Document:

EX-10.2 FORM OF ADVISORY AGREEMENT

EXHIBIT 10.2

ADVISORY AGREEMENT

AMONG

NORTHSTAR REAL ESTATE INCOME TRUST, INC.,

NORTHSTAR REAL ESTATE INCOME TRUST OPERATING PARTNERSHIP, LP,

AND

NS REAL ESTATE INCOME TRUST ADVISOR, LLC

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE 1 - DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 - APPOINTMENT
	 	 	6	 
	 
	 	 	 	 
	ARTICLE 3 - DUTIES OF THE ADVISOR
	 	 	6	 
	 
	 	 	 	 
	3.01 Offering Services
	 	 	6	 
	3.02 Acquisition Services
	 	 	7	 
	3.03 Asset Management Services
	 	 	7	 
	3.04 Accounting and Other Administrative Services
	 	 	8	 
	3.05 Stockholder Services
	 	 	9	 
	3.06 Financing Services
	 	 	9	 
	3.07 Disposition Services
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 4 - AUTHORITY OF ADVISOR
	 	 	10	 
	 
	 	 	 	 
	4.01 Powers of the Advisor
	 	 	10	 
	4.02 Approval by the Board
	 	 	10	 
	4.03 Modification or Revocation of Authority of Advisor
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 5 - BANK ACCOUNTS
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 6 - RECORDS AND ACCESS
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 7 - LIMITATION ON ACTIVITIES
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 8 - FEES
	 	 	11	 
	 
	 	 	 	 
	8.01 Acquisition Fees
	 	 	11	 
	8.02 Asset Management Fees
	 	 	12	 
	8.03 Disposition Fees
	 	 	12	 
	8.04 Operating Partnership Interests
	 	 	12	 
	8.05 Changes to Fee Structure
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 9 - EXPENSES
	 	 	13	 
	 
	 	 	 	 
	9.01 General
	 	 	13	 
	9.02 Timing of and Additional Limitations on Reimbursements
	 	 	14	 
	 
	 	 	 	 
	ARTICLE 10 - OTHER SERVICES
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 11 - VOTING AGREEMENT
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 12 - RELATIONSHIP OF ADVISOR AND COMPANY; OTHER ACTIVITIES OF THE ADVISOR
	 	 	15	 
	 
	 	 	 	 
	12.01 Relationship
	 	 	15	 
	12.02 Time Commitment
	 	 	15	 
	12.03 Investment Opportunities and Allocation
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 13 —THE NORTHSTAR NAME
	 	 	16	 

i

 

	 	 	 	 	 
	ARTICLE 14 - TERM AND TERMINATION OF THE AGREEMENT
	 	 	17	 
	 
	 	 	 	 
	14.01 Term
	 	 	17	 
	14.02 Termination by the Parties
	 	 	17	 
	14.03 Payments on Termination and Survival of Certain Rights and Obligations
	 	 	17	 
	 
	 	 	 	 
	ARTICLE 15 - ASSIGNMENT
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 16 - INDEMNIFICATION AND LIMITATION OF LIABILITY
	 	 	18	 
	 
	 	 	 	 
	16.01 Indemnification
	 	 	18	 
	16.02 Limitation on Indemnification
	 	 	18	 
	16.03 Limitation on Payment of Expenses
	 	 	19	 
	16.04 Indemnification by Advisor
	 	 	19	 
	 
	 	 	 	 
	ARTICLE 17 - NON-SOLICITATION
	 	 	19	 
	 
	 	 	 	 
	ARTICLE 18 - MISCELLANEOUS
	 	 	20	 
	 
	 	 	 	 
	18.01 Notices
	 	 	20	 
	18.02 Modification
	 	 	20	 
	18.03 Severability
	 	 	20	 
	18.04 Construction
	 	 	20	 
	18.05 Entire Agreement
	 	 	20	 
	18.06 Waiver
	 	 	20	 
	18.07 Gender
	 	 	20	 
	18.08 Titles Not to Affect Interpretation
	 	 	21	 
	18.09 Counterparts
	 	 	21	 

ii

 

ADVISORY AGREEMENT

          THIS ADVISORY AGREEMENT (this “Agreement”), dated as of the                      day of                                         ,
2009, and effective as of the date that the Registration Statement (as defined below) is declared
effective by the Securities and Exchange Commission (the “Effective Date”), is entered into
by and among NorthStar Real Estate Income Trust, Inc., a Maryland corporation (the
“Company”), NorthStar Real Estate Income Trust Operating Partnership, LP, a Delaware
limited partnership (the “Operating Partnership”), and NS Real Estate Income Trust Advisor,
LLC, a Delaware limited liability company (the “Advisor”). Capitalized terms used herein
shall have the meanings ascribed to them in Section 1 below.

W I T N E S S E T H

     WHEREAS, the Company intends to qualify as a REIT, and to invest its funds in investments
permitted by the terms of Sections 856 through 860 of the Code;

     WHEREAS, the Company is the general partner of the Operating Partnership and intends to
conduct all of its business and make all or substantially all Investments through the Operating
Partnership;

     WHEREAS, the Company and the Operating Partnership desire to avail themselves of the
knowledge, experience, sources of information, advice, assistance and certain facilities available
to the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set
forth, on behalf of, and subject to the supervision of, the Board of the Company, all as provided
herein; and

     WHEREAS, the Advisor is willing to undertake to render such services, subject to the
supervision of the Board, on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

     As used in this Agreement, the following terms shall have the meanings specified below:

     Acquisition Expenses means any and all expenses, excluding Acquisition Fees incurred
by the Company, the Operating Partnership, the Advisor or any of their Affiliates in connection
with the selection, evaluation, acquisition, origination or development of any Investments, whether
or not acquired or originated, as applicable, including, without limitation, legal fees and
expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on
properties or other investments not acquired, accounting fees and expenses, title insurance
premiums and the costs of performing due diligence.

     Acquisition Fees means the fee payable to the Advisor pursuant to Section 8.01 plus
all other fees and commissions, excluding Acquisition Expenses, paid by any Person to any Person in
connection with making or investing in any Investments or the purchase, development or construction
of any Property by the Company. Included in the computation of such fees or commissions shall be
any real estate commission, selection fee, development fee, construction fee, nonrecurring
management fee, loan fees or points or any fee of a similar nature, however designated. Excluded
shall be development fees and construction fees paid to Persons not Affiliated with the Advisor in
connection with the actual development and construction of a Property.

1

 

     Advisor means (i) NS Real Estate Income Trust Advisor, LLC, a Delaware limited
liability company, or (ii) any successor advisor to the Company.

     Affiliate or Affiliated means, with respect to any Person, (i) any Person directly or
indirectly controlling, controlled by, or under common control with such other Person; (ii) any
Person directly or indirectly owning, controlling, or holding with the power to vote 10.0% or more
of the outstanding voting securities of such other Person; (iii) any legal entity for which such
Person acts as an executive officer, director, trustee, or general partner; (iv) any Person 10.0%
or more of whose outstanding voting securities are directly or indirectly owned, controlled, or
held, with power to vote, by such other Person; and (v) any executive officer, director, trustee,
or general partner of such other Person. An entity shall not be deemed to control or be under
common control with a program sponsored by the sponsor of the Company unless (A) the entity owns
10.0% or more of the voting equity interests of such program or (B) a majority of the Board (or
equivalent governing body) of such program is composed of Affiliates of the entity.

     Asset Management Fee means the fees payable to the Advisor pursuant to Section 8.02.

     Average Invested Assets means, for a specified period, the average of the aggregate
book value of the assets of the Company invested, directly or indirectly, in Investments before
reserves for depreciation or bad debts or other similar non-cash reserves, computed by taking the
average of such values at the end of each month during such period.

     Board means the board of directors of the Company, as of any particular time.

     Bylaws means the bylaws of the Company, as amended from time to time.

     Cause means with respect to the termination of this Agreement, fraud, criminal
conduct, willful misconduct, gross negligence or breach of fiduciary duty by the Advisor, or a
material breach of this Agreement by the Advisor.

     Charter means the articles of incorporation of the Company, as amended from time to
time.

     Code means the Internal Revenue Code of 1986, as amended from time to time, or any
successor statute thereto. Reference to any provision of the Code shall mean such provision as in
effect from time to time, as the same may be amended, and any successor provision thereto, as
interpreted by any applicable regulations as in effect from time to time.

     Company means NorthStar Real Estate Income Trust, Inc., a corporation organized under
the laws of the State of Maryland.

     Contract Sales Price means the total consideration received by the Company for the
sale of an Investment.

     Cost of Investments means the sum of (i) with respect to the acquisition or
origination of a Property, Loan or other Permitted Investment to be wholly owned, directly or
indirectly, by the Company, the amount actually paid or allocated to fund the acquisition,
origination, development, construction or improvement of the Property, Loan or other Permitted
Investment, inclusive of expenses associated with such Property, Loan or other Permitted Investment
and the amount of any debt associated with, or used to fund the investment in, such Property, Loan
or other Permitted Investment and (ii) with respect to the acquisition or origination of a
Property, Loan or other Permitted Investment through any Joint Venture, the portion of the amount
actually paid or allocated to fund the acquisition, origination, development, construction or
improvement of the Property, Loan or other Permitted Investment, inclusive of expenses associated
with such Property, Loan or other Permitted Investment and expenses of the Joint Venture, plus the
amount of any debt associated with, or used to fund the investment in, such Property, Loan or other
Permitted Investment that is attributable to the Company’s investment in such Joint Venture.

2

 

     Dealer Manager means NS Capital Markets, LLC, a Delaware limited liability company, or
such other Person or entity selected by the Board to act as dealer manager for the Offering.

     Disposition Fee means the fees payable to the Advisor pursuant to Section 8.03.

     Distribution means any distributions of money or other property by the Company to
Stockholders, including distributions that may constitute a return of capital for federal income
tax purposes.

     Excess Amount has the meaning set forth in Section 9.02.

     Expense Year has the meaning set forth in Section 9.02.

     FINRA means the Financial Industry Regulatory Authority, Inc.

     GAAP means generally accepted accounting principles as in effect in the United States
of America from time to time.

     Good Reason means either (i) any failure by the Company or the Operating Partnership
to obtain a satisfactory agreement from any successor to the Company or the Operating Partnership
to assume and agree to perform the Company’s or the Operating Partnership’s obligations under this
Agreement; or (ii) any material breach of this Agreement of any nature whatsoever by the Company or
the Operating Partnership.

     Gross Proceeds means the aggregate purchase price of all Shares sold for the account
of the Company through an Offering, without deduction for Organization and Offering Expenses, and
not including Shares sold pursuant to the Company’s distribution reimbursement plan.

     Independent Directors has the meaning set forth in the Articles of Incorporation.

     Initial Public Offering means the initial public offering of Shares registered on
Registration Statement No. 333-[                    ] on 

Form S-11.

     Investments means any investments by the Company or the Operating Partnership in
Properties, Loans and all other investments in which the Company or the Operating Partnership may
acquire an interest, either directly or indirectly, including through ownership interests in a
Joint Venture, pursuant to its Charter, Bylaws and the investment objectives and policies adopted
by the Board from time to time, other than short-term investments acquired for purposes of cash
management.

     Joint Venture means any joint venture, limited liability company, partnership or other
entity pursuant to which the Company is a co-venturer or partner with respect to the ownership of
any Investments.

     Listing means the listing of the Shares on a national securities exchange. Upon such
Listing, the Shares shall be deemed “Listed.”

     Loans means mortgage loans and other types of debt financing investments made by the
Company or the Operating Partnership, either directly or indirectly, including through ownership
interests in a Joint Venture, including, without limitation, mezzanine loans, B-notes, bridge
loans, convertible debt, wraparound mortgage loans, construction mortgage loans, loans on leasehold
interests, and participations in such loans.

     NASAA REIT Guidelines means the Statement of Policy Regarding Real Estate Investment
Trusts published by the North American Securities Administrators Association as in effect on the
Effective Date.

3

 

     Net Income means, for any period, the Company’s total revenues applicable to such
period, less the total expenses applicable to such period excluding additions to reserves for
depreciation, bad debts or other similar non-cash reserves; provided, however, Net Income for
purposes of calculating total allowable Operating Expenses (as defined herein) shall exclude the
gain from the sale of the Company’s assets.

     Offering means any offering of Shares that is registered with the SEC, excluding
Shares offered under any employee benefit plan.

     Operating Expenses means all costs and expenses paid or incurred by the Company, as
determined under GAAP, that in any way are related to the operation of the Company or its business,
including fees paid to the Advisor, but excluding (i) the expenses of raising capital such as
Organization and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing,
registration, and other fees, printing and other such expenses and taxes incurred in connection
with the issuance, distribution, transfer, registration and Listing, (ii) interest payments, (iii)
taxes, (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves, (v)
incentive fees paid in compliance with the NASAA REIT Guidelines, (vi) Acquisition Fees,
origination fees, Acquisition Expenses, real estate commissions on the resale of real property and
other fees and expenses connected with the acquisition, financing, disposition, management and
ownership of real estate interests, loans or other property (other than commissions on the sale of
assets other than real property), including the costs of foreclosure, insurance premiums, legal
services, maintenance, repair, and improvement of property. The definition of “Operating Expenses”
set forth above is intended to encompass only those expenses which are required to be treated as
“Total Operating Expenses” under the NASAA REIT Guidelines. As a result, and notwithstanding the
definition set forth above, any expense of the Company which is not part of Total Operating
Expenses under the NASAA REIT Guidelines shall not be treated as part of “Operating Expenses” for
purposes hereof.

     Operating Partnership means NorthStar Real Estate Income Trust Operating Partnership,
LP, a Delaware limited partnership formed to own and operate Investments on behalf of the Company.

     Operating Partnership Agreement means the agreement among the Company, the Advisor and
NorthStar OP Holdings, LLC.

     OP Units means the units of limited partnership interest in the Operating Partnership.

     Organization and Offering Expenses means any and all costs and expenses incurred by or
on behalf of the Company and to be paid from the Assets in connection with the formation of the
Company and the qualification and registration of an Offering, and the marketing and distribution
of Shares, including, without limitation, total underwriting and brokerage discounts and
commissions (including fees of the underwriters’ attorneys), expenses for printing, engraving and
amending registration statements or supplementing prospectuses, mailing and distributing costs,
salaries of employees while engaged in sales activity, telephone and other telecommunications
costs, all advertising and marketing expenses, charges of transfer agents, registrars, trustees,
escrow holders, depositories and experts and fees, expenses and taxes related to the filing,
registration and qualification of the sale of the Shares under federal and state laws, including
taxes and fees and accountants’ and attorneys’ fees.

     Person means an individual, corporation, partnership, estate, trust (including a trust
qualified under Section 401(a) or 501(c) (17) of the Code), a portion of a trust permanently set
aside for or to be used exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the Code, joint stock
company or other entity, or any government or any agency or political subdivision thereof, and also
includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended.

4

 

     Property means any real property or properties transferred or conveyed to the Company
or the Operating Partnership, either directly or indirectly, including through ownership interests
in a Joint Venture.

     Property Manager means an entity that has been retained to perform and carry out
property management services at one or more of the Properties, excluding persons, entities or
independent contractors retained or hired to perform facility management or other services or tasks
at a particular Property, the costs for which are passed through to and ultimately paid by the
tenant at such Property.

     Registration Statement means the registration statement filed by the Company with the
SEC on Form S-11 (Reg. No. 333-[                    ]), as amended from time to time, in connection with
the Initial Public Offering.

     REIT means a “real estate investment trust” under Sections 856 through 860 of the
Code.

     Sale means (i) any transaction or series of transactions whereby: (A) the Company or
the Operating Partnership sells, grants, transfers, conveys, or relinquishes its ownership of any
Investment or portion thereof, including the transfer of any Property that is the subject of a
ground lease, including any event with respect to any Investment that gives rise to a significant
amount of insurance proceeds or condemnation awards, and including the issuance by one of the
Company’s subsidiaries of any asset-backed securities or collateralized debt obligations as part of
a securitization transaction; (B) the Company or the Operating Partnership sells, grants,
transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of
the Company or the Operating Partnership in any Joint Venture in which it is a partner; or (C) any
Joint Venture in which the Company or the Operating Partnership is a co-venturer or partner, sells,
grants, transfers, conveys, or relinquishes its ownership of any Investment or portion thereof,
including any event with respect to any Investment that gives rise to insurance claims or
condemnation awards, and including the issuance by such Joint Venture or one of its subsidiaries of
any asset-backed securities or collateralized debt obligations as part of a securitization
transaction.

     SEC means the United States Securities and Exchange Commission.

     Securities means any Shares, any other stock, shares or other evidences of equity or
beneficial or other interests, voting trust certificates, bonds, debentures, notes or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in
general any instruments commonly known as “securities” or any certificates of interest, shares or
participations in, temporary or interim certificates for, receipts for, guarantees of, or warrants,
options or rights to subscribe to, purchase or acquire, any of the foregoing.

     Shares means shares of common stock of the Company, par value $.01 per share.

     Special OP Units means the separate series of limited partnership interests to be
issued in accordance with Section 8.04.

     Stockholders means the registered holders of the Shares.

     Termination Date means the date of termination of the Agreement determined in
accordance with Article 15 hereof.

     Termination Event means the termination or nonrenewal of this Agreement (i) in
connection with a merger, sale of assets or transaction involving the Company pursuant to which a
majority of the Board then in office are replaced or removed, (ii) by the Advisor for Good Reason
or (iii) by the Company and the Operating Partnership other than for Cause.

5

 

     2%/25% Guidelines means the requirement pursuant to the NASAA REIT Guidelines that, in
any period of four consecutive fiscal quarters, total Operating Expenses not exceed the greater of
2.0% of the Company’s Average Invested Assets during such 12-month period or 25.0% of the Company’s
Net Income over the same 12-month period.

ARTICLE 2

APPOINTMENT

     The Company and the Operating Partnership hereby appoint the Advisor to serve as their advisor
and asset manager on the terms and conditions set forth in this Agreement, and the Advisor hereby
accepts such appointment.

ARTICLE 3

DUTIES OF THE ADVISOR

     The Advisor is responsible for managing, operating, directing and supervising the operations
and administration of the Company and its assets.  The Advisor undertakes to use its commercially
reasonable efforts to present to the Company and the Operating Partnership potential investment
opportunities, to make investment decisions on behalf of the Company subject to the limitations in
the Company’s Charter, the direction and oversight of the Board and Section 4.03 hereof, and to
provide the Company with a continuing and suitable investment program consistent with the
investment objectives and policies of the Company as determined and adopted from time to time by
the Board.  Subject to the limitations set forth in this Agreement, including Article 4 hereof, and
the continuing and exclusive authority of the Board over the management of the Company, the Advisor
shall, either directly or by engaging an Affiliate or third party, perform the following duties:

     3.01 Offering Services. The Advisor shall manage and supervise:

          (i) Development of the Initial Public Offering and any subsequent Offering approved by
the Board, including the determination of the specific terms of the securities to be offered
by the Company, preparation of all offering and related documents, and obtaining all required
regulatory approvals of such documents;

          (ii) Along with the Dealer Manager, approval of the participating broker-dealers and
negotiation of the related selling agreements;

          (iii) Coordination of the due diligence process relating to participating broker-dealers
and their review of the Registration Statement and other Offering and Company documents;

          (iv) Preparation and approval of all marketing materials contemplated to be used by the
Dealer Manager or others relating to the Offering;

          (v) Along with the Dealer Manager, negotiation and coordination with the transfer agent
for the receipt, collection, processing and acceptance of subscription agreements,
commissions, and other administrative support functions;

          (vi) Creation and implementation of various technology and electronic communications
related to the Offering; and

6

 

          (vii) All other services related to the Offering, other than services that (a) are to be
performed by the Dealer Manager, (b) the Company elects to perform directly or (c) would
require the Advisor to register as a broker-dealer with the SEC, FINRA or any state.

     3.02 Acquisition Services.

          The Advisor shall:

          (i) Serve as the Company’s investment and financial advisor and obtain certain market
research and economic and statistical data in connection with the Company’s Investments and
investment objectives and policies;

          (ii) Subject to Article 4 hereof and the investment objectives and policies of the
Company: (a) locate, analyze and select potential Investments; (b) structure and negotiate the
terms and conditions of transactions pursuant to which the Investments will be made; and
(c) acquire Investments on behalf of the Company;

          (iii) Oversee the due diligence process related to prospective Investments;

          (iv) Prepare reports regarding prospective investments which include recommendations and
supporting documentation necessary for the Board to evaluate the prospective investments;

          (v) Obtain reports (which may be prepared by the Advisor or its Affiliates), where
appropriate, concerning the value of prospective Investments of the Company; and

          (vi) Negotiate and execute approved Investments and other transactions.

     3.03 Asset Management Services.

          The Advisor shall:

          (i) Investigate, select, and, on behalf of the Company, engage and conduct business with
such Persons as the Advisor deems necessary to the proper performance of its obligations
hereunder, including but not limited to consultants, accountants, lenders, technical advisors,
attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries,
custodians, agents for collection, insurers, insurance agents, developers, construction
companies, Property Managers and any and all Persons acting in any other capacity deemed by
the Advisor necessary or desirable for the performance of any of the foregoing services;

          (ii) Monitor applicable markets and obtain reports (which may be prepared by the Advisor
or its Affiliates) where appropriate, concerning the value of Investments of the Company;

          (iii) Monitor and evaluate the performance of Investments of the Company, provide daily
management services to the Company and perform and supervise the various management and
operational functions related to the Company’s Investments;

          (iv) Formulate and oversee the implementation of strategies for the administration,
promotion, management, operation, maintenance, improvement, financing and refinancing,
marketing, leasing and disposition of Investments on an overall portfolio basis;

7

 

          (v) Oversee the performance by the Property Managers of their duties, including
collection and proper deposits of rental payments and payment of Property expenses and
maintenance;

          (vi) Conduct periodic on-site property visits to some or all (as the Advisor deems
reasonably necessary) of the Properties to inspect the physical condition of the Properties
and to evaluate the performance of the Property Managers;

          (vii) Review, analyze and comment upon the operating budgets, capital budgets and leasing
plans prepared and submitted by each Property Manager and aggregate these property budgets
into the Company’s overall budget;

          (viii) Coordinate and manage relationships between the Company and any Joint Venture
partners; and

          (ix) Provide financial and operational planning services and investment portfolio
management functions.

     3.04 Accounting and Other Administrative Services.

          The Advisor shall:

          (i) Manage and perform the various administrative functions necessary for the management
of the day-to-day operations of the Company;

          (ii) From time-to-time, or at any time reasonably requested by the Board, make reports to
the Board on the Advisor’s performance of services to the Company under this Agreement;

          (iii) Coordinate with the Company’s independent accountants and auditors to prepare and
deliver to the Company’s audit committee an annual report covering the Advisor’s compliance
with certain material aspects of this Agreement;

          (iv) Provide or arrange for administrative services and items, legal and other services,
office space, office furnishings, personnel and other overhead items necessary and incidental
to the Company’s business and operations;

          (v) Provide financial and operational planning services and portfolio management
functions;

          (vi) Maintain accounting data and any other information concerning the activities of the
Company as shall be needed to prepare and file all periodic financial reports and returns
required to be filed with the SEC and any other regulatory agency, including annual financial
statements;

          (vii) Maintain all appropriate books and records of the Company;

          (viii) Oversee tax and compliance services and risk management services and coordinate
with appropriate third parties, including independent accountants and other consultants, on
related tax matters;

          (ix) Supervise the performance of such ministerial and administrative functions as may be
necessary in connection with the daily operations of the Company;

8

 

          (x) Provide the Company with all necessary cash management services;

          (xi) Manage and coordinate with the transfer agent the distribution process and payments
to Stockholders;

          (xii) Consult with the officers of the Company and the Board and assist in evaluating and
obtaining adequate insurance coverage based upon risk management determinations;

          (xiii) Provide the officers of the Company and the Board with timely updates related to
the overall regulatory environment affecting the Company, as well as managing compliance with
such matters;

          (xiv) Consult with the officers of the Company and the Board relating to the corporate
governance structure and appropriate policies and procedures related thereto; and

          (xv) Oversee all reporting, record keeping, internal controls and similar matters in a
manner to allow the Company to comply with applicable law including the Sarbanes-Oxley Act of
2002.

     3.05 Stockholder Services.

          The Advisor shall:

          (i) Manage communications with Stockholders, including answering phone calls, preparing
and sending written and electronic reports and other communications; and

          (ii) Establish technology infrastructure to assist in providing Stockholder support and
service.

     3.06 Financing Services.

          The Advisor shall:

          (i) Identify and evaluate potential financing and refinancing sources, engaging a
third-party broker if necessary;

          (ii) Negotiate terms, arrange and execute financing agreements;

          (iii) Manage relationships between the Company and its lenders; and

          (iv) Monitor and oversee the service of the Company’s debt facilities and other
financings.

     3.07 Disposition Services.

          The Advisor shall:

          (i) Consult with the Board and provide assistance with the evaluation and approval of
potential asset dispositions, sales or other liquidity events; and

9

 

          (ii) Structure and negotiate the terms and conditions of transactions pursuant to which
Investments may be sold.

ARTICLE 4

AUTHORITY OF ADVISOR

     4.01 Powers of the Advisor.  Subject to the express limitations set forth in this Agreement
and the continuing and exclusive authority of the Board over the management of the Company, the
power to direct the management, operation and policies of the Company, including making, financing
and disposing of Investments, and the performance of those services described in Article 3 hereof,
shall be vested in the Advisor, which shall have the power by itself and shall be authorized and
empowered on behalf and in the name of the Company to carry out any and all of the objectives and
purposes of the Company and to perform all acts and enter into and perform all contracts and other
undertakings that it may in its sole discretion deem necessary, advisable or incidental thereto to
perform its obligations under this Agreement. The Advisor shall have the power to delegate all or
any part of its rights and powers to manage and control the business and affairs of the Company to
such officers, employees, Affiliates, agents and representatives of the Advisor or the Company as
it may deem appropriate. Any authority delegated by the Advisor to any other Person shall be
subject to the limitations on the rights and powers of the Advisor specifically set forth in this
Agreement or the Charter.

     4.02 Approval by the Board.  Notwithstanding the foregoing, the Advisor may not take any
action on behalf of the Company without the prior approval of the Board or duly authorized
committees thereof if the Charter or Maryland General Corporation Law require the prior approval of
the Board.  If the Board or a committee of the Board must approve a proposed investment, financing
or disposition or chooses to do so, the Advisor will deliver to the Board or committee, as
applicable, all documents required by it to evaluate such investment, financing or disposition.

     4.03 Modification or Revocation of Authority of Advisor.  The Board may, at any time upon the
giving of notice to the Advisor, modify or revoke the authority or approvals set forth in Article 3
and this Article 4 hereof; provided, however, that such modification or revocation shall be
effective upon receipt by the Advisor and shall not be applicable to investment transactions to
which the Advisor has committed the Company prior to the date of receipt by the Advisor of such
notification.

ARTICLE 5

BANK ACCOUNTS

     The Advisor may establish and maintain one or more bank accounts in its own name for the
account of the Company or the Operating Partnership or in the name of the Company and the Operating
Partnership and may collect and deposit into any such account or accounts, and disburse from any
such account or accounts, any money on behalf of the Company or the Operating Partnership, under
such terms and conditions as the Board may approve, provided that no funds shall be commingled with
the funds of the Advisor.  The Advisor shall from time to time render appropriate accountings of
such collections and payments to the Board and the independent auditors of the Company.

10

 

ARTICLE 6

RECORDS AND ACCESS

     The Advisor, in the conduct of its responsibilities to the Company, shall maintain adequate
and separate books and records for the Company’s operations in accordance with GAAP, which shall be
supported by sufficient documentation to ascertain that such books and records are properly and
accurately recorded. Such books and records shall be the property of the Company and shall be
available for inspection by the Board and by counsel, auditors and other authorized agents of the
Company, at any time or from time to time during normal business hours. The Advisor shall at all
reasonable times have access to the books and records of the Company and the Operating Partnership.

ARTICLE 7

LIMITATION ON ACTIVITIES

     Notwithstanding any provision in this Agreement to the contrary, the Advisor shall not take
any action that, in its sole judgment made in good faith, would (i) adversely affect the ability of
the Company to qualify or continue to qualify as a REIT under the Code unless the Board has
determined that the Company will not seek or maintain REIT qualification for the Company,
(ii) subject the Company to regulation under the Investment Company Act of 1940, as amended,
(iii) violate any law, rule, regulation or statement of policy of any governmental body or agency
having jurisdiction over the Company, its Shares or its other securities, (iv) require the Advisor
to register as a broker-dealer with the SEC or any state, or (v) violate the Charter or Bylaws. In
the event an action that would violate (i) through (v) of the preceding sentence but such action
has been ordered by the Board, the Advisor shall notify the Board of the Advisor’s judgment of the
potential impact of such action and shall refrain from taking such action until it receives further
clarification or instructions from the Board. In such event, the Advisor shall have no liability
for acting in accordance with the specific instructions of the Board so given.

ARTICLE 8

FEES

     8.01 Acquisition Fees.  As compensation for the investigation, selection, sourcing and
acquisition or origination (by purchase, investment or exchange) of Investments, the Company shall
pay an Acquisition Fee to the Advisor for each such investment (whether an acquisition or
origination).  With respect to the acquisition or origination of an Investment to be wholly owned,
directly or indirectly, by the Company, the Acquisition Fee payable to the Advisor shall equal 1.0%
of the sum of the amount actually paid or allocated to fund the acquisition, origination,
development, construction or improvement of the Investment, inclusive of the Acquisition Expenses
associated with such Investment and the amount of any debt associated with, or used to fund the
investment in, such Investment.  With respect to the acquisition or origination of an Investment
through any Joint Venture in which the Company or the Partnership is, directly or indirectly, a
partner, the Acquisition Fee payable to the Advisor shall equal 1.0% of the portion of the amount
actually paid or allocated to fund the acquisition, origination, development, construction or
improvement of the Investment, inclusive of the Acquisition Expenses associated with such
Investment, plus the amount of any debt associated with, or used to fund the investment in, such
Investment that is attributable to the Company’s investment in such Joint Venture.  Notwithstanding
anything herein to the contrary, the payment of Acquisition Fees by the Company shall be subject to
the limitations on acquisition fees contained in (and defined in) the Company’s Charter. The
Advisor shall submit an invoice to the Company following the closing or closings of each
acquisition or origination, accompanied by a computation of the Acquisition Fee. Generally, the
Acquisition Fee payable to the Advisor shall be paid at the closing of the transaction upon receipt
of the invoice by the Company; provided, however, that

11

 

such Acquisition Fee shall be paid to an Affiliate of the Advisor that is registered as a
FINRA member broker-dealer if applicable laws or regulations prohibit such payment to be made to a
Person that is not a FINRA member broker-dealer.  However, payment of the Acquisition Fee may be
deferred, in whole or in part, as to any transaction in the sole discretion of the Advisor.  Any
such deferred Acquisition Fees shall be paid to the Advisor without interest at such subsequent
date as the Advisor shall request.

     8.02 Asset Management Fees.  The Company shall pay the Advisor as compensation for the
services described in Section 3.03 hereof a monthly fee (the “Asset Management Fee”) in an
amount equal to one-twelfth of 1.25% of the sum of the Cost of Investments, less any principal
repaid by borrowers on Loans or other debt securities (or the Company’s proportionate share thereof
in the case of an Investment made through a Joint Venture), as of the end of the preceding
month.  The Advisor shall submit a monthly invoice to the Company, accompanied by a computation of
the Asset Management Fee for the applicable period. Generally, the Asset Management Fee payable to
the Advisor shall be paid on the last day of such month, or the first business day following the
last day of such month.  However, payment of the Asset Management Fee may be deferred, in whole or
in part, as to any transaction in the sole discretion of the Advisor.  Any such deferred Asset
Management Fees shall be paid to the Advisor without interest at such subsequent date as the
Advisor shall request.

     8.03 Disposition Fees.  If the Advisor or any of its Affiliates provide a substantial amount
of services (as determined by the Independent Directors) in connection with a Sale (except for the
Sale of any Securities that are traded on a national securities exchange), the Advisor or such
Affiliate shall receive a Disposition Fee of 1.0% of the Contract Sales Price of each Loan,
Security or Property sold. The Advisor shall
also receive a Disposition Fee upon the maturity, prepayment, workout, modification or extension of
a Loan or other debt-related investment if there is a corresponding fee paid by the borrower to the
Company, in which event the Advisor shall receive the lesser of
(i) 1.0% of the principal amount of the loan or debt-related
investment prior to such transaction or (ii) the
amount of the fee paid by the borrower to the Company in connection with such transaction. The
payment of any Disposition Fees by the Company shall be subject to the limitations contained in the
Company’s Charter.   The Advisor shall submit an invoice to the Company following the closing or
closings of each disposition, accompanied by a computation of the Disposition Fee. Generally, the
Disposition Fee payable to the Advisor shall be paid at the closing of the transaction upon receipt
of the invoice by the Company; provided, however, that such Disposition Fee shall be paid to an
Affiliate of the Advisor that is registered as a FINRA member broker-dealer if applicable laws or
regulations prohibit such payment to be made to a Person that is not a FINRA member
broker-dealer.   However, payment of the Disposition Fee may be deferred, in whole or in part, as
to any transaction in the sole discretion of the Advisor.  Any such deferred Disposition Fees shall
be paid to the Advisor without interest at such subsequent date as the Advisor shall request.

     8.04 Operating Partnership Interests. The Advisor has made a capital contribution of $1,000
to the Operating Partnership in exchange for OP Units. In addition, an Affiliate of the Advisor
has made a capital contribution of $1,000 to the Operating Partnership in exchange for Special OP
Units. The Special OP Units shall be entitled to the distributions provided for, and shall be
subject to redemption by the Operating Partnership, in accordance with the terms of the Operating
Partnership Agreement.

     8.05 Changes to Fee Structure.  In the event of Listing, the Company and the Advisor shall
negotiate in good faith to establish a fee structure appropriate for a perpetual-life entity.

12

 

ARTICLE 9

EXPENSES

     9.01 General.  In addition to the compensation paid to the Advisor pursuant to Article 8
hereof, the Company shall pay directly or reimburse the Advisor for all of the expenses paid or
incurred by the Advisor or its Affiliates on behalf of the Company or in connection with the
services provided to the Company pursuant to this Agreement, including, but not limited to:

          (i)  All Organization and Offering Expenses; provided, however, that the Company shall
not reimburse the Advisor to the extent such reimbursement would cause the total amount spent
by the Company on Organization and Offering Expenses to exceed 15.0% of the Gross Proceeds
raised as of the date of the reimbursement and provided further that within 60 days after the
end of the month in which an Offering terminates, the Advisor shall reimburse the Company to
the extent the Company incurred Organization and Offering Expenses exceeding 15.0% of the
Gross Proceeds raised in the completed Offering; the Company shall not reimburse the Advisor
for any Organization and Offering Expenses that the Independent Directors determine are not
fair and commercially reasonable to the Company;

          (ii)  Acquisition Fees and Acquisition Expenses incurred in connection with the selection
and acquisition of Investments, including such expenses incurred related to assets pursued or
considered but not ultimately acquired by the Company, provided that, notwithstanding anything
herein to the contrary, the payment of Acquisition Fees and Acquisition Expenses by the
Company shall be subject to the limitations contained in the Company’s Charter;

          (iii)  The actual out-of-pocket cost of goods and services used by the Company and
obtained from entities not Affiliated with the Advisor;

          (iv)  Interest and other costs for borrowed money or securitization transactions,
including discounts, points and other similar fees;

          (v)  Taxes and assessments on income or Properties, taxes as an expense of doing business
and any other taxes otherwise imposed on the Company and its business, assets or income;

          (vi)  Out-of-pocket costs associated with insurance required in connection with the
business of the Company or by its officers and Board;

          (vii)  Expenses of managing, improving, developing, operating and selling Investments
owned, directly or indirectly, by the Company, as well as expenses of other transactions
relating to such Investments, including but not limited to prepayments, maturities, workouts
and other settlements of Loans and other Investments;

          (viii)  All out-of-pocket expenses in connection with payments to the Board and meetings
of the Board and Stockholders;

          (ix)  Personnel and related employment costs incurred by the Advisor or its Affiliates in
performing the services described in Article 3 hereof, including but not limited to reasonable
salaries and wages, benefits and overhead of all employees directly involved in the
performance of such services, provided that no reimbursement shall be made for costs of such
employees of the Advisor or its Affiliates to the extent that such employees (A) perform
services for which the Advisor receives Acquisition Fees or Disposition Fees or (B) serve as
executive officers of the Company;

13

 

          (x)  Out-of-pocket expenses of providing services for and maintaining communications with
Stockholders, including the cost of preparation, printing, and mailing annual reports and
other Stockholder reports, proxy statements and other reports required by governmental
entities;

          (xi)  Audit, accounting and legal fees, and other fees for professional services relating
to the operations of the Company and all such fees incurred at the request, or on behalf of,
the Board or any other committee of the Board;

          (xii)  Out-of-pocket costs for the Company to comply with all applicable laws,
regulations and ordinances;

          (xiii)  Expenses connected with payments of Distributions made or caused to be made by
the Company to the Stockholders;

          (xiv)  Expenses of organizing, redomesticating, merging, liquidating or dissolving the
Company or of amending the Charter or the Bylaws; and

          (xv)  All other out-of-pocket costs incurred by the Advisor in performing its duties
hereunder.

     9.02 Timing of and Additional Limitations on Reimbursements.

          (i)  Expenses incurred by the Advisor on behalf of the Company and reimbursable pursuant
to this Article 9 shall be reimbursed no less than monthly to the Advisor. The Advisor shall
prepare a statement documenting the expenses of the Company during each quarter and shall
deliver such statement to the Company within 45 days after the end of each quarter.

          (ii)  Notwithstanding anything else in this Article 9 to the contrary, the expenses
enumerated in this Article 9 shall not become reimbursable to the Advisor unless and until the
Company has raised $2 million in the Initial Public Offering.

          (iii)  Commencing upon the fourth fiscal quarter after the commencement of the Initial
Public Offering, the following limitation on Operating Expenses shall apply:   The Company
shall not reimburse the Advisor at the end of any fiscal quarter for Operating Expenses that
in the four consecutive fiscal quarters then ended (the “Expense Year”) exceed (the
“Excess Amount”) the greater of 2% of Average Invested Assets or 25% of Net Income
(the “2%/25% Guidelines”) for such year unless the Board determines that such excess
was justified, based on unusual and nonrecurring factors that the Board deems sufficient. If
the Board does not approve such excess as being so justified, any Excess Amount paid to the
Advisor during a fiscal quarter shall be repaid to the Company. If the Board determines such
excess was justified, then, within 60 days after the end of any fiscal quarter of the Company
for which total reimbursed Operating Expenses for the Expense Year exceed the 2%/25%
Guidelines, the Advisor, at the direction of the Board, shall cause such fact to be disclosed
to the Stockholders in writing (or the Company shall disclose such fact to the Stockholders in
the next quarterly report of the Company or by filing a Current Report on Form 8-K with the
SEC within 60 days of such quarter end), together with an explanation of the factors the Board
considered in determining that such excess expenses were justified. The Company will ensure
that such determination will be reflected in the minutes of the meetings of the Board. All
figures used in the foregoing computation shall be determined in accordance with GAAP applied
on a consistent basis.

14

 

ARTICLE 10

OTHER SERVICES

          Should (i) the Operating Partnership request that the Advisor or any manager, officer or
employee thereof render services for the Company other than as set forth in this Agreement or
(ii) there are changes to the regulatory environment in which the Advisor or Company operates that
would increase significantly the level of services performed such that the costs and expenses borne
by the Advisor for which the Advisor is not entitled to separate reimbursement for personnel and
related employment direct costs and overhead under Article 9 of this Agreement would increase
significantly, such services shall be separately compensated at such rates and in such amounts as
are agreed by the Advisor and the Independent Directors, subject to the limitations contained in
the Articles of Incorporation, and shall not be deemed to be services pursuant to the terms of this
Agreement.

ARTICLE 11

VOTING AGREEMENT

     NS Real Estate Income Trust Advisor, LLC agrees that, with respect to any Shares now or
hereinafter owned by it, it will not vote or consent on matters submitted to the Stockholders of
the Company regarding (i) the removal of NS Real Estate Income Trust Advisor, LLC or any of its
Affiliates as the Advisor or (ii) any transaction between the Company and NS Real Estate Income
Trust Advisor, LLC or any of its Affiliates.  This voting restriction shall survive until such time
that NS Real Estate Income Trust Advisor, LLC or any of its Affiliates is no longer serving as the
Advisor.

ARTICLE 12

RELATIONSHIP OF ADVISOR AND COMPANY;

OTHER ACTIVITIES OF THE ADVISOR

     12.01 Relationship.  The Company and the Advisor are not partners or joint venturers with each
other, and nothing in this Agreement shall be construed to make them such partners or joint
venturers. Nothing herein contained shall prevent the Advisor from engaging in other activities,
including, without limitation, the rendering of advice to other Persons (including other REITs) and
the management of other programs advised, sponsored or organized by the Advisor or its Affiliates.
Nor shall this Agreement limit or restrict the right of any manager, director, officer, employee or
equityholder of the Advisor or its Affiliates to engage in any other business or to render services
of any kind to any other Person. The Advisor may, with respect to any investment in which the
Company is a participant, also render advice and service to each and every other participant
therein. The Advisor shall promptly disclose to the Board the existence of any condition or
circumstance, existing or anticipated, of which it has knowledge, that creates or could create a
conflict of interest between the Advisor’s obligations to the Company and its obligations to or its
interest in any other Person.

     12.02 Time Commitment.  The Advisor shall, and shall cause its Affiliates and their respective
employees, officers and agents to, devote to the Company such time as shall be reasonably necessary
to conduct the business and affairs of the Company in an appropriate manner consistent with the
terms of this Agreement. The Company acknowledges that the Advisor and its Affiliates and their
respective employees, officers and agents may also engage in activities unrelated to the Company
and may provide services to Persons other than the Company or any of its Affiliates.

     12.03 Investment Opportunities and Allocation.  The Advisor shall be required to use
commercially reasonable efforts to present a continuing and suitable investment program to the
Company

15

 

that is consistent with the investment policies and objectives of the Company, but neither the
Advisor nor any Affiliate of the Advisor shall be obligated generally to present any particular
Investment opportunity to the Company even if the opportunity is of character that, if presented to
the Company, could be taken by the Company. The Company shall not make any Investment unless the
Advisor has recommended the Investment to the Company. The Advisor shall be required to notify the
Board at least annually of investments that have been purchased by other entities managed by the
Advisor or its Affiliates for determination by the Board that the Advisor is fairly presenting
investment opportunities to the Company. In the event an investment opportunity is located, the
allocation procedure set forth under the caption “Conflicts of Interest – Certain Conflict
Resolution Measures – Allocation of Investment Opportunities” in the Registration Statement shall
govern the allocation of the opportunity among the Company and other entities managed by the
Advisor or its Affiliates.

ARTICLE 13

THE NORTHSTAR NAME

     The Advisor and its Affiliates have a proprietary interest in the name “NorthStar.”  The
Advisor hereby grants to the Company a non-transferable, non-assignable, non-exclusive royalty-free
right and license to use the name “NorthStar” during the term of this Agreement. Accordingly, and
in recognition of this right, if at any time the Company ceases to retain the Advisor or one of its
Affiliates to perform advisory services for the Company, the Company will, promptly after receipt
of written request from the Advisor, cease to conduct business under or use the name “NorthStar” or
any derivative thereof and the Company shall change its name and the names of any of its
subsidiaries to a name that does not contain the name “NorthStar” or any other word or words that
might, in the reasonable discretion of the Advisor, be susceptible of indication of some form of
relationship between the Company and the Advisor or any its Affiliates.  At such time, the Company
will also make any changes to any trademarks, servicemarks or other marks necessary to remove any
references to the word “NorthStar.” Consistent with the foregoing, it is specifically recognized
that the Advisor or one or more of its Affiliates has in the past and may in the future organize,
sponsor or otherwise permit to exist other investment vehicles (including vehicles for investment
in real estate loans, real estate-related debt securities and other real estate assets) and
financial and service organizations having “NorthStar” as a part of their name, all without the
need for any consent (and without the right to object thereto) by the Company.

16

 

ARTICLE 14

TERM AND TERMINATION OF THE AGREEMENT

     14.01 Term.  This Agreement shall have an initial term of one year from the Effective Date and
may be renewed for an unlimited number of successive one-year terms upon mutual consent of the
parties. The Company (acting through the Independent Directors) will evaluate the performance of
the Advisor annually before renewing this Agreement, and each such renewal shall be for a term of
no more than one year.  Any such renewal must be approved by the Independent Directors.

     14.02 Termination by the Parties.  This Agreement may be terminated:

          (i) immediately by the Company or the Operating Partnership for Cause or upon the
bankruptcy of the Advisor;

          (ii) upon 60 days written notice without Cause and without penalty by a majority of the
Independent Directors of the Company; or

          (iii) upon 60 days written notice with Good Reason by the Advisor.

          The provisions of Article 13, Section 14.03 and Articles 16 through 18 of this Agreement shall
survive termination of this Agreement.

     14.03 Payments on Termination and Survival of Certain Rights and Obligations.   Payments to
the Advisor pursuant to this Section 15.03 shall be subject to the 2%/25% Guidelines to the extent
applicable.

          (i)  After the Termination Date, the Advisor shall not be entitled to compensation for
further services hereunder except it shall be entitled to receive from the Company or the
Operating Partnership within 30 days after the effective date of such termination all unpaid
reimbursements of expenses and all earned but unpaid fees payable to the Advisor prior to
termination of this Agreement, subject to the 2%/25% Guidelines to the extent applicable.

          (ii)  The Advisor shall promptly upon termination:

     (a)  pay over to the Company and the Operating Partnership all money collected
and held for the account of the Company and the Operating Partnership pursuant to this
Agreement, if any, after deducting any accrued compensation and reimbursement for its
expenses to which it is then entitled;

     (b)  deliver to the Board a full accounting, including a statement showing all
payments collected by it and a statement of all money held by it, covering the period
following the date of the last accounting furnished to the Board;

     (c)  deliver to the Board all assets and documents of the Company then in the
custody of the Advisor; and

     (d)  cooperate with the Company to provide an orderly transition of advisory
functions.

17

 

ARTICLE 15

ASSIGNMENT

     This Agreement may be assigned by the Advisor to an Affiliate with the approval of a majority
of the Board (including a majority of the Independent Directors). The Advisor may assign any rights
to receive fees or other payments under this Agreement without obtaining the approval of the Board.
This Agreement shall not be assigned by the Company or the Operating Partnership without the
consent of the Advisor, except in the case of an assignment by the Company or the Operating
Partnership to a corporation or other organization that is a successor to all of the assets, rights
and obligations of the Company or the Operating Partnership, in which case such successor
organization shall be bound hereunder and by the terms of said assignment in the same manner as the
Company and the Operating Partnership are bound by this Agreement. Nothing herein shall be deemed
to prohibit or otherwise restrict any transfers or additional issuances of equity interests in the
Advisor nor shall any such transfer or issuance be deemed an assignment for purposes of this
Article 15.

ARTICLE 16

INDEMNIFICATION AND LIMITATION OF LIABILITY

     16.01 Indemnification.  Except as prohibited by the restrictions provided in this
Section 16.01, Section 16.02 and Section 16.03, the Company and the Operating Partnership shall
indemnify, defend and hold harmless the Advisor and its Affiliates, including their respective
officers, directors, equity holders, partners and employees, from all liability, claims, damages or
losses arising in the performance of their duties hereunder, and related expenses, including
reasonable attorneys’ fees, to the extent such liability, claims, damages or losses and related
expenses are not fully reimbursed by insurance. Any indemnification of the Advisor may be made only
out of the net assets of the Company and not from Stockholders.

     Notwithstanding the foregoing, the Company shall not indemnify the Advisors or its Affiliates
for any loss, liability or expense arising from or out of an alleged violation of federal or state
securities laws by such party unless one or more of the following conditions are met: (i) there has
been a successful adjudication on the merits of each count involving alleged material securities
law violations as to the particular indemnitee; (ii) such claims have been dismissed with prejudice
on the merits by a court of competent jurisdiction as to the particular indemnitee; or (iii) a
court of competent jurisdiction approves a settlement of the claims against a particular indemnitee
and finds that indemnification of the settlement and the related costs should be made, and the
court considering the request for indemnification has been advised of the position of the SEC and
of the published position of any state securities regulatory authority in which securities of the
Company were offered or sold as to indemnification for violations of securities laws.

     16.02 Limitation on Indemnification.  Notwithstanding the foregoing, the Company and Operating
Partnership shall not provide for indemnification of the Advisor or its Affiliates for any
liability or loss suffered by any of them, nor shall any of them be held harmless for any loss or
liability suffered by the Company, unless all of the following conditions are met:

          (i) The Advisor or its Affiliates have determined, in good faith, that the course of
conduct that caused the loss or liability was in the best interests of the Company and the
Operating Partnership.

          (ii) The Advisor or its Affiliates were acting on behalf of or performing services for
the Company or the Operating Partnership.

18

 

          (iii) Such liability or loss was not the result of negligence or misconduct by the
Advisor or its Affiliates.

          (iv) Such indemnification or agreement to hold harmless is recoverable only out of the
Company’s net assets and not from the Stockholders.

     16.03 Limitation on Payment of Expenses.  The Company shall pay or reimburse reasonable legal
expenses and other costs incurred by the Advisors or its Affiliates in advance of the final
disposition of a proceeding only if (in addition to the procedures required by the Maryland General
Corporation Law, as amended from time to time) all of the following are satisfied: (a) the
proceeding relates to acts or omissions with respect to the performance of duties or services on
behalf of the Company or the Operating Partnership, (b) the legal proceeding was initiated by a
third party who is not a Stockholder or, if by a Stockholder acting in his or her capacity as such,
a court of competent jurisdiction approves such advancement and (c)  the Advisor or its Affiliates
undertake to repay the amount paid or reimbursed by the Company Operating Partnership, together
with the applicable legal rate of interest thereon, if it is ultimately determined that the
particular indemnitee is not entitled to indemnification.

          16.04 Indemnification by Advisor. The Advisor shall indemnify and hold harmless the Company
and the Operating Partnership from contract or other liability, claims, damages, taxes or losses
and related expenses including attorneys’ fees, to the extent that such liability, claims, damages,
taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by
reason of the Advisor’s bad faith, fraud, misfeasance, intentional misconduct, negligence or
reckless disregard of its duties; provided, however, that the Advisor shall not be held responsible
for any action of the Board in following or declining to follow any advice or recommendation given
by the Advisor.

ARTICLE 17

NON-SOLICITATION

     During the period commencing on the Effective Date and ending one year following the
Termination Date, the Company shall not, without the Advisor’s prior written consent, directly or
indirectly, (i) solicit or encourage any person to leave the employment or other service of the
Advisor or its Affiliates, or (ii) hire, on behalf of the Company or any other person or entity,
any person who has left the employment within the one year period following the termination of that
person’s employment with the Advisor or its Affiliates. During the period commencing on the date
hereof through and ending one year following the Termination Date, the Company will not, whether
for its own account or for the account of any other Person, intentionally interfere with the
relationship of the Advisor or its Affiliates with, or endeavor to entice away from the Advisor or
its Affiliates, any person who during the term of the Agreement is, or during the preceding
one-year period, was a tenant, co-investor, co-developer, joint venturer or other customer of the
Advisor or its Affiliates.

19

 

ARTICLE 18

MISCELLANEOUS

     18.01 Notices.  Any notice, report or other communication required or permitted to be given
hereunder shall be in writing unless some other method of giving such notice, report or other
communication is required by the Charter, the Bylaws or is accepted by the party to whom it is
given, and shall be given by being delivered by hand or by overnight mail or other overnight
delivery service to the addresses set forth herein:

	 	 	 
	To the Board, the Company or the
Operating Partnership:

	 	NorthStar Real Estate Income Trust,
Inc. 

399 Park Avenue 

18th Floor 

New York, New York 10022
	 
	 	 
	To the Advisor:

	 	NS Real Estate Income Trust Advisor, LLC

399 Park Avenue

18th Floor

New York, New York 10022

     Either party may at any time give notice in writing to the other party of a change in its
address for the purposes of this Section 18.01.

     18.02 Modification.  This Agreement shall not be changed, modified, terminated or discharged,
in whole or in part, except by an instrument in writing signed by both parties hereto, or their
respective successors or permitted assigns.

     18.03 Severability.  The provisions of this Agreement are independent of and severable from
each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of
the fact that for any reason any other or others of them may be invalid or unenforceable in whole
or in part.

     18.04 Construction.  The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York.

     18.05 Entire Agreement.  This Agreement contains the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof. The express terms
hereof control and supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof. This Agreement may not be modified or amended other than by an agreement
in writing.

     18.06 Waiver.  Neither the failure nor any delay on the part of a party to exercise any right,
remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any
right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such
right, remedy, power or privilege with respect to any other occurrence. No waiver shall be
effective unless it is in writing and is signed by the party asserted to have granted such waiver.

     18.07 Gender.  Words used herein regardless of the number and gender specifically used, shall
be deemed and construed to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context requires.

20

 

     18.08 Titles Not to Affect Interpretation.  The titles of Articles and Sections contained in
this Agreement are for convenience only, and they neither form a part of this Agreement nor are
they to be used in the construction or interpretation hereof.

     18.09 Counterparts.  This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original as against any party whose signature appears thereon, and
all of which shall together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.

[The remainder of this page is intentionally left blank.

Signature page follows.]

21

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.
 

	 	 	 	 	 	 	 
	 	 	NorthStar Real Estate Income Trust, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

	 	 	 	 	 	 	 	 	 
	 	 	NorthStar Real Estate Income Trust Operating Partnership, LP	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	NorthStar Real Estate Income Trust, Inc., 

its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 	 

	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	NS Real Estate Income Trust Advisor, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	NorthStar Real Estate Income Trust Operating

Partnership, LP, its sole member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:
	 	 

	 	 
	 

	 	 	 	Title:EX-10.4 2009 LONG-TERM INCENTIVE PLAN

EXHIBIT 10.4

 

NORTHSTAR REAL ESTATE INCOME TRUST, INC.

LONG TERM INCENTIVE PLAN

 

 

 

NORTHSTAR REAL ESTATE INCOME TRUST, INC.

LONG TERM INCENTIVE PLAN

	 	 	 	 	 
	ARTICLE 1 PURPOSE
	 	 	1	 
	 
	 	 	 	 
	1.1 General
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	2.1 Definitions
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 3 EFFECTIVE TERM OF PLAN
	 	 	6	 
	 
	 	 	 	 
	3.1 Effective Date
	 	 	6	 
	3.2
Termination of Plan
	 	 	6	 
	 
	 	 	 	 
	ARTICLE 4 ADMINISTRATION
	 	 	6	 
	 
	 	 	 	 
	4.1 Committee
	 	 	6	 
	4.2 Actions and Interpretations by the Committee
	 	 	7	 
	4.3 Authority of Committee
	 	 	7	 
	4.4 Award Certificates
	 	 	7	 
	 
	 	 	 	 
	ARTICLE 5 SHARES SUBJECT TO THE PLAN
	 	 	8	 
	 
	 	 	 	 
	5.1 Number of Shares
	 	 	8	 
	5.2 Share Counting
	 	 	8	 
	5.3 Stock Distributed
	 	 	8	 
	 
	 	 	 	 
	ARTICLE 6 ELIGIBILITY
	 	 	9	 
	 
	 	 	 	 
	6.1 General
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 7 STOCK OPTIONS
	 	 	9	 
	 
	 	 	 	 
	7.1 General
	 	 	9	 
	7.2 Incentive Stock Options
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 8 STOCK APPRECIATION RIGHTS
	 	 	10	 
	 
	 	 	 	 
	8.1 Grant of Stock Appreciation Rights
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 9 RESTRICTED STOCK, RESTRICTED STOCK UNITS AND DEFERRED STOCK UNITS
	 	 	10	 
	 
	 	 	 	 
	9.1 Grant of Restricted Stock, Restricted Stock
Units and Deferred Stock Units
	 	 	10	 
	9.2 Issuance and Restrictions
	 	 	10	 
	9.3 Forfeiture
	 	 	11	 
	9.4 Delivery of Restricted Stock
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 10 PERFORMANCE AWARDS
	 	 	11	 
	 
	 	 	 	 
	10.1 Grant of Performance Awards
	 	 	11	 
	10.2 Performance Goals
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 11 DIVIDEND EQUIVALENTS
	 	 	12	 

- i -

 

	 	 	 	 	 
	11.1 Grant of Dividend Equivalents
	 	 	12	 
	 
	 	 	 	 
	ARTICLE
12 STOCK OR OTHER AWARDS
	 	 	12	 
	 
	 	 	 	 
	12.1 Grant of Stock or Other Awards
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 13 PROVISIONS APPLICABLE TO AWARDS
	 	 	12	 
	 
	 	 	 	 
	13.1 Term of Awards
	 	 	12	 
	13.2 Form of
Payment for Awards
	 	 	12	 
	13.3 Limits on Transfer
	 	 	13	 
	13.4 Beneficiaries
	 	 	13	 
	13.5 Stock Trading Restrictions
	 	 	13	 
	13.6 Acceleration upon Death or Disability
	 	 	13	 
	13.7 Acceleration upon a Change in Control
	 	 	14	 
	13.8 Acceleration for Any Reason
	 	 	14	 
	13.9 Forfeiture Events
	 	 	14	 
	13.10 Substitute Awards
	 	 	14	 
	 
	 	 	 	 
	ARTICLE 14 CHANGES IN CAPITAL STRUCTURE
	 	 	15	 
	 
	 	 	 	 
	14.1 Mandatory Adjustments
	 	 	15	 
	14.2 Discretionary Adjustments
	 	 	15	 
	14.3 General
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 15 AMENDMENT, MODIFICATION AND TERMINATION
	 	 	15	 
	 
	 	 	 	 
	15.1 Amendment, Modification and Termination
	 	 	15	 
	15.2 Awards Previously Granted
	 	 	16	 
	15.3 Compliance Amendments
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 16 GENERAL PROVISIONS
	 	 	16	 
	 
	 	 	 	 
	16.1 Rights of Participants
	 	 	16	 
	16.2 Withholding
	 	 	17	 
	16.3 Special Provisions Related to Section 409A of the Code
	 	 	17	 
	16.4 Unfunded Status of Awards
	 	 	18	 
	16.5 Relationship to Other Benefits
	 	 	18	 
	16.6 Expenses
	 	 	18	 
	16.7 Titles and Headings
	 	 	19	 
	16.8 Gender and Number
	 	 	19	 
	16.9 Fractional Shares
	 	 	19	 
	16.10 Government and Other Regulations
	 	 	19	 
	16.11 Governing Law
	 	 	19	 
	16.12 Additional Provisions
	 	 	19	 
	16.13 No Limitations on Rights of Company
	 	 	19	 
	16.14 Indemnification
	 	 	20	 

- ii -

 

NORTHSTAR REAL ESTATE INCOME TRUST, INC.

LONG TERM INCENTIVE PLAN

ARTICLE 1

PURPOSE

     1.1. GENERAL. The purpose of the NorthStar Real Estate Income Trust, Inc. Long Term
Incentive Plan (the “Plan”) is to enable NorthStar Real Estate Income Trust, Inc. (the “Company”)
and its Affiliates (as defined below) to (1) provide an incentive to employees, officers,
directors, consultants and advisors to increase the value of the Company’s common stock, (2) give
such persons a stake in the Company’s future that corresponds to the stake of each of the Company’s
stockholders, and (3) obtain or retain the services of these persons who are considered essential
to the Company’s long-term success, by offering such persons an opportunity to participate in the
Company’s growth through ownership of the Company’s common stock or through other equity-related
awards. Accordingly, the Plan permits the grant of incentive awards from time to time to selected
employees, officers, directors, consultants and advisors of the Company and its Affiliates.

ARTICLE 2

DEFINITIONS

     2.1. DEFINITIONS. When a word or phrase appears in this Plan with the initial letter
capitalized, and the word or phrase does not commence a sentence, the word or phrase shall
generally be given the meaning ascribed to it in this Section or in Section 1.1 unless a clearly
different meaning is required by the context. The following words and phrases shall have the
following meanings:

     (a) “Affiliate” means (i) any Subsidiary or Parent, or (ii) an entity that directly or
through one or more intermediaries controls, is controlled by or is under common control
with, the Company, as determined by the Committee.

     (b) “Award” means any Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit, Deferred Stock Unit, Performance Award, Dividend Equivalent, Other Award, or any
other right or interest relating to Stock or cash, granted to a Participant under the Plan.

     (c) “Award Certificate” means a written document, in such form as the Committee
prescribes from time to time, setting forth the terms and conditions of an Award. Award
Certificates may be in the form of individual award agreements or certificates or a program
document describing the terms and provisions of an Awards or series of Awards under the
Plan. The Committee may provide for the use of electronic, internet or other non-paper
Award Certificates, and the use of electronic, internet or other non-paper means for the
acceptance thereof and actions thereunder by a Participant.

     (d) “Beneficial Owner” shall have the meaning given such term in Rule 13d-3 of the
General Rules and Regulations under the 1934 Act.

     (e) “Board” means the Board of Directors of the Company.

     (f) “Cause” as a reason for a Participant’s termination of employment shall have the
meaning assigned such term in the employment, severance or similar agreement, if any, between

1

 

such Participant and the Company or an Affiliate, provided, however that if there is
no such employment, severance or similar agreement in which such term is defined, and unless
otherwise defined in the applicable Award Certificate, “Cause” shall mean any of the
following acts by the Participant, as determined by the Committee: gross neglect of duty,
prolonged absence from duty without the consent of the Company, material breach by the
Participant of any published Company code of conduct or code of ethics; or willful
misconduct, misfeasance or malfeasance of duty which is reasonably determined to be
detrimental to the Company. With respect to a Participant’s termination of directorship,
“Cause” means an act or failure to act that constitutes cause for removal of a director
under applicable Maryland law.  The determination of the Committee as to the existence of
“Cause” shall be conclusive on the Participant and the Company.

     (g) “Change in Control” means and includes the occurrence of any one of the following
events but shall specifically exclude a Public Offering:

     (i) individuals who, on the Effective Date, constitute the Board (the
“Incumbent Directors”) cease for any reason to constitute at least a majority of
such Board, provided that any person becoming a director after the Effective Date
and whose election or nomination for election was approved by a vote of at least a
majority of the Incumbent Directors then on the Board shall be an Incumbent
Director; provided, however, that no individual initially elected or
nominated as a director of the Company as a result of an actual or threatened
election contest with respect to the election or removal of directors (“Election
Contest”) or other actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board (“Proxy Contest”), including by reason of
any agreement intended to avoid or settle any Election Contest or Proxy Contest,
shall be deemed an Incumbent Director; or

     (ii) any Person becomes a Beneficial Owner, directly or indirectly, of either
(A) 35% or more of the then-outstanding shares of common stock of the Company
(“Company Common Stock”) or (B) securities of the Company representing 35% or more
of the combined voting power of the Company’s then outstanding securities eligible
to vote for the election of directors (the “Company Voting Securities”);
provided, however, that for purposes of this subsection (ii), the
following acquisitions of Company Common Stock or Company Voting Securities shall
not constitute a Change in Control: (w) an acquisition directly from the Company,
(x) an acquisition by the Company or a Subsidiary, (y) an acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company or
any Subsidiary, or (z) an acquisition pursuant to a Non-Qualifying Transaction (as
defined in subsection (iii) below); or

     (iii) the consummation of a reorganization, merger, consolidation, statutory
share exchange or similar form of corporate transaction involving the Company or a
Subsidiary (a “Reorganization”), or the sale or other disposition of all or
substantially all of the Company’s assets (a “Sale”) or the acquisition of assets or
stock of another corporation or other entity (an “Acquisition”), unless immediately
following such Reorganization, Sale or Acquisition: (A) all or substantially all of
the individuals and entities who were the Beneficial Owners, respectively, of the
outstanding Company Common Stock and outstanding Company Voting Securities
immediately prior to such Reorganization, Sale or Acquisition beneficially own,
directly or indirectly, more than 50% of, respectively, the then outstanding shares
of common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the
election of directors, as the case may be, of the entity resulting from such Reorganization,

2

 

Sale or Acquisition (including, without limitation, an entity which
as a result of such transaction owns the Company or all or substantially all of the
Company’s assets or stock either directly or through one or more subsidiaries, the
“Surviving Entity”) in substantially the same proportions as their ownership,
immediately prior to such Reorganization, Sale or Acquisition, of the outstanding
Company Common Stock and the outstanding Company Voting Securities, as the case may
be, and (B) no Person (other than (x) the Company or any Subsidiary, (y) the
Surviving Entity or its ultimate parent entity, or (z) any employee benefit plan (or
related trust) sponsored or maintained by any of the foregoing) is the Beneficial
Owner, directly or indirectly, of 50% or more of the total common stock or 50% or
more of the total voting power of the outstanding voting securities eligible to
elect directors of the Surviving Entity, and (C) at least a majority of the members
of the board of directors of the Surviving Entity were Incumbent Directors at the
time of the Board’s approval of the execution of the initial agreement providing for
such Reorganization, Sale or Acquisition (any Reorganization, Sale or Acquisition
which satisfies all of the criteria specified in (A), (B) and (C) above shall be
deemed to be a “Non-Qualifying Transaction”); or

     (iv) approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

     (h) “Charter” means the articles of incorporation of the Company, as such articles of
incorporation may be amended from time to time.

     (i) “Code” means the Internal Revenue Code of 1986, as amended from time to time. For
purposes of this Plan, references to sections of the Code shall be deemed to include
references to any applicable regulations thereunder and any successor or similar provision.

     (j) “Committee” means the committee of the Board described in Article 4.

     (k) “Company” means NorthStar Real Estate Income Trust, Inc., a Maryland corporation,
or any successor corporation.

     (l) “Continuous Status as a Participant” means the absence of any interruption or
termination of service as an employee, officer, director, consultant or advisors of the
Company or any Affiliate, as applicable; provided, however, that for purposes of an
Incentive Stock Option “Continuous Status as a Participant” means the absence of any
interruption or termination of service as an employee of the Company or any Parent or
Subsidiary, as applicable, pursuant to applicable tax regulations. Continuous Status as a
Participant shall not be considered interrupted in the following cases: (i) a Participant
transfers employment between the Company and an Affiliate or between Affiliates, or (ii) in
the discretion of the Committee as specified at or prior to such occurrence, in the case of
a spin-off, sale or disposition of the Participant’s employer from the Company or any
Affiliate, or (iii) any leave of absence authorized in writing by the Company prior to its
commencement; provided, however, that for purposes of Incentive Stock Options, no such leave
may exceed 90 days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 91st day of such leave any Incentive Stock Option held
by the Participant shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option. Whether military, government or
other service or other leave of absence shall constitute a termination of Continuous Status
as a Participant shall be determined in each case by the Committee at its discretion, and
any determination by the
Committee shall be final and conclusive.

3

 

     (m) “Deferred Stock Unit” means a right granted to a Participant under Article 9 to
receive Shares (or the equivalent value in cash or other property if the Committee so
provides) at a future time as determined by the Committee, or as determined by the
Participant within guidelines established by the Committee in the case of voluntary deferral
elections.

     (n) “Disability” of a Participant means that the Participant (i) is unable to engage in
any substantial gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, or (ii) is, by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an accident and health
plan covering employees of the Participant’s employer. If the determination of Disability
relates to an Incentive Stock Option, Disability means Permanent and Total Disability as
defined in Section 22(e)(3) of the Code. In the event of a dispute, the determination of
whether a Participant is Disabled will be made by the Committee and may be supported by the
advice of a physician competent in the area to which such Disability relates.

     (o) “Dividend Equivalent” means a right granted to a Participant under Article 11.

     (p) “Effective Date” has the meaning assigned such term in Section 3.1.

     (q) “Eligible Participant” means an employee, officer, consultant or director of the
Company or any Affiliate.

     (r) “Exchange” means any national securities exchange on which the Stock may from time
to time be listed or traded.

     (s) “Fair Market Value,” on any date, means (i) if the Stock is listed on a securities
exchange, the closing sales price on such exchange or over such system on such date or, in
the absence of reported sales on such date, the closing sales price on the immediately
preceding date on which sales were reported, or (ii) if the Stock is not listed on a
securities exchange, the mean between the bid and offered prices as quoted by the applicable
interdealer quotation system for such date, provided that if the Stock is not quoted on such
interdealer quotation system or it is determined that the fair market value is not properly
reflected by such quotations, Fair Market Value will be determined by such other method as
the Committee determines in good faith to be reasonable and in compliance with Code Section
409A.

     (t) “Grant Date” of an Award means the first date on which all necessary corporate
action has been taken to approve the grant of the Award as provided in the Plan, or such
later date as is determined and specified as part of that authorization process. Notice of
the grant shall be provided to the grantee within a reasonable time after the Grant Date.

     (u) “Incentive Stock Option” means an Option that is intended to be an incentive stock
option and meets the requirements of Section 422 of the Code or any successor provision
thereto.

     (v) “Independent Director” means a director of the Company who is not a common law
employee of the Company and who meets the additional requirements set forth for an
“independent director” in the Charter.

4

 

     (w) “Nonstatutory Stock Option” means an Option that is not an Incentive Stock Option.

     (x) “NROP” means NorthStar Real Estate Income Trust Operating Partnership, LP, a
Delaware limited partnership of which the Company is the sole general partner.

     (y) “NROP Interests” means limited partnership interests in NROP that may be exchanged
or redeemed for Shares on a one-for-one basis, or any profits
interest in NROP that may be exchanged or converted into such limited partnership interests.

     (z) “Option” means a right granted to a Participant under Article 7 of the Plan to
purchase Stock at a specified price during specified time periods. An Option may be either
an Incentive Stock Option or a Nonstatutory Stock Option.

     (aa) “Other Award” means a right granted to a Participant under Article 12.

     (bb) “Parent” means a corporation, limited liability company, partnership or other
entity which owns or beneficially owns a majority of the outstanding voting stock or voting
power of the Company. Notwithstanding the above, with respect to an Incentive Stock Option,
Parent shall have the meaning set forth in Section 424(e) of the Code.

     (cc) “Participant” means a person who, as an employee, officer, director or consultant
of the Company or any Affiliate, has been granted an Award under the Plan; provided that in
the case of the death of a Participant, the term “Participant” refers to a beneficiary
designated pursuant to Section 13.4 or the legal guardian or other legal representative
acting in a fiduciary capacity on behalf of the Participant under applicable state law and
court supervision.

     (dd) “Performance Award” means any award granted under the Plan pursuant to Article 10.

     (ee) “Person” means any individual, entity or group, within the meaning of Section
3(a)(9) of the 1934 Act and as used in Section 13(d)(3) or 14(d)(2) of the 1934 Act.

     (ff) “Plan” means the NorthStar Real Estate Income Trust, Inc. Long Term Incentive
Plan, as amended from time to time.

     (gg) “Public Offering” shall occur on the closing date of a public offering of any
class or series of the Company’s equity securities pursuant to a registration statement
filed by the Company under the 1933 Act.

     (hh) “Restricted Stock” means Stock granted to a Participant under Article 9 that is
subject to certain restrictions and to risk of forfeiture.

     (ii) “Restricted Stock Unit” means a right granted to a Participant under Article 9 to
receive shares of Stock (or the equivalent value in cash or other property if the Committee
so provides) in the future, which right is subject to certain restrictions and to risk of
forfeiture.

     (jj) “Shares” means shares of the Company’s Stock. If there has been an adjustment or
substitution pursuant to Section 14.1, the term “Shares” shall also include any shares of
stock
or other securities that are substituted for Shares or into which Shares are adjusted
pursuant to

5

 

Section 14.1.

     (kk) “Stock” means the $0.01 par value common stock of the Company and such other
securities of the Company as may be substituted for Stock pursuant to Section 14.1.

     (ll) “Stock Appreciation Right” or “SAR” means a right granted to a Participant under
Article 8 to receive a payment equal to the difference between the Fair Market Value of a
Share as of the date of exercise of the SAR over the grant price of the SAR, all as
determined pursuant to Article 8.

     (mm) “Subsidiary” means any corporation, limited liability company, partnership or
other entity of which a majority of the outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Company. Notwithstanding the above, with
respect to an Incentive Stock Option, Subsidiary shall have the meaning set forth in Section
424(f) of the Code.

     (nn) “1933 Act” means the Securities Act of 1933, as amended from time to time.

     (oo) “1934 Act” means the Securities Exchange Act of 1934, as amended from time to
time.

ARTICLE 3

EFFECTIVE TERM OF PLAN

     3.1. EFFECTIVE DATE. The Plan shall be effective as of the date it is approved by
both the Board and the stockholders of the Company (the “Effective Date”).

     3.2. TERMINATION OF PLAN. The Plan shall terminate on the tenth anniversary of the
Effective Date unless earlier terminated as provided herein. The termination of the Plan on such
date shall not affect the validity of any Award outstanding on the date of termination, which shall
continue to be governed by the applicable terms and conditions of this Plan. Notwithstanding the
foregoing, no Incentive Stock Options may be granted more than ten (10) years after the earlier of
(a) adoption of this Plan by the Board, or (b) the Effective Date.

ARTICLE 4

ADMINISTRATION

     4.1. COMMITTEE. The Plan shall be administered by a Committee appointed by the Board
(which Committee shall consist of at least two directors) or, at the discretion of the Board from
time to time, the Plan may be administered by the Board. The members of the Committee shall be
appointed by, and may be changed at any time and from time to time in the discretion of, the Board.
It is intended that at least two of the directors appointed to serve on the Committee shall be
“non-employee directors” (within the meaning of Rule 16b-3 promulgated under the 1934 Act) and that
any such members of the Committee who do not so qualify shall abstain from participating in any
decision to make or administer Awards that are made to Eligible Participants who at the time of
consideration for such Award are persons subject to the short-swing profit rules of Section 16 of
the 1934 Act. However, the mere fact that a Committee member shall fail to qualify as a
“non-employee director” or shall fail to abstain from such action shall not invalidate any Award
made by the Committee which Award is otherwise validly made under the Plan. The members of the
Committee shall be appointed by, and may be changed at any time and from time to time in the
discretion of, the Board.
The Board may reserve to itself any or all of the authority and responsibility of the Committee
under the Plan or may act as administrator of the Plan for any and all purposes. To the extent the
Board has reserved any authority and responsibility or during any

6

 

time that the Board is acting as
administrator of the Plan, it shall have all the powers of the Committee hereunder, and any
reference herein to the Committee (other than in this Section 4.1) shall include the Board. To the
extent any action of the Board under the Plan conflicts with actions taken by the Committee, the
actions of the Board shall control.

     4.2. ACTION AND INTERPRETATIONS BY THE COMMITTEE. For purposes of administering the
Plan, the Committee may from time to time adopt rules, regulations, guidelines and procedures for
carrying out the provisions and purposes of the Plan and make such other determinations, not
inconsistent with the Plan, as the Committee may deem appropriate. The Committee’s interpretation
of the Plan, any Awards granted under the Plan, any Award Certificate and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and conclusive on all
parties. Each member of the Committee is entitled to, in good faith, rely or act upon any report
or other information furnished to that member by any officer or other employee of the Company or
any Affiliate, the Company’s or an Affiliate’s independent certified public accountants, Company
counsel or any executive compensation consultant or other professional retained by the Company to
assist in the administration of the Plan.

     4.3. AUTHORITY OF COMMITTEE. The Committee has the exclusive power, authority and
discretion to:

     (a) Grant Awards;

     (b) Designate Participants;

     (c) Determine the type or types of Awards to be granted to each Participant;

     (d) Determine the number of Awards to be granted and the number of Shares, NROP
Interests or dollar amount to which an Award will relate;

     (e) Determine the terms and conditions of any Award granted under the Plan;

     (f) Prescribe the form of each Award Certificate, which need not be identical for each
Participant;

     (g) Decide all other matters that must be determined in connection with an Award;

     (h) Establish, adopt or revise any rules, regulations, guidelines or procedures as it
may deem necessary or advisable to administer the Plan;

     (i) Make all other decisions and determinations that may be required under the Plan or
as the Committee deems necessary or advisable to administer the Plan;

     (j) Amend the Plan or any Award Certificate as provided herein; and

     (k) Adopt such modifications, procedures, and subplans as may be necessary or desirable
to comply with provisions of the laws of non-U.S. jurisdictions in which the Company or any
Affiliate may operate, in order to assure the viability of the benefits of Awards granted to
participants located in such other jurisdictions and to meet the objectives of the Plan.

     4.4. AWARD CERTIFICATES. Each Award shall be evidenced by an Award Certificate. Each
Award Certificate shall include such provisions, not inconsistent with the Plan, as may be
specified

7

 

by the Committee.

ARTICLE 5

SHARES SUBJECT TO THE PLAN

     5.1. NUMBER OF SHARES. Subject to adjustment as provided in Sections 5.2 and Section
14.1, the aggregate number of Shares reserved and available for issuance pursuant to Awards granted
under the Plan shall be 2,000,000. The maximum number of Shares that may be issued upon exercise
of Incentive Stock Options granted under the Plan shall be 2,000,000.

     5.2. SHARE COUNTING. Shares covered by an Award shall be subtracted from the Plan
share reserve as of the date of grant, but shall be added back to the Plan share reserve in
accordance with this Section 5.2.

     (a) To the extent that an Award is canceled, terminates, expires, is forfeited or
lapses for any reason, any unissued or forfeited Shares subject to the Award will again be
available for issuance pursuant to Awards granted under the Plan.

     (b) Shares subject to Awards settled in cash will again be available for issuance
pursuant to Awards granted under the Plan.

     (c) Shares withheld from an Award or delivered by a Participant to satisfy minimum tax
withholding requirements will again be available for issuance pursuant to Awards granted
under the Plan. 

     (d) If the exercise price of an Option is satisfied by delivering Shares to the Company
(by either actual delivery or attestation), only the number of Shares issued to the
Participant in excess of the Shares tendered (by delivery or attestation) shall be
considered for purposes of determining the number of Shares remaining available for issuance
pursuant to Awards granted under the Plan.

     (e) To the extent that the full number of Shares subject to an Option or SAR is not
issued upon exercise of the Option or SAR for any reason, including by reason of
net-settlement of the Award, only the number of Shares issued and delivered upon exercise of
the Option or SAR shall be considered for purposes of determining the number of Shares
remaining available for issuance pursuant to Awards granted under the Plan.

     (f) To the extent that the full number of Shares subject to an Award other than an
Option or SAR is not issued for any reason, including by reason of failure to achieve
maximum performance goals, only the number of Shares issued and delivered shall be
considered for purposes of determining the number of Shares remaining available for issuance
pursuant to Awards granted under the Plan.

     (g) Substitute Awards granted pursuant to Section 13.10 of the Plan shall not count
against the Shares otherwise available for issuance under the Plan under Section 5.1.

     5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may consist, in
whole or in part, of authorized and unissued Stock,
treasury Stock or Stock purchased on the open market.

8

 

ARTICLE 6

ELIGIBILITY

     6.1. GENERAL. Awards may be granted only to Eligible Participants. Incentive Stock
Options may be granted only to Eligible Participants who are employees of the Company or a Parent
or Subsidiary as defined in Section 424(e) and (f) of the Code. Eligible Participants who are
service providers to an Affiliate may be granted Options or SARs under this Plan only if the
Affiliate qualifies as an “eligible issuer of service recipient stock” within the meaning of
§1.409A-1(b)(5)(iii)(E) of the final regulations under Code Section 409A.

ARTICLE 7

STOCK OPTIONS

     7.1. GENERAL. The Committee is authorized to grant Options to Participants on the
following terms and conditions:

     (a) EXERCISE PRICE. The exercise price per Share under an Option shall be
determined by the Committee, provided that the exercise price for any Option (other than an
Option issued as a substitute Award pursuant to Section 13.10) shall not be less than the
Fair Market Value as of the Grant Date.

     (b) PROHIBITION ON REPRICING. Except as otherwise provided in Section 14.1,
the exercise price of an Option may not be reduced, directly or indirectly by cancellation
and regrant or otherwise, without the prior approval of the stockholders of the Company.

     (c) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time or
times at which an Option may be exercised in whole or in part, subject to Section 7.1(e).
The Committee shall also determine the performance or other conditions, if any, that must be
satisfied before all or part of an Option may be exercised or vested.

     (d) PAYMENT. The Committee shall determine the methods by which the exercise
price of an Option may be paid, the form of payment, including, without limitation, cash,
Shares, or other property (including “cashless exercise” arrangements), and the methods by
which Shares shall be delivered or deemed to be delivered to Participants.

     (e) EXERCISE TERM. Except for Nonstatutory Options granted to Participants
outside the United States, no Option granted under the Plan shall be exercisable for more
than ten years from the Grant Date.

     (f) NO DEFERRAL FEATURE. No Option shall provide for any feature for the
deferral of compensation other than the deferral of recognition of income until the exercise
or disposition of the Option.

     (g) NO DIVIDEND EQUIVALENTS. No Option shall provide for Dividend Equivalents.

     7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options granted under
the Plan must comply with the requirements of Section 422 of the Code. If all of the requirements
of Section 422 of the Code are not met, the Option
shall automatically become a Nonstatutory Stock Option.

9

 

ARTICLE 8

STOCK APPRECIATION RIGHTS

     8.1. GRANT OF STOCK APPRECIATION RIGHTS. The Committee is authorized to grant Stock
Appreciation Rights to Participants on the following terms and conditions:

     (a) RIGHT TO PAYMENT. Upon the exercise of a SAR, the Participant to whom it
is granted has the right to receive, for each Share with respect to which the SAR is being
exercised, the excess, if any, of:

     (1) The Fair Market Value of one Share on the date of exercise; over

     (2) The base price of the SAR as determined by the Committee, which shall not be
less than the Fair Market Value of one Share on the Grant Date.

     (b) PROHIBITION ON REPRICING. Except as otherwise provided in Section 14.1,
the base price of a SAR may not be reduced, directly or indirectly by cancellation and
regrant or otherwise, without the prior approval of the stockholders of the Company.

     (c) EXERCISE TERM. Except for SARs granted to Participants outside the United
States, no SAR shall be exercisable for more than ten years from the Grant Date.

     (d) NO DEFERRAL FEATURE. No SAR shall provide for any feature for the deferral
of compensation other than the deferral of recognition of income until the exercise or
disposition of the SAR.

     (e) NO DIVIDEND EQUIVALENTS. No SAR shall provide for Dividend Equivalents.

     (f) OTHER TERMS. All SARs shall be evidenced by an Award Certificate. Subject
to the limitations of this Article 8, the terms, methods of exercise, methods of settlement,
form of consideration payable in settlement, and any other terms and conditions of any SAR
shall be determined by the Committee at the time of the grant of the Award and shall be
reflected in the Award Certificate.

ARTICLE 9

RESTRICTED STOCK, RESTRICTED STOCK UNITS

AND DEFERRED STOCK UNITS

     9.1. GRANT OF RESTRICTED STOCK, RESTRICTED STOCK UNITS AND DEFERRED STOCK UNITS. The
Committee is authorized to make Awards of Restricted Stock, Restricted Stock Units or Deferred
Stock Units to Participants in such amounts and subject to such terms and conditions as may be
selected by the Committee. An Award of Restricted Stock, Restricted Stock Units or Deferred Stock
Units shall be evidenced by an Award Certificate setting forth the terms, conditions, and
restrictions applicable to the Award.

     9.2. ISSUANCE AND RESTRICTIONS. Restricted Stock, Restricted Stock Units or Deferred
Stock Units shall be subject to such restrictions on transferability and other restrictions as the
Committee may impose (including, without limitation, limitations on the right to vote Restricted
Stock or the right to receive dividends on the Restricted Stock). These restrictions may lapse
separately or in combination at such times, under such circumstances, in such installments, upon
the satisfaction of

10

 

performance goals or otherwise, as the Committee determines at the time of the
grant of the Award or thereafter. Except as otherwise provided in an Award Certificate or any
special Plan document governing an Award, the Participant shall have all of the rights of a
stockholder with respect to the Restricted Stock, and the Participant shall have none of the rights
of a stockholder with respect to Restricted Stock Units or Deferred Stock Units until such time as
Shares of Stock are paid in settlement of the Restricted Stock Units or Deferred Stock Units.
Unless otherwise provided in the applicable Award Certificate, awards of Restricted Stock will be
entitled to full dividend rights and any dividends paid thereon will be paid or distributed to the
holder no later than the end of the calendar year in which the dividends are paid to stockholders
or, if later, the 15th day of the third month following the date the dividends are paid
to stockholders.

     9.3. FORFEITURE. Except as otherwise determined by the Committee at the time of the
grant of the Award or thereafter, upon termination of Continuous Status as a Participant during the
applicable restriction period or upon failure to satisfy a performance goal during the applicable
restriction period, Restricted Stock or Restricted Stock Units that are at that time subject to
restrictions shall be forfeited.

     9.4. DELIVERY OF RESTRICTED STOCK. Shares of Restricted Stock shall be delivered to
the Participant at the time of grant either by book-entry registration or by delivering to the
Participant, or a custodian or escrow agent (including, without limitation, the Company or one or
more of its employees) designated by the Committee, a stock certificate or certificates registered
in the name of the Participant. If physical certificates representing shares of Restricted Stock
are registered in the name of the Participant, such certificates must bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Restricted Stock.

ARTICLE 10

PERFORMANCE AWARDS

     10.1. GRANT OF PERFORMANCE AWARDS. The Committee is authorized to grant any Award
under this Plan, including cash-based Awards, with performance-based vesting criteria, on such
terms and conditions as may be selected by the Committee. The Committee shall have the complete
discretion to determine the number of Performance Awards granted to each Participant and to
designate the provisions of such Performance Awards as provided in Section 4.3. All Performance
Awards shall be evidenced by an Award Certificate or a written program established by the
Committee, pursuant to which Performance Awards are awarded under the Plan under uniform terms,
conditions and restrictions set forth in such written program.

     10.2. PERFORMANCE GOALS. The Committee may establish performance goals for
Performance Awards which may be based on any criteria selected by the Committee. Such performance
goals may be described in terms of Company-wide objectives or in terms of objectives that relate to
the performance of the Participant, an Affiliate or a division, region, department or function
within the Company or an Affiliate. If the Committee determines that a change in the business,
operations, corporate structure or capital structure of the Company or the manner in which the
Company or an Affiliate conducts its business, or other events or circumstances render performance
goals to be unsuitable, the Committee may modify such performance goals in whole or in part, as the
Committee deems appropriate. If a Participant is promoted, demoted or transferred to a
different business unit or function during a performance period, the Committee may determine that
the performance goals or performance period are no longer appropriate and may (i) adjust, change or
eliminate the performance goals or the applicable performance period as it deems appropriate to
make such goals and period comparable to the initial goals and period, or (ii) make a cash payment
to the participant in an amount determined by the Committee.

11

 

ARTICLE 11

DIVIDEND EQUIVALENTS

     11.1. GRANT OF DIVIDEND EQUIVALENTS. Except as provided in Sections 7.1(g) and 8.1(e), the Committee is authorized to grant Dividend Equivalents with respect to Awards granted
hereunder, subject to such terms and conditions as may be selected by the Committee. Dividend
Equivalents shall entitle the Participant to receive payments equal to dividends with respect to
all or a portion of the number of Shares subject to an Award, as determined by the Committee. The
Committee may provide that Dividend Equivalents be paid or distributed when accrued or be deemed to
have been reinvested in additional Shares, or otherwise reinvested. Unless otherwise provided in
the applicable Award Certificate, Dividend Equivalents will be paid or distributed no later than
the 15th day of the 3rd month following the later of (i) the calendar year in
which the corresponding dividends were paid to stockholders, or (ii) the first calendar year in
which the Participant’s right to such Dividends Equivalents is no longer subject to a substantial
risk of forfeiture.

ARTICLE 12

STOCK OR OTHER AWARDS

     12.1. GRANT OF STOCK OR OTHER AWARDS. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards that are payable in,
valued in whole or in part by reference to, or otherwise based on or related to Shares, as deemed
by the Committee to be consistent with the purposes of the Plan, including without limitation, NROP
Interests, membership interests in a Subsidiary or operating partnership, Shares awarded purely as
a “bonus” and not subject to any restrictions or conditions, convertible or exchangeable debt
securities,other rights convertible or exchangeable into Shares, and Awards valued by reference to
book value of Shares or the value of securities of or the performance of specified Parents or
Subsidiaries. The Committee shall determine the terms and conditions of such Awards. For purposes
of calculating the number of Shares underlying an Other Award relative to the total number of
Shares of Stock reserved and available for issuance under Section 5.1 hereof, the Committee shall
establish in good faith the maximum number of Shares to which a grantee of such Other Award may be
entitled upon fulfillment of all applicable conditions set forth in the relevant Award Certificate,
including vesting, accretion factors, conversion ratios, exchange ratios and the like. If and when
any such conditions are no longer capable of being met, in whole or in part, the number of Shares
underlying such Other Award shall be reduced accordingly by the Committee and the related Shares
shall be added back to the Shares of Stock available for issuance under the Plan. The Committee
may require that Other Awards be held through a limited partnership, or similar “look-through”
entity, and the Committee may require such limited partnership or similar entity to impose
restrictions on its partners or other beneficial owners that are not inconsistent with the
provisions of this Section 12.1. The provisions of the grant of Other Awards need not be the same
with respect to each Participant.

ARTICLE 13

PROVISIONS APPLICABLE TO AWARDS

     13.1. TERM OF AWARD. The term of each Award
shall be for the period as determined by the Committee, provided that in no event shall the term of
any Option or a Stock Appreciation Right exceed a period of ten years from its Grant Date.

     13.2. FORM OF PAYMENT FOR AWARDS. At the discretion of the Committee, payment of
Awards may be made in cash, Stock, a combination of cash and Stock, or any other form of property
as the Committee shall determine. In addition, payment of Awards may include such terms,
conditions, restrictions and/or limitations, if any, as the Committee deems appropriate, including,
in the case of Awards paid in the form of Stock, restrictions on transfer and forfeiture
provisions. Further, payment of

12

 

Awards may be made in the form of a lump sum, or in installments,
as determined by the Committee.

     13.3. LIMITS ON TRANSFER. No right or interest of a Participant in any unexercised or
restricted Award may be pledged, encumbered, or hypothecated to or in favor of any party other than
the Company or an Affiliate, or shall be subject to any lien, obligation, or liability of such
Participant to any other party other than the Company or an Affiliate. No unexercised or
restricted Award shall be assignable or transferable by a Participant other than by will or the
laws of descent and distribution; provided, however, that the Committee may (but need not) permit
other transfers (other than transfers for value) where the Committee concludes that such
transferability (i) does not result in accelerated taxation, (ii) does not cause any Option
intended to be an Incentive Stock Option to fail to be described in Code Section 422(b), and (iii)
is otherwise appropriate and desirable, taking into account any factors deemed relevant, including
without limitation, state or federal tax or securities laws applicable to transferable Awards.

     13.4. BENEFICIARIES. Notwithstanding Section 13.3, a Participant may, in the manner
determined by the Committee, designate a beneficiary to exercise the rights of the Participant and
to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary,
legal guardian, legal representative, or other person claiming any rights under the Plan is subject
to all terms and conditions of the Plan and any Award Certificate applicable to the Participant,
except to the extent the Plan and Award Certificate otherwise provide, and to any additional
restrictions deemed necessary or appropriate by the Committee. If no beneficiary has been
designated or survives the Participant, payment shall be made to the Participant’s estate. Subject
to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time
provided the change or revocation is filed with the Committee.

     13.5. STOCK TRADING RESTRICTIONS. All Stock issuable under the Plan is subject to any
stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply
with federal or state securities laws, rules and regulations and the rules of any national
securities exchange or automated quotation system on which the Stock is listed, quoted, or traded.
The Committee may place legends on any Stock certificate or issue instructions to the transfer
agent to reference restrictions applicable to the Stock.

     13.6. ACCELERATION UPON DEATH OR DISABILITY. Except as otherwise provided in the
Award Certificate or any special Plan document governing an Award, upon the termination of a
person’s Continuous Status as a Participant by reason of death or Disability:

     (i) all of that Participant’s outstanding Options and SARs shall become fully
exercisable;

     (ii) all time-based vesting restrictions on that Participant’s outstanding Awards shall
lapse as of the date of termination; and

     (iii) the payout opportunities attainable under all of that Participant’s outstanding
performance-based Awards shall be deemed to have been fully earned as of the date of
termination as follows:

     (A) if the date of termination occurs during the first half of the applicable
performance period, all relevant performance goals will be deemed to have been
achieved at the “target” level, and

     (B) if the date of termination occurs during the second half of the applicable

13

 

performance period, the actual level of achievement of all relevant performance
goals against target will be measured as of the end of the calendar quarter
immediately preceding the date of termination, and

     (C) in either such case, there shall be a pro rata payout to the Participant or
his or her estate within sixty (60) days following the date of termination (unless a
later date is required by Section 16.3 hereof), based upon the length of time within
the performance period that has elapsed prior to the date of termination.

     To the extent that this provision causes Incentive Stock Options to exceed the dollar
limitation set forth in Code Section 422(d), the excess Options shall be deemed to be Nonstatutory
Stock Options.

     13.7. ACCELERATION UPON A CHANGE IN CONTROL. Except as otherwise provided in the
Award Certificate or any special Plan document governing an Award, upon the occurrence of a Change
in Control, (i) all outstanding Options, SARs, and other Awards in the nature of rights that may be
exercised shall become fully exercisable, and (ii) all time-based vesting restrictions on
outstanding Awards shall lapse. Except as otherwise provided in the Award Certificate or any
special Plan document governing an Award, upon the occurrence of a Change in Control, the target
payout opportunities attainable under all outstanding performance-based Awards shall be deemed to
have been fully earned as of the effective date of the Change in Control based upon an assumed
achievement of all relevant performance goals at the “target” level and there shall be a pro rata
payout to Participants within thirty (30) days following the effective date of the Change in
Control based upon the length of time within the performance period that has elapsed prior to the
Change in Control.

     13.8. ACCELERATION FOR ANY REASON. The Committee may in its sole discretion at any
time determine that all or a portion of a Participant’s Options, SARs, and other Awards in the
nature of rights that may be exercised shall become fully or partially exercisable, that all or a
part of the time-based vesting restrictions on all or a portion of the outstanding Awards shall
lapse, and/or that any performance-based criteria with respect to any Awards shall be deemed to be
wholly or partially satisfied, in each case, as of such date as the Committee may, in its sole
discretion, declare. The Committee may discriminate among Participants and among Awards granted to
a Participant in exercising its discretion pursuant to this Section 13.8. Notwithstanding anything
in the Plan, including this Section 13.8, the Committee may not accelerate the payment of any Award
if such acceleration would violate Section 409A(a)(3) of the Code.

     13.9. FORFEITURE EVENTS. The Committee may specify in an Award Certificate that the
Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition
to any otherwise applicable vesting or performance conditions of an Award.
Such events shall include, but shall not be limited to, termination of employment for Cause,
violation of material Company or Affiliate policies, breach of noncompetition, confidentiality or
other restrictive covenants that may apply to the Participant, or other conduct by the Participant
that is detrimental to the business or reputation of the Company or any Affiliate.

     13.10. SUBSTITUTE AWARDS. The Committee may grant Awards under the Plan in
substitution for stock and stock-based awards held by employees of another entity who become
employees of the Company or an Affiliate as a result of a merger or consolidation of the former
employing entity with the Company or an Affiliate or the acquisition by the Company or an Affiliate
of property or stock of the former employing corporation. The Committee may direct that the
substitute awards be granted on such terms and conditions as the Committee considers appropriate in
the

14

 

circumstances.

ARTICLE 14

CHANGES IN CAPITAL STRUCTURE

     14.1. MANDATORY ADJUSTMENTS. In the event of a nonreciprocal transaction between the
Company and its stockholders that causes the per-share value of the Stock to change (including,
without limitation, any stock dividend, stock split, spin-off, rights offering, or large
nonrecurring cash dividend), the authorization limits under Section 5.1 shall be adjusted
proportionately, and the Committee shall make such adjustments to the Plan and Awards as it deems
necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately
resulting from such transaction. Action by the Committee may include: (i) adjustment of the number
and kind of shares that may be delivered under the Plan; (ii) adjustment of the number and kind of
shares subject to outstanding Awards; (iii) adjustment of the exercise price of outstanding Awards
or the measure to be used to determine the amount of the benefit payable on an Award; and (iv) any
other adjustments that the Committee determines to be equitable. Notwithstanding the foregoing,
the Committee shall not make any adjustments to outstanding Options or SARs that would constitute a
modification or substitution of the stock right under Treas. Reg. Sections 1.409A-1(b)(5)(v) that
would be treated as the grant of a new stock right or change in the form of payment for purposes of
Code Section 409A. Without limiting the foregoing, in the event of a subdivision of the
outstanding Stock (stock-split), a declaration of a dividend payable in Shares, or a combination or
consolidation of the outstanding Stock into a lesser number of Shares, the authorization limits
under Section 5.1 shall automatically be adjusted proportionately, and the Shares then subject to
each Award shall automatically, without the necessity for any additional action by the Committee,
be adjusted proportionately without any change in the aggregate purchase price therefor.

     14.2. DISCRETIONARY ADJUSTMENTS. Upon the occurrence or in anticipation of any
corporate event or transaction involving the Company (including, without limitation, any merger,
reorganization, recapitalization, combination or exchange of shares, or any transaction described
in Section 14.1), the Committee may, in its sole discretion, provide (i) that Awards will be
settled in cash rather than Stock, (ii) that Awards will become immediately vested and exercisable
and will expire after a designated period of time to the extent not then exercised, (iii) that
Awards will be assumed by another party to a transaction or otherwise be equitably converted or
substituted in connection with such transaction, (iv) that outstanding Awards may be settled by
payment in cash or cash equivalents equal to the excess of the Fair Market Value of the underlying
Stock, as of a specified date associated with the transaction, over the exercise price of the
Award, (v) that performance targets and performance periods for Performance Awards will be
modified, or (vi) any combination of the foregoing. The Committee’s determination need not be
uniform and may be different for different Participants whether or not such Participants are
similarly situated.

     14.3. GENERAL. Any discretionary adjustments made
pursuant to this Article 14 shall be subject to the provisions of Section 15.2. To the extent
that any adjustments made pursuant to this Article 14 cause Incentive Stock Options to cease to
qualify as Incentive Stock Options, such Options shall be deemed to be Nonstatutory Stock Options.

ARTICLE 15

AMENDMENT, MODIFICATION AND TERMINATION

     15.1. AMENDMENT, MODIFICATION AND TERMINATION. The Board or the Committee may, at any
time and from time to time, amend, modify or terminate the Plan without stockholder approval;
provided, however, that if an amendment to the Plan would, in the reasonable opinion of the Board
or the Committee, either (i) materially increase the number of Shares available under the Plan,

15

 

(ii) expand the types of awards under the Plan, (iii) materially expand the class of participants
eligible to participate in the Plan, (iv) materially extend the term of the Plan, or (v) otherwise
constitute a material change requiring stockholder approval under applicable laws, policies or
regulations or the applicable listing or other requirements of an Exchange, then such amendment
shall be subject to stockholder approval; and provided, further, that the Board or Committee may
condition any other amendment or modification on the approval of stockholders of the Company for
any reason, including by reason of such approval being necessary or deemed advisable (i) to comply
with the listing or other requirements of an Exchange, or (ii) to satisfy any other tax, securities
or other applicable laws, policies or regulations.

     15.2. AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the Committee may
amend, modify or terminate any outstanding Award without approval of the Participant; provided,
however:

     (a) Subject to the terms of the applicable Award Certificate, such amendment,
modification or termination shall not, without the Participant’s consent, reduce or diminish
the value of such Award determined as if the Award had been exercised, vested, cashed in or
otherwise settled on the date of such amendment or termination (with the per-share value of
an Option or SAR for this purpose being calculated as the excess, if any, of the Fair Market
Value as of the date of such amendment or termination over the exercise or base price of
such Award);

     (b) The original term of an Option or SAR may not be extended without the prior
approval of the stockholders of the Company;

     (c) Except as otherwise provided in Section 14.1, the exercise price of an Option or
SAR may not be reduced, directly or indirectly, without the prior approval of the
stockholders of the Company; and

     (d) No termination, amendment, or modification of the Plan shall adversely affect any
Award previously granted under the Plan, without the written consent of the Participant
affected thereby. An outstanding Award shall not be deemed to be “adversely affected” by a
Plan amendment if such amendment would not reduce or diminish the value of such Award
determined as if the Award had been exercised, vested, cashed in or otherwise settled on the
date of such amendment (with the per-share value of an Option or SAR for this purpose being
calculated as the excess, if any, of the Fair Market Value as of the date of such amendment
over the exercise or base price of such Award).

     15.3. COMPLIANCE AMENDMENTS. Notwithstanding anything in the Plan or in any Award
Certificate to the contrary, the Board may amend the Plan or an Award Certificate, to take effect
retroactively or otherwise, as deemed necessary or
advisable for the purpose of conforming the Plan or Award Certificate to any present or future
law relating to plans of this or similar nature (including, but not limited to, Section 409A of the
Code), and to the administrative regulations and rulings promulgated thereunder. By accepting an
Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 15.3 to
any Award granted under the Plan without further consideration or action.

ARTICLE 16

GENERAL PROVISIONS

     16.1. RIGHTS OF PARTICIPANTS.

     (a) No Participant or any Eligible Participant shall have any claim to be granted any
Award under the Plan. Neither the Company, its Affiliates nor the Committee is obligated to
treat

16

 

Participants or Eligible Participants uniformly, and determinations made under the
Plan may be made by the Committee selectively among Eligible Participants who receive, or
are eligible to receive, Awards (whether or not such Eligible Participants are similarly
situated).

     (b) Nothing in the Plan, any Award Certificate or any other document or statement made
with respect to the Plan, shall interfere with or limit in any way the right of the Company
or any Affiliate to terminate any Participant’s employment or status as an officer, or any
Participant’s service as a director, at any time, nor confer upon any Participant any right
to continue as an employee, officer, or director of the Company or any Affiliate, whether
for the duration of a Participant’s Award or otherwise.

     (c) Neither an Award nor any benefits arising under this Plan shall constitute an
employment contract with the Company or any Affiliate and, accordingly, subject to Article
15, this Plan and the benefits hereunder may be terminated at any time in the sole and
exclusive discretion of the Committee without giving rise to any liability on the part of
the Company or an of its Affiliates.

     (d) No Award gives a Participant any of the rights of a stockholder of the Company
unless and until Shares are in fact issued to such person in connection with such Award.

     16.2. WITHHOLDING. The Company or any Affiliate shall have the authority and the
right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient
to satisfy federal, state, and local taxes (including the Participant’s FICA obligation) required
by law to be withheld with respect to any exercise, lapse of restriction or other taxable event
arising as a result of the Plan. With respect to withholding required upon any taxable event under
the Plan, the Committee may, at the time the Award is granted or thereafter, require or permit that
any such withholding requirement be satisfied, in whole or in part, by withholding from the Award
Shares having a Fair Market Value on the date of withholding equal to the minimum amount (and not
any greater amount) required to be withheld for tax purposes, all in accordance with such
procedures as the Committee establishes. All such elections shall be subject to any restrictions
or limitations that the Committee, in its sole discretion, deems appropriate.

     16.3. SPECIAL PROVISIONS RELATED TO SECTION 409A OF THE CODE.

     (a) General. It is intended that the payments and benefits provided under the Plan
and any Award shall either be exempt from the application of, or comply with, the requirements of
Section 409A of the Code. The Plan and all Award Certificates shall be construed in a manner that
effects such intent.
Nevertheless, the tax treatment of the benefits provided under the Plan or any Award is not
warranted or guaranteed. Neither the Company, its Affiliates nor their respective directors,
officers, employees or advisers shall be held liable for any taxes, interest, penalties or other
monetary amounts owed by any Participant or other taxpayer as a result of the Plan or any Award.

     (b) Definitional Restrictions. Notwithstanding anything in the Plan or in any Award
Certificate to the contrary, to the extent that any amount or benefit that would constitute
non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be
payable or distributable, or a different form of payment (e.g., lump sum or installment) would be
effected, under the Plan or any Award Certificate by reason of the occurrence of a Change in
Control, or the Participant’s Disability or separation from service, such amount or benefit will
not be payable or distributable to the Participant, and/or such different form of payment will not
be effected, by reason of such circumstance unless the circumstances giving rise to such Change in
Control, Disability or separation from service meet any description or definition of “change in
control event”, “disability” or “separation from service”, as the case may be, in Section 409A of
the Code and applicable regulations (without giving effect to any

17

 

elective provisions that may be
available under such definition). This provision does not prohibit the vesting of any Award upon a
Change in Control, Disability or separation from service, however defined. If this provision
prevents the payment or distribution of any amount or benefit, such payment or distribution shall
be made on the next earliest payment or distribution date or event specified in the Award
Certificate that is permissible under Section 409A of the Code. If this provision prevents the
application of a different form of payment of any amount or benefit, such payment shall be made in
the same form as would have applied absent such designated event or circumstance.

     (c) Allocation among Possible Exemptions. If any one or more Awards granted under the
Plan to a Participant could qualify for any separation pay exemption described in Treas. Reg.
Section 1.409A-1(b)(9), but such Awards in the aggregate exceed the dollar limit permitted for the
separation pay exemptions, the Company (acting through the Committee) shall determine which Awards
or portions thereof will be subject to such exemptions.

     (d) Six-Month Delay in Certain Circumstances. Notwithstanding anything in the Plan or
in any Award Certificate to the contrary, if any amount or benefit that would constitute non-exempt
“deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or
distributable under this Plan or any Award Certificate by reason of a Participant’s separation from
service during a period in which the Participant is a Specified Employee (as defined below), then,
subject to any permissible acceleration of payment by the Committee under Treas. Reg. Section
1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi)
(payment of employment taxes):

     (i) the amount of such non-exempt deferred compensation that would otherwise be payable
during the six-month period immediately following the Participant’s separation from service
will be accumulated through and paid or provided on the first day of the seventh month
following the Participant’s separation from service (or, if the Participant dies during such
period, within 30 days after the Participant’s death) (in either case, the “Required Delay
Period”), and

     (ii) the normal payment or distribution schedule for any remaining payments or
distributions will resume at the end of the Required Delay Period.

     For purposes of this Plan, the term “Specified Employee” has the meaning given such
term in Section 409A of the Code and the final regulations thereunder, provided, however,
that, as permitted in such final regulations, the Company’s Specified Employees and its
application of the six-month delay rule of 409A(a)(2)(B)(i) of the Code shall be determined
in accordance with rules adopted by the Board or any committee of the Board, which shall be
applied consistently
with respect to all nonqualified deferred compensation arrangements of the Company,
including this Plan.

     16.4. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an “unfunded” plan for
incentive and deferred compensation. With respect to any payments not yet made to a Participant
pursuant to an Award, nothing contained in the Plan or any Award Certificate shall give the
Participant any rights that are greater than those of a general creditor of the Company or any
Affiliate. This Plan is not intended to be subject to ERISA.

     16.5. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be taken into
account in determining any benefits under any pension, retirement, savings, profit sharing, group
insurance, welfare or benefit plan of the Company or any Affiliate unless provided otherwise in
such other plan.

     16.6. EXPENSES. The expenses of administering the Plan shall be borne by the Company
and

18

 

its Affiliates.

     16.7. TITLES AND HEADINGS. The titles and headings of the Sections in the Plan are
for convenience of reference only, and in the event of any conflict, the text of the Plan, rather
than such titles or headings, shall control.

     16.8. GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall include the singular
and the singular shall include the plural.

     16.9. FRACTIONAL SHARES. No fractional Shares shall be issued and the Committee shall
determine, in its discretion, whether cash shall be given in lieu of fractional Shares or whether
such fractional Shares shall be eliminated by rounding up or down.

     16.10. GOVERNMENT AND OTHER REGULATIONS.

     (a) Notwithstanding any other provision of the Plan, no Participant who acquires Shares
pursuant to the Plan may, during any period of time that such Participant is an affiliate of
the Company (within the meaning of the rules and regulations of the Securities and Exchange
Commission under the 1933 Act), sell such Shares, unless such offer and sale is made (i)
pursuant to an effective registration statement under the 1933 Act, which is current and
includes the Shares to be sold, or (ii) pursuant to an appropriate exemption from the
registration requirement of the 1933 Act, such as that set forth in Rule 144 promulgated
under the 1933 Act.

     (b) Notwithstanding any other provision of the Plan, if at any time the Committee shall
determine that the registration, listing or qualification of the Shares covered by an Award
upon any Exchange or under any foreign, federal, state or local law or practice, or the
consent or approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Award or the purchase or receipt
of Shares thereunder, no Shares may be purchased, delivered or received pursuant to such
Award unless and until such registration, listing, qualification, consent or approval shall
have been effected or obtained free of any condition not acceptable to the Committee. Any
Participant receiving or purchasing Shares pursuant to an Award shall make such
representations and agreements and furnish such information as the Committee may request to
assure compliance with the foregoing or any other applicable legal requirements. The
Company shall not be required to issue or deliver any
certificate or certificates for Shares under the Plan prior to the Committee’s
determination that all related requirements have been fulfilled. The Company shall in no
event be obligated to register any securities pursuant to the 1933 Act or applicable state
or foreign law or to take any other action in order to cause the issuance and delivery of
such certificates to comply with any such law, regulation or requirement.

     16.11. GOVERNING LAW. To the extent not governed by federal law, the Plan and all
Award Certificates shall be construed in accordance with and governed by the laws of the State of
Maryland.

     16.12. ADDITIONAL PROVISIONS. Each Award Certificate may contain such other terms and
conditions as the Committee may determine; provided that such other terms and conditions are not
inconsistent with the provisions of the Plan.

     16.13. NO LIMITATIONS ON RIGHTS OF COMPANY. The grant of any Award shall not in any
way affect the right or power of the Company to make adjustments, reclassification or changes in
its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer
all or any part of

19

 

its business or assets. The Plan shall not restrict the authority of the
Company, for proper corporate purposes, to draft or assume awards, other than under the Plan, to or
with respect to any person. If the Committee so directs, the Company may issue or transfer Shares
to an Affiliate, for such lawful consideration as the Committee may specify, upon the condition or
understanding that the Affiliate will transfer such Shares to a Participant in accordance with the
terms of an Award granted to such Participant and specified by the Committee pursuant to the
provisions of the Plan.

     16.14. INDEMNIFICATION. Each person who is or shall have been a member of the
Committee or of the Board shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her
in connection with or resulting from any claim, action, suit, or proceeding to which he or she may
be a party or in which he or she may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him or her in settlement thereof,
with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such
action, suit, or proceeding against him or her, provided he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf, unless such loss, cost, liability, or expense is a
result of his or her own willful misconduct or except as expressly provided by statute. The
foregoing right of indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company’s charter or bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them harmless.

20

 

The foregoing is hereby acknowledged as being the NorthStar Real Estate Income Trust, Inc. Long
Term Incentive Plan as adopted by the Board on                     , 2009 and by the stockholders on
                    , 2009.

	 	 	 	 	 	 	 	 	 
	 	 	NORTHSTAR REAL ESTATE INCOME TRUST, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00154-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00154-of-00352.parquet"}]]