Document:

Exhibit 10.35

 

 

SECOND AMENDMENT TO

NOTE PURCHASE AGREEMENT

AND REPURCHASE DOCUMENTS

(Wachovia/NRF-Reindeer Ltd.)

 

THIS SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT, dated as of October 28,
2009 (this “Amendment No. 2”), is entered into by and among NRF—REINDEER LTD., a Cayman Islands exempted limited
liability company, as the seller (together with its successors and permitted
assigns, the “Seller”), NORTHSTAR REALTY FINANCE
CORP., a Maryland corporation, as the guarantor (together with its
successors and permitted assigns, the “Guarantor”), and WACHOVIA BANK, N.A. (LONDON BRANCH), as the purchaser
(together with its successors and assigns, the “Purchaser”), and
consented and agreed to by NRFC LUXEMBOURG HOLDINGS I
S.À R.L. (together with its successors and permitted assigns, “NRFC
Luxembourg”) and NRFC SUB-REIT CORP.,
as the pledgor (together with its successors and permitted assigns, the “Pledgor”).  Capitalized terms used and not otherwise
defined herein shall have the meanings given to such terms in the Note Purchase
Agreement (as defined below).

 

R E C I T A L S

 

WHEREAS, the Seller and the Purchaser are parties to that
certain Note Purchase Agreement, dated as of March 29, 2007, as amended by
the First Amendment to Note Purchase Agreement and Repurchase Documents, dated November 6,
2007 (“Amendment No. 1”) (as amended, modified, restated, replaced,
waived, substituted, supplemented or extended from time to time, including
pursuant to Amendment No. 1 and this Amendment No. 2, the “Note
Purchase Agreement”);

 

WHEREAS, the Seller desires to make certain modifications
to the Repurchase Documents;

 

WHEREAS, the Guarantor desires to make certain
modifications to the Guaranty Agreement and to reaffirm its obligations under
the Guaranty Agreement;

 

WHEREAS, NRFC Luxembourg and the Pledgor desire to consent
to the terms of this Amendment No. 2; and

 

WHEREAS, the Purchaser is willing to modify the Repurchase
Documents as requested by the Seller and the Guarantor on the terms and
conditions specified herein.

 

NOW THEREFORE, in consideration of the foregoing recitals,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:

 

Section 1.                                          Amendment
to Note Purchase Agreement.

 

(a)                                  The definition of “Administrative
Standard” contained in Section 1 of Exhibit A to the
Note Purchase Agreement is hereby amended and restated in its entirety as
follows:

 

““Administrative
Standard”: The Purchaser acting in its sole and absolute discretion
exercised in good faith.”

 

 

(b)                                 The definition of “Aggregate
Unpaids” contained in Section 1 of Exhibit A to the
Note Purchase Agreement is hereby amended and restated in its entirety as
follows:

 

““Aggregate
Unpaids”:  At any time, an amount
equal to the sum of the aggregate Purchase Price outstanding for the
Transaction, the aggregate Price Differential outstanding, outstanding interest
at the Default Rate, if any, Margin Deficits, if any, Breakage Costs, if any,
Costs, if any, Increased Costs, if any, Taxes, if any, Additional Amounts, if
any, expenses payable under Subsection 8(b) and all other
amounts owed by the Seller to the Purchaser or by the Seller or any other
Person under this Agreement, the Repurchase Documents and any other document or
agreement delivered in connection with the transactions contemplated by this
Agreement or the Repurchase Documents (whether due or accrued), including, but
not limited to, any interest accruing after the occurrence of a filing of a
petition for bankruptcy by the Seller, the Guarantor, the Pledgor or NRFC
Luxembourg, regardless of whether such interest is an allowed claim under any
Insolvency Laws.”

 

(c)                                  The definition
of “Asset Value” contained in Section 1 of Exhibit A to
the Note Purchase Agreement is hereby amended and restated in its entirety as
follows:

 

““Asset
Value”: As of any date of determination for the Purchased
Items, the lesser of (1) the product of the Book Value of the
Purchased Items times the Advance Rate and (2) the product of
the Market Value of the Purchased Items times the Advance
Rate, in each case, taking into account the maximum loan to value
ratio determined by the Purchaser in its discretion; provided, however,
the Asset Value of the Purchased Items may be reduced in
the Purchaser’s discretion (in all cases subject to the
Administrative Standard) for any reason by an amount determined by
the Purchaser in its discretion (which amount may, in the Purchaser’s
discretion, be reduced to zero) with respect to the Purchased Items, including,
without limitation, (i) with respect to the Purchased Items
(including the Mortgaged Property with respect thereto), the Mortgaged
Property has deteriorated materially in value or the Mortgaged Property
and/or any applicable asset or development plan are not performing as expected
(whether related to construction progress, re-leasing, zoning, reserve
balances, servicing and any other similar situations), including, without
limitation, (A) the debt yield is less than the prior quarter (except for
known and planned events pursuant to any asset business plan), (B) the lease-up
plan or lot or condo sales differ from the original asset business plan, (C) the
debt service reserve runs out with no replenishment feature or guaranty of
interest, (D) any construction timeline greater than six (6) months
is off the initial schedule, (E) cost overruns are greater than 15% to 20%
or (F) required principal pay downs are not met, (ii) in respect of which
there is a breach of a representation or warranty set forth in Subsection
5(w) of the Agreement or in any other subsection of Section 5
(to the extent such representation or warranty relates to the
Purchased Items or the Mortgaged Property or the Purchaser’s rights or
remedies with respect thereto), and in each case under this clause (ii) without
regard to (A) knowledge or lack of knowledge of a breach, (B) any
qualifications (if any) to such representations and warranties based on
knowledge (regardless of how such knowledge is qualified or phrased) and (C) representations
or warranties with respect to knowledge or lack of knowledge thereof, (iii) in
respect of which the complete Asset File has not been delivered to
the Purchaser within the time periods required by the Agreement, (iv) with
respect to which a Collateral Default has occurred,  (v) with respect
to which any funding commitment, funding obligation or any other
obligation of any kind shall have been transferred to the Purchaser, (vi) for
which an Asset Document or Asset File has been released from the
possession of the Purchaser or its designee to the Seller or its
designee and the same has not been returned to the Purchaser for a period
in excess of twenty (20) calendar days, other than with the consent of
the Purchaser, (vii) any portion (including any interest that is
senior or pari passu to the Purchased Items)
has been downgraded by any Rating Agency and/or (viii) with respect
to 

 

2

 

which
there has occurred any Insolvency Proceeding with respect to any Obligor
or any co—participant or any Person having an interest in the Purchased
Items or any related Mortgaged Property which is pari passu
with, in right of payment or priority, the rights of the Purchaser in
such Purchased Items. 
Notwithstanding the foregoing or anything else contained in the
Agreement, in the case of each reduction of the Asset Value by
the Purchaser, the Purchaser shall act in accordance with the
Administrative Standard.”

 

(d)                                 The definition
of “Asset Valuation Period” is hereby added to Section 1 of Exhibit A
to the Note Purchase Agreement:

 

““Asset
Valuation Period”: As defined in clause (i) of the definition thereof
set forth in the Credit Agreement.”

 

(e)                                  The definition
of “Bi-Annual Principal Reduction” is hereby added to Section 1 of Exhibit A
to the Note Purchase Agreement:

 

““Bi-Annual
Principal Reduction”: Defined in the Credit Agreement.”

 

(f)                                    The definition
of “Collateral Default” contained in Section 1 of Exhibit A
to the Note Purchase Agreement is hereby amended and restated in its entirety
as follows:

 

““Collateral
Default”: With respect to the Note, the other Purchased Items, the Asset
Documents and the Loan, any of the foregoing (a) that is, with respect to
any default in payment of principal and/or interest, sixty (60) or more days
delinquent under the terms thereof or, with respect to any other material
payment default, seventy five (75) or more days delinquent under the terms
thereof, or (b) for which there is a material non-monetary default (beyond
any applicable notice and cure period) under the terms thereof (including, for
the avoidance of doubt, any Insolvency Proceeding or Insolvency Event) which
results in acceleration.”

 

(g)                                 The definition
of “Credit Facility” contained in Section 1 of Exhibit A
to the Note Purchase Agreement is hereby amended and restated in its entirety
as follows:

 

““Credit
Facility”: That certain facility evidenced by, among other agreements, the
First Amended and Restated Credit Agreement, dated as of October 28, 2009,
between by and among the NRFC WA Holdings, LLC, a Delaware limited liability
company, as a borrower, NRFC WA Holdings II, LLC, a Delaware limited liability
company, as a borrower, NRFC WA Holdings VII, LLC, a Delaware limited liability
company, as a borrower, NRFC WA Holdings X, LLC, a Delaware limited liability
company, as a borrower, NRFC WA Holdings XII, LLC, a Delaware limited liability
company, as a borrower, Northstar Realty Finance Corp., a Maryland corporation,
as a guarantor, Northstar Realty Finance L.P., a Delaware limited partnership,
as a guarantor, the several banks and other financial institutions as are or
may from time to time become parties to the Credit Agreement (each, together
with its successors and assigns, a “Lender” and collectively, the “Lenders”),
and Wachovia, as administrative agent for the Lenders thereunder (as amended,
modified, restated, replaced, waived, substituted, supplemented or extended
from time to time, the “Credit Agreement”), as such agreements are
amended, modified, restated, replaced, waived, substituted, supplemented or
extended from time to time.”

 

(h)                                 The definition
of “Credit Parties” is hereby added to Section 1 of Exhibit A
to the Note Purchase Agreement:

 

““Credit
Parties”: Defined in the Credit Agreement.”

 

3

 

(i)                                     The definition
of “Extension Fee” is hereby deleted in its entirety from Section 1
of Exhibit A to the Purchase Agreement.

 

(j)                                     The definition
of “Fixed Repurchase Date” contained in Section 1 of Exhibit A
to the Note Purchase Agreement is hereby amended and restated in its entirety
as follows:

 

““Fixed
Repurchase Date”: October 28, 2012.”

 

(k)                                  The definition
of “Guaranty Agreement” contained in Section 1 of Exhibit A
to the Note Purchase Agreement is hereby amended and restated in its entirety
as follows:

 

““Guaranty
Agreement:  That certain Guaranty
Agreement, dated as of March 29, 2007, as amended by that certain First
Amendment to Note Purchase Agreement and Repurchase Documents, dated as of November 6,
2007, and that certain Second Amendment to Note Purchase Agreement and
Repurchase Documents, dated as of October 28, 2009, executed by the
Guarantor in favor of the Purchaser, as amended, modified, restated, replaced,
waived, substituted, supplemented or extended from time to time.”

 

(l)                                     The definition
of “Independent Director” contained in Section 1 of Exhibit A
to the Note Purchase Agreement is hereby amended and restated in its entirety
as follows:

 

““Independent
Director”: A natural Person who (a) is not, at the time of initial
appointment as Independent Director, and may not have been at any time during
the five (5) years preceding such initial appointment or at any time
while serving as Independent Director, (i) a stockholder, partner, member
or direct or indirect legal or beneficial owner of the Seller, the Guarantor or
any Subsidiary or Affiliate of the foregoing; (ii) a contractor, creditor,
customer, supplier, director (with the exception of serving as the Independent
Director of the Seller), officer, employee, attorney, manager or other Person
who derives any of its purchases or revenues from its activities with the
Seller, the Guarantor or any Affiliate or Subsidiary of the foregoing; (iii) a
natural Person who controls (directly or indirectly or otherwise) the Seller,
the Guarantor or any Affiliate or Subsidiary of the foregoing or who controls
or is under common control with any Person that would be excluded from serving
as an Independent Director under (i) or (ii), above; or (iv) a member
of the immediate family of a natural Person excluded from serving as an
Independent Director under clauses (i) or (ii) above, (b) is an
employee of a nationally recognized organization that supplies independent
directors and (c) otherwise satisfies the then current requirements of the
Rating Agencies.  A Person who is an
employee of a nationally recognized organization that supplies independent
directors and who otherwise satisfies the criteria in clause (a) but
for the fact that such organization receives payment from the Seller or the
Guarantor for providing such independent director shall not be disqualified
from serving as an Independent Director hereunder.”

 

(m)                               The definition
of “Pricing Rate” contained in Section 1 of Exhibit A
to the Note Purchase Agreement is hereby amended and restated in its entirety
as follows:

 

““Pricing
Rate”: With respect to the Note, on any date of determination, a rate per
annum equal to the sum of (a) the Rate plus (b) 350 basis
points provided, however, during the continuance of an Asset Valuation
Period, the 350 basis points set forth in clause (b) of this definition of
Pricing Rate shall be increased to 400 basis points.”

 

4

 

(n)                                 The definition
of “Revolving Loan” is hereby added to Section 1 of Exhibit A
to the Note Purchase Agreement:

 

““Revolving
Loan”: Defined in the Credit Agreement.”

 

(o)                                 The definition
of “Restatement Date” is hereby added to Section 1 of Exhibit A
to the Note Purchase Agreement:

 

““Restatement
Date”: October 28, 2009.”

 

(p)                                 The definition
of “Term Loan Average Advance Rate” is hereby deleted in its entirety from Section 1
of Exhibit A to the Note Purchase Agreement.

 

(q)                                 The definition
of “Term Loan Collateral” is hereby deleted in its entirety from Section 1
of Exhibit A to the Note Purchase Agreement.

 

(r)                                    Section 4(i) of the
Note Purchase Agreement is hereby amended and restated in its entirety as
follows:

 

“If
at any time during an Asset Valuation Period the Purchaser determines (based on
such factors as the Purchaser determines to rely on its discretion, including
but not limited to a credit analysis of the Mortgaged Properties and the
current market conditions for the Note) that the Asset Value of the Note is
less than the aggregate Purchase Price outstanding (a “Margin Deficit”),
then the Purchaser may by notice (a “Margin Deficit Notice”) to the
Seller require the Seller to transfer to the Purchaser cash in such amount that
the aggregate Asset Value of the Note will thereupon equal or exceed the
aggregate Purchase Price outstanding. 
Notwithstanding anything to the contrary in this Agreement, the Seller
shall transfer such cash to the Purchaser’s Account no later than forty-eight
(48) hours after the Margin Deficit Notice shall be deemed to have been
received under Section 11. 
All cash transferred to the Purchaser pursuant to this Subsection 4(i) shall
be deposited in the Purchaser’s Account and shall be applied on account of the
Aggregate Unpaids.  The Purchaser’s
election, in its discretion, not to deliver a Margin Deficit Notice at any time
there is a Margin Deficit shall not in any way limit or impair its right to
deliver a Margin Deficit Notice at any time a Margin Deficit exists (including
the same or a different Margin Deficit).”

 

(s)                                  Section 4(k) of the
Note Purchase Agreement is hereby amended and restated in its entirety as
follows:

 

“(k)                            (i) at all
times while the Bi-Annual Principal Reduction is satisfied and to the extent
the Note or other Purchased Items is repaid or prepaid in whole or part by the
underlying Obligor of the Note or other Purchased Items, the outstanding
Purchase Price for the Note or other Purchased Items is reduced for any reason
or the Seller desires to voluntarily repurchase the Note or other Purchased
Items or otherwise desires to reduce, repay or prepay the Purchase Price for
the Note or other Purchased Items in whole or in part, the Seller shall, on or
before the effective date of such repayment, prepayment, reduction or removal,
pay an amount equal to 115% multiplied by the Purchase Price (or, in the case
of partial repayments, partial prepayments or partial reductions, multiplied by
the amount of such partial repayment, partial prepayment or partial reduction)
(the “Release Prepayment”) for the Note or other Purchased Items, which
shall be applied as follows:  the amount
representing the fraction the numerator of which shall be 100 and the
denominator of which shall be 115 (100/115) of the Release Prepayment shall be
applied first, to the outstanding Purchase Price of the Note or other Purchased
Items, and the fraction the numerator of which shall be 15 and the denominator
of which shall be 115 (15/115) of the Release Prepayment shall 

 

5

 

be
applied to the outstanding Term Loans and the Aggregate Unpaids (other than
Purchase Price) in such manner and order as the Purchaser shall determine in
its reasonable discretion and then, after payment in full of the Term Loans and
Aggregate Unpaids, to the Revolving Loans in such manner and order as the
Purchaser may determine in its reasonable discretion or (ii) at all times while
the Bi-Annual Principal Reduction is not satisfied and to the extent the Note
or other Purchased Items is repaid or prepaid in whole or part by the
underlying Obligor of the Note or other Purchased Items, the outstanding
Purchase Price for the Note or other Purchased Items is reduced for any reason
or the Seller desires to voluntarily repurchase the Note or other Purchased
Items or otherwise desires to reduce, repay or prepay the Purchase Price for
the Note or other Purchased Items in whole or in part, the Seller shall, on or
before the effective date of such repayment, prepayment, reduction or removal,
pay an amount equal to the greater of (y) the outstanding Purchase Price
(or, in the case of partial repayments, partial prepayments or partial
reductions, the amount of such partial payment, partial prepayment or partial
reduction) plus 50% of the Net Cash Proceeds received by the Seller for
any sale of the Note or other Purchased Items (such Net Cash Proceeds not to
include the amount of the outstanding Purchase Price) and (z) 125% of the
outstanding Purchase Price (or, in the case of partial repayments, partial
prepayments or partial reductions, 125% of the amount of such partial payment,
partial prepayment or partial reduction) for the Note or other Purchased Items,
which shall be applied as follows: first, to the outstanding Purchase Price,
second, to the outstanding Term Loans and the Aggregate Unpaids (other than
Purchase Price) in such manner and order as the Purchaser shall determine in
its discretion, and, third, to the outstanding Revolving Loans in such manner
and order as the Purchaser shall determine in its discretion.  Notwithstanding anything contained herein or
in the Repurchase Documents to the contrary, the Note or Purchased Items shall
not be released from the Purchaser’s Lien until, subject to other conditions in
the Repurchase Documents (including, but not limited to, no Events of Default
are existing) the Purchaser has received the outstanding Repurchase Price and
all other Aggregate Unpaids for the related Transaction.”

 

(t)                                    Section 4(l) of the
Note Purchase Agreement is hereby amended and restated in its entirety as
follows:

 

“At
any time that the Note or any other Purchased Item is the subject of a
Collateral Default, the Seller shall transfer to the Purchaser cash such that
the aggregate Purchase Price outstanding shall equal fifty percent (50%) of the
Asset Value of the Note (determined in accordance with the definition of Asset
Value) as of the date that the Note or such other Purchased Item went into
Collateral Default (such date, the “Collateral Default Date”), with such
payment to be made in three equal installments, with the first installment
being due no later than the date that is twenty (20) days following the
Collateral Default Date, the second installment being due no later than the
date that is forty (40) days following the Collateral Default Date and the
third installment being due no later than the date that is sixty (60) days
following the Collateral Default Date; provided, however, if the
Purchased Item is in Collateral Default during the three (3) year period
following the Restatement Date and the aggregate Purchase Price outstanding and
the outstanding principal balance of the Term Loans and/or Aggregate Unpaids is
reduced by an amount greater than or equal to $90,000,000 prior to the date
that is three (3) years from the Restatement Date, the first installment
shall be due no later than the date that is forty (40) days following the
Collateral Default Date, the second installment shall be due no later than the
date that is eighty (80) days following the Collateral Default Date and the
third installment shall be due no later than the date that is one hundred
twenty (120) days following the Collateral Default Date; provided, further,
however, if an Event of Default occurs, the payment required under this Section 4(l) shall
be immediately due and payable.  All cash
transferred to the Purchaser pursuant to this Subsection 4(l) shall
be deposited in the Purchaser’s Account and shall be applied to the 

 

6

 

reduction
of the outstanding Purchase Price of the Note and the other outstanding
Aggregate Unpaids.”

 

(u)                                 The “and”
appearing at the end of clause (x) of Section 6(g) is
hereby deleted, the “.” appearing at the end of clause (xi) of Section 6(g) is
hereby deleted and replaced with “; and” and a new clause (xii) is hereby added
to Section 6(g) of the Note Purchase Agreement as follows:

 

“(xii)                       Collateral Default.  Promptly upon notice or knowledge thereof
(and, in any event, within two (2) Business Days), provide written notice
to the Purchaser if the Purchased Items becomes the subject of a Collateral Default.”

 

(v)                                 A new Section 6(v) is
hereby added to the Note Purchase Agreement as follows:

 

“(v)                           Independent Director.  The Seller and the Guarantor shall provide
the Purchaser at least ten (10) Business Days prior written notice of its
removal or replacement of any Independent Director appointed with respect to
the Seller.  The Seller and the Guarantor
shall provide the Purchaser a copy of the executed agreement with respect to
the appointment of any such Independent Director.  The identity and contact information for such
Independent Director is set forth on Schedule I attached hereto, as such
information may be updated from time to time by written notice to the
Purchaser.”

 

(w)                               A new Section 6(w) is
hereby added to the Note Purchase Agreement as follows:

 

“(w)                         Additional
Covenants.  In the
event that (i) the Seller, the Guarantor, the Pledgor or any other Credit
Party or any Consolidated Subsidiary of the foregoing shall incur any
additional secured Indebtedness on or after the Restatement Date, or amend the
documentation for any secured Indebtedness of the Seller, the Guarantor, the
Pledgor or any other Credit Party or any Consolidated Subsidiary of the
foregoing outstanding on or after the Restatement Date, and (ii) such
secured Indebtedness either requires or incorporates additional covenants, or
amends any covenants, of the Seller, the Guarantor, the Pledgor or any other
Credit Party or any Consolidated Subsidiary of the foregoing that (A) are
the same as or similar to the Financial Covenants (as defined in the Credit
Agreement)  or (B) require repayment
of any such secured Indebtedness from any Equity Issuance (as defined in the
Credit Agreement), any Debt Issuance (as defined in the Credit Agreement), any
sale of any non-cash consideration received in connection with an Equity
Issuance or Debt Issuance or any disposition of collateral not pledged in
connection with such other secured Indebtedness facility by the Seller, the
Guarantor, the Pledgor or any other Credit Party or any Consolidated Subsidiary
of the foregoing in such a way as to make any covenant or repayment referred to
in clauses (A) or (B) above (the “Additional Covenants”) more
restrictive than provided for in the Repurchase Documents or the Credit
Documents (as defined in the Credit Agreement), the Seller, the Guarantor
and the Pledgor shall promptly (but in no event later than ten (10) Business
Days thereafter) notify the Purchaser in writing of such occurrence.  If the Purchaser so elects within twenty
(20) Business Days following receipt of such notice, then such Additional
Covenants shall automatically be incorporated by reference into the
Repurchase Documents without the need for further action by any party
whatsoever.  Thereupon, the Purchaser
shall have a separate and independent right to enforce such Additional
Covenants.  The Purchaser may also elect
to amend the Repurchase Documents to incorporate such Additional
Covenants.  The Seller, the Guarantor and
the Pledgor agree to cooperate in executing such amendments to the Repurchase Documents
as the Purchaser may require in its reasonable discretion.  For the purposes of this Section, (x) the
term Credit Parties shall include NRFC SUB-REIT Corp. and (y) the term
Consolidated Subsidiaries shall not include: (1) NorthStar Corp.’s Wakefield venture and
entities directly related to such venture, (2) NorthStar Real Estate
Income 

 

7

 

Trust, Inc. and its Subsidiaries, NorthStar
Income Opportunity REIT I, Inc. and its Subsidiaries and any other public
entities that may be part of NorthStar Corp.’s non-listed REIT initiative, (3) NorthStar
Real Estate Securities Opportunity Master Fund, L.P. and its Subsidiaries, and (4) any
other entities that may in the future be managed by NorthStar Corp. or its
Affiliates that are not majority owned, directly or indirectly, by NorthStar
Corp. “

 

(x)                                   The last
sentence of Subsection 8(b) to the Note Purchase Agreement is
hereby amended and restated in its entirety:

 

“On
the Restatement Date and on each anniversary of such date, the Seller shall pay
to the Purchaser an asset management fee (“Asset Management Fee”) of
$5,000; provided, however, if the Seller pays all amounts due
under this Agreement and the other Repurchase Documents on the Restatement
Date, the Purchaser shall rebate the Asset Management Fee.”

 

(y)                                 Section 29 of the Note
Purchase Agreement is hereby amended and restated in its entirety as follows:

 

“[Reserved].”

 

Section 2.                                          Guaranty
Agreement.

 

(a)                                  The word “Limited”
is hereby deleted from the title of the “Limited Guaranty Agreement” and
henceforth the “Limited Guaranty Agreement” shall be titled the “Guaranty
Agreement.”

 

(b)                                 The Section 1
of the Guaranty Agreement is amended and restated as follows:

 

“The
Guarantor hereby absolutely, primarily, unconditionally and irrevocably
guarantees, as primary obligor and as guarantor of payment and performance and
not merely as surety or guarantor of collection, to the Purchaser subject to
the terms of this Section 1 (i) the payment, when due, by
maturity, acceleration or otherwise, of the Guarantee Indebtedness, and (ii) the
full and timely performance of, and compliance with, each and every duty,
agreement, undertaking, indemnity and obligation of the Seller under the
Repurchase Documents strictly in accordance with the terms thereof
(collectively, the “Guarantor Obligations” and, together with the
Guarantee Indebtedness, the “Guarantee Liabilities”), in each case,
however created, arising or evidenced, whether direct or indirect, primary or
secondary, absolute or contingent, joint or several and whether now or
hereafter existing or due or to become due. 
For the purposes hereof, the term “Guarantee Indebtedness” means
any and all Indebtedness of the Seller or the Pledgor to the Purchaser (and any
other related Persons specified in the Repurchase Agreement) in connection with
the Repurchase Documents, including, but not limited to, the aggregate
Repurchase Price outstanding, the aggregate Price Differential outstanding and
all other Aggregate Unpaids outstanding, howsoever evidenced, whether existing
now or arising hereafter, as such Guarantee Indebtedness may be amended,
modified, extended, renewed or replaced from time to time.  For the avoidance of doubt, the Guarantor’s
liability for the Guarantee Liabilities is for the full amount thereof and such
Guarantee Liabilities are no longer limited to a fixed dollar amount.  Notwithstanding any provision to the contrary
contained herein or in any of the other Repurchase Documents, the obligations
of each Guarantor (if more than one) hereunder shall be limited to an aggregate
amount equal to the largest amount that would not render its obligations
hereunder subject to avoidance under Section 548 of the Bankruptcy Code or
any comparable provisions of any Applicable Law of any state.  All payments under this Guaranty shall be in
Euros.”

 

8

 

Section 3.                                          Repurchase
Documents in Full Force and Effect as Modified.

 

Except
as specifically modified hereby, the Repurchase Documents shall remain in full
force and effect in accordance with their terms.  All references to any Repurchase Document
shall be deemed to mean each Repurchase Document as modified by this Amendment No. 2.  This Amendment No. 2 shall not
constitute a novation of the Repurchase Documents, but shall constitute a
modification thereof.  The parties hereto
agree to be bound by the terms and conditions of the Repurchase Documents, as
modified by this Amendment No. 2, as though such terms and conditions were
set forth herein.

 

Section 4.                                          Representations.

 

Each of the Seller, the Guarantor and the Pledgor
represents and warrants, as of the date of this Amendment No. 2, as
follows:

 

(a)                                  it is duly incorporated or
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and each jurisdiction where it conducts business;

 

(b)                                 the execution, delivery and
performance by it of this Amendment No. 2 is within its corporate, company
or partnership powers, has been duly authorized and does not contravene (1) its
Governing Documents or its applicable resolutions, (2) any Applicable Law or (3) any
Contractual Obligation or Indebtedness;

 

(c)                                  no consent, license, permit,
approval or authorization of, or registration, filing or declaration with, any
Governmental Authority or other Person is required in connection with the execution,
delivery, performance, validity or enforceability by or against it of this
Amendment No. 2;

 

(d)                                 this Amendment No. 2
has been duly executed and delivered by it;

 

(e)                                  this Amendment No. 2,
as well as each of the Repurchase Documents as modified by this Amendment No. 2,
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally or by general principles of
equity;

 

(f)                                    no default or Event of
Default exists or will exist after giving effect to this Amendment No. 2;

 

(g)                                 each of the Repurchase
Documents is in full force and effect and neither the Seller, the Guarantor nor
the Pledgor has any defense, offset, counterclaim, abatement, right of
rescission or other claims, actions, causes of action, demands, damages or
liabilities of any kind or nature, in all cases whether legal or equitable,
available to the Seller, the Guarantor, the Pledgor or any other Person with
respect to (i) this Amendment No. 2, 
the Note Purchase Agreement, the Repurchase Documents or any other
instrument, document and/or agreement described herein or therein, as modified
and amended hereby, (ii) the obligation of the Seller and the Guarantor to
repay the Aggregate Unpaids and other amounts due under the Repurchase
Documents or (iii) the Purchaser or the Purchaser’s respective officers,
employees, representatives, agents, counsel or directors arising out of or from
or in any way related to or in connection with the Note Purchase Agreement or
the Repurchase Documents, including, without limitation, any action by such
Persons, or failure of such Persons to act, under the Note Purchase Agreement
or the other Repurchase Documents on or prior to the date hereof; and

 

9

 

(h)                                  except as specifically
provided in this Amendment No. 2, the Aggregate Unpaids are not reduced or
modified by this Amendment No. 2.

 

Section 5.                                          Conditions
Precedent.

 

The
effectiveness of this Amendment No. 2 is subject to the following
conditions precedent:  (i) delivery
to the Purchaser of this Amendment No. 2 duly executed by each of the
parties hereto; (ii) delivery of legal opinions from Paul, Hastings,
Janofsky & Walker LLP and Venable LLP with respect to the Seller and
the Guarantor; (iii) the payment of a
commitment fee in the amount of $879,848.89 to the Purchaser; (iv) the
payment of all reasonable legal fees and expenses of Moore & Van Allen
PLLC, as counsel to the Purchaser, in the amount to be set forth on a separate
invoice; and (v) such other documents, agreements or certifications as the
Purchaser may reasonably require.

 

Section 6.                                          Miscellaneous.

 

(a)                                  This Amendment No. 2
may be executed in any number of counterparts (including by facsimile), and by
the different parties hereto on the same or separate counterparts, each of
which shall be deemed to be an original instrument but all of which together
shall constitute one and the same agreement.

 

(b)                                 The descriptive headings of
the various sections of this Amendment No. 2 are inserted for convenience
of reference only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.

 

(c)                                  This Amendment No. 2
may not be amended or otherwise modified, waived or supplemented except as
provided in the Note Purchase Agreement.

 

(d)                                 The interpretive provisions
of Sections 2, 3 and 4 of Exhibit A to the
Note Purchase Agreement are incorporated herein mutatis mutandis.

 

(e)                                  This Amendment No. 2
represents the final agreement among the parties and may not be contradicted by
evidence of prior, contemporaneous or subsequent oral agreements between the
parties.  There are no unwritten oral
agreements between the parties.

 

(f)                                    THIS
AMENDMENT NO. 2 AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AMENDMENT NO. 2 SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

(g)                                 Each of the Seller, the Guarantor and the Pledgor hereby ratifies the
Note Purchase Agreement and the other Repurchase Documents and acknowledges and
reaffirms (a) that it is bound by all terms of the Note Purchase Agreement
and the other Repurchase Documents applicable to it and (b) that it is
responsible for the Aggregate Unpaids and the observance and full performance
of its respective obligations under the Repurchase Documents.

 

(h)                                 This Amendment No. 2 is a Repurchase Document executed pursuant to
the Note Purchase Agreement and shall be construed, administered and applied in
accordance with the terms and provisions of the Note Purchase Agreement.

 

(i)                                     In consideration of the Purchaser entering into this Amendment No. 2,
each of the Seller, the Guarantor and the Pledgor hereby waives, releases and
discharges the Purchaser and the Purchaser’s officers, employees,
representatives, agents, counsel and directors from any and all actions, causes
of 

 

10

 

action, claims, demands, damages and liabilities of
whatever kind or nature, in law or in equity, now known or unknown, suspected
or unsuspected to the extent that any of the foregoing arises out of or
from or in any way relating to or in connection with the Note Purchase
Agreement or the Repurchase Documents, including but not limited to, any action or failure to act under the Note Purchase
Agreement or the other Repurchase Documents on or prior to the date hereof,
except, with respect to any such Person being released hereby, any actions,
causes of action, claims, demands, damage and liabilities arising out of such
Person’s gross negligence or willful misconduct in connection with the
Note Purchase Agreement or the other Repurchase Documents.

 

(j)                                     The Guarantor (i) agrees
to and consents to the terms and provisions of this Amendment No. 2, (ii) acknowledges
and confirms that the Guaranty Agreement remains in full force and effect
notwithstanding this Amendment No. 2, and (iii) reaffirms its
obligations under the Guaranty Agreement.

 

(k)                                  The Purchaser acknowledges
and agrees that, as of the Restatement Date, upon receipt of a payment in
the amount of €13,000,414.83, the aggregate Purchase Price outstanding shall be
€59,541,780.31.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

11

 

IN WITNESS WHEREOF, the parties have caused
this Amendment No. 2 to be executed by their respective officers thereunto
duly authorized, as of the date first above written.

 

	
   

  	
  Executed
  as a deed by:

  
	
   

  	
   

  
	
  THE
  SELLER:

  	
  NRF–REINDEER
  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Daniel R. Gilbert

  
	
   

  	
  Name:  

  	
  Daniel
  R. Gilbert

  
	
   

  	
  Title:
  

  	
  Executive
  Vice President

  
	
   

  	
   

  	
  and
  Chief Investment Officer

  
	
   

  	
   

  
	
   

  	
  Address
  for Notices:

  
	
   

  	
   

  
	
   

  	
  NRF–Reindeer
  Ltd.

  
	
   

  	
  c/o
  Walkers SPV Ltd

  
	
   

  	
  Walker
  House, 87 Mary Street

  
	
   

  	
  George
  Town, Grand Cayman KY1–9001

  
	
   

  	
  Cayman
  Islands

  
	
   

  	
  Attention:
  

  	
  Directors

  
	
   

  	
  Facsimile
  No.: 

  	
  (345)
  949–7886

  
	
   

  	
  Confirmation
  No.: 

  	
  (345)
  949–0100

  
				

 

[Signatures Continued on the Following Page]

 

S-1

 

	
  THE
  PURCHASER:

  	
  WACHOVIA
  BANK, N.A. (LONDON BRANCH)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  H. Lee Goins III

  
	
   

  	
  Name:  

  	
  H.
  Lee Goins III

  
	
   

  	
  Title:  

  	
  Director

  
	
   

  	
   

  
	
   

  	
  Address
  for Notices:

  
	
   

  	
   

  
	
   

  	
  Wachovia
  Bank, N.A. (London Branch)

  
	
   

  	
  c/o
  Wachovia Bank, National Association

  
	
   

  	
  One
  Wachovia Center, Mail Code:  NC0166

  
	
   

  	
  301
  South College Street

  
	
   

  	
  Charlotte,
  North Carolina 28288

  
	
   

  	
  Attention:
  

  	
  Lee
  Goins

  
	
   

  	
  Facsimile
  No.: 

  	
  (704)
  715–0066

  
	
   

  	
  Confirmation
  No.:

  	
  (704)
  383–2324

  
				

 

[Signatures Continued on the Following Page]

 

S-2

 

	
  GUARANTOR:

  	
  NORTHSTAR
  REALTY FINANCE CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Daniel R. Gilbert

  
	
   

  	
  Name:  

  	
  Daniel
  R. Gilbert

  
	
   

  	
  Title:
  

  	
  Executive
  Vice President

  
	
   

  	
   

  	
  and
  Chief Investment Officer

  

 

[Signatures Continued on the Following Page]

 

S-3

 

	
  Consented
  and agreed to by:

  	
   

  
	
   

  	
   

  
	
  NRFC
  LUXEMBOURG HOLDINGS I S.À R.L.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Daniel R. Gilbert

  	
   

  
	
  Name:  

  	
  Daniel
  R. Gilbert

  	
   

  
	
  Title:
  

  	
  Executive
  Vice President

  	
   

  
	
   

  	
  and
  Chief Investment Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:
  

  	
  /s/
  Albert Tylis

  	
   

  
	
  Name:  

  	
  Albert
  Tylis

  	
   

  
	
  Title:
  

  	
  Executive
  Vice President

  	
   

  
	
   

  	
  General
  Counsel and Secretary

  	
   

  

 

S-4

 

	
  Consented
  and agreed to by:

  	
   

  
	
   

  	
   

  
	
  NRFC
  SUB-REIT Corp.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:
  

  	
  /s/
  Daniel R. Gilbert

  	
   

  
	
  Name:  

  	
  Daniel
  R. Gilbert

  	
   

  
	
  Title:
  

  	
  Executive
  Vice President

  	
   

  
	
   

  	
  and
  Chief Investment Officer

  	
   

  

 

S-5

 

Schedule
I

 

Independent
Director

 

	
  Identity

  	
   

  	
  Contact
  Information

  
	
  Jennifer A. Schwartz

  	
   

  	
  CT Corporation System 

  1209 Orange Street 

  Wilmington DE 19801 

  T 877-428-3477 

  F
  302-658-5459         

  Jennifer.schwartz@wolterskluwer.com

  Vic.duva@wolterskluwer.comExhibit 10.36

 

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

 

NORTHSTAR REALTY FINANCE CORP.

 

COMMON STOCK PURCHASE WARRANT

 

	
  Date of Issuance: October 28, 2009

  	
   

  	
  Certificate No. W-1

  

 

THIS IS TO CERTIFY that WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association (together with its permitted
transferees, successors and assigns, the “Holder”), for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, is entitled to purchase from NORTHSTAR REALTY FINANCE CORP.,  a Maryland corporation (the “Company”), at the price of $7.50 per
share (the “Exercise Price”),
at any time after the date hereof (the “Commencement
Date”) and expiring on October 28, 2019 (the “Expiration Date”), 500,000  shares of fully paid and
non-assessable  common
stock, par value $0.01 per share (“Common
Stock”), of the Company (as such number may be adjusted as provided
herein).  The 500,000  shares
of Common Stock which may be purchased pursuant to this Warrant are referred to
herein as the “Aggregate Number”. 
This common stock purchase warrant (this “Warrant”) is issued
under and in connection with that certain First Amended and Restated Credit
Agreement, dated as of October 28, 2009 as the same may be amended,
modified, restated, replaced, waived, substituted, supplemented or extended
from time to time, the “Credit
Agreement”), among NRFC WA HOLDINGS, LLC, a Delaware limited
liability company, as a borrower, NRFC WA HOLDINGS II, LLC, a Delaware limited
liability company, as a borrower, NRFC WA HOLDINGS VII, LLC, a Delaware limited
liability company, as a borrower, NRFC WA HOLDINGS X, LLC, a Delaware limited
liability company, as a borrower, NRFC WA HOLDINGS XII, LLC, a Delaware limited
liability company, as a borrower,  the
Company, as a guarantor, NORTHSTAR REALTY FINANCE L.P., a Delaware limited
partnership, as a guarantor, and the other entities from time to time party
thereto, the several banks and other financial institutions as are, or may from
time to time become parties thereto, and Wachovia Bank, National Association, a
national banking association, as administrative agent for the lenders
thereunder.

 

 

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

 

SECTION 1.                            The Warrant;
Transfer and Exchange.

 

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

 

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

 

SECTION 2.                            Exercise.

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)                                 Notices.

 

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

 

 

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

 

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

 

(c)                                  When Adjustment
Not Required.  If the
Company shall take a record of the holders of its Common Stock for any purpose
requiring an adjustment pursuant to Section 5(a) hereunder,
but shall, thereafter and before the consummation of the event requiring such
adjustment legally abandon its plan, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.

 

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

 

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

 

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

 

SECTION 7.                            Transfers of this Warrant.

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

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

 

SECTION 8.                            Covenants.

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

SECTION 9.                            No Effect Upon Lending
Relationship.   Notwithstanding anything herein to the contrary, nothing contained in
this Warrant shall affect, limit or impair the rights and remedies of the
Holder or any of its Affiliates in its capacity as a lender to the Company
pursuant to any agreement under which the Company has borrowed money from the
Holder.  Without limiting the generality
of the foregoing, the Holder, in exercising its rights as a lender, including
making its decision on whether to foreclose on any collateral security, will
have no duty to consider (i) its status or the status of any of its
Affiliates as a direct or indirect equity holder of the Company, (ii) the
equity of the Company or (iii) any duty it may have to any other direct or
indirect equity holder of the Company, except as may be required under the
applicable loan documents or by commercial law applicable to creditors
generally.

 

SECTION 10.                     Events of Non-Compliance and
Remedies.

 

(a)                                  Events of Non-Compliance.  If the Company fails to keep and fully and
promptly perform and observe in all material respects any of the terms,
covenants or representations contained or referenced herein within twenty (20)
calendar days from the earlier to occur of (i) written notice from the
Holder specifying what failure has occurred, or requesting that a specified
failure be remedied or (ii) the Company becoming aware of such failure (an
“Event of Non-Compliance”),
the Holder shall be entitled to the remedies set forth in subsection (b) hereof.

 

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

 

SECTION 11.                     Definitions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

“Outstanding
Common Stock” of the Company means, as of the date of determination,
the sum (without duplication) of the following: (a) the number of shares
of Common Stock then outstanding at the date of determination, (b) the
number of shares of Common Stock then issuable upon the exercise of this
Warrant (as such number of shares may be adjusted pursuant to the terms hereof)
and (c) the number of shares of Common Stock then issuable upon the
exercise or conversion of Convertible Securities and any warrants, options or
other rights to subscribe for or purchase Common Stock or Convertible
Securities (but excluding any unvested options and securities not then
exercisable for or convertible into Common Stock).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

SECTION 13.  Delays, Omissions and Indulgences.  It is agreed that no delay or omission to
exercise any right, power or remedy accruing to the Holder upon any breach or
default of the Company under this Warrant shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach or default,
or any acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter occurring.  It is further agreed that any waiver, permit,
consent or approval of any kind or character on the Holder’s part of any breach
or default under this Warrant, or any waiver on the Holder’s part of any
provisions or conditions of this Warrant must be in writing and that all
remedies, either under this Warrant, or by Requirement of Law or otherwise
afforded to the Holder, shall be cumulative and not alternative.

 

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

 

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

 

SECTION 16.  Notices.

 

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

 

 

	
  if to the Company:

  
	
   

  
	
  c/o NorthStar Realty
  Finance Corp.

  
	
  399 Park Avenue, 18th
  floor

  
	
  New York, New York 10022

  
	
  Attention:

  	
  Andy Richardson

  
	
   

  	
  Al Tylis, Esq.

  
	
   

  	
  Daniel R. Gilbert

  
	
  Facsimile No.:

  	
  (212) 547–2700

  
	
  Telephone Nos.:

  	
  (212) 547–2650

  
	
   

  	
  (212) 547–2641

  
	
   

  	
  (212) 547–2680

  
	
  Emails:

  	
  richardson@nrfc.com

  
	
   

  	
  tylis@nrfc.com

  
	
   

  	
  gilbert@nrfc.com

  
	
   

  
	
   

  
	
  with a copy to:

  
	
   

  
	
  Paul Hastings
  Janofsky & Walker LLP

  
	
  75 East 55th Street

  
	
  New York, New York 10022

  
	
  Attention:

  	
  Robert J. Grados, Esq.

  
	
  Facsimile No.:

  	
  (212) 230–7830

  
	
  Telephone No.:

  	
  (212) 318–6923

  
	
  Email:

  	
  RobertGrados@paulhastings.com

  
	
   

  
	
  if to the Holder:

  
	
   

  
	
  Wachovia Bank, National
  Association

  
	
  One Wachovia Center,
  NC0166

  
	
  301 South College Street

  
	
  Charlotte, North Carolina
  28202

  
	
  Attention:

  	
  Lee Goins

  
	
  Facsimile No.:

  	
  (704) 715-0666

  
	
  Telephone No.:

  	
  (704) 715-7655

  
	
  Email:

  	
  lee.goins@wachovia.com

  
	
   

  
	
   

  
	
  with a copy to:

  
	
   

  
	
  Moore & Van Allen
  PLLC

  
	
  100 North Tryon Street

  
	
  Suite 4700

  
	
  Charlotte, North Carolina
  28202

  
	
  Attention:

  	
  Kenneth P. Kerr, Esq.

  
	
  Facsimile No.:

  	
  (704) 378–2097

  
	
  Telephone No.:

  	
  (704) 331–1145

  
	
  Email:

  	
  kenkerr@mvalaw.com

  

 

Notices sent by hand or overnight courier
service, or mailed by certified or registered mail, shall be deemed to have
been given when received; notices sent by telecopier shall be deemed to have
been 

 

 

given when sent (except that, if not given during normal business hours
for the recipient, shall be deemed to have been given at the opening of
business on the next Business Day for the recipient).  Notices delivered through electronic
communications to the extent provided in paragraph (b) below shall be
effective as provided in said paragraph (b).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 21.  Entire Agreement.  This Warrant and the Credit Agreement are
intended by the parties as a final expression of their agreement and are
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein.

 

SECTION 22.  Rules of Construction.  Unless the context otherwise requires “or” is
not exclusive, and references to sections or subsections refer to sections or
subsections of this Warrant.  All 

 

 

pronouns and any variations thereof refer to the masculine, feminine or
neuter, singular or plural, as the context may require.

 

[Remainder of Page Intentionally Omitted.]

 

 

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

 

 

	
   

  	
  NORTHSTAR REALTY FINANCE
  CORP.,  

  a Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  Daniel R. Gilbert

  
	
   

  	
   

  	
  Name:

  	
  Daniel R. Gilbert

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
  and Chief Investment Officer

  

 

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

To:                                               

 

 

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

 

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

 

o            Exercise for Cash

 

o            Cashless Exercise

 

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

 

 

	
   

  	
  (Name of Record Holder/Transferee)

  

 

and deliver such certificate or certificates to the following address:

 

 

	
   

  	
  (Address of Record Holder/Transferee)

  

 

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

 

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

 

 

	
   

  	
  (Name of Record Holder/Transferee)

  

 

and deliver such warrant to the following address:

 

	
   

  	
   

  
	
   

  	
  (Address of Record Holder/Transferee)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
  (Date)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}]]