day year and the
     actual number of days elapsed in the relevant interest period. The amount
     of Distributions payable for any period shall include any Additional
     Interest Amounts in respect of such period; and

          (iv) Distributions on the Trust Securities shall be made by the Paying
     Agent from the Payment Account and shall be payable on each Distribution
     Date only to the extent that the Trust has funds then on hand and available
     in the Payment Account for the payment of such Distributions.

     (b) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities at the close of business on the relevant
record date, which shall be at the close of business on the fifteenth day
(whether or not a Business Day) preceding the relevant Distribution Date, except
that Distributions and any Additional Interest Amounts payable on the stated
maturity (or any date of principal repayment upon early maturity) of the
principal of a Trust Security or on a Redemption Date shall be paid to the
Person to whom principal is paid. Distributions payable on any Trust Securities
that are not punctually paid on any Distribution Date as a result of the
Depositor having failed to make an interest payment under the Notes will cease
to be payable to the Person in whose name such Trust Securities are registered
on the relevant record date, and such defaulted Distributions and any Additional
Interest Amounts will instead be payable to the Person in whose name such Trust
Securities are registered on the special record date, or other specified date
for determining Holders entitled to such defaulted Distribution and Additional
Interest Amount, established in the same manner, and on the same date, as such
is established with respect to the Notes under the Indenture.

     SECTION 4.2. Redemption.

     (a) On each Note Redemption Date and on the stated maturity (or any date of
principal repayment upon early maturity) of the Notes and on each other date on
(or in respect of) which any principal on the Notes is repaid, the Trust will be
required to redeem a Like Amount of Trust Securities at the Redemption Price.


                                       18



     (b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than thirty (30) nor more
than sixty (60) days prior to the Redemption Date to each Holder of Trust
Securities to be redeemed, at such Holder's address appearing in the Securities
Register. All notices of redemption shall state:

          (i) the Redemption Date;

          (ii) the Redemption Price or, if the Redemption Price cannot be
     calculated prior to the time the notice is required to be sent, the
     estimate of the Redemption Price provided pursuant to the Indenture, as
     calculated by the Depositor, together with a statement that it is an
     estimate and that the actual Redemption Price will be calculated by the
     Calculation Agent on the fifth Business Day prior to the Redemption Date
     (and if an estimate is provided, a further notice shall be sent of the
     actual Redemption Price on the date that such Redemption Price is
     calculated);

          (iii) if less than all the Outstanding Trust Securities are to be
     redeemed, the identification (and, in the case of partial redemption, the
     respective amounts) and Liquidation Amounts of the particular Trust
     Securities to be redeemed;

          (iv) that on the Redemption Date, the Redemption Price will become due
     and payable upon each such Trust Security, or portion thereof, to be
     redeemed and that Distributions thereon will cease to accumulate on such
     Trust Security or such portion, as the case may be, on and after said date,
     except as provided in Section 4.2(d);

          (v) the place or places where the Trust Securities are to be
     surrendered for the payment of the Redemption Price; and

          (vi) such other provisions as the Property Trustee deems relevant.

     (c) The Trust Securities (or portion thereof) redeemed on each Redemption
Date shall be redeemed at the Redemption Price with the proceeds from the
contemporaneous redemption or payment at maturity of Notes. Redemptions of the
Trust Securities (or portion thereof) shall be made and the Redemption Price
shall be payable on each Redemption Date only to the extent that the Trust has
funds then on hand and available in the Payment Account for the payment of such
Redemption Price. Under the Indenture, the Notes may be redeemed by the
Depositor on any Interest Payment Date, at the Depositor's option, on or after
January 30, 2011, in whole or in part, from time to time at the Optional Note
Redemption Price. The Notes may also be redeemed by the Depositor, at its option
pursuant to the terms of the Indenture, in whole but not in part, upon the
occurrence and during the continuation of an Investment Company Event or a Tax
Event, at the Special Note Redemption Price.

     (d) If the Property Trustee gives a notice of redemption in respect of any
Preferred Securities, then by 10:00 A.M., New York City time, on the Redemption
Date, the Depositor shall deposit sufficient funds with the Property Trustee to
pay the Redemption Price. If such deposit has been made by such time, then by
12:00 noon, New York City time, on the Redemption Date, the Property Trustee
will, with respect to Book-Entry Preferred Securities, irrevocably deposit with
the Depositary for such Book-Entry Preferred Securities, to the extent


                                       19



available therefor, funds sufficient to pay the applicable Redemption Price and
will give such Depositary irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities. With respect to
Preferred Securities that are not Book-Entry Preferred Securities, the Property
Trustee will irrevocably deposit with the Paying Agent, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will give
the Paying Agent irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Preferred Securities upon surrender of their
Preferred Securities Certificates. Notwithstanding the foregoing, Distributions
payable on or prior to the Redemption Date for any Trust Securities (or portion
thereof) called for redemption shall be payable to the Holders of such Trust
Securities as they appear on the Securities Register on the relevant record
dates for the related Distribution Dates. If notice of redemption shall have
been given and funds deposited as required, then upon the date of such deposit,
all rights of Holders holding Trust Securities (or portion thereof) so called
for redemption will cease, except the right of such Holders to receive the
Redemption Price and any Distribution payable in respect of the Trust Securities
on or prior to the Redemption Date, but without interest, and, in the case of a
partial redemption, the right of such Holders to receive a new Trust Security or
Securities of authorized denominations, in aggregate Liquidation Amount equal to
the unredeemed portion of such Trust Security or Securities, and such Securities
(or portion thereof) called for redemption will cease to be Outstanding. In the
event that any date on which any Redemption Price is payable is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding Business Day (and no interest shall accrue in respect of the
amounts whose payment is so delayed for the period from and after each such date
until the next succeeding Business Day), in each case, with the same force and
effect as if made on such date. In the event that payment of the Redemption
Price in respect of any Trust Securities (or portion thereof) called for
redemption is improperly withheld or refused and not paid either by the Trust,
Distributions on such Trust Securities (or portion thereof) will continue to
accumulate, as set forth in Section 4.1, from the Redemption Date originally
established by the Trust for such Trust Securities (or portion thereof) to the
date such Redemption Price is actually paid, in which case the actual payment
date will be the date fixed for redemption for purposes of calculating the
Redemption Price.

     (e) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated pro
rata to the Common Securities and the Preferred Securities based upon the
relative aggregate Liquidation Amounts of the Common Securities and the
Preferred Securities. Upon such a partial redemption, the Preferred Securities
to be redeemed from each Holder of Preferred Securities shall be selected on a
pro rata basis based upon the respective Liquidation Amounts of the Preferred
Securities then held by each Holder of the Preferred Securities not more than
sixty (60) days prior to the Redemption Date by the Property Trustee from the
Outstanding Preferred Securities not previously called for redemption; provided,
that with respect to Holders that would be required to hold less than one
hundred (100) but more than zero (0) Trust Securities as a result of such
redemption, the Trust shall redeem Trust Securities of each such Holder so that
after such redemption such Holder shall hold either one hundred (100) Trust
Securities or such Holder no longer holds any Trust Securities, and shall use
such method (including, without limitation, by lot) as the Trust shall deem fair
and appropriate; and provided, further, that so long as the Preferred Securities
are Book-Entry


                                       20



Preferred Securities, such selection shall be made in accordance with the
Applicable Depositary Procedures for the Preferred Securities by such
Depositary. The Property Trustee shall promptly notify the Securities Registrar
in writing of the Preferred Securities (or portion thereof) selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
this Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Preferred Securities shall relate, in the case of
any Preferred Securities redeemed or to be redeemed only in part, to the portion
of the aggregate Liquidation Amount of Preferred Securities that has been or is
to be redeemed.

     (f) The Trust in issuing the Trust Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Property Trustee shall indicate the
"CUSIP" numbers of the Trust Securities in notices of redemption and related
materials as a convenience to Holders; provided, that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Trust Securities or as contained in any notice of redemption and
related materials.

     SECTION 4.3. Subordination of Common Securities.

     (a) Payment of Distributions (including any Additional Interest Amounts)
on, the Redemption Price of and the Liquidation Distribution in respect of, the
Trust Securities, as applicable, shall be made, pro rata among the Common
Securities and the Preferred Securities based on the Liquidation Amount of the
respective Trust Securities; provided, that if on any Distribution Date,
Redemption Date or Liquidation Date an Event of Default shall have occurred and
be continuing, no payment of any Distribution (including any Additional Interest
Amounts) on, Redemption Price of or Liquidation Distribution in respect of, any
Common Security, and no other payment on account of the redemption, liquidation
or other acquisition of Common Securities, shall be made unless payment in full
in cash of all accumulated and unpaid Distributions (including any Additional
Interest Amounts) on all Outstanding Preferred Securities for all Distribution
Periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all Outstanding
Preferred Securities then called for redemption, or in the case of payment of
the Liquidation Distribution the full amount of such Liquidation Distribution on
all Outstanding Preferred Securities, shall have been made or provided for, and
all funds immediately available to the Property Trustee shall first be applied
to the payment in full in cash of all Distributions (including any Additional
Interest Amounts) on, or the Redemption Price of or the Liquidation Distribution
in respect of, the Preferred Securities then due and payable.

     (b) In the case of the occurrence of any Event of Default, the Holders of
the Common Securities shall have no right to act with respect to any such Event
of Default under this Trust Agreement until all such Events of Default with
respect to the Preferred Securities have been cured, waived or otherwise
eliminated. Until all such Events of Default under this Trust Agreement with
respect to the Preferred Securities have been so cured, waived or otherwise
eliminated, the Property Trustee shall act solely on behalf of the Holders of
the Preferred Securities and not on behalf of the Holders of the Common
Securities, and only the Holders of all the Preferred Securities will have the
right to direct the Property Trustee to act on their behalf.


                                       21



     SECTION 4.4. Payment Procedures.

     Payments of Distributions (including any Additional Interest Amounts), the
Redemption Price, Liquidation Amount or any other amounts in respect of the
Preferred Securities shall be made by wire transfer at such place and to such
account at a banking institution in the United States as may be designated in
writing at least ten (10) Business Days prior to the date for payment by the
Person entitled thereto unless proper written transfer instructions have not
been received by the relevant record date, in which case such payments shall be
made by check mailed to the address of such Person as such address shall appear
in the Securities Register. If any Preferred Securities are held by a
Depositary, such Distributions thereon shall be made to the Depositary in
immediately available funds. Payments in respect of the Common Securities shall
be made in such manner as shall be mutually agreed between the Property Trustee
and the Holder of all the Common Securities.

     SECTION 4.5. Withholding Tax.

     (a) The Trust and the Administrative Trustees shall comply with all
withholding and backup withholding tax requirements under United States federal,
state and local law. The Administrative Trustees on behalf of the Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding and backup
withholding tax with respect to each Holder and any representations and forms as
shall reasonably be requested by the Administrative Trustees on behalf of the
Trust to assist it in determining the extent of, and in fulfilling, its
withholding and backup withholding tax obligations. The Administrative Trustees
shall file required forms with applicable jurisdictions and, unless an exemption
from withholding and backup withholding tax is properly established by a Holder,
shall remit amounts withheld with respect to the Holder to applicable
jurisdictions. To the extent that the Trust is required to withhold and pay over
any amounts to any jurisdiction with respect to Distributions or allocations to
any Holder, the amount withheld shall be deemed to be a Distribution in the
amount of the withholding to the Holder. In the event of any claimed
overwithholding, Holders shall be limited to an action against the applicable
jurisdiction. If the amount required to be withheld was not withheld from actual
Distributions made, the Administrative Trustees on behalf of the Trust may
reduce subsequent Distributions by the amount of such required withholding.

     SECTION 4.6. Tax Returns and Other Reports.

     The Administrative Trustees shall prepare (or cause to be prepared) at the
principal office of the Trust in the United States, as defined for purposes of
Treasury regulations section 301.7701-7, at the Depositor's expense, and file,
all United States federal, state and local tax and information returns and
reports required to be filed by or in respect of the Trust. The Administrative
Trustees shall prepare at the principal office of the Trust in the United
States, as defined for purposes of Treasury regulations section 301.7701-7, and
furnish (or cause to be prepared and furnished), by January 31 in each taxable
year of the Trust to each Holder all Internal Revenue Service forms and returns
required to be provided by the Trust. The Administrative Trustees shall provide
the Depositor, Taberna Capital Management, LLC and the Property Trustee with a
copy of all such returns and reports promptly after such filing or furnishing.


                                       22



     SECTION 4.7. Payment of Taxes, Duties, Etc. of the Trust.

     Upon receipt under the Notes of Additional Tax Sums and upon the written
direction of the Administrative Trustees, the Property Trustee shall promptly
pay, solely out of monies on deposit pursuant to this Trust Agreement, any
Additional Taxes imposed on the Trust by the United States or any other taxing
authority.

     SECTION 4.8. Payments under Indenture or Pursuant to Direct Actions.

     Any amount payable hereunder to any Holder of Preferred Securities shall be
reduced by the amount of any corresponding payment such Holder (or any Owner
with respect thereto) has directly received pursuant to Section 5.8 of the
Indenture or Section 6.10(b) of this Trust Agreement.

     SECTION 4.9. Exchanges.

     (a) If at any time the Depositor or any of its Affiliates (in either case,
a "Depositor Affiliate") is the Owner or Holder of any Preferred Securities,
such Depositor Affiliate shall have the right to deliver to the Property Trustee
all or such portion of its Preferred Securities as it elects and, subject to
compliance with Sections 2.2 and 3.5 of the Indenture, receive, in exchange
therefor, a Like Amount of Notes. Such election shall be exercisable effective
on any Distribution Date by such Depositor Affiliate delivering to the Property
Trustee (i) at least ten (10) Business Days prior to the Distribution Date on
which such exchange is to occur, the registration instructions and the
documentation, if any, required pursuant to Sections 2.2 and 3.5 of the
Indenture to enable the Indenture Trustee to issue the requested Like Amount of
Notes, (ii) a written notice of such election specifying the Liquidation Amount
of Preferred Securities with respect to which such election is being made and
the Distribution Date on which such exchange shall occur, which Distribution
Date shall be not less than ten (10) Business Days after the date of receipt by
the Property Trustee of such election notice and (iii) shall be conditioned upon
such Depositor Affiliate having delivered or caused to be delivered to the
Property Trustee or its designee the Preferred Securities that are the subject
of such election by 10:00 A.M. New York time, on the Distribution Date on which
such exchange is to occur. After the exchange, such Preferred Securities will be
canceled and will no longer be deemed to be Outstanding and all rights of the
Depositor Affiliate with respect to such Preferred Securities will cease.

     (b) In the case of an exchange described in Section 4.9(a), the Property
Trustee on behalf of the Trust will, on the date of such exchange, exchange
Notes having a principal amount equal to a proportional amount of the aggregate
Liquidation Amount of the Outstanding Common Securities, based on the ratio of
the aggregate Liquidation Amount of the Preferred Securities exchanged pursuant
to Section 4.9(a) divided by the aggregate Liquidation Amount of the Preferred
Securities Outstanding immediately prior to such exchange, for such proportional
amount of Common Securities held by the Depositor (which contemporaneously shall
be canceled and no longer be deemed to be Outstanding); provided, that the
Depositor delivers or causes to be delivered to the Property Trustee or its
designee the required amount of Common Securities to be exchanged by 10:00 A.M.
New York time, on the Distribution Date on which such exchange is to occur.


                                       23



     SECTION 4.10. Calculation Agent.

     (a) The Calculation Agent may be removed by the Administrative Trustees at
any time. Notwithstanding the foregoing, the Property Trustee shall initially,
and, for so long as it holds any of the Notes, be the Calculation Agent for
purposes of determining LIBOR for each Distribution Date. If the Calculation
Agent is unable or unwilling to act as such or is removed by the Administrative
Trustees, the Administrative Trustees will promptly appoint as a replacement
Calculation Agent the London office of a leading bank which is engaged in
transactions in three-month Eurodollar deposits in the international Eurodollar
market and which does not control or is not controlled by or under common
control with the Administrative Trustee or its Affiliates. The Calculation Agent
may not resign its duties without a successor having been duly appointed.

     (b) The Calculation Agent shall be required to agree that, as soon as
possible after 11:00 a.m. (London time) on each LIBOR Determination Date, but in
no event later than 11:00 a.m. (London time) on the Business Day immediately
following each LIBOR Determination Date, the Calculation Agent will calculate
the interest rate (rounded to the nearest cent, with half a cent being rounded
upwards) for the related Distribution Date, and will communicate such rate and
amount to the Depositor, the Administrative Trustees, the Note Trustee, each
Paying Agent and the Depositary. The Calculation Agent will also specify to the
Administrative Trustee the quotations upon which the foregoing rates and amounts
are based and, in any event, the Calculation Agent shall notify the
Administrative Trustees before 5:00 p.m. (London time) on each LIBOR
Determination Date that either: (i) it has determined or is in the process of
determining the foregoing rates and amounts or (ii) it has not determined and is
not in the process of determining the foregoing rates and amounts, together with
its reasons therefor. The Calculation Agent's determination of the foregoing
rates and amounts for any Distribution Date will (in the absence of manifest
error) be final and binding upon all parties. For the sole purpose of
calculating the interest rate for the Trust Securities, "Business Day" shall be
defined as any day on which dealings in deposits in Dollars are transacted in
the London interbank market.

     SECTION 4.11. Certain Accounting Matters.

     (a) At all times during the existence of the Trust, the Administrative
Trustees shall keep, or cause to be kept at the principal office of the Trust in
the United States, as defined for purposes of Treasury Regulations section
301.7701-7, full books of account, records and supporting documents, which shall
reflect in reasonable detail each transaction of the Trust. The books of account
shall be maintained on the accrual method of accounting, in accordance with
generally accepted accounting principles, consistently applied.

     (b) The Administrative Trustees shall either (i) if the Depositor is then
subject to such reporting requirements, cause each Form 10-K and Form 10-Q
prepared by the Depositor and filed with the Commission in accordance with the
Exchange Act to be delivered to each Holder, with a copy to the Property
Trustee, within thirty (30) days after the filing thereof or (ii) cause to be
prepared at the principal office of the Trust in the United States, as defined
for purposes of Treasury Regulations section 301.7701-7, and delivered to each
of the Holders, with a copy to the Property Trustee, within ninety (90) days
after the end of each Fiscal Year, annual financial


                                       24



statements of the Trust, including a balance sheet of the Trust as of the end of
such Fiscal Year, and the related statements of income or loss.

     (c) If the Depositor intends to file its annual and quarterly information
with the Commission in electronic form pursuant to Regulation S-T of the
Commission using the Commission's Electronic Data Gathering, Analysis and
Retrieval ("EDGAR") system, the Administrative Trustees shall notify the
Property Trustee in the manner prescribed herein of each such annual and
quarterly filing. The Property Trustee is hereby authorized and directed to
access the EDGAR system for purposes of retrieving the financial information so
filed. Compliance with the foregoing shall constitute delivery by the
Administrative Trustees of its financial statements to the Property Trustee in
compliance with the provisions of Section 314(a) of the Trust Indenture Act, if
applicable. The Property Trustee shall have no duty to search for or obtain any
electronic or other filings that the Depositor makes with the Commission,
regardless of whether such filings are periodic, supplemental or otherwise.
Delivery of reports, information and documents to the Property Trustee pursuant
to this Section 4.11(c) shall be solely for purposes of compliance with this
Section 4.11 and, if applicable, with Section 314(a) of the Trust Indenture Act.
The Property Trustee's receipt of such reports, information and documents shall
not constitute notice to it of the content thereof or any matter determinable
from the content thereof, including the Depositor's compliance with any of its
covenants hereunder, as to which the Property Trustee is entitled to rely upon
Officers' Certificates.

     (d) The Trust shall maintain one or more bank accounts in the United
States, as defined for purposes of Treasury Regulations section 301.7701-7, in
the name and for the sole benefit of the Trust; provided, however, that all
payments of funds in respect of the Notes held by the Property Trustee shall be
made directly to the Payment Account and no other funds of the Trust shall be
deposited in the Payment Account. The sole signatories for such accounts
(including the Payment Account) shall be designated by the Property Trustee.

                                   ARTICLE V.

                                   SECURITIES

     SECTION 5.1. Initial Ownership.

     Upon the creation of the Trust and the contribution by the Depositor
referred to in Section 2.3 and until the issuance of the Trust Securities, and
at any time during which no Trust Securities are Outstanding, the Depositor
shall be the sole beneficial owner of the Trust.

     SECTION 5.2. Authorized Trust Securities.

     The Trust shall be authorized to issue Preferred Securities having an
aggregate Liquidation Amount of $40,000,000 and Common Securities having an
aggregate Liquidation Amount of $1,238,000.


                                       25



     SECTION 5.3. Issuance of the Common Securities; Subscription and Purchase
of Notes.

     On the Closing Date, an Administrative Trustee, on behalf of the Trust,
shall execute and deliver to the Depositor Common Securities Certificates,
registered in the name of the Depositor, evidencing an aggregate of One Thousand
Two Hundred Thirty Eight (1,238) Common Securities having an aggregate
Liquidation Amount of One Million Two Hundred Thirty Eight Thousand Dollars
($1,238,000), against receipt by the Trust of the aggregate purchase price of
such Common Securities of One Million Two Hundred Thirty Eight Thousand Dollars
($1,238,000). Contemporaneously therewith and with the sale by the Trust to the
Holders of an aggregate of 40,000 Preferred Securities having an aggregate
Liquidation Amount of Forty Million Dollars ($40,000,000), an Administrative
Trustee, on behalf of the Trust, shall purchase from the Depositor Notes, to be
registered in the name of the Property Trustee on behalf of the Trust and having
an aggregate principal amount of Forty One Million Two Hundred Thirty Eight
Thousand Dollars ($41,238,000), and, in satisfaction of the purchase price for
such Notes, the Property Trustee, on behalf of the Trust, shall deliver to the
Depositor the sum of Forty One Million Two Hundred Thirty Eight Thousand Dollars
($41,238,000) (being the aggregate of the amount paid by the Holders for the
Preferred Securities and the amount paid by the Depositor for the Common
Securities).

     SECTION 5.4. The Securities Certificates.

     (a) The Preferred Securities Certificates shall be issued in minimum
denominations of $100,000 Liquidation Amount and integral multiples of $1,000 in
excess thereof, and the Common Securities Certificates shall be issued in
minimum denominations of $10,000 Liquidation Amount and integral multiples of
$1,000 in excess thereof. The Securities Certificates shall be executed on
behalf of the Trust by manual or facsimile signature of at least one
Administrative Trustee. Securities Certificates bearing the signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign such Securities Certificates on behalf of the Trust shall be
validly issued and entitled to the benefits of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the delivery of such Securities Certificates or did not have
such authority at the date of delivery of such Securities Certificates.

     (b) On the Closing Date, upon the written order of an authorized officer of
the Depositor, the Administrative Trustees shall cause Securities Certificates
to be executed on behalf of the Trust and delivered, without further corporate
action by the Depositor, in authorized denominations.

     (c) The Preferred Securities issued to QIBs/QPs shall be, except as
provided in Section 5.6, Book-Entry Preferred Securities issued in the form of
one or more Global Preferred Securities registered in the name of the
Depositary, or its nominee and deposited with the Depositary or a custodian for
the Depositary for credit by the Depositary to the respective accounts of the
Depositary Participants thereof (or such other accounts as they may direct). The
Preferred Securities issued to a Person other than a QIB/QP shall be issued in
the form of Definitive Preferred Securities Certificates.


                                       26



     (d) A Preferred Security shall not be valid until authenticated by the
manual signature of an authorized signatory of the Property Trustee. Such
signature shall be conclusive evidence that the Preferred Security has been
authenticated under this Trust Agreement. Upon written order of the Trust signed
by one Administrative Trustee, the Property Trustee shall authenticate the
Preferred Securities for original issue. The Property Trustee may appoint an
authenticating agent that is a U.S. Person acceptable to the Trust to
authenticate the Preferred Securities. A Common Security need not be so
authenticated and shall be valid upon execution by one or more Administrative
Trustees. The form of this certificate of authentication can be found in Section
5.13.

     SECTION 5.5. Rights of Holders.

     The Trust Securities shall have no preemptive or similar rights and when
issued and delivered to Holders against payment of the purchase price therefor
will be fully paid and non-assessable by the Trust. Except as provided in
Section 5.11(b), the Holders of the Trust Securities, in their capacities as
such, shall be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.

     SECTION 5.6. Book-Entry Preferred Securities.

     (a) A Global Preferred Security may be exchanged, in whole or in part, for
Definitive Preferred Securities Certificates registered in the names of the
Owners only if such exchange complies with Section 5.7 and (i) the Depositary
advises the Administrative Trustees and the Property Trustee in writing that the
Depositary is no longer willing or able properly to discharge its
responsibilities with respect to the Global Preferred Security, and no qualified
successor is appointed by the Administrative Trustees within ninety (90) days of
receipt of such notice, (ii) the Depositary ceases to be a clearing agency
registered under the Exchange Act and the Administrative Trustees fail to
appoint a qualified successor within ninety (90) days of obtaining knowledge of
such event, (iii) the Administrative Trustees at their option advise the
Property Trustee in writing that the Trust elects to terminate the book-entry
system through the Depositary or (iv) a Note Event of Default has occurred and
is continuing. Upon the occurrence of any event specified in clause (i), (ii),
(iii) or (iv) above, the Administrative Trustees shall notify the Depositary and
instruct the Depositary to notify all Owners of Book-Entry Preferred Securities,
the Delaware Trustee and the Property Trustee of the occurrence of such event
and of the availability of the Definitive Preferred Securities Certificates to
Owners of the Preferred Securities requesting the same. Upon the issuance of
Definitive Preferred Securities Certificates, the Trustees shall recognize the
Holders of the Definitive Preferred Securities Certificates as Holders.
Notwithstanding the foregoing, if an Owner of a beneficial interest in a Global
Preferred Security wishes at any time to transfer an interest in such Global
Preferred Security to a Person other than a QIB/QP, such transfer shall be
effected, subject to the Applicable Depositary Procedures, in accordance with
the provisions of this Section 5.6 and Section 5.7, and the transferee shall
receive a Definitive Preferred Securities Certificate in connection with such
transfer. A holder of a Definitive Preferred Securities Certificate that is a
QIB/QP may, upon request and in accordance with the provisions of this Section
5.6 and Section 5.7, exchange such Definitive Preferred Securities Certificate
for a beneficial interest in a Global Preferred Security.


                                       27



     (b) If any Global Preferred Security is to be exchanged for Definitive
Preferred Securities Certificates or canceled in part, or if any Definitive
Preferred Securities Certificate is to be exchanged in whole or in part for any
Global Preferred Security, then either (i) such Global Preferred Security shall
be so surrendered for exchange or cancellation as provided in this Article V or
(ii) the aggregate Liquidation Amount represented by such Global Preferred
Security shall be reduced, subject to Section 5.4, or increased by an amount
equal to the Liquidation Amount represented by that portion of the Global
Preferred Security to be so exchanged or canceled, or equal to the Liquidation
Amount represented by such Definitive Preferred Securities Certificates to be so
exchanged for any Global Preferred Security, as the case may be, by means of an
appropriate adjustment made on the records of the Securities Registrar,
whereupon the Property Trustee, in accordance with the Applicable Depositary
Procedures, shall instruct the Depositary or its authorized representative to
make a corresponding adjustment to its records. Upon any such surrender to the
Administrative Trustees or the Securities Registrar of any Global Preferred
Security or Securities by the Depositary, accompanied by registration
instructions, the Administrative Trustees, or any one of them, shall execute the
Definitive Preferred Securities Certificates in accordance with the instructions
of the Depositary. None of the Securities Registrar or the Trustees shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be fully protected in relying on, such instructions.

     (c) Every Definitive Preferred Securities Certificate executed and
delivered upon registration or transfer of, or in exchange for or in lieu of, a
Global Preferred Security or any portion thereof shall be executed and delivered
in the form of, and shall be, a Global Preferred Security, unless such
Definitive Preferred Securities Certificate is registered in the name of a
Person other than the Depositary for such Global Preferred Security or a nominee
thereof.

     (d) The Depositary or its nominee, as registered owner of a Global
Preferred Security, shall be the Holder of such Global Preferred Security for
all purposes under this Trust Agreement and the Global Preferred Security, and
Owners with respect to a Global Preferred Security shall hold such interests
pursuant to the Applicable Depositary Procedures. The Securities Registrar and
the Trustees shall be entitled to deal with the Depositary for all purposes of
this Trust Agreement relating to the Global Preferred Securities (including the
payment of the Liquidation Amount of and Distributions on the Book-Entry
Preferred Securities represented thereby and the giving of instructions or
directions by Owners of Book-Entry Preferred Securities represented thereby and
the giving of notices) as the sole Holder of the Book-Entry Preferred Securities
represented thereby and shall have no obligations to the Owners thereof. None of
the Trustees nor the Securities Registrar shall have any liability in respect of
any transfers effected by the Depositary.

     (e) The rights of the Owners of the Book-Entry Preferred Securities shall
be exercised only through the Depositary and shall be limited to those
established by law, the Applicable Depositary Procedures and agreements between
such Owners and the Depositary and/or the Depositary Participants; provided,
that solely for the purpose of determining whether the Holders of the requisite
amount of Preferred Securities have voted on any matter provided for in this
Trust Agreement, to the extent that Preferred Securities are represented by a
Global Preferred Security, the Trustees may conclusively rely on, and shall be
fully protected in relying on, any written instrument (including a proxy)
delivered to the Property Trustee by the


                                       28



Depositary setting forth the Owners' votes or assigning the right to vote on any
matter to any other Persons either in whole or in part. To the extent that
Preferred Securities are represented by a Global Preferred Security, the initial
Depositary will make book-entry transfers among the Depositary Participants and
receive and transmit payments on the Preferred Securities that are represented
by a Global Preferred Security to such Depositary Participants, and none of the
Depositor or the Trustees shall have any responsibility or obligation with
respect thereto.

     (f) To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Preferred Securities are
represented by a Global Preferred Security, the Trustees shall give all such
notices and communications to the Depositary, and shall have no obligations to
the Owners.

     SECTION 5.7. Registration of Transfer and Exchange of Preferred Securities
Certificates.

     (a) The Property Trustee shall keep or cause to be kept, at the Corporate
Trust Office, a register or registers (the "Securities Register") in which the
registrar and transfer agent with respect to the Trust Securities (the
"Securities Registrar"), subject to such reasonable regulations as it may
prescribe, shall provide for the registration of Preferred Securities
Certificates and Common Securities Certificates and registration of transfers
and exchanges of Preferred Securities Certificates as herein provided. The
Person acting as the Property Trustee shall at all times also be the Securities
Registrar. The provisions of Article VIII shall apply to the Property Trustee in
its role as Securities Registrar.

     (b) Subject to Section 5.7(d), upon surrender for registration of transfer
of any Preferred Securities Certificate at the office or agency maintained
pursuant to Section 5.7(f), the Administrative Trustees or any one of them shall
execute by manual or facsimile signature and deliver to the Property Trustee,
and the Property Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Preferred Securities
Certificates in authorized denominations of a like aggregate Liquidation Amount
as may be required by this Trust Agreement dated the date of execution by such
Administrative Trustee or Trustees. At the option of a Holder, Preferred
Securities Certificates may be exchanged for other Preferred Securities
Certificates in authorized denominations and of a like aggregate Liquidation
Amount upon surrender of the Preferred Securities Certificate to be exchanged at
the office or agency maintained pursuant to Section 5.7(f). Whenever any
Preferred Securities Certificates are so surrendered for exchange, the
Administrative Trustees or any one of them shall execute by manual or facsimile
signature and deliver to the Property Trustee, and the Property Trustee shall
authenticate and deliver, the Preferred Securities Certificates that the Holder
making the exchange is entitled to receive.

     (c) The Securities Registrar shall not be required, (i) to issue, register
the transfer of or exchange any Preferred Security during a period beginning at
the opening of business fifteen (15) days before the day of selection for
redemption of such Preferred Securities pursuant to Article IV and ending at the
close of business on the day of mailing of the notice of redemption or (ii) to
register the transfer of or exchange any Preferred Security so selected for
redemption in whole or in part, except, in the case of any such Preferred
Security to be redeemed in part, any portion thereof not to be redeemed.


                                       29



     (d) Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Securities
Registrar duly executed by the Holder or such Holder's attorney duly authorized
in writing that such Preferred Securities Certificate is being transferred to a
QP, accompanied by a certificate of the transferee substantially in the form set
forth as Exhibit E or Exhibit F hereto.

     (e) No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Property Trustee on
behalf of the Trust may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Preferred Securities Certificates.

     (f) The Administrative Trustees shall designate an office or offices or
agency or agencies where Preferred Securities Certificates may be surrendered
for registration of transfer or exchange and initially designate the Corporate
Trust Office as its office and agency for such purposes. The Administrative
Trustees shall give prompt written notice to the Depositor, the Property Trustee
and to the Holders of any change in the location of any such office or agency.

     SECTION 5.8. Mutilated, Destroyed, Lost or Stolen Securities Certificates.

     (a) If any mutilated Securities Certificate shall be surrendered to the
Securities Registrar together with such security or indemnity as may be required
by the Securities Registrar to save each of the Trustees harmless, the
Administrative Trustees, or any one of them, on behalf of the Trust, shall
execute and make available for delivery in exchange therefor a new Securities
Certificate of like class, tenor and denomination.

     (b) If the Securities Registrar shall receive evidence to its satisfaction
of the destruction, loss or theft of any Securities Certificate and there shall
be delivered to the Securities Registrar such security or indemnity as may be
required by it to save each of the Trustees harmless, then in the absence of
notice that such Securities Certificate shall have been acquired by a protected
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Trust, shall execute and make available for delivery, and, with respect to
Preferred Securities, the Property Trustee shall authenticate, in exchange for
or in lieu of any such destroyed, lost or stolen Securities Certificate, a new
Securities Certificate of like class, tenor and denomination.

     (c) In connection with the issuance of any new Securities Certificate under
this Section 5.8, the Administrative Trustees or the Securities Registrar may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.

     (d) Any duplicate Securities Certificate issued pursuant to this Section
5.8 shall constitute conclusive evidence of an undivided beneficial interest in
the assets of the Trust corresponding to that evidenced by the mutilated, lost,
stolen or destroyed Securities Certificate, as if originally issued, whether or
not the lost, stolen or destroyed Securities Certificate shall be found at any
time.


                                       30



     (e) If any such mutilated, destroyed, lost or stolen Securities Certificate
has become or is about to become due and payable, the Depositor in its
discretion may provide the Administrative Trustee with the funds to pay such
Trust Security and upon receipt of such funds, the Administrative Trustee shall
pay such Trust Security instead of issuing a new Securities Certificate.

     (f) The provisions of this Section 5.8 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
of mutilated, destroyed, lost or stolen Securities Certificates.

     SECTION 5.9. Persons Deemed Holders.

     The Trustees and the Securities Registrar shall each treat the Person in
whose name any Securities Certificate shall be registered in the Securities
Register as the owner of such Securities Certificate for the purpose of
receiving Distributions and for all other purposes whatsoever, and none of the
Trustees and the Securities Registrar shall be bound by any notice to the
contrary.

     SECTION 5.10. Cancellation.

     All Preferred Securities Certificates surrendered for registration of
transfer or exchange or for payment shall, if surrendered to any Person other
than the Property Trustee, be delivered to the Property Trustee, and any such
Preferred Securities Certificates and Preferred Securities Certificates
surrendered directly to the Property Trustee for any such purpose shall be
promptly canceled by it. The Administrative Trustees may at any time deliver to
the Property Trustee for cancellation any Preferred Securities Certificates
previously delivered hereunder that the Administrative Trustees may have
acquired in any manner whatsoever, and all Preferred Securities Certificates so
delivered shall be promptly canceled by the Property Trustee. No Preferred
Securities Certificates shall be executed and delivered in lieu of or in
exchange for any Preferred Securities Certificates canceled as provided in this
Section 5.10, except as expressly permitted by this Trust Agreement. All
canceled Preferred Securities Certificates shall be retained by the Property
Trustee in accordance with its customary practices.

     SECTION 5.11. Ownership of Common Securities by Depositor.

     (a) On the Closing Date, the Depositor shall acquire, and thereafter shall
retain, beneficial and record ownership of the Common Securities. Neither the
Depositor nor any successor Holder of the Common Securities may transfer less
than all the Common Securities, and the Depositor or any such successor Holder
may transfer the Common Securities only (i) in connection with a consolidation
or merger of the Depositor into another Person, or any conveyance, transfer or
lease by the Depositor of its properties and assets substantially as an entirety
to any Person (in which event such Common Securities will be transferred to such
surviving entity, transferee or lessee, as the case may be), pursuant to Section
8.1 of the Indenture or (ii) to the Depositor or an Affiliate of the Depositor,
in each such case in compliance with applicable law (including the Securities
Act, and applicable state securities and blue sky laws). To the fullest extent
permitted by law, any attempted transfer of the Common Securities other than as
set forth in the immediately preceding sentence shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued to
the Depositor


                                       31



to contain a legend stating substantially "THIS CERTIFICATE IS NOT TRANSFERABLE
EXCEPT IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST
AGREEMENT."

     (b) Any Holder of the Common Securities shall be liable for the debts and
obligations of the Trust in the manner and to the extent set forth with respect
to the Depositor and agrees that it shall be subject to all liabilities to which
the Depositor may be subject and, prior to becoming such a Holder, shall deliver
to the Administrative Trustees an instrument of assumption satisfactory to such
Trustees.

     SECTION 5.12. Restricted Legends.

     (a) Each Preferred Security Certificate shall bear a legend in
substantially the following form:

     [IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS PREFERRED SECURITY IS A
     GLOBAL SECURITY WITHIN THE MEANING OF THE TRUST AGREEMENT HEREINAFTER
     REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY
     ("DTC") OR A NOMINEE OF DTC. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR
     SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE
     ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT, AND NO
     TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS
     PREFERRED SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF
     DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
     CIRCUMSTANCES.

     UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
     OF DTC TO NORTHSTAR REALTY FINANCE TRUST III OR ITS AGENT FOR REGISTRATION
     OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS
     REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY
     AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE
     & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
     REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
     OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
     OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

     THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
     ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
     OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND SUCH PREFERRED SECURITIES
     OR ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
     IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
     EACH PURCHASER OF ANY PREFERRED SECURITIES IS


                                       32



     HEREBY NOTIFIED THAT THE SELLER OF THE PREFERRED SECURITIES MAY BE RELYING
     ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
     PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.

     THE HOLDER OF THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE
     AGREES FOR THE BENEFIT OF THE TRUST AND THE DEPOSITOR THAT SUCH PREFERRED
     SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
     TRUST OR (B) (I) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
     "QUALIFIED PURCHASER" (AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT
     COMPANY ACT OF 1940, AS AMENDED), AND (II) (Z) TO A PERSON WHOM THE SELLER
     REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
     RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
     REQUIREMENTS OF RULE 144A, (Y) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
     WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501
     UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
     ACCOUNT, OR FOR THE ACCOUNT OF AN "ACCREDITED INVESTOR," FOR INVESTMENT
     PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH,
     ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (X) PURSUANT TO AN
     EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (W) PURSUANT
     TO AN EXEMPTION FROM THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
     ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
     OTHER APPLICABLE JURISDICTION AND, IN THE CASE OF (Y) OR (W), SUBJECT TO
     THE RIGHT OF THE TRUST AND THE DEPOSITOR TO REQUIRE AN OPINION OF COUNSEL
     AND OTHER INFORMATION SATISFACTORY TO EACH OF THEM. IN ADDITION, THE HOLDER
     FURTHER AGREES THAT IT WILL NOTIFY ANY PURCHASER OF ANY PREFERRED
     SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN THE PRECEDING
     SENTENCE AND THAT SUCH PREFERRED SECURITIES MAY BE OFFERED, RESOLD OR
     OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH SECTION 5.7 OF THE TRUST
     AGREEMENT AS DEFINED HEREIN.

     THE PREFERRED SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
     BLOCKS HAVING AN AGGREGATE LIQUIDATION AMOUNT OF NOT LESS THAN $100,000. TO
     THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF PREFERRED
     SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE
     LIQUIDATION AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS
     THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO
     THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE
     DEEMED NOT TO BE THE HOLDER OF SUCH PREFERRED SECURITIES FOR ANY PURPOSE,
     INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON
     SUCH


                                       33



     PREFERRED SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED
     TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH PREFERRED
     SECURITIES.

     THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE
     HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN
     EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR
     ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY
     ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE
     CODE OF 1986, AS AMENDED (THE "CODE") (EACH A "PLAN"), OR AN ENTITY WHOSE
     UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT
     IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY
     ACQUIRE OR HOLD THIS PREFERRED SECURITY OR ANY INTEREST THEREIN. ANY
     PURCHASER OR HOLDER OF THE PREFERRED SECURITIES OR ANY INTEREST THEREIN
     WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT
     IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF
     ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE
     OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR
     ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR
     PLAN TO FINANCE SUCH PURCHASE."

     (b) The above legend shall not be removed from any of the Preferred
Securities Certificates unless there is delivered to the Property Trustee and
the Depositor satisfactory evidence, which may include an opinion of counsel, as
may be reasonably required to ensure that any future transfers thereof may be
made without restriction under the provisions of the Securities Act and other
applicable law. Upon provision of such satisfactory evidence, one or more of the
Administrative Trustees on behalf of the Trust shall execute and deliver to the
Property Trustee, and the Property Trustee shall deliver, at the written
direction of the Administrative Trustees and the Depositor, Preferred Securities
Certificates that do not bear the legend.

     SECTION 5.13. Form of Certificate of Authentication.

          The Property Trustee's certificate of authentication shall be in
     substantially the following form:

          This is one of the Preferred Securities referred to in the
     within-mentioned Trust Agreement.

Dated: ________                         JPMORGAN CHASE BANK, NATIONAL
                                        ASSOCIATION, not in its individual
                                        capacity, but solely as Property Trustee


                                       34




                                        By:
                                            ------------------------------------
                                            Authorized signatory

                                  ARTICLE VI.

                        MEETINGS; VOTING; ACTS OF HOLDERS

     SECTION 6.1. Notice of Meetings.

     Notice of all meetings of the Holders of the Preferred Securities, stating
the time, place and purpose of the meeting, shall be given by the Property
Trustee pursuant to Section 10.8 to each Holder of Preferred Securities, at such
Holder's registered address, at least fifteen (15) days and not more than ninety
(90) days before the meeting. At any such meeting, any business properly before
the meeting may be so considered whether or not stated in the notice of the
meeting. Any adjourned meeting may be held as adjourned without further notice.

     SECTION 6.2. Meetings of Holders of the Preferred Securities.

     (a) No annual meeting of Holders is required to be held. The Property
Trustee, however, shall call a meeting of the Holders of the Preferred
Securities to vote on any matter upon the written request of the Holders of at
least twenty five percent (25%) in aggregate Liquidation Amount of the
Outstanding Preferred Securities and the Administrative Trustees or the Property
Trustee may, at any time in their discretion, call a meeting of the Holders of
the Preferred Securities to vote on any matters as to which such Holders are
entitled to vote.

     (b) The Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, present in person or by proxy, shall constitute a quorum
at any meeting of the Holders of the Preferred Securities.

     (c) If a quorum is present at a meeting, an affirmative vote by the Holders
present, in person or by proxy, holding Preferred Securities representing at
least a Majority in Liquidation Amount of the Preferred Securities held by the
Holders present, either in person or by proxy, at such meeting shall constitute
the action of the Holders of the Preferred Securities, unless this Trust
Agreement requires a lesser or greater number of affirmative votes.

     SECTION 6.3. Voting Rights.

     Holders shall be entitled to one vote for each $10,000 of Liquidation
Amount represented by their Outstanding Trust Securities in respect of any
matter as to which such Holders are entitled to vote.

     SECTION 6.4. Proxies, Etc.

     At any meeting of Holders, any Holder entitled to vote thereat may vote by
proxy, provided, that no proxy shall be voted at any meeting unless it shall
have been placed on file with the Administrative Trustees, or with such other
officer or agent of the Trust as the


                                       35



Administrative Trustees may direct, for verification prior to the time at which
such vote shall be taken. Pursuant to a resolution of the Property Trustee,
proxies may be solicited in the name of the Property Trustee or one or more
officers of the Property Trustee. Only Holders of record shall be entitled to
vote. When Trust Securities are held jointly by several Persons, any one of them
may vote at any meeting in person or by proxy in respect of such Trust
Securities, but if more than one of them shall be present at such meeting in
person or by proxy, and such joint owners or their proxies so present disagree
as to any vote to be cast, such vote shall not be received in respect of such
Trust Securities. A proxy purporting to be executed by or on behalf of a Holder
shall be deemed valid unless challenged at or prior to its exercise, and the
burden of proving invalidity shall rest on the challenger. No proxy shall be
valid more than three years after its date of execution.

     SECTION 6.5. Holder Action by Written Consent.

     Any action that may be taken by Holders at a meeting may be taken without a
meeting and without prior notice if Holders holding at least a Majority in
Liquidation Amount of all Preferred Securities entitled to vote in respect of
such action (or such lesser or greater proportion thereof as shall be required
by any other provision of this Trust Agreement) shall consent to the action in
writing; provided, that notice of such action is promptly provided to the
Holders of Preferred Securities that did not consent to such action. Any action
that may be taken by the Holders of all the Common Securities may be taken
without a meeting and without prior notice if such Holders shall consent to the
action in writing.

     SECTION 6.6. Record Date for Voting and Other Purposes.

     Except as provided in Section 6.10(a), for the purposes of determining the
Holders who are entitled to notice of and to vote at any meeting or to act by
written consent, or to participate in any distribution on the Trust Securities
in respect of which a record date is not otherwise provided for in this Trust
Agreement, or for the purpose of any other action, the Administrative Trustees
may from time to time fix a date, not more than ninety (90) days prior to the
date of any meeting of Holders or the payment of a Distribution or other action,
as the case may be, as a record date for the determination of the identity of
the Holders of record for such purposes.

     SECTION 6.7. Acts of Holders.

     (a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by an agent
thereof duly appointed in writing; and, except as otherwise expressly provided
herein, such action shall become effective when such instrument or instruments
are delivered to an Administrative Trustee. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Trust Agreement and conclusive in favor of
the Trustees, if made in the manner provided in this Section 6.7.


                                       36



     (b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than such signer's individual capacity, such
certificate or affidavit shall also constitute sufficient proof of such signer's
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner that any Trustee receiving the same deems sufficient.

     (c) The ownership of Trust Securities shall be proved by the Securities
Register.

     (d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Trust Security shall bind every future Holder
of the same Trust Security and the Holder of every Trust Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustees, the
Administrative Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.

     (e) Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.

     (f) If any dispute shall arise among the Holders or the Trustees with
respect to the authenticity, validity or binding nature of any request, demand,
authorization, direction, notice, consent, waiver or other Act of such Holder or
Trustee under this Article VI, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.

     SECTION 6.8. Inspection of Records.

     Upon reasonable written notice to the Administrative Trustees and the
Property Trustee, the records of the Trust shall be open to inspection by any
Holder during normal business hours for any purpose reasonably related to such
Holder's interest as a Holder.

     SECTION 6.9. Limitations on Voting Rights.

     (a) Except as expressly provided in this Trust Agreement and in the
Indenture and as otherwise required by law, no Holder of Preferred Securities
shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Trust or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Securities Certificates, be construed so as to constitute the Holders
from time to time as partners or members of an association.


                                       37



     (b) So long as any Notes are held by the Property Trustee on behalf of the
Trust, the Property Trustee shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Note Trustee, or
exercise any trust or power conferred on the Property Trustee with respect to
the Notes, (ii) waive any past default that may be waived under Section 5.13 of
the Indenture or waive compliance with any covenant or condition under Section
10.7 of the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Notes shall be due and payable or (iv)
consent to any amendment, modification or termination of the Indenture or the
Notes, where such consent shall be required, without, in each case, obtaining
the prior approval of the Holders of at least a Majority in Liquidation Amount
of the Preferred Securities; provided, that where a consent under the Indenture
would require the consent of each holder of Notes (or each Holder of Preferred
Securities) affected thereby, no such consent shall be given by the Property
Trustee without the prior written consent of each Holder of Preferred
Securities. The Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Preferred Securities,
except by a subsequent vote of the Holders of the Preferred Securities. In
addition to obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Property Trustee
shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced
in such matters to the effect that such action shall not cause the Trust to be
taxable as a corporation or classified as other than a grantor trust for United
States federal income tax purposes.

     (c) If any proposed amendment to the Trust Agreement provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely affect
in any material respect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the Trust Agreement or
otherwise or (ii) the dissolution, winding-up or termination of the Trust, other
than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Preferred Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities. Notwithstanding any other provision of this
Trust Agreement, no amendment to this Trust Agreement may be made if, as a
result of such amendment, it would cause the Trust to be taxable as a
corporation or classified as other than a grantor trust for United States
federal income tax purposes.

     SECTION 6.10. Acceleration of Maturity; Rescission of Annulment; Waivers of
Past Defaults.

     (a) For so long as any Preferred Securities remain Outstanding, if, upon a
Note Event of Default, the Note Trustee fails or the holders of not less than
twenty five percent (25%) in principal amount of the outstanding Notes fail to
declare the principal of all of the Notes to be immediately due and payable, the
Holders of at least twenty five percent (25%) in Liquidation Amount of the
Preferred Securities then Outstanding shall have the right to make such
declaration by a notice in writing to the Property Trustee, the Depositor and
the Note Trustee. At any time after a declaration of acceleration with respect
to the Notes has been made and before a judgment or decree for payment of the
money due has been obtained by the Note Trustee as provided in the Indenture,
the Holders of at least a Majority in Liquidation Amount of the


                                       38



Preferred Securities, by written notice to the Property Trustee, the Depositor
and the Note Trustee, may rescind and annul such declaration and its
consequences if:

          (i) the Depositor has paid or deposited with the Note Trustee a sum
     sufficient to pay:

               (A) all overdue installments of interest on all of the Notes;

               (B) any accrued Additional Interest on all of the Notes;

               (C) the principal of and any premium, if any, on any Notes that
          have become due otherwise than by such declaration of acceleration and
          interest and Additional Interest thereon at the rate borne by the
          Notes; and

               (D) all sums paid or advanced by the Note Trustee under the
          Indenture and the reasonable compensation, expenses, disbursements and
          advances of the Note Trustee, the Property Trustee and their agents
          and counsel; and

          (ii) all Note Events of Default, other than the non-payment of the
     principal of the Notes that has become due solely by such acceleration,
     have been cured or waived as provided in Section 5.13 of the Indenture.

     Upon receipt by the Property Trustee of written notice requesting such an
acceleration, or rescission and annulment thereof, by Holders of any part of the
Preferred Securities, a record date shall be established for determining Holders
of Outstanding Preferred Securities entitled to join in such notice, which
record date shall be at the close of business on the day the Property Trustee
receives such notice. The Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to join in such notice,
whether or not such Holders remain Holders after such record date; provided,
that, unless such declaration of acceleration, or rescission and annulment, as
the case may be, shall have become effective by virtue of the requisite
percentage having joined in such notice prior to the day that is ninety (90)
days after such record date, such notice of declaration of acceleration, or
rescission and annulment, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such ninety (90)-day period, a new written notice of
declaration of acceleration, or rescission and annulment thereof, as the case
may be, that is identical to a written notice that has been canceled pursuant to
the proviso to the preceding sentence, in which event a new record date shall be
established pursuant to the provisions of this Section 6.10(a).

     (b) For so long as any Preferred Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust Agreement
and the Indenture, upon a Note Event of Default specified in paragraph (a) or
(b) of Section 5.1 of the Indenture, any Holder of Preferred Securities shall
have the right to institute a proceeding directly against the Depositor,
pursuant to Section 5.8 of the Indenture, for enforcement of payment to such
Holder of any amounts payable in respect of Notes having an aggregate principal
amount equal to the aggregate Liquidation Amount of the Preferred Securities of
such Holder. Except as set forth in


                                       39



Section 6.10(a) and this Section 6.10(b), the Holders of Preferred Securities
shall have no right to exercise directly any right or remedy available to the
holders of, or in respect of, the Notes.

     (c) Notwithstanding paragraphs (a) and (b) of this Section 6.10, the
Holders of at least a Majority in Liquidation Amount of the Preferred Securities
may, on behalf of the Holders of all the Preferred Securities, waive any Note
Event of Default, except any Note Event of Default arising from the failure to
pay any principal of or any premium, if any, or interest on (including any
Additional Interest) the Notes (unless such Note Event of Default has been cured
and a sum sufficient to pay all matured installments of interest and all
principal and premium, if any, on all Notes due otherwise than by acceleration
has been deposited with the Note Trustee) or a Note Event of Default in respect
of a covenant or provision that under the Indenture cannot be modified or
amended without the consent of the holder of each outstanding Note. Upon any
such waiver, such Note Event of Default shall cease to exist and any Note Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of the Indenture; but no such waiver shall affect any subsequent Note
Event of Default or impair any right consequent thereon.

     (d) Notwithstanding paragraphs (a) and (b) of this Section 6.10, the
Holders of at least a Majority in Liquidation Amount of the Preferred Securities
may, on behalf of the Holders of all the Preferred Securities, waive any past
Event of Default and its consequences. Upon such waiver, any such Event of
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Trust Agreement, but no
such waiver shall extend to any subsequent or other Event of Default or impair
any right consequent thereon.

     (e) The Holders of a Majority in Liquidation Amount of the Preferred
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee in
respect of this Trust Agreement or the Notes or exercising any trust or power
conferred upon the Property Trustee under this Trust Agreement; provided, that,
subject to Sections 8.5 and 8.7, the Property Trustee shall have the right to
decline to follow any such direction if the Property Trustee being advised by
counsel determines that the action so directed may not lawfully be taken, or if
the Property Trustee in good faith shall, by an officer or officers of the
Property Trustee, determine that the proceedings so directed would be illegal or
involve it in personal liability or be unduly prejudicial to the rights of
Holders not party to such direction, and provided, further, that nothing in this
Trust Agreement shall impair the right of the Property Trustee to take any
action deemed proper by the Property Trustee and which is not inconsistent with
such direction.


                                       40



                                  ARTICLE VII.

                         REPRESENTATIONS AND WARRANTIES

     SECTION 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee.

     The Property Trustee and the Delaware Trustee, each severally on behalf of
and as to itself, hereby represents and warrants for the benefit of the
Depositor and the Holders that:

          (a) the Property Trustee is a national banking association, duly
     organized and validly existing under the laws of the United States;

          (b) the Property Trustee has full corporate power, authority and legal
     right to execute, deliver and perform its obligations under this Trust
     Agreement and has taken all necessary action to authorize the execution,
     delivery and performance by it of this Trust Agreement;

          (c) the Delaware Trustee is a national banking association, duly
     formed and validly existing under the laws of the United States;

          (d) the Delaware Trustee has full corporate power, authority and legal
     right to execute, deliver and perform its obligations under this Trust
     Agreement and has taken all necessary action to authorize the execution,
     delivery and performance by it of this Trust Agreement;

          (e) this Trust Agreement has been duly authorized, executed and
     delivered by the Property Trustee and the Delaware Trustee and constitutes
     the legal, valid and binding agreement of each of the Property Trustee and
     the Delaware Trustee enforceable against each of them in accordance with
     its terms, subject to applicable bankruptcy, insolvency, fraudulent
     transfer, reorganization, moratorium and similar laws affecting creditors'
     rights generally and to general principles of equity;

          (f) the execution, delivery and performance of this Trust Agreement
     have been duly authorized by all necessary corporate or other action on the
     part of the Property Trustee and the Delaware Trustee and do not require
     any approval of stockholders of the Property Trustee and the Delaware
     Trustee and such execution, delivery and performance will not (i) violate
     the Restated Organization Certificate or Articles of Association, as
     applicable, or By-laws of the Property Trustee or the Delaware Trustee,
     (ii) violate any provision of, or constitute, with or without notice or
     lapse of time, a default under, or result in the imposition of any lien on
     any properties included in the Trust Property pursuant to the provisions of
     any indenture, mortgage, credit agreement, license or other agreement or
     instrument to which the Property Trustee or the Delaware Trustee is a party
     or by which it is bound, or (iii) violate any applicable law, governmental
     rule or regulation of the United States or the State of Delaware, as the
     case may be, governing the banking, trust or general powers of the Property
     Trustee or the Delaware Trustee or any order, judgment or decree applicable
     to the Property Trustee or the Delaware Trustee;


                                       41



          (g) neither the authorization, execution or delivery by the Property
     Trustee or the Delaware Trustee of this Trust Agreement nor the
     consummation of any of the transactions by the Property Trustee or the
     Delaware Trustee contemplated herein requires the consent or approval of,
     the giving of notice to, the registration with or the taking of any other
     action with respect to any governmental authority or agency under any
     existing law of the United States or the State of Delaware governing the
     banking, trust or general powers of the Property Trustee or the Delaware
     Trustee, as the case may be; and

          (h) to the best of each of the Property Trustee's and the Delaware
     Trustee's knowledge, there are no proceedings pending or threatened against
     or affecting the Property Trustee or the Delaware Trustee in any court or
     before any governmental authority, agency or arbitration board or tribunal
     that, individually or in the aggregate, would materially and adversely
     affect the Trust or would question the right, power and authority of the
     Property Trustee or the Delaware Trustee, as the case may be, to enter into
     or perform its obligations as one of the Trustees under this Trust
     Agreement.

     SECTION 7.2. Representations and Warranties of Depositor.

     The Depositor hereby represents and warrants for the benefit of the Holders
that:

          (a) the Depositor is a limited partnership duly organized, validly
     existing and in good standing under the laws of its state of organization;

          (b) the Depositor has full organizational power, authority and legal
     right to execute, deliver and perform its obligations under this Trust
     Agreement and has taken all necessary action to authorize the execution,
     delivery and performance by it of this Trust Agreement;

          (c) this Trust Agreement has been duly authorized, executed and
     delivered by the Depositor and constitutes the legal, valid and binding
     agreement of the Depositor enforceable against the Depositor in accordance
     with its terms, subject to applicable bankruptcy, insolvency and similar
     laws affecting creditors' rights generally and to general principles of
     equity;

          (d) the Securities Certificates issued on the Closing Date on behalf
     of the Trust have been duly authorized and will have been validly executed,
     issued and delivered by the applicable Trustees pursuant to the terms and
     provisions of, and in accordance with the requirements of, this Trust
     Agreement and the Holders will be, as of such date, entitled to the
     benefits of this Trust Agreement;

          (e) the execution, delivery and performance of this Trust Agreement
     has been duly authorized by all necessary corporate or other action on the
     part of the Depositor and do not require any approval of stockholders of
     the Depositor and such execution, delivery and performance will not (i)
     violate the articles or certificate of incorporation or by-laws (or other
     organizational documents) of the Depositor or (ii) violate any applicable
     law, governmental rule or regulation governing the Depositor or any
     material portion of its


                                       42



     property or any order, judgment or decree applicable to the Depositor or
     any material portion of its property;

          (f) neither (i) the authorization, execution or delivery by the
     Depositor of this Trust Agreement nor (ii) the consummation of any of the
     transactions by the Depositor contemplated herein requires the consent or
     approval of, the giving of notice to, the registration with or the taking
     of any other action with respect to any governmental authority or agency
     under any existing law governing the Depositor or any material portion of
     its property; and

          (g) there are no proceedings pending or, to the best of the
     Depositor's knowledge, threatened against or affecting the Depositor or any
     material portion of its property in any court or before any governmental
     authority, agency or arbitration board or tribunal that, individually or in
     the aggregate, would materially and adversely affect the Trust or would
     question the right, power and authority of the Depositor, as the case may
     be, to enter into or perform its obligations under this Trust Agreement.

                                 ARTICLE VIII.

                                  THE TRUSTEES

     SECTION 8.1. Number of Trustees.

     The number of Trustees shall be five (5); provided, that the Property
Trustee and the Delaware Trustee may be the same Person, in which case the
number of Trustees shall be four (4). The number of Trustees may be increased or
decreased by Act of the Holder of the Common Securities subject to Sections 8.2,
8.3, and 8.4. The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to annul, dissolve or terminate the Trust.

     SECTION 8.2. Property Trustee Required.

     There shall at all times be a Property Trustee hereunder with respect to
the Trust Securities. The Property Trustee shall be a corporation organized and
doing business under the laws of the United States or of any state thereof,
authorized to exercise corporate trust powers, having a combined capital and
surplus of at least fifty million dollars ($50,000,000), subject to supervision
or examination by federal or state authority and having an office within the
United States. If any such Person publishes reports of condition at least
annually pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section 8.2, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Property Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.2, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article VIII.


                                       43



     SECTION 8.3. Delaware Trustee Required.

     (a) If required by the Delaware Statutory Trust Act, there shall at all
times be a Delaware Trustee with respect to the Trust Securities. The Delaware
Trustee shall either be (i) a natural person who is at least 21 years of age and
a resident of the State of Delaware or (ii) a legal entity that has its
principal place of business in the State of Delaware, otherwise meets the
requirements of applicable Delaware law and shall act through one or more
persons authorized to bind such entity. If at any time the Delaware Trustee
shall cease to be eligible in accordance with the provisions of this Section
8.3, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article VIII. The Delaware Trustee shall have the same rights,
privileges and immunities as the Property Trustee.

     (b) The Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities, of the
Property Trustee or the Administrative Trustees set forth herein. The Delaware
Trustee shall be one of the trustees of the Trust for the sole and limited
purpose of fulfilling the requirements of Section 3807 of the Delaware Statutory
Trust Act and for taking such actions as are required to be taken by a Delaware
trustee under the Delaware Statutory Trust Act. The duties (including fiduciary
duties), liabilities and obligations of the Delaware Trustee shall be limited to
(a) accepting legal process served on the Trust in the State of Delaware and (b)
the execution of any certificates required to be filed with the Secretary of
State of the State of Delaware that the Delaware Trustee is required to execute
under Section 3811 of the Delaware Statutory Trust Act and there shall be no
other duties (including fiduciary duties) or obligations, express or implied, at
law or in equity, of the Delaware Trustee.

     SECTION 8.4. Appointment of Administrative Trustees.

     (a) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity. Each of the individuals identified as an "Administrative Trustee" in the
preamble of this Trust Agreement hereby accepts his or her appointment as such.

     (b) Except where a requirement for action by a specific number of
Administrative Trustees is expressly set forth in this Trust Agreement, any act
required or permitted to be taken by, and any power of the Administrative
Trustees may be exercised by, or with the consent of, any one such
Administrative Trustee. Whenever a vacancy in the number of Administrative
Trustees shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 8.11, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
provision of this Trust Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.

     SECTION 8.5. Duties and Responsibilities of the Trustees.

     (a) The rights, immunities, duties and responsibilities of the Trustees
shall be as provided by this Trust Agreement and there shall be no other duties
(including fiduciary duties)


                                       44



or obligations, express or implied, at law or in equity, of the Trustees;
provided, however, that if an Event of Default known to the Property Trustee has
occurred and is continuing, the Property Trustee shall, prior to the receipt of
directions, if any, from the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities, exercise such of the rights and powers
vested in it by this Trust Agreement, and use the same degree of care and skill
in its exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs. Notwithstanding the
foregoing, no provision of this Trust Agreement shall require any of the
Trustees to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its or their rights or powers, if it or they shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not herein
expressly so provided, every provision of this Trust Agreement relating to the
conduct or affecting the liability of or affording protection to the Trustees
shall be subject to the provisions of this Section 8.5. Nothing in this Trust
Agreement shall be construed to release any Administrative Trustee from
liability for his or her own negligent action, negligent failure to act; or his
or her own willful misconduct. To the extent that, at law or in equity, a
Trustee has duties and liabilities relating to the Trust or to the Holders, such
Trustee shall not be liable to the Trust or to any Holder for such Trustee's
good faith reliance on the provisions of this Trust Agreement. The provisions of
this Trust Agreement, to the extent that they restrict the duties and
liabilities of the Trustees otherwise existing at law or in equity, are agreed
by the Depositor and the Holders to replace such other duties and liabilities of
the Trustees.

     (b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Property Trustee or a Paying
Agent to make payments in accordance with the terms hereof. Each Holder, by its
acceptance of a Trust Security, agrees that it will look solely to the revenue
and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Trustees are not personally
liable to it for any amount distributable in respect of any Trust Security or
for any other liability in respect of any Trust Security. This Section 8.5(b)
does not limit the liability of the Trustees expressly set forth elsewhere in
this Trust Agreement.

     (c) No provisions of this Trust Agreement shall be construed to relieve the
Property Trustee from liability with respect to matters that are within the
authority of the Property Trustee under this Trust Agreement for its own
negligent action, negligent failure to act or willful misconduct, except that:

          (i) the Property Trustee shall not be liable for any error or judgment
     made in good faith by an authorized officer of the Property Trustee, unless
     it shall be proved that the Property Trustee was negligent in ascertaining
     the pertinent facts;

          (ii) the Property Trustee shall not be liable with respect to any
     action taken or omitted to be taken by it in good faith in accordance with
     the direction of the Holders of at least a Majority in Liquidation Amount
     of the Preferred Securities relating to the time, method and place of
     conducting any proceeding for any remedy available to the Property


                                       45



     Trustee hereunder or under the Indenture, or exercising any trust or power
     conferred upon the Property Trustee under this Trust Agreement;

          (iii) the Property Trustee's sole duty with respect to the custody,
     safe keeping and physical preservation of the Notes and the Payment Account
     shall be to deal with such Property in a similar manner as the Property
     Trustee deals with similar property for its own account, subject to the
     protections and limitations on liability afforded to the Property Trustee
     under this Trust Agreement;

          (iv) the Property Trustee shall not be liable for any interest on any
     money received by it except as it may otherwise agree in writing with the
     Depositor; and money held by the Property Trustee need not be segregated
     from other funds held by it except in relation to the Payment Account
     maintained by the Property Trustee pursuant to Section 3.1 and except to
     the extent otherwise required by law; and

          (v) the Property Trustee shall not be responsible for monitoring the
     compliance by the Administrative Trustees or the Depositor with their
     respective duties under this Trust Agreement, nor shall the Property
     Trustee be liable for the default or misconduct of any other Trustee or the
     Depositor.

     SECTION 8.6. Notices of Defaults and Extensions.

     (a) Within ninety (90) days after the occurrence of a default actually
known to the Property Trustee, the Property Trustee shall transmit notice of
such default to the Holders, the Administrative Trustees and the Depositor,
unless such default shall have been cured or waived. For the purpose of this
Section 8.6, the term "default" means any event that is, or after notice or
lapse of time or both would become, an Event of Default.

     (b) Within five (5) Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the Notes
pursuant to the Indenture, the Property Trustee shall transmit, in the manner
and to the extent provided in Section 10.8, notice of such exercise to the
Holders and the Administrative Trustees, unless such exercise shall have been
revoked.

     (c) The Property Trustee shall not be charged with knowledge of any Event
of Default unless either (i) a Responsible Officer of the Property Trustee shall
have actual knowledge or (ii) the Property Trustee shall have received written
notice thereof from the Depositor, an Administrative Trustee or a Holder.

     (d) The Property Trustee shall notify all Holders of the Preferred
Securities of any notice of default received with respect to the Notes.


                                       46



     SECTION 8.7. Certain Rights of Property Trustee.

     Subject to the provisions of Section 8.5:

          (a) the Property Trustee may conclusively rely and shall be protected
     in acting or refraining from acting in good faith and in accordance with
     the terms hereof upon any resolution, Opinion of Counsel, certificate,
     written representation of a Holder or transferee, certificate of auditors
     or any other resolution, certificate, statement, instrument, opinion,
     report, notice, request, direction, consent, order, appraisal, bond,
     debenture, note, other evidence of indebtedness or other paper or document
     believed by it to be genuine and to have been signed or presented by the
     proper party or parties;

          (b) if (i) in performing its duties under this Trust Agreement the
     Property Trustee is required to decide between alternative courses of
     action, (ii) in construing any of the provisions of this Trust Agreement
     the Property Trustee finds a provision ambiguous or inconsistent with any
     other provisions contained herein or (iii) the Property Trustee is unsure
     of the application of any provision of this Trust Agreement, then, except
     as to any matter as to which the Holders of the Preferred Securities are
     entitled to vote under the terms of this Trust Agreement, the Property
     Trustee shall deliver a notice to the Depositor requesting the Depositor's
     written instruction as to the course of action to be taken and the Property
     Trustee shall take such action, or refrain from taking such action, as the
     Property Trustee shall be instructed in writing to take, or to refrain from
     taking, by the Depositor; provided, that if the Property Trustee does not
     receive such instructions of the Depositor within ten (10) Business Days
     after it has delivered such notice or such reasonably shorter period of
     time set forth in such notice, the Property Trustee may, but shall be under
     no duty to, take such action, or refrain from taking such action, as the
     Property Trustee shall deem advisable and in the best interests of the
     Holders, in which event the Property Trustee shall have no liability except
     for its own negligence, bad faith or willful misconduct;

          (c) any direction or act of the Depositor contemplated by this Trust
     Agreement shall be sufficiently evidenced by an Officers' Certificate
     unless otherwise expressly provided herein;

          (d) any direction or act of an Administrative Trustee contemplated by
     this Trust Agreement shall be sufficiently evidenced by a certificate
     executed by such Administrative Trustee and setting forth such direction or
     act;

          (e) the Property Trustee shall have no duty to see to any recording,
     filing or registration of any instrument (including any financing or
     continuation statement or any filing under tax or securities laws) or any
     re-recording, re-filing or re-registration thereof;

          (f) the Property Trustee may consult with counsel (which counsel may
     be counsel to the Property Trustee, the Depositor or any of its Affiliates,
     and may include any of its employees) and the advice of such counsel shall
     be full and complete authorization and protection in respect of any action
     taken, suffered or omitted by it hereunder in good faith and in reliance
     thereon and in accordance with such advice; the


                                       47



     Property Trustee shall have the right at any time to seek instructions
     concerning the administration of this Trust Agreement from any court of
     competent jurisdiction;

          (g) the Property Trustee shall be under no obligation to exercise any
     of the rights or powers vested in it by this Trust Agreement at the request
     or direction of any of the Holders pursuant to this Trust Agreement, unless
     such Holders shall have offered to the Property Trustee reasonable security
     or indemnity against the costs, expenses (including reasonable attorneys'
     fees and expenses) and liabilities that might be incurred by it in
     compliance with such request or direction, including reasonable advances as
     may be requested by the Property Trustee; provided, however, that nothing
     contained in this Section 8.7(g) shall be construed to relieve the Property
     Trustee, upon the occurrence of an Event of Default, of its obligation to
     exercise the rights and powers in it vested by this Trust Agreement;
     provided, further, that nothing contained in this Section 8.7(g) shall
     prevent the Property Trustee from exercising its rights under Section 8.11
     hereof;

          (h) the Property Trustee shall not be bound to make any investigation
     into the facts or matters stated in any resolution, certificate, statement,
     instrument, opinion, report, notice, request, direction, consent, order,
     approval, bond, debenture, note or other evidence of indebtedness or other
     paper or document, unless requested in writing to do so by one or more
     Holders, but the Property Trustee may make such further inquiry or
     investigation into such facts or matters as it may see fit, and, if the
     Property Trustee shall determine to make such inquiry or investigation, it
     shall be entitled to examine the books, records and premises of the
     Depositor, personally or by agent or attorney;

          (i) the Property Trustee may execute any of the trusts or powers
     hereunder or perform any duties hereunder either directly or by or through
     its agents, attorneys, custodians or nominees and the Property Trustee
     shall not be responsible for any negligence or misconduct on the part of
     any such agent, attorney, custodian or nominee appointed with due care by
     it hereunder;

          (j) whenever in the administration of this Trust Agreement the
     Property Trustee shall deem it desirable to receive instructions with
     respect to enforcing any remedy or right hereunder, the Property Trustee
     (i) may request instructions from the Holders (which instructions may only
     be given by the Holders of the same proportion in Liquidation Amount of the
     Trust Securities as would be entitled to direct the Property Trustee under
     this Trust Agreement in respect of such remedy, right or action), (ii) may
     refrain from enforcing such remedy or right or taking such other action
     until such instructions are received and (iii) shall be protected in acting
     in accordance with such instructions;

          (k) except as otherwise expressly provided by this Trust Agreement,
     the Property Trustee shall not be under any obligation to take any action
     that is discretionary under the provisions of this Trust Agreement;

          (l) without prejudice to any other rights available to the Property
     Trustee under applicable law, when the Property Trustee incurs expenses or
     renders services in connection with a Bankruptcy Event, such expenses
     (including legal fees and expenses of


                                       48



     its agents and counsel) and the compensation for such services are intended
     to constitute expenses of administration under any bankruptcy law or law
     relating to creditors rights generally; and

          (m) whenever in the administration of this Trust Agreement the
     Property Trustee shall deem it desirable that a matter be proved or
     established prior to taking, suffering or omitting any action hereunder,
     the Property Trustee (unless other evidence be herein specifically
     prescribed) may, in the absence of bad faith on its part, request and rely
     on an Officers' Certificate which, upon receipt of such request, shall be
     promptly delivered by the Depositor.

     No provision of this Trust Agreement shall be deemed to impose any duty or
obligation on any Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it, in any jurisdiction in
which it shall be illegal, or in which such Person shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts,
or to exercise any such right, power, duty or obligation.

     SECTION 8.8. Delegation of Power.

     Any Trustee may, by power of attorney consistent with applicable law,
delegate to any other natural person over the age of 21 its, his or her power
for the purpose of executing any documents contemplated in Section 2.5. The
Trustees shall have power to delegate from time to time to such of their number
or to the Depositor the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient, to the extent such delegation is
not prohibited by applicable law or contrary to the provisions of this Trust
Agreement.

     SECTION 8.9. May Hold Securities.

     Any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and except as provided in the definition of the term "Outstanding" in
Article I, may otherwise deal with the Trust with the same rights it would have
if it were not an Trustee or such other agent.

     SECTION 8.10. Compensation; Reimbursement; Indemnity.

     The Depositor agrees:

          (a) to pay to the Trustees from time to time such reasonable
     compensation for all services rendered by them hereunder as may be agreed
     by the Depositor and the Trustees from time to time (which compensation
     shall not be limited by any provision of law in regard to the compensation
     of a trustee of an express trust);

          (b) to reimburse the Trustees upon request for all reasonable
     expenses, disbursements and advances incurred or made by the Trustees in
     accordance with any provision of this Trust Agreement (including the
     reasonable compensation and the expenses and disbursements of their agents
     and counsel), except any such expense,


                                       49



     disbursement or advance as may be attributable to their gross negligence,
     bad faith or willful misconduct; and

          (c) to the fullest extent permitted by applicable law, to indemnify
     and hold harmless (i) each Trustee, (ii) any Affiliate of any Trustee,
     (iii) any officer, director, shareholder, employee, representative or agent
     of any Trustee or any Affiliate of any Trustee and (iv) any employee or
     agent of the Trust (referred to herein as an "Indemnified Person") from and
     against any loss, damage, liability, tax (other than income, franchise or
     other taxes imposed on amounts paid pursuant to Section 8.10(a) or (b)
     hereof), penalty, expense or claim of any kind or nature whatsoever
     incurred without negligence, bad faith or willful misconduct on its part,
     arising out of or in connection with the acceptance or administration of
     the Trust hereunder, including the advancement of funds to cover the costs
     and expenses of defending itself against any claim or liability in
     connection with the exercise or performance of any of its powers or duties
     hereunder.

     The Trust shall have no payment, reimbursement or indemnity obligations to
the Trustees under this Section 8.10. The provisions of this Section 8.10 shall
survive the termination of this Trust Agreement and the earlier removal or
resignation of any Trustee.

     No Trustee may claim any Lien on any Trust Property whether before or after
termination of the Trust as a result of any amount due pursuant to this Section
8.10.

     To the fullest extent permitted by law, in no event shall the Property
Trustee and the Delaware Trustee be liable for any indirect, special, punitive
or consequential loss or damage of any kind whatsoever, including, but not
limited to, lost profits, even if the Trustee has been advised of the likelihood
of such loss or damage and regardless of the form of action.

     In no event shall the Property Trustee and the Delaware Trustee be liable
for any failure or delay in the performance of its obligations hereunder because
of circumstances beyond its control, including, but not limited to, acts of God,
flood, war (whether declared or undeclared), terrorism, fire, riot, embargo,
government action, including any laws, ordinances, regulations, governmental
action or the like which delay, restrict or prohibit the providing of the
services contemplated by this Trust Agreement.

     SECTION 8.11. Resignation and Removal; Appointment of Successor.

     (a) No resignation or removal of any Trustee and no appointment of a
successor Trustee pursuant to this Article VIII shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 8.12.

     (b) A Trustee may resign at any time by giving written notice thereof to
the Depositor and, in the case of the Property Trustee and the Delaware Trustee,
to the Holders.

     (c) Unless an Event of Default shall have occurred and be continuing, the
Property Trustee or the Delaware Trustee, or both of them, may be removed (with
or without cause) at any time by Act of the Holder of Common Securities. If an
Event of Default shall have occurred and be continuing, the Property Trustee or
the Delaware Trustee, or both of them, may be removed


                                       50



(with or without cause) at such time by Act of the Holders of at least a
Majority in Liquidation Amount of the Preferred Securities, delivered to the
removed Trustee (in its individual capacity and on behalf of the Trust). An
Administrative Trustee may be removed (with or without cause) only by Act of the
Holder of the Common Securities at any time.

     (d) If any Trustee shall resign, be removed or become incapable of acting
as Trustee, or if a vacancy shall occur in the office of any Trustee for any
reason, at a time when no Event of Default shall have occurred and be
continuing, the Holder of the Common Securities, by Act of the Holder of the
Common Securities, shall promptly appoint a successor Trustee or Trustees, and
such successor Trustee and the retiring Trustee shall comply with the applicable
requirements of Section 8.12. If the Property Trustee or the Delaware Trustee
shall resign, be removed or become incapable of continuing to act as the
Property Trustee or the Delaware Trustee, as the case may be, at a time when an
Event of Default shall have occurred and be continuing, the Holders of the
Preferred Securities, by Act of the Holders of a Majority in Liquidation Amount
of the Preferred Securities, shall promptly appoint a successor Property Trustee
or Delaware Trustee, and such successor Property Trustee or Delaware Trustee and
the retiring Property Trustee or Delaware Trustee shall comply with the
applicable requirements of Section 8.12. If an Administrative Trustee shall
resign, be removed or become incapable of acting as Administrative Trustee, at a
time when an Event of Default shall have occurred and be continuing, the Holder
of the Common Securities by Act of the Holder of Common Securities shall
promptly appoint a successor Administrative Trustee and such successor
Administrative Trustee and the retiring Administrative Trustee shall comply with
the applicable requirements of Section 8.12. If no successor Trustee shall have
been so appointed by the Holder of the Common Securities or Holders of the
Preferred Securities, as the case may be, and accepted appointment in the manner
required by Section 8.12 within thirty (30) days after the giving of a notice of
resignation by a Trustee, the removal of a Trustee, or a Trustee becoming
incapable of acting as such Trustee, any Holder who has been a Holder of
Preferred Securities for at least six (6) months may, on behalf of himself and
all others similarly situated, and any resigning Trustee may, in each case, at
the expense of the Depositor, petition any court of competent jurisdiction for
the appointment of a successor Trustee.

     (e) The Depositor shall give notice of each resignation and each removal of
the Property Trustee or the Delaware Trustee and each appointment of a successor
Property Trustee or Delaware Trustee to all Holders in the manner provided in
Section 10.8. Each notice shall include the name of the successor Property
Trustee or Delaware Trustee and the address of its Corporate Trust Office if it
is the Property Trustee.

     (f) Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Holder of Common
Securities, incompetent or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by (i) the unanimous act of the
remaining Administrative Trustees if there are at least two of them or (ii)
otherwise by the Holder of the Common Securities (with the successor in each
case being a Person who satisfies the eligibility requirement for Administrative
Trustees or Delaware Trustee, as the case may be, set forth in Sections 8.3 and
8.4).


                                       51



     (g) Upon the appointment of a successor Delaware Trustee, such successor
Delaware Trustee shall file a Certificate of Amendment to the Certificate of
Trust in accordance with Section 3810 of the Delaware Statutory Trust Act.

     SECTION 8.12. Acceptance of Appointment by Successor.

     (a) In case of the appointment hereunder of a successor Trustee, each
successor Trustee shall execute and deliver to the Depositor and to the retiring
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and each such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on request of the Trust or any successor Trustee such retiring Trustee
shall, upon payment of its charges, duly assign, transfer and deliver to such
successor Trustee all Trust Property, all proceeds thereof and money held by
such retiring Trustee hereunder with respect to the Trust Securities and the
Trust.

     (b) Upon request of any such successor Trustee, the Trust (or the retiring
Trustee if requested by the Depositor) shall execute any and all instruments for
more fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts referred to in the preceding paragraph.

     (c) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article VIII.

     SECTION 8.13. Merger, Conversion, Consolidation or Succession to Business.

     Any Person into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Trustee
shall be a party, or any Person succeeding to all or substantially all the
corporate trust business of such Trustee, shall be the successor of such Trustee
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, provided, that such Person shall be
otherwise qualified and eligible under this Article VIII.

     SECTION 8.14. Not Responsible for Recitals or Issuance of Securities.

     The recitals contained herein and in the Securities Certificates shall be
taken as the statements of the Trust and the Depositor, and the Trustees do not
assume any responsibility for their correctness. The Trustees make no
representations as to the title to, or value or condition of, the property of
the Trust or any part thereof, nor as to the validity or sufficiency of this
Trust Agreement, the Notes or the Trust Securities. The Trustees shall not be
accountable for the use or application by the Depositor of the proceeds of the
Notes.

     SECTION 8.15. Property Trustee May File Proofs of Claim.

     (a) In case of any Bankruptcy Event (or event that with the passage of time
would become a Bankruptcy Event) relative to the Trust or any other obligor upon
the Trust Securities


                                       52



or the property of the Trust or of such other obligor or their creditors, the
Property Trustee (irrespective of whether any Distributions on the Trust
Securities shall then be due and payable and irrespective of whether the
Property Trustee shall have made any demand on the Trust for the payment of any
past due Distributions) shall be entitled and empowered, to the fullest extent
permitted by law, by intervention in such proceeding or otherwise:

          (i) to file and prove a claim for the whole amount of any
     Distributions owing and unpaid in respect of the Trust Securities and to
     file such other papers or documents as may be necessary or advisable in
     order to have the claims of the Property Trustee (including any claim for
     the reasonable compensation, expenses, disbursements and advances of the
     Property Trustee, its agents and counsel) and of the Holders allowed in
     such judicial proceeding; and

          (ii) to collect and receive any monies or other property payable or
     deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such proceeding is hereby authorized by each
Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee first any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Property
Trustee, its agents and counsel, and any other amounts due the Property Trustee.

     (b) Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or compensation affecting
the Trust Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.

     SECTION 8.16. Reports to the Property Trustee.

     (a) As set forth in Exhibit G, the Depositor and the Administrative
Trustees shall deliver to the Property Trustee, not later than forty five (45)
days after the end of each of the first three fiscal quarters of the Depositor
and not later than ninety (90) days after the end of each fiscal year of the
Trust ending after the date of this Trust Agreement, Officer's Financial
Certificate covering the preceding fiscal year, stating whether or not to the
knowledge of the signers thereof the Depositor and the Trust are in default in
the performance or observance of any of the terms, provisions and conditions of
this Trust Agreement (without regard to any period of grace or requirement of
notice provided hereunder) and, if the Depositor or the Trust shall be in
default, specifying all such defaults and the nature and status thereof of which
they have knowledge.

     (b) The Depositor shall cause NorthStar Realty Finance Corp., the general
partner of the Depositor, to furnish (i) to the Property Trustee; (ii) Taberna
Capital Management, LLC, 450 Park Avenue, 23rd Floor, New York, NY 10022 or such
other address as designated by Taberna Capital Management, LLC); and (iii) any
Owner of the Preferred Securities reasonably identified to the Depositor and the
Trust (which identification may be made either by such


                                       53



Owner or by Taberna Capital Management, LLC) a duly completed and executed
certificate substantively and substantially in the form attached hereto as
Exhibit H, including the financial statements referenced in such Exhibit, which
certificate and financial statements shall be so furnished by the Depositor not
later than fifty (50) days after the end of each of the first three fiscal
quarters of each fiscal year of the Depositor and not later than ninety five
(95) days after the end of each fiscal year of the Depositor.

     The Property Trustee shall obtain all reports, certificate and information,
which it is entitled to obtain under each of the Operative Documents.

                                   ARTICLE IX.

                       TERMINATION, LIQUIDATION AND MERGER

     SECTION 9.1. Dissolution Upon Expiration Date.

     Unless earlier dissolved, the Trust shall automatically dissolve on
December 30, 2040 (the "Expiration Date"), and the Trust Property shall be
liquidated in accordance with Section 9.4.

     SECTION 9.2. Early Termination.

     The first to occur of any of the following events is an "Early Termination
Event", upon the occurrence of which the Trust shall be dissolved:

          (a) the occurrence of a Bankruptcy Event in respect of, or the
     dissolution or liquidation of, the Depositor, in its capacity as the Holder
     of the Common Securities, unless the Depositor shall have transferred the
     Common Securities as provided by Section 5.11, in which case this provision
     shall refer instead to any such successor Holder of the Common Securities;

          (b) the written direction to the Property Trustee from the Holder of
     the Common Securities at any time to dissolve the Trust and, after
     satisfaction of any liabilities of the Trust as required by applicable law,
     to distribute the Notes to Holders in exchange for the Preferred Securities
     (which direction is optional and wholly within the discretion of the Holder
     of the Common Securities);

          (c) the redemption of all of the Preferred Securities in connection
     with the payment at maturity or redemption of all the Notes; and

          (d) the entry of an order for dissolution of the Trust by a court of
     competent jurisdiction.


                                       54



     SECTION 9.3. Termination.

     (a) The respective obligations and responsibilities of the Trustees and the
Trust shall terminate upon the latest to occur of the following: (a) the
distribution by the Property Trustee to Holders of all amounts required to be
distributed hereunder upon the liquidation of the Trust pursuant to Section 9.4,
or upon the redemption of all of the Trust Securities pursuant to Section 4.2;
(b) the satisfaction of any expenses owed by the Trust; and (c) the discharge of
all administrative duties of the Administrative Trustees, including the
performance of any tax reporting obligations with respect to the Trust or the
Holders.

     (b) As soon as practicable after the completion of the winding up of the
Trust in accordance with the Delaware Statutory Trust Act and after satisfaction
of liabilities to creditors of the Trust as required by applicable law,
including Section 3808 of the Statutory Trust Act, the Delaware Trustee, when
notified in writing of the completion of the winding up of the Trust in
accordance with the Delaware Statutory Trust Act, shall terminate the Trust by
filing, at the expense of the Depositor, a certificate of cancellation with the
Secretary of State of the State of Delaware.

     SECTION 9.4. Liquidation.

     (a) If an Early Termination Event specified in Section 9.2(a), (b) or (d)
occurs or upon the Expiration Date, the Trust shall be liquidated by the
Property Trustee as expeditiously as the Property Trustee shall determine to be
possible by distributing, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, to each Holder a Like Amount of Notes,
subject to Section 9.4(d). Notice of liquidation shall be given by the Property
Trustee not less than thirty (30) nor more than sixty (60) days prior to the
Liquidation Date to each Holder of Trust Securities at such Holder's address
appearing in the Securities Register. All such notices of liquidation shall:

          (i) state the Liquidation Date;

          (ii) state that from and after the Liquidation Date, the Trust
     Securities will no longer be deemed to be Outstanding and (subject to
     Section 9.4(d)) any Securities Certificates not surrendered for exchange
     will be deemed to represent a Like Amount of Notes; and

          (iii) provide such information with respect to the mechanics by which
     Holders may exchange Securities Certificates for Notes, or if Section
     9.4(d) applies, receive a Liquidation Distribution, as the Property Trustee
     shall deem appropriate.

     (b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect the
liquidation of the Trust and distribution of the Notes to Holders, the Property
Trustee, either itself acting as exchange agent or through the appointment of a
separate exchange agent, shall establish a record date for such distribution
(which shall not be more than forty five (45) days prior to the Liquidation Date
nor prior to the date on which notice of such liquidation is given to the
Holders) and establish such procedures as it shall deem appropriate to effect
the distribution of Notes in exchange for the Outstanding Securities
Certificates.


                                       55



     (c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation
Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii)
certificates representing a Like Amount of Notes will be issued to Holders of
Securities Certificates, upon surrender of such Certificates to the exchange
agent for exchange, (iii) the Depositor shall use its best efforts to have the
Notes listed on the New York Stock Exchange or on such other exchange,
interdealer quotation system or self-regulatory organization on which the
Preferred Securities are then listed, if any, (iv) Securities Certificates not
so surrendered for exchange will be deemed to represent a Like Amount of Notes
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on such Securities Certificates until such certificates are
so surrendered (and until such certificates are so surrendered, no payments of
interest or principal will be made to Holders of Securities Certificates with
respect to such Notes) and (v) all rights of Holders holding Trust Securities
will cease, except the right of such Holders to receive Notes upon surrender of
Securities Certificates.

     (d) Notwithstanding the other provisions of this Section 9.4, if
distribution of the Notes in the manner provided herein is determined by the
Property Trustee not to be permitted or practical, the Trust Property shall be
liquidated, and the Trust shall be wound up by the Property Trustee in such
manner as the Property Trustee determines. In such event, Holders will be
entitled to receive out of the assets of the Trust available for distribution to
Holders, after satisfaction of liabilities to creditors of the Trust as provided
by applicable law, an amount equal to the Liquidation Amount per Trust Security
plus accumulated and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"). If, upon any such winding up the
Liquidation Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then, subject to the next succeeding sentence, the amounts payable
by the Trust on the Trust Securities shall be paid on a pro rata basis (based
upon Liquidation Amounts). The Holder of the Common Securities will be entitled
to receive Liquidation Distributions upon any such winding up pro rata (based
upon Liquidation Amounts) with Holders of all Trust Securities, except that, if
an Event of Default has occurred and is continuing, the Preferred Securities
shall have a priority over the Common Securities as provided in Section 4.3.

     SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of
Trust.

     The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any Person except pursuant to this Article IX.
At the request of the Holders of the Common Securities, without the consent of
the Holders of the Preferred Securities, the Trust may merge with or into,
consolidate, amalgamate, or be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any State; provided, that:

          (a) such successor entity either (i) expressly assumes all of the
     obligations of the Trust under this Trust Agreement with respect to the
     Preferred Securities or (ii) substitutes for the Preferred Securities other
     securities having substantially the same terms as the Preferred Securities
     (such other Securities, the "Successor Securities") so


                                       56



     long as the Successor Securities have the same priority as the Preferred
     Securities with respect to distributions and payments upon liquidation,
     redemption and otherwise;

          (b) a trustee of such successor entity possessing substantially the
     same powers and duties as the Property Trustee is appointed to hold the
     Notes;

          (c) if the Preferred Securities or the Notes are rated, such merger,
     consolidation, amalgamation, replacement, conveyance, transfer or lease
     does not cause the Preferred Securities or the Notes (including any
     Successor Securities) to be downgraded by any nationally recognized
     statistical rating organization that then assigns a rating to the Preferred
     Securities or the Notes;

          (d) the Preferred Securities are listed, or any Successor Securities
     will be listed upon notice of issuance, on any national securities exchange
     or interdealer quotation system on which the Preferred Securities are then
     listed, if any;

          (e) such merger, consolidation, amalgamation, replacement, conveyance,
     transfer or lease does not adversely affect the rights, preferences and
     privileges of the Holders of the Preferred Securities (including any
     Successor Securities) in any material respect;

          (f) such successor entity has a purpose substantially identical to
     that of the Trust;

          (g) prior to such merger, consolidation, amalgamation, replacement,
     conveyance, transfer or lease, the Depositor has received an Opinion of
     Counsel to the effect that (i) such merger, consolidation, amalgamation,
     replacement, conveyance, transfer or lease does not adversely affect the
     rights, preferences and privileges of the Holders of the Preferred
     Securities (including any Successor Securities) in any material respect;
     (ii) following such merger, consolidation, amalgamation, replacement,
     conveyance, transfer or lease, neither the Trust nor such successor entity
     will be required to register as an "investment company" under the
     Investment Company Act and (iii) following such merger, consolidation,
     amalgamation, replacement, conveyance, transfer or lease, the Trust (or the
     successor entity) will continue to be classified as a grantor trust for
     U.S. federal income tax purposes; and

          (h) the Depositor or its permitted transferee owns all of the common
     securities of such successor entity.

Notwithstanding the foregoing, the Trust shall not, except with the consent of
Holders of all of the Preferred Securities, consolidate, amalgamate, merge with
or into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other Person or permit any other
entity to consolidate, amalgamate, merge with or into, or replace, the Trust if
such consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or the successor entity to be taxable as a
corporation or classified as other than a grantor trust for United States
federal income tax purposes or cause the Notes to be treated as other than
indebtedness of the Depositor for United States federal income tax purposes.


                                       57



                                   ARTICLE X.

                            MISCELLANEOUS PROVISIONS

     SECTION 10.1. Limitation of Rights of Holders.

     Except as set forth in Section 9.2, the death, bankruptcy, termination,
dissolution or incapacity of any Person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor annul, dissolve or terminate the Trust nor entitle the legal
representatives or heirs of such Person or any Holder for such Person, to claim
an accounting, take any action or bring any proceeding in any court for a
partition or winding up of the arrangements contemplated hereby, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of
them.

     SECTION 10.2. Agreed Tax Treatment of Trust and Trust Securities.

     The parties hereto and, by its acceptance or acquisition of a Trust
Security or a beneficial interest therein, the Holder of, and any Person that
acquires a beneficial interest in, such Trust Security intend and agree to treat
the Trust as a grantor trust for United States federal, state and local tax
purposes, and to treat the Trust Securities (including all payments and proceeds
with respect to such Trust Securities) as undivided beneficial ownership
interests in the Trust Property (and payments and proceeds therefrom,
respectively) for United States federal, state and local tax purposes and to
treat the Notes as indebtedness of the Depositor for United States federal,
state and local tax purposes. The provisions of this Trust Agreement shall be
interpreted to further this intention and agreement of the parties.

     SECTION 10.3. Amendment.

     (a) This Trust Agreement may be amended from time to time by the Property
Trustee, the Administrative Trustees and the Holder of all the Common
Securities, without the consent of any Holder of the Preferred Securities, (i)
to cure any ambiguity, correct or supplement any provision herein that may be
defective or inconsistent with any other provision herein, or to make or amend
any other provisions with respect to matters or questions arising under this
Trust Agreement, which shall not be inconsistent with the other provisions of
this Trust Agreement, (ii) to modify, eliminate or add to any provisions of this
Trust Agreement to such extent as shall be necessary to ensure that the Trust
will neither be taxable as a corporation nor be classified as other than a
grantor trust for United States federal income tax purposes at all times that
any Trust Securities are Outstanding or to ensure that the Notes are treated as
indebtedness of the Depositor for United States federal income tax purposes, or
to ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act or (iii) to add to the covenants,
restrictions or obligations of the Depositor; provided, that in the case of
clauses (i), (ii) or (iii), such action shall not adversely affect in any
material respect the interests of any Holder.

     (b) Except as provided in Section 10.3(c), any provision of this Trust
Agreement may be amended by the Property Trustee, the Administrative Trustees
and the Holder of all of the Common Securities and with (i) the consent of
Holders of at least a Majority in Liquidation


                                       58



Amount of the Preferred Securities and (ii) receipt by the Trustees of an
Opinion of Counsel to the effect that such amendment or the exercise of any
power granted to the Trustees in accordance with such amendment will not cause
the Trust to be taxable as a corporation or classified as other than a grantor
trust for United States federal income tax purposes or affect the treatment of
the Notes as indebtedness of the Depositor for United States federal income tax
purposes or affect the Trust's exemption from status (or from any requirement to
register) as an "investment company" under the Investment Company Act. In
addition to and subject to the foregoing, the Distribution Dates, Redemption
Date and Stated Maturity (as defined in the Indenture) with respect to the
Preferred Securities or a portion of the Preferred Securities shall be conformed
in connection with any modification of the Interest Payment Date, Redemption
Date or Stated Maturity of the Junior Subordinated Notes made by the Company and
the Trust at the direction of any holder of the Preferred Securities or a
portion of the Preferred Securities as set forth in Section 6 of the Purchase
Agreement.

     (c) Notwithstanding any other provision of this Trust Agreement, without
the consent of each Holder, this Trust Agreement may not be amended to (i)
change the accrual rate, amount, currency or timing of any Distribution on or
the redemption price of the Trust Securities or otherwise adversely affect the
amount of any Distribution or other payment required to be made in respect of
the Trust Securities as of a specified date, except as set forth in the last
sentence of Section 10.3(b) above, (ii) restrict or impair the right of a Holder
to institute suit for the enforcement of any such payment on or after such date,
(iii) reduce the percentage of aggregate Liquidation Amount of Outstanding
Preferred Securities, the consent of whose Holders is required for any such
amendment, or the consent of whose Holders is required for any waiver of
compliance with any provision of this Trust Agreement or of defaults hereunder
and their consequences provided for in this Trust Agreement; (iv) impair or
adversely affect the rights and interests of the Holders in the Trust Property,
or permit the creation of any Lien on any portion of the Trust Property; or (v)
modify the definition of "Outstanding," this Section 10.3(c), Sections 4.1, 4.2,
4.3, 6.10(e) or Article IX.

     (d) Notwithstanding any other provision of this Trust Agreement, no Trustee
shall enter into or consent to any amendment to this Trust Agreement that would
cause the Trust to be taxable as a corporation or to be classified as other than
a grantor trust for United States federal income tax purposes or that would
cause the Notes to fail or cease to be treated as indebtedness of the Depositor
for United States federal income tax purposes or that would cause the Trust to
fail or cease to qualify for the exemption from status (or from any requirement
to register) as an "investment company" under the Investment Company Act.

     (e) If any amendment to this Trust Agreement is made, the Administrative
Trustees or the Property Trustee shall promptly provide to the Depositor and the
Note Trustee a copy of such amendment.

     (f) No Trustee shall be required to enter into any amendment to this Trust
Agreement that affects its own rights, duties or immunities under this Trust
Agreement. The Trustees shall be entitled to receive an Opinion of Counsel and
an Officers' Certificate stating that any amendment to this Trust Agreement is
in compliance with this Trust Agreement and all conditions precedent herein
provided for relating to such action have been met.


                                       59



     (g) No amendment or modification to this Trust Agreement that adversely
affects in any material respect the rights, duties, liabilities, indemnities or
immunities of the Delaware Trustee hereunder shall be permitted without the
prior written consent of the Delaware Trustee.

     SECTION 10.4. Separability.

     If any provision in this Trust Agreement or in the Securities Certificates
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, and there shall be deemed substituted for the provision at
issue a valid, legal and enforceable provision as similar as possible to the
provision at issue.

     SECTION 10.5. Governing Law.

     THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE HOLDERS,
THE TRUST, THE DEPOSITOR AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT
AND THE TRUST SECURITIES SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS CONFLICTS
OF LAWS PROVISIONS.

     SECTION 10.6. Successors.

     This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Trust and any Trustee, including any
successor by operation of law. Except in connection with a transaction involving
the Depositor that is permitted under Article VIII of the Indenture and pursuant
to which the assignee agrees in writing to perform the Depositor's obligations
hereunder, the Depositor shall not assign its obligations hereunder.

     SECTION 10.7. Headings.

     The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement

     SECTION 10.8. Reports, Notices and Demands.

     (a) Any report, notice, demand or other communication that by any provision
of this Trust Agreement is required or permitted to be given or served to or
upon any Holder or the Depositor may be given or served in writing delivered in
person, or by reputable, overnight courier, by telecopy or by deposit thereof,
first-class postage prepaid, in the United States mail, addressed, (a) in the
case of a Holder of Preferred Securities, to such Holder as such Holder's name
and address may appear on the Securities Register; and (b) in the case of the
Holder of all the Common Securities or the Depositor, to NorthStar Realty
Finance Limited Partnership, 527 Madison Avenue, New York, NY 10022, Attention:
Richard J. McCready, or to such other address as may be specified in a written
notice by the Holder of all the Common Securities or the Depositor, as the case
may be, to the Property Trustee. Such report, notice, demand or other
communication to or upon a Holder or the Depositor shall be deemed to have been
given when


                                       60



received in person, within one (1) Business Day following delivery by overnight
courier, when telecopied with receipt confirmed, or within three (3) Business
Days following delivery by mail, except that if a notice or other document is
refused delivery or cannot be delivered because of a changed address of which no
notice was given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.

     (b) Any notice, demand or other communication that by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Property Trustee, the Delaware Trustee, the Administrative Trustees or the Trust
shall be given in writing by deposit thereof, first-class postage prepaid, in
the U.S. mail, personal delivery or facsimile transmission, addressed to such
Person as follows: (i) with respect to the Property Trustee to JPMorgan Chase
Bank, National Association, 600 Travis, 50th Floor, Houston, Texas 77002,
Attention: Worldwide Securities Services-- NorthStar Realty Finance Trust III,
facsimile no. (713) 216-2101, (ii) with respect to the Delaware Trustee, to
Chase Bank USA, National Association, c/o JPMorgan Chase Bank, National
Association, 500 Stanton Christiana Road, Building 4 (3rd Floor), Newark,
Delaware 19713, Attention: Worldwide Securities Services-- NorthStar Realty
Finance Trust III, facsimile no. (302) 552-6280; (iii) with respect to the
Administrative Trustees, to them at the address above for notices to the
Depositor, marked "Attention: Administrative Trustees of NorthStar Realty
Finance Trust III", and (iv) with respect to the Trust, to its principal
executive office specified in Section 2.2, with a copy to the Property Trustee.
Such notice, demand or other communication to or upon the Trust, the Property
Trustee or the Administrative Trustees shall be deemed to have been sufficiently
given or made only upon actual receipt of the writing by the Trust, the Property
Trustee or the Administrative Trustees.

     SECTION 10.9. Agreement Not to Petition.

     Each of the Trustees and the Depositor agree for the benefit of the Holders
that, until at least one year and one day after the Trust has been terminated in
accordance with Article IX, they shall not file, or join in the filing of, a
petition against the Trust under any Bankruptcy Law or otherwise join in the
commencement of any proceeding against the Trust under any Bankruptcy Law. If
the Depositor takes action in violation of this Section 10.9, the Property
Trustee agrees, for the benefit of Holders, that at the expense of the
Depositor, it shall file an answer with the applicable bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor against
the Trust or the commencement of such action and raise the defense that the
Depositor has agreed in writing not to take such action and should be estopped
and precluded therefrom and such other defenses, if any, as counsel for the
Property Trustee or the Trust may assert.

     SECTION 10.10. Counterparts. This instrument may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                       61



     IN WITNESS WHEREOF, the parties hereto have executed this Second Amended
and Restated Trust Agreement as of the day and year first above written.

                                        NORTHSTAR REALTY FINANCE LIMITED
                                        PARTNERSHIP, as Depositor

                                        By: NorthStar Realty Finance Corp., as
                                        General Partner


                                        By: /s/ Mark E. Chertok
                                            ------------------------------------
                                            Name: Mark E. Chertok
                                            Title: Chief Financial Officer and
                                                   Treasurer

JPMORGAN CHASE BANK, NATIONAL           CHASE BANK USA, NATIONAL ASSOCIATION, as
ASSOCIATION, not in its individual      Delaware Trustee
capacity but solely as Property
Trustee


By: /s/ Shelly A. Sterling              By: /s/ Sarika M. Sheth
    ---------------------------------       ------------------------------------
    Name:  Shelly A. Sterling               Name: Sarika M. Sheth
    Title: Vice President                   Title: Trust Officer

/s/ David T. Hamamoto                   /s/ Mark E. Chertok
-------------------------------------   ----------------------------------------
David T. Hamamoto, as Administrative    Mark E. Chertok, as Administrative
Trustee                                 Trustee

/s/ Richard J. McCready
--------------------------------------
Richard J. McCready, as Administrative
Trustee



                                                                       Exhibit A

                              CERTIFICATE OF TRUST

                                       OF

                       NORTHSTAR REALTY FINANCE TRUST III

     This Certificate of Trust of NorthStar Realty Finance Trust III (the
"Trust") is being duly executed and filed on behalf of the Trust by the
undersigned, as trustees, to form a statutory trust under the Delaware Statutory
Trust Act (12 Del. C.Section 3801 et seq.) (the "Act").

     1. Name. The name of the statutory trust formed by this Certificate of
Trust is: NorthStar Realty Finance Trust III.

     2. Delaware Trustee. The name and business address of the trustee of the
Trust with its principal place of business in the State of Delaware are Chase
Bank USA, National Association c/o JPMorgan Chase Bank, National Association,
500 Stanton Christiana Road, Building 4 (3rd Floor), Newark, Delaware 19713,
Attention: Institutional Trust Services.

     3. Effective Date. This Certificate of Trust shall be effective upon its
filing with the Secretary of State of the State of Delaware.

     IN WITNESS WHEREOF, the undersigned have duly executed this Certificate of
Trust in accordance with Section 3811(a)(1) of the Act.

                                        CHASE BANK USA, NATIONAL ASSOCIATION,
                                        not in its individual capacity, but
                                        solely as Delaware Trustee


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                       A-1



                                                                       Exhibit B

                     [FORM OF COMMON SECURITIES CERTIFICATE]

 THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
   AS AMENDED, OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES
   LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
       PURSUANT TO AN EXEMPTION FROM REGISTRATION. THIS CERTIFICATE IS NOT
    TRANSFERABLE EXCEPT IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF
                               THE TRUST AGREEMENT

CERTIFICATE NUMBER                                   NUMBER OF COMMON SECURITIES

     C-

                    CERTIFICATE EVIDENCING COMMON SECURITIES

                                       OF

                       NORTHSTAR REALTY FINANCE TRUST III

                         FLOATING RATE COMMON SECURITIES

                 (LIQUIDATION AMOUNT $1,000 PER COMMON SECURITY)

NorthStar Realty Finance Trust III, a statutory trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that NorthStar Realty
Finance Limited Partnership, a Delaware limited partnership (the "Holder") is
the registered owner of [Amount#] common securities of the Trust representing
undivided common beneficial interests in the assets of the Trust and designated
the NorthStar Realty Finance Trust III Floating Rate Common Securities
(liquidation amount $1,000 per Common Security) (the "Common Securities").
Except in accordance with Section 5.11 of the Trust Agreement (as defined
below), the Common Securities are not transferable and, to the fullest extent
permitted by law, any attempted transfer hereof other than in accordance
therewith shall be void. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are set
forth in, and this certificate and the Common Securities represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Amended and Restated Trust Agreement of the Trust, dated as of November 22, 2005
as the same may be amended from time to time (the "Trust Agreement"), among
NorthStar Realty Finance Limited Partnership, as Depositor, JPMorgan Chase Bank,
National Association, as Property Trustee, Chase Bank USA, National Association,
as Delaware Trustee, the Administrative Trustees named therein and the Holders,
from time to time, of the Trust Securities. The Trust will furnish a copy of the
Trust Agreement to the Holder without charge upon written request to the Trust
at its principal place of business or registered office.


                                       B-1



Upon receipt of this certificate, the Holder is bound by the Trust Agreement and
is entitled to the benefits thereunder.

This Common Securities Certificate shall be governed by and construed in
accordance with the laws of the State of Delaware.

Terms used but not defined herein have the meanings set forth in the Trust
Agreement.

IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed
on behalf of the Trust this certificate this __ day of _______________, 2005.

                                        NORTHSTAR REALTY FINANCE TRUST III


                                        By:
                                            ------------------------------------
                                                        , as Administrative
                                            Trustee


                                       B-2



                                                                       Exhibit C

                   [FORM OF PREFERRED SECURITIES CERTIFICATE]

[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS PREFERRED SECURITY IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE TRUST AGREEMENT HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A
NOMINEE OF DTC. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT, AND NO TRANSFER OF THIS
PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE
BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF
DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC TO NORTHSTAR REALTY FINANCE TRUST III OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]

THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND SUCH PREFERRED SECURITIES OR ANY INTEREST
THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY
PREFERRED SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE PREFERRED
SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.

THE HOLDER OF THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES
FOR THE BENEFIT OF THE TRUST AND THE DEPOSITOR THAT SUCH PREFERRED SECURITIES
MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE TRUST OR (B) (I)
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED PURCHASER" (AS
DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED),
AND (II) (Z) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (Y) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING


                                       C-1



OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, (X) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (W) PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT, IN EACH
CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND, IN THE CASE OF (Y) OR
(W), SUBJECT TO THE RIGHT OF THE TRUST AND THE DEPOSITOR TO REQUIRE AN OPINION
OF COUNSEL AND OTHER INFORMATION SATISFACTORY TO EACH OF THEM. IN ADDITION, THE
HOLDER FURTHER AGREES THAT IT WILL NOTIFY ANY PURCHASER OF ANY PREFERRED
SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN THE PRECEDING
SENTENCE AND THAT SUCH PREFERRED SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE
TRANSFERRED ONLY IN ACCORDANCE WITH SECTION 5.7 OF THE TRUST AGREEMENT AS
DEFINED HEREIN

THE PREFERRED SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING AN AGGREGATE LIQUIDATION AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF PREFERRED SECURITIES, OR ANY
INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE LIQUIDATION AMOUNT OF LESS THAN
$100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID
AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH PREFERRED
SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
PRINCIPAL OF OR INTEREST ON SUCH PREFERRED SECURITIES, OR ANY INTEREST THEREIN,
AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN
SUCH PREFERRED SECURITIES.

THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF
OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE
BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO
TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") (EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN
ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON
INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS PREFERRED SECURITY
OR ANY INTEREST THEREIN. ANY PURCHASER OR HOLDER OF THE PREFERRED SECURITIES OR
ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND
HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF
SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE


                                       C-2



CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE
BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY
EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE."

THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES OR ANY
AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE
CORPORATION (THE "FDIC").


                                       C-3



CERTIFICATE NUMBER                                  AGGREGATE LIQUIDATION AMOUNT

                                                            PREFERRED SECURITIES

P-___                                                     $_____________________

                                   ----------

                   CERTIFICATE EVIDENCING PREFERRED SECURITIES

                                       OF

                       NORTHSTAR REALTY FINANCE TRUST III

                       FLOATING RATE PREFERRED SECURITIES
               (LIQUIDATION AMOUNT $1,000 PER PREFERRED SECURITY)

NorthStar Realty Finance Trust III, a statutory trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that _____________, a
_________ (the "Holder") is the registered owner of [___________ (______)]
Preferred Securities [if the Preferred Security is a Global Security, then
insert - or such other number of Preferred Securities represented hereby as may
be set forth in the records of the Securities Registrar hereinafter referred to
in accordance with the Trust Agreement (as defined below)] of the Trust
representing an undivided preferred beneficial interest in the assets of the
Trust and designated the NorthStar Realty Finance Trust III Floating Rate
Preferred Securities, (liquidation amount $1,000 per Preferred Security) (the
"Preferred Securities"). Subject to the terms of the Trust Agreement (as defined
below), the Preferred Securities are transferable on the books and records of
the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer as provided in Section
5.7 of the Trust Agreement (as defined below). The designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Securities are set forth in, and this certificate and the Preferred
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Trust Agreement of the
Trust, dated as of November 22, 2005, as the same may be amended from time to
time (the "Trust Agreement"), among NorthStar Realty Finance Limited
Partnership, as Depositor, JPMorgan Chase Bank, National Association, as
Property Trustee, Chase Bank USA, National Association, as Delaware Trustee, the
Administrative Trustees named therein and the Holders, from time to time, of the
Trust Securities. The Trust will furnish a copy of the Trust Agreement to the
Holder without charge upon written request to the Property Trustee at its
Corporate Trust Office.

Upon receipt of this certificate, the Holder is bound by the Trust Agreement and
is entitled to the benefits thereunder.


                                       C-4



This Preferred Securities Certificate shall be governed by and construed in
accordance with the laws of the State of Delaware.

All capitalized terms used but not defined in this Preferred Securities
Certificate are used with the meanings specified in the Trust Agreement,
including the Schedules and Exhibits thereto.

IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed
on behalf of the Trust this certificate this __ day of __________, 2005.

                                        NORTHSTAR REALTY FINANCE TRUST III


                                        By:
                                             -----------------------------------
                                             Name:
                                             Administrative Trustee

     This is one of the Preferred Securities referred to in the within-mentioned
Trust Agreement.

Dated:

                                        JPMORGAN CHASE BANK, NATIONAL
                                        ASSOCIATION, not in its individual
                                        capacity, but solely as Property Trustee


                                        By:
                                            ------------------------------------
                                                    Authorized signatory


                                       C-5



                          [FORM OF REVERSE OF SECURITY]

     The Trust promises to pay Distributions from November 22, 2005, or from the
most recent date on and to which Distributions have been paid or duly provided
for, quarterly (subject to deferral as set forth herein) in arrears on January
30, April 30, July 30 and October 30 of each year, at a fixed rate equal
to7.812% per annum through the Interest Payment Date in January 2016 and
thereafter at a variable rate equal to LIBOR plus 2.832% per annum of the
Liquidation Amount of the Preferred Securities represented by this Preferred
Securities Certificate, together with any Additional Interest Amounts, in
respect to such period.

     Distributions on the Trust Securities shall be made by the Paying Agent
from the Payment Account and shall be payable on each Distribution Date only to
the extent that the Trust has funds then on hand and available in the Payment
Account for the payment of such Distributions.

     In the event (and to the extent) that the Depositor exercises its right
under the Indenture to defer the payment of interest on the Notes, Distributions
on the Preferred Securities shall be deferred.

     Under the Indenture, so long as no Note Event of Default has occurred and
is continuing, after May [__], 2007, the Depositor shall have the right, at any
time and from time to time during the term of the Notes, to defer the payment of
interest on the Notes for a period of up to six (6) consecutive quarterly
Interest Payment Periods (such right to defer, the "Extension Right" and each
such extended Interest Payment Period, an "Extension Period"), during which
Extension Period(s), no interest shall be due and payable (except any Additional
Tax Sums that may be due and payable); provided, that, the Depositor shall not
be entitled to exercise its Extension Right so that it would be able to defer
the payment of interest on the Notes for more than six (6) quarterly Interest
Payment Periods; provided, further, that, after the expiration of any Extension
Period, the Depositor may not exercise its Extension Right to begin any
subsequent Extension Period until it pays all interest then accrued and unpaid
on the Notes, together with such Additional Interest prior to beginning such
subsequent Extension Period. No interest on the Notes shall be due and payable
during an Extension Period, except at the end thereof, but each installment of
interest that would otherwise have been due and payable during such Extension
Period shall bear Additional Interest (to the extent payment of such interest
would be legally enforceable) at a fixed rate equal to 7.812% per annum through
the Interest Payment Date in January 2016 and thereafter at a variable rate
equal to LIBOR PLUS 2.832% per annum compounded quarterly, from the dates on
which amounts would have otherwise been due and payable until paid or until
funds for the payment thereof have been made available for payment. If
Distributions are deferred, the deferred Distributions (including Additional
Interest Amounts) shall be paid on the date that the related Extension Period
terminates to Holders (as defined in the Trust Agreement) of the Trust
Securities as they appear on the books and records of the Trust on the record
date immediately preceding such termination date.

     Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such Distributions in the Payment Account of the
Trust. The Trust's funds available for Distribution


                                       C-6



to the Holders of the Preferred Securities will be limited to payments received
from the Depositor.

     During any Extension Period or Event of Default, the Depositor shall not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Depositor's
capital stock or (ii) make any payment of principal of or any interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Depositor that rank pari passu in all respects with or junior in interest to the
Notes (other than (a) repurchases, redemptions or other acquisitions of shares
of capital stock of the Depositor in connection with (1) any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, (2) a dividend
reinvestment or stockholder stock purchase plan or (3) the issuance of capital
stock of the Depositor (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period or Event of Default, (b) as a result of an
exchange or conversion of any class or series of the Depositor's capital stock
(or any capital stock of a Subsidiary (as defined in the Indenture) of the
Depositor) for any class or series of the Depositor's capital stock or of any
class or series of the Depositor's indebtedness for any class or series of the
Depositor's capital stock, (c) the purchase of fractional interests in shares of
the Depositor's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any Rights Plan (as defined in the
Indenture), the issuance of rights, stock or other property under any Rights
Plan, or the redemption or repurchase of rights pursuant thereto or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock).

     On each Note Redemption Date, on the stated maturity (or any date of
principal repayment upon early maturity) of the Notes and on each other date on
(or in respect of) which any principal on the Notes is repaid, the Trust will be
required to redeem a Like Amount of Trust Securities at the Redemption Price.
Under the Indenture, the Notes may be redeemed by the Depositor on any Interest
Payment Date, at the Depositor's option, on or after January 30, 2011 in whole
or in part from time to time at the Optional Note Redemption Price of the
principal amount thereof or the redeemed portion thereof, as applicable,
together, in the case of any such redemption, with accrued interest, including
any Additional Interest, to but excluding the date fixed for redemption. The
Notes may also be redeemed by the Depositor, at its option, at any time, in
whole but not in part, upon the occurrence of an Investment Company Event or a
Tax Event at the Special Note Redemption Price; provided, that such Investment
Company Event or a Tax Event is continuing on the Redemption Date.

     The Trust Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the proceeds from the contemporaneous redemption or
payment at maturity of Notes. Redemptions of the Trust Securities (or portion
thereof) shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Trust has funds then on hand and
available in the Payment Account for the payment of such Redemption Price.


                                       C-7



     Payments of Distributions (including any Additional Interest Amounts), the
Redemption Price, Liquidation Amount or any other amounts in respect of the
Preferred Securities shall be made by wire transfer at such place and to such
account at a banking institution in the United States as may be designated in
writing at least ten (10) Business Days prior to the date for payment by the
Person entitled thereto unless proper written transfer instructions have not
been received by the relevant record date, in which case such payments shall be
made by check mailed to the address of such Person as such address shall appear
in the Security Register. If any Preferred Securities are held by a Depositary,
such Distributions shall be made to the Depositary in immediately available
funds.

     The indebtedness evidenced by the Notes is, to the extent provided in the
Indenture, subordinate and junior in right of payment to the prior payment in
full of all Senior Debt (as defined in the Indenture), and this Security is
issued subject to the provisions of the Indenture with respect thereto.


                                       C-8



                                   ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Securities Certificate to:

        (Insert assignee's social security or tax identification number)

                    (Insert address and zip code of assignee)

and irrevocably appoints

agent to transfer this Preferred Securities Certificate on the books of the
Trust. The agent may substitute another to act for him or her.

Date: _____________________


Signature:
           ---------------------------------------------------------------------
              (Sign exactly as your name appears on the other side of this
                            Preferred Securities Certificate)

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.


                                       C-9



                                                                       Exhibit D

                          JUNIOR SUBORDINATED INDENTURE


                                       D-1



                                                                       Exhibit E

                          FORM OF TRANSFER CERTIFICATE
                             TO BE EXECUTED FOR QIBS

                                                                 __________, [ ]

JPMorgan Chase Bank, National Association
600 Travis, 50th Floor
Houston, Texas 77002
Attention: Worldwide Securities Services

NorthStar Realty Finance Limited Partnership
NorthStar Realty Finance Trust III
527 Madison Avenue
New York, NY 10022

          Re: Purchase of $40,000,000 stated liquidation amount of Floating
              Rate Preferred Securities (the "Preferred Securities") of
              NorthStar Realty Finance Trust III

Ladies and Gentlemen:

          In connection with our purchase of the Preferred Securities we confirm
that:

          1. We understand that the Floating Rate Preferred Securities (the
"Preferred Securities") of NorthStar Realty Finance Trust III (the "Trust") and
the Floating Rate Junior Subordinated Notes due 2035 (the "Subordinated Notes")
of NorthStar Realty Finance Limited Partnership (the "Company") (the entire
amount of the Trust's outstanding Preferred Securities and the Subordinated
Notes together being referred to herein as the "Offered Securities"), have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered or sold except as permitted in the following
sentence. We agree on our own behalf and on behalf of any investor account for
which we are purchasing the Offered Securities that, if we decide to offer, sell
or otherwise transfer any such Offered Securities, (i) such offer, sale or
transfer will be made only (a) to the Trust, (b) to a person we reasonably
believe is a "qualified purchaser" (a "QP") (as defined in section 2(a)(51) of
the Investment Company Act of 1940, as amended) and pursuant to any available
exemption under the Securities Act. We understand that the certificates for any
Offered Security that we receive will bear a legend substantially to the effect
of the foregoing.

          2. We are a Qualified Institutional Buyer ("QIB") under Rule 144A of
the Securities Act and are purchasing for our own account or for the account of
a QIB and to whom notice is given that the transfer is being made in reliance on
Rule 144A.

          3. We are a "qualified purchaser" within the meaning of section
2(a)(51) of the Investment Company Act of 1940, as amended, and are purchasing
for our own account or for the account of such a "qualified purchaser," and we
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our


                                       E-1



investment in the Offered Securities, and we and any account for which we are
acting are each able to bear the economic risks of our or its investment.

          3. We are acquiring the Offered Securities purchased by us for our own
account (or for one or more accounts as to each of which we exercise sole
investment discretion and have authority to make, and do make, the statements
contained in this letter) and not with a view to any distribution of the Offered
Securities, subject, nevertheless, to the understanding that the disposition of
our property will at all times be and remain within our control.

          4. In the event that we purchase any Preferred Securities or any
Subordinated Notes, we will acquire such Preferred Securities having an
aggregate stated liquidation amount of not less than $100,000 or such
Subordinated Notes having an aggregate principal amount not less than $100,000,
for our own account and for each separate account for which we are acting.

          5. We acknowledge that we are not a fiduciary of (i) an employee
benefit, individual retirement account or other plan or arrangement subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code") (each a "Plan"); or (ii) an entity whose underlying assets include "plan
assets" by reason of any Plan's investment in the entity, and are not purchasing
any of the Offered Securities on behalf of or with "plan assets" by reason of
any Plan's investment in the entity.

          6. We acknowledge that the Trust and the Company and others will rely
upon the truth and accuracy of the foregoing acknowledgments, representations,
warranties and agreements and agree that if any of the acknowledgments,
representations, warranties and agreements deemed to have been made by our
purchase of any of the Offered Securities are no longer accurate, we shall
promptly notify the Company. If we are acquiring any Offered Securities as a
fiduciary or agent for one or more investor accounts, we represent that we have
sole discretion with respect to each such investor account and that we have full
power to make the foregoing acknowledgments, representations and agreement on
behalf of each such investor account.

                                        (Name of Purchaser)


                                        By:
                                            ------------------------------------
                                        Date:
                                              ----------------------------------


                                       E-2



     Upon transfer, the Preferred Securities (having a stated liquidation amount
of $_____________) would be registered in the name of the new beneficial owner
as follows.

Name: ___________________

Address: _________________________________

Taxpayer ID Number: ___________


                                       E-3



                                                                       Exhibit F

                         FORM OF TRANSFEREE CERTIFICATE
                  TO BE EXECUTED BY TRANSFEREES OTHER THAN QIBS

                                                                 __________, [ ]

JPMorgan Chase Bank, National Association
600 Travis, 50th Floor
Houston, Texas 77002
Attention: Worldwide Securities Services

NorthStar Realty Finance Limited Partnership
NorthStar Realty Finance Trust III
527 Madison Avenue
New York, NY 10022

          Re: Purchase of $40,000,000 stated liquidation amount of Floating
              Rate Preferred Securities (the "Preferred Securities") of
              NorthStar Realty Finance Trust III

Ladies and Gentlemen:

          In connection with our purchase of the Preferred Securities we confirm
that:

          1. We understand that the Floating Rate Preferred Securities (the
"Preferred Securities") of NorthStar Realty Finance Trust III (the "Trust") and
the Floating Rate Junior Subordinated Notes due 2035 (the "Subordinated Notes")
of NorthStar Realty Finance Limited Partnership (the "Company") (the entire
amount of the Trust's outstanding Preferred Securities and the Subordinated
Notes together being referred to herein as the "Offered Securities"), have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered or sold except as permitted in the following
sentence. We agree on our own behalf and on behalf of any investor account for
which we are purchasing the Offered Securities that, if we decide to offer, sell
or otherwise transfer any such Offered Securities, (i) such offer, sale or
transfer will be made only (a) to the Trust, (b) to a person we reasonably
believe is a "qualified purchaser" (a "QP") (as defined in section 2(a)(51) of
the Investment Company Act of 1940, as amended) and pursuant to any available
exemption under the Securities Act. We understand that the certificates for any
Offered Security that we receive will bear a legend substantially to the effect
of the foregoing.

          2. We are an "accredited investor" within the meaning of subparagraph
(a) (1), (2), (3), or (7) of Rule 501 under the Securities Act purchasing for
our own account or for the account of such an "accredited investor," and we are
acquiring the Offered Securities for investment purposes and not with a view to,
or for offer or sale in connection with, any distribution in violation of the
Securities Act, and we have such knowledge and experience in financial and
business matters to be capable of evaluating the merits and risks of our
investment in the Offered Securities, and we and any account for which we are
acting are each able to bear the economic risks of our or its investment.


                                       F-1



          3. We are acquiring the Offered Securities purchased by us for our own
account (or for the one or more accounts to which we exercise sole investment
discretion and have authority to make, and do make, the statements contained in
this letter) and not with a view to any distribution of the Offered Securities,
subject, nevertheless, to the understanding that the disposition of out property
will at all time be and remain within our control.

          4. We are a "qualified purchaser" within the meaning of section
2(a)(51) of the Investment Company Act of 1940, as amended, and are purchasing
for our own account or for the account of such a "qualified purchaser," and we
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Offered
Securities, and we and any account for which we are acting are each able to bear
the economic risks of our or its investment.

          5. We are acquiring the Offered Securities purchased by us for our own
account (or for one or more accounts as to each of which we exercise sole
investment discretion and have authority to make, and do make, the statements
contained in this letter) and not with a view to any distribution of the Offered
Securities, subject, nevertheless, to the understanding that the disposition of
our property will at all times be and remain within our control.

          6. In the event that we purchase any Preferred Securities or any
Subordinated Notes, we will acquire such Preferred Securities having an
aggregate stated liquidation amount of not less than $100,000 or such
Subordinated Notes having an aggregate principal amount not less than $100,000,
for our own account and for each separate account for which we are acting.

          7. We acknowledge that we are not a fiduciary of (i) an employee
benefit, individual retirement account or other plan or arrangement subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code") (each a "Plan"); or (ii) an entity whose underlying assets include "plan
assets" by reason of any Plan's investment in the entity, and are not purchasing
any of the Offered Securities on behalf of or with "plan assets" by reason of
any Plan's investment in the entity.

          8. We acknowledge that the Trust and the Company and others will rely
upon the truth and accuracy of the foregoing acknowledgments, representations,
warranties and agreements and agree that if any of the acknowledgments,
representations, warranties and agreements deemed to have been made by our
purchase of any of the Offered Securities are no longer accurate, we shall
promptly notify the Company. If we are acquiring any Offered Securities as a
fiduciary or agent for one or more investor accounts, we represent that we have
sole discretion with respect to each such investor account and that we have full
power to make the foregoing acknowledgments, representations and agreement on
behalf of each such investor account.

                                        (Name of Purchaser)


                                        By:
                                            ------------------------------------
                                        Date:
                                              ----------------------------------


                                       F-2



          Upon transfer, the Preferred Securities (having a stated liquidation
amount of $_____________) would be registered in the name of the new beneficial
owner as follows.

Name: _________________

Address: ____________________________________

Taxpayer ID Number: _____________


                                       F-3



                                                                       Exhibit G

                         OFFICER'S FINANCIAL CERTIFICATE

     The undersigned, the [Chairman/Vice Chairman/Chief Executive
Officer/President/Vice President/Chief Financial Officer/Treasurer/Assistant
Treasurer], hereby certifies pursuant to Section 8.16(b) of the Amended and
Restated Trust Agreement, dated as of November 22, 2005 (the "Trust Agreement"),
among NorthStar Realty Finance Limited Partnership, JPMorgan Chase Bank,
National Association, as property trustee, Chase Bank USA, National Association,
as Delaware trustee, and the administrative trustees named therein, that, as of
[date], [20__], the NorthStar Realty Finance Corp. (the "Company") had the
following ratios and balances:

As of [Quarterly/Annual Financial Date], 20__



                                                                                        THE COMPANY AND
                                                                                          CONSOLIDATED
                                                                      THE COMPANY AND    SUBSIDIARIES &
                                                                        CONSOLIDATED     UNCONSOLIDATED
                                                                        SUBSIDIARIES      SUBSIDIARIES
                                                                      ---------------   ---------------

Senior secured indebtedness for borrowed money ("Debt")............        $_____            $_____
Senior unsecured Debt..............................................        $_____            $_____
Subordinated Debt..................................................        $_____            $_____
Total Debt.........................................................        $_____            $_____
Ratio of (x) senior secured and unsecured Debt to (y) total Debt...         _____%            _____%


[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial
statements (including the balance sheet, income statement and statement of cash
flows, and notes thereto, together with the report of the independent
accountants thereon) of the Company and its consolidated subsidiaries for the
three years ended _______, 20___].]

[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and
consolidating financial statements (including the balance sheet and income
statement) of the Company and its consolidated subsidiaries for the fiscal
quarter ended [date], 20__.]

The financial statements fairly present in all material respects, in accordance
with U.S. generally accepted accounting principles ("GAAP"), the financial
position of the Company and its consolidated subsidiaries, and the results of
operations and changes in financial condition as of the date, and for the
[QUARTER] [ANNUAL] period ended [DATE], 20__, and such financial statements have
been prepared in accordance with GAAP consistently applied throughout the period
involved (except as otherwise noted therein).

There has been no monetary default with respect to any indebtedness owed by the
Company and/or its subsidiaries (other than those defaults cured within 30 days
of the occurrence of the same) [except as set forth below:].

[Insert any exceptions by listing, in detail, the nature of the condition or
event causing such noncompliance, the period during which such condition or
event has existed and the action(s) the Company has taken, is taking, or
proposes to take with respect to each such condition or event.]


                                      G-1



                                                                       Exhibit G

     IN WITNESS WHEREOF, the undersigned has executed this Officer's Financial
Certificate as of this _____ day of _____________, 20__.

                                        NORTHSTAR REALTY FINANCE CORP.


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                      G-2



                                                                       Exhibit H

                  OFFICER'S FINANCIAL CERTIFICATE FOR DEPOSITOR

The undersigned, the [Chairman/Vice Chairman/Chief Executive
Officer/President/Vice President/Chief Financial Officer/Treasurer/Assistant
Treasurer] of NorthStar Realty Finance Corp, the general partner of NorthStar
Realty Finance Limited Partnership, and [ ], as one of the administrative
trustees of , hereby certifies pursuant to Section 8.16(a) of the Amended and
Restated Trust Agreement, dated as of November 22, 2005 (the "Trust Agreement"),
among NorthStar Realty Finance Limited Partnership, JPMorgan Chase Bank,
National Association, as property trustee, Chase Bank USA, National Association,
as Delaware trustee, and the administrative trustees named therein, that, to his
or her knowledge, there has been no default in the performance or observance of
any of the terms, clauses and conditions of the Trust Agreement (without regard
to any period of grace or requirement of notice provided hereunder) by NorthStar
Realty Finance Limited Partnership [except at set forth below:].

                                    NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP


                                        By: NORTHSTAR REALTY FINANCE CORP.,
                                        its General Partner


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                       H-1



                         FINANCIAL CERTIFICATE FOR TRUST

The undersigned, one of the administrative trustees of NorthStar Realty Finance
Trust III, , hereby certifies pursuant to Section 8.16(a) of the Amended and
Restated Trust Agreement, dated as of November 22, 2005 (the "Trust Agreement"),
among NorthStar Realty Finance Limited Partnership, JPMorgan Chase Bank,
National Association, as property trustee, Chase Bank USA, National Association,
as Delaware trustee, and the administrative trustees named therein, that, to his
or her knowledge, there has been no default in the performance or observance of
any of the terms, clauses and conditions of the Trust Agreement (without regard
to any period of grace or requirement of notice provided hereunder) by NorthStar
Realty Finance Trust [except at set forth below:].

                                        NORTHSTAR REALTY FINANCE TRUST III


                                        By:
                                            ------------------------------------
                                            Name:
                                            Administrative Trustee


                                       H-2



                                                                      Schedule A

                             DETERMINATION OF LIBOR

     With respect to the Trust Securities, the London interbank offered rate
("LIBOR") shall be determined by the Calculation Agent in accordance with the
following provisions (in each case rounded to the nearest .000001%):

     (1) On the second LIBOR Business Day (as defined below) prior to a
Distribution Date (except with respect to the first Distribution Period, such
date shall be November 22, 2005) (each such day, a "LIBOR Determination Date"),
LIBOR for any given security shall for the following Distribution Period equal
the rate, as obtained by the Calculation Agent from Bloomberg Financial Markets
Commodities News, for three-month Eurodollar deposits that appears on Dow Jones
Telerate Page 3750 (as defined in the International Swaps and Derivatives
Association, Inc. 2000 Interest Rate and Currency Exchange Definitions), or such
other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such
LIBOR Determination Date.

     (2) If, on any LIBOR Determination Date, such rate does not appear on Dow
Jones Telerate Page 3750 or such other page as may replace such Page 3750, the
Calculation Agent shall determine the arithmetic mean of the offered quotations
of the Reference Banks (as defined below) to leading banks in the London
interbank market for three-month Eurodollar deposits in an amount determined by
the Calculation Agent by reference to requests for quotations as of
approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by
the Calculation Agent to the Reference Banks. If, on any LIBOR Determination
Date, at least two of the Reference Banks provide such quotations, LIBOR shall
equal such arithmetic mean of such quotations. If, on any LIBOR Determination
Date, only one or none of the Reference Banks provide such quotations, LIBOR
shall be deemed to be the arithmetic mean of the offered quotations that leading
banks in the City of New York selected by the Calculation Agent are quoting on
the relevant LIBOR Determination Date for three-month Eurodollar deposits in an
amount determined by the Calculation Agent by reference to the principal London
offices of leading banks in the London interbank market; provided, that if the
Calculation Agent is required but is unable to determine a rate in accordance
with at least one of the procedures provided above, LIBOR shall be LIBOR as
determined on the previous LIBOR Determination Date.

     (3) As used herein: "Reference Banks" means four major banks in the London
interbank market selected by the Calculation Agent; and "LIBOR Business Day"
means a day on which commercial banks are open for business (including dealings
in foreign exchange and foreign currency deposits) in London.