Document:

Exhibit
10.24

 

 

FIRST AMENDMENT TO

NOTE PURCHASE AGREEMENT

AND REPURCHASE DOCUMENTS

(Wachovia/NRF—Reindeer Ltd.)

 

THIS FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT, dated as of November 6, 2007
(this “Amendment No. 1”), 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 to by NRFC LUXEMBOURG HOLDINGS I S.À R.L.
(together with its successors and permitted assigns, “NRFC Luxembourg”).  Capitalized terms used and not otherwise
defined herein shall have the meanings given to such terms in the 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,
modified, restated, replaced, waived, substituted, supplemented or extended
from time to time, including this Amendment No. 1, the “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;

 

WHEREAS, NRFC Luxembourg desires to consent to the terms of
this Amendment No. 1; 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 Purchase Agreement.

 

(a)           The following definition of “Administrative
Standard” is hereby added to Section 1 of Exhibit A to
the Purchase Agreement:

 

““Administrative Standard” shall mean
the Purchaser acting in its sole and absolute discretion subject to
commercial reasonableness and good faith.”

 

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

 

“”Asset
Value” shall mean, 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 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, (i) the Purchaser shall not have the
right to reduce the Asset Value of the Purchased Items if, as a result of
marking the Market Value thereof to market, the price at which 

 

 

the Purchased
Items could readily be sold is less than the Market Value of the Purchased
Items at the time it was sold and pledged to the Purchaser due
to the interest rate spread or interest rate fluctuations payable by the
Obligor of such Purchased Items, (ii) in the case of each reduction
of the Asset Value by the Purchaser, the Purchaser shall act in
accordance with the Administrative Standard, (iii) except as provided
in clause (iv) below, the Purchaser may not reduce the Asset Value
other than on a quarterly basis commencing with the date of Amendment No. 1
to the Agreement and (iv) the Purchaser may reduce the Asset Value at
any time  if any event, happening,
situation or circumstance occurs (including, without limitation any event
described above in the proviso to the definition of Asset Value) at or with
respect to the Purchased Items or the Mortgaged Property
for such Purchased Items that impacts, affects, impairs or
results in a reduction of at least 10% of the Asset Value of
such Purchased Items.  If there is a
reduction of Asset Value and the Purchaser requires, in accordance with
the Agreement, a payment or prepayment in connection therewith,
the Purchaser will promptly provide the details and methodology of such
reduction to the Seller.”

 

(c)           The
following definition of “Cash Equivalents” is hereby added to Section 1
of Exhibit A to the Purchase Agreement:

 

““Cash
Equivalents” shall mean any of the following:  (a) securities issued or directly and
fully guaranteed or insured by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than
one (1) year from the date of acquisition, (b) time deposits or
certificates of deposit of any commercial bank incorporated under the laws of
the United States or any state thereof, of recognized standing having capital
and unimpaired surplus in excess of $1,000,000,000 and whose short-term
commercial paper rating at the time of acquisition is at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody’s (any such bank, an “Approved Bank”), with such deposits or
certificates having maturities of not more than one (1) year from the
date of acquisition, (c) repurchase obligations with a term of not more
than seven (7) days for underlying securities of the types described
in clauses (a) and (b) above entered into with any Approved
Bank, (d) commercial paper or finance company paper issued by any Person
incorporated under the laws of the United States or any state thereof and rated
at least A-1 or the equivalent thereof by S&P or at least P-1 or the
equivalent thereof by Moody’s, and in each case maturing not more than
one (1) year after the date of acquisition, and (e) investments
in money market funds that are registered under the Investment Company Act of
1940, as amended, which have net assets of at least $1,000,000,000 and at least
85% of whose assets consist of securities and other obligations of the type
described in clauses (a) through (e) above.  All such Cash Equivalents must be denominated
solely for payment in Dollars.”

 

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

 

““Credit Agreement” shall have the meaning
set forth in the definition of Credit Facility.”

 

(e)           The following definition of “Credit
Facility” is hereby added to Section 1 of Exhibit A to
the Purchase Agreement:

 

““Credit
Facility” shall mean that certain facility evidenced by, among other
agreements, the Credit Agreement, dated as of November 6, 2007, 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.”

 

(f)            The following
definition of “Collateral Default” is hereby added to Section 1 of Exhibit A
to the Purchase Agreement:

 

““Collateral
Default” shall mean, with respect to the Note, the other Purchased Items,
the Asset Documents and the Loan, (a) any of the foregoing that is thirty
(30) or more days delinquent under the terms thereof, (b) for which there
is a material non-monetary default (beyond any applicable notice and cure
period) under the terms thereof, or (c) with respect to which the related
Obligor is the subject of an Insolvency Proceeding or Insolvency Event.”

 

(g)           The following definition of “Extension
Fee” is hereby added to Section 1 of Exhibit A to the
Purchase Agreement:

 

““Extension Fee” shall have the meaning set
forth in Section 4(l) of this Agreement.”

 

(h)           The
following definition of “Fair Market Value” is hereby added to Section 1
of Exhibit A to the Purchase Agreement:

 

““Fair
Market Value” shall mean, with respect to (a) a security listed on a
national securities exchange or recognized automated quotation system, the
price of such security as reported on such exchange by any widely recognized
reporting method customarily relied upon by financial institutions, and (b) with
respect to any other assets or Property, including realty, the price which
could be negotiated in an arm’s-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of which is under
pressure or compulsion to complete the transaction.”

 

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

 

““Fixed
Repurchase Date” shall mean November 6, 2009, as such date may be
extended pursuant to Section 4(k).”

 

 

(j)            The following definition of “Intercreditor
Agreement” is hereby added to Section 1 of Exhibit A to
the Purchase Agreement:

 

“Intercreditor Agreement” shall mean the
Intercreditor Agreement to be extended into by and among the Purchaser and the
administrative agent under the Credit Agreement, as amended, modified,
restated, replaced, waived, substituted, supplemented or extended from time to
time.”

 

(k)           The following definition of “Net Cash
Proceeds” is hereby added to Section 1 of Exhibit A to
the Purchase Agreement:

 

““Net
Cash Proceeds” shall mean the aggregate cash proceeds, Cash Equivalents and
the Fair Market Value of all other Property and assets received by, or payable
to, the Seller or any Subsidiary or Affiliate in respect of any sale or other
disposition of the Purchased Items, net of (a) direct costs (including,
without limitation, legal, accounting and investment banking fees, and sales
commissions) associated therewith, and (b) taxes paid or payable as a
result thereof; it being understood that “Net Cash Proceeds” shall include,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received by the Seller, any Subsidiary or any Affiliate
in any sale or other disposition of the Purchased Items.”

 

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

 

““Pricing
Rate” shall mean, with respect to the Note, on any date of determination, a
rate per annum equal to the sum of (a) the Rate plus (b) 200
basis points provided, however; if the Fixed Repurchase Date is
extended in accordance with Section 4(k), the 200 basis points set
forth in clause (b) of this definition of Pricing Rate shall be increased
to 225 basis points.”

 

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

 

““Repurchase
Obligations” shall mean the obligations, liabilities and Indebtedness owed
under and/or secured by the Credit Facility.”

 

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

 

““Term
Loan” shall have the meaning set forth in the Credit Agreement.”

 

(o)           The following definition of “Term
Loan Average Advance Rate” is hereby added to Section 1 of Exhibit A
to the Purchase Agreement:

 

““Term
Loan Average Advance Rate” shall have the meaning set forth in the Credit
Agreement.”

 

(p)           The following definition of “Term
Loan Collateral” is hereby added to Section 1 of Exhibit A
to the Purchase Agreement:

 

““Term
Loan Collateral” shall have the meaning set forth in the Credit Agreement.”

 

 

(q)          The definition of “VFCC
Repurchase Facility” contained in Section 1 of Exhibit A
to the Purchase Agreement is hereby deleted in its entirety.

 

(r)           The definition of
“Wachovia Repurchase Facility” contained in Section 1 of Exhibit A
to the Purchase Agreement is hereby deleted in its entirety.

 

(s)           Subsection 4(b) to
the Purchase Agreement is hereby amended and restated as follows:

 

“(b)         Following the occurrence and during the
continuance of (1) any default under any of the Repurchase Documents or
any of the following events:  (i) any
Insolvency Proceeding with respect to the Seller, the Guarantor, the Pledgor or
NRFC Luxembourg, (ii) any breach by the Seller, the Guarantor, the Pledgor
or NRFC Luxembourg of any representation or warranty set forth in any of the
Repurchase Documents, the Asset Documents or any other document, agreement or
certificate delivered to the Purchaser (other than with respect to a
representation or warranty described in clause (ii) of the proviso to the definition of Asset
Value, which representations or warranties, if untrue, shall give rise to a
right of the Purchaser to mark the related Note to market under Subsection 4(i) of
this Agreement), (iii) any failure to deliver the Asset File within the
time frame required under Subsection 2(b) or Subsection 2(c),
(iv) any failure to comply with Subsections 4(c) or 4(i),
(v) any default in the performance of any duty, agreement, obligation or
covenant of the Seller, the Guarantor, the Pledgor or NRFC Luxembourg under any
of the Repurchase Documents, the Asset Documents or any other document,
agreement or certificate delivered to the Purchaser, including, without
limitation, the obligation of the Seller to pay Price Differential, Purchase
Price and all other amounts owed hereunder or under the other Repurchase
Documents on or before the date such amounts are due under the terms of the
Repurchase Documents and/or any event resulting in a right or obligation of
redemption of the Note under condition 4 thereof and not otherwise specified in
this Subsection 4(b), (vi) the occurrence of a Material Adverse
Effect, (vii) other than as contemplated under the Repurchase Documents,
the Seller, the Guarantor, the Pledgor or NRFC Luxembourg shall grant, or
suffer to exist, any Lien on the Note, the Purchased Item or Pledged Collateral
(except Permitted Liens), (viii) the Note or the Purchased Items shall not
have been sold to the Purchaser, or the Liens contemplated under the Repurchase
Documents shall cease or fail to be first priority perfected Liens on the Note,
the Purchased Items or the Pledged Collateral in favor of the Purchaser (other
than as a result of the Purchaser failing to file a UCC financing statement or
continuation thereof against the Seller or Pledgor in the applicable
jurisdiction with respect to the Purchased Items or Pledged Collateral, as
applicable), (ix) the Seller, the Guarantor, the Pledgor, NRFC Luxembourg
or any other Person shall, directly or indirectly, contest in any manner the
effectiveness, validity, binding nature or enforceability of any Repurchase
Document, any Lien or security interest thereunder or the Asset Documents or (x) the
Seller, the Guarantor, the Pledgor or NRFC Luxembourg shall admit its inability
to, or its intentions not to, perform any of its obligations, covenants or
agreements under any Repurchase Document or the Asset Documents, and/or  (2) an “Event of Default” under the Credit Facility
(any default or event of default under clauses (1) through (2) above,
an “Event of Default”), the Seller shall be required immediately upon
the occurrence thereof to repurchase the Note and the related Purchased Items
by paying to the Purchaser the aggregate Repurchase Price, all other Aggregate
Unpaids and all other Debt; provided, however, the Price
Differential shall be calculated using a Rate equal to the Default Rate until
all amounts due to the Purchaser are paid in full.  The Seller shall pay all such amounts
referred to in the previous sentence in immediately available funds to the
Collection Account within two (2) Business Days of the occurrence of
an Event of Default.”

 

 

(t)            The
first sentence of Subsection 4(g) to the Purchase Agreement is
hereby amended and restated as follows:

 

“Unless
otherwise expressly provided herein, all amounts to be paid or deposited by the
Seller hereunder shall be paid or deposited in accordance with the terms of
this Agreement no later than 3:00 p.m. on the day when due in Euros
(except any payments in connection with the Credit Facility, in which case the
same shall be lawful money of the United States), in immediately available
funds and without deduction, set—off or counterclaim to the Purchaser’s Account
or the Collection Account, as applicable, and if not received before such time
shall be deemed to be received on the next Business Day.”

 

(u)           The
following new Section 4(k) is hereby added to the Purchase
Agreement:

 

“(k)         Not less than forty-five (45) days, but
not more than ninety (90) days, prior to the Fixed Repurchase Date, the Seller
may request in writing that the Purchaser extend the Fixed Repurchase Date for
an additional year.  Such request to
extend the Fixed Repurchase Date shall be granted so long as (i) the Term
Loan Average Advance Rate on the Term Loan Collateral plus the Purchased Items
is not greater than 65%, (ii) no default or Event of Default has occurred
and is continuing, (iii) there is no Collateral Default, (iv) the
Commitments plus the Debt, both as of the date of such extension request and
immediately after giving effect to such extension request, shall not exceed
$400,000,000 and (v) the Seller pays the Extention Fee (defined below).”

 

(v)           The
following new Section 4(l) is hereby added to the Purchase
Agreement:

 

“(l)          The Seller shall pay the following
fees to the Purchaser: (i) to the extent the Fixed Repurchase Date is
extended pursuant to Section 4(k) of this Agreement, the Seller
shall pay to the Purchaser, on or before the Fixed Repurchase Date, an
extension fee (the “Extension Fee”) in an amount equal to the products
of (A) 0.375% (37.5 basis points) and (B) the outstanding Purchase
Price on the Fixed Repurchase Date (prior to any extension thereof), and (ii) on
the date of this Amendment No. 1 and on each anniversary of the date of
this Amendment No. 1 until termination of this Agreement, the Seller shall
pay to the Purchaser an asset management fee of $4,000.”

 

(w)          The
following new Section 4(n) is hereby added to the Purchase
Agreement:

 

“(n)         The Seller and the Guarantor shall
acknowledge and agree to the Intercreditor Agreement to the extent the
Purchaser deems that such Intercreditor Agreement is necessary.”

 

(x)           The last paragraph of Subsection 7(a) to
the Purchase Agreement is hereby deleted in its entirety.

 

(y)           The
first sentence of Subsection 7(b) to the Purchase Agreement is
hereby amended and restated as follows:

 

“If
an Event of Default shall have occurred and be continuing, to the extent not
already accelerated, all amounts due to the Purchaser shall automatically be
accelerated, and the Purchaser, without any other notice to or demand upon the
Seller, shall have in any jurisdiction in which enforcement hereof is sought,
in addition to all other rights and remedies under Applicable Law, the same
rights and remedies as the “administrative agent” or a “lender” has under the 

 

 

Credit
Agreement upon an “Event of Default” thereunder, mutatis mutandis,
all of the rights and remedies of a secured party under the UCC and any
additional rights and remedies as may be provided to a secured party in any
jurisdiction in which the Seller, NRFC Luxembourg, the Note, the Purchased
Items or any Mortgaged Properties are located, including, without limitation,
the right to take possession of the Purchased Items, and for that purpose the
Purchaser may, so far as the Seller can give authority therefor, enter upon any
premises on which the Purchased Items may be situated and remove the same
therefrom.”

 

(z)            The
following sentence is hereby added to the end of Subsection 8(b) to
the Purchase Agreement:

 

“On
November 6, 2007 and on each anniversary of such date, the Seller shall pay
to the Purchaser an asset management fee (“Asset Management Fee”) of
$4,000; provided, however, if the Seller pays all amounts due under
this Agreement and the other Repurchase Documents within three (3) months
of November 6, 2007, the Purchaser shall rebate the Asset Management Fee.”

 

Section 2.              Guaranty Agreement.

 

The
proviso to the second sentence of Section 1 of the Guaranty
Agreement is amendment and restated as follows:

 

“provided,
however, that the aggregate amount that the Guarantor is liable for
under this Guaranty and under the Limited Guaranty Agreement dated November 6,
2007,  for the Credit Facility shall not
exceed $200,000,000.”

 

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.  All references to any
Repurchase Document shall be deemed to mean each Repurchase Document as
modified by this Amendment No. 1. 
This Amendment No. 1 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. 1, as though such terms and conditions were set forth herein.

 

Section 4.              Representations.

 

Each of the Seller and Guarantor represents and
warrants, as of the date of this Amendment No. 1, 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. 1 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. 1;

 

 

(d)           this
Amendment No. 1 has been duly executed and delivered by it;

 

(e)           this
Amendment No. 1, as well as each of the Repurchase Documents as modified
by this Amendment No. 1, 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. 1; and

 

(g)           each
of the Repurchase Documents is in full force and effect and neither the Seller nor
the Guarantor has any defense, offset, counterclaim, abatement, right of
rescission or other claims, legal or equitable, available to it or any other
Person with respect to this Amendment No. 1,  the Purchase Agreement, the Repurchase
Documents or any other instrument, document and/or agreement described herein
or therein, as modified and amended hereby, or with respect to the obligation
of the Seller and the Guarantor to repay the obligations and amounts due under
the Repurchase Documents.

 

Section 5.              Conditions
Precedent.

 

The
effectiveness of this Amendment No. 1 is subject to the following
conditions precedent:  (i) delivery
to the Purchaser of this Amendment No. 1 duly executed by each of the
parties hereto, together with the fully executed side letter of even date
herewith; (ii) delivery of legal opinions from Paul, Hastings, Janofsky &
Walker LLP and Venable LLP with respect to the Seller, the Guarantor and NRFC
Luxembourg within seven (7) Business Days of this Amendment No. 1; (iii) 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 (iv) such other
documents, agreements or certifications as the Purchaser may reasonably
require.

 

Section 6.              Miscellaneous.

 

(a)           This
Amendment No. 1 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. 1 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. 1 may not be amended or otherwise modified, waived or
supplemented except as provided in the Purchase Agreement.

 

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

 

(e)           This
Amendment No. 1 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. 1 AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT NO. 1 SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, the parties have caused
this Amendment No. 1 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.,

  
	
   

  	
   

  	
  a
  Cayman Islands exempted limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Andrew C. Richardson

  
	
   

  	
   

  	
  Name:

  	
  Andrew
  C. Richardson

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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]

 

 

	
  THE
  PURCHASER:

  	
   

  	
  WACHOVIA
  BANK, N.A. (LONDON BRANCH)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  H. Lee Goins, III

  
	
   

  	
   

  	
  Name:

  	
  H.
  Lee Goins, III

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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]

 

 

	
  GUARANTOR:

  	
   

  	
  NORTHSTAR
  REALTY FINANCE CORP.,

  
	
   

  	
   

  	
  a
  Maryland corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Daniel R. Gilbert

  
	
   

  	
   

  	
  Name:

  	
  Daniel
  R. Gilbert

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President

  

 

[Signatures Continued on the
Following Page]

 

 

	
  Consented
  to by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NRFC
  LUXEMBOURG HOLDINGS I S.À R.L.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Albert Tylis

  	
   

  	
   

  
	
  Name:

  	
  Albert
  Tylis

  	
   

  	
   

  
	
  Title:

  	
  Executive
  Vice President,

  	
   

  	
   

  
	
   

  	
  General
  Counsel & Assistant Secretary

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Andrew C. Richardson

  	
   

  	
   

  
	
  Name:

  	
  Andrew
  C. Richardson

  	
   

  	
   

  
	
  Title:

  	
  Chief
  Financial Officer and TreasurerExhibit 10.31

 

NORTHSTAR REALTY
FINANCE CORP.

EXECUTIVE INCENTIVE BONUS PLAN

 

1.             Purpose

 

This Executive Incentive Bonus Plan (the “Plan”) is intended to
provide an incentive for superior work and to motivate executives and employees
of NorthStar Realty Finance Corp. (the “Company”) toward even higher
achievement and business results, to tie their goals and interests to those of
the Company and its stockholders and to enable the Company to attract and
retain highly qualified executives and employees.  The Plan is for the benefit of Participants
(as defined below).

 

2.             Definitions

 

For purposes of this Plan:

 

(a)           “AFFO” means FFO, plus or minus, as applicable,
each of the following: (i) normalized recurring expenditures that are
capitalized by the Company and then amortized, but which are necessary to
maintain the Company’s properties and revenue stream, such as leasing
commissions and tenant improvement allowances; (ii) an adjustment to
reverse the effects of the straight-lining of rents and fair value lease revenue
under SFAS 141; (iii) the amortization or accrual of various deferred
costs including intangible assets and equity based compensation; (iv) an
adjustment to reverse the effects of non-cash unrealized gains/losses; (v) an
adjustment to reverse the effects of DPOs; and (vi) any item(s) that
management and the Audit Committee of the Board or management and the Committee
determine are one-time items for earnings reporting purposes.

 

(b)           “Annual Bonus” means a Bonus determined and
paid pursuant to Section 5.

 

(c)           “Annual Bonus Pool Percentage” means a
percentage of the Bonus Pool awarded to a Participant and payable in the form
of an Annual Bonus under the Plan.

 

(d)           “Balance Sheet Liquidity” means, as of a
particular date of determination, all cash and cash equivalents of the Company
and any subsidiary of the Company.

 

(e)           “Beneficial Owner” shall have the meaning set
forth in Rule 13d-3 under the Exchange Act.

 

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

 

(g)           “Bonus” means any Annual Bonus, Deferred Bonus
or Long-Term Bonus.

 

(h)           “Bonus Award Notice” means a notice or
agreement provided to a Participant that sets forth the terms, conditions and
limitations of the Participant’s Bonus(es) and Bonus Pool Percentage(s).

 

 

(i)            “Bonus Pool” means for each Plan Year, an
amount equal to the sum of (1) 1.75 percent of the NorthStar Adjusted
Equity Capital for such Plan Year (determined based on the average of the
NorthStar Adjusted Equity Capital as of the first and last day of such Plan
Year) and (2) 25 percent of the Company’s Equity Adjusted AFFO for such
Plan Year (determined as of the last day of such Plan Year) above a nine
percent annual return on NorthStar Adjusted Equity Capital hurdle.

 

(j)            “Bonus Pool Percentage” means an Annual Bonus
Pool Percentage, a Deferred Bonus Pool Percentage or a Long-Term Bonus Pool
Percentage.  Participants may be
allocated by the Committee an Annual Bonus Pool Percentage, a Deferred Bonus
Pool Percentage, a Long-Term Bonus Pool Percentage or any combination thereof.  The initial allocation of Bonus Pool
Percentages among Participants applicable to the 2009 Plan Year shall be set
forth on Exhibit A hereto and allocations of Bonus Pool Percentages
among Participants applicable to subsequent Plan Years shall be set forth on
separate exhibits hereto.

 

(k)           “Cause” shall have the meaning set forth in a
Participant’s Service Agreement.  If a
Participant is not a party to a Service Agreement as of any relevant date or a
Participant’s Service Agreement does not contain a definition of “cause,” then “Cause”
for purposes of this Plan shall mean a dismissal upon the occurrence of any of
the following events: (i) the conviction of, or a plea of nolo contendere by, the Participant for the commission of a
felony; (ii) continuing willful failure for ten business days to
substantially perform the Participant’s duties to the Company (other than such
failure resulting from the Participant’s incapacity due to physical or mental
illness) after demand for substantial performance is delivered by the Company
in writing that specifically identifies the manner in which the Company
believes the Participant has not substantially performed his duties; or (iii) willful
misconduct by the Participant (including, but not limited to, breach by the Participant
of terms of any Service Agreement to which the Participant is a party) that is
demonstrably and materially injurious to the Company or its subsidiaries.

 

(l)            “CDO Liquidity” means, as of a particular date
of determination, cash available in the Company’s collateralized debt
obligations, less any such cash which is the result of a DPO and less any such
cash which results from the sale of securities solely for the purposes of
creating “CDO Liquidity” for purposes of this Plan.

 

(m)          “Change of Control” means and includes any of
the following events:

 

(i)            any Person is or becomes Beneficial
Owner, directly or indirectly, of securities of the Company representing 35
percent or more of the combined voting power of the then outstanding securities
of the Company, excluding (A) any Person who becomes such a Beneficial
Owner in connection with a transaction described in clause (x) of
subsection (ii) below and (B) any Person who becomes such a
Beneficial Owner through the issuance of such securities with respect to
purchases made directly from the Company; or

 

(ii)           the consummation of a merger or
consolidation of the Company with any other Person or the issuance of voting
securities of the Company in connection with a merger or consolidation of the
Company (or any direct or indirect subsidiary of the Company) pursuant to
applicable stock exchange requirements, other than (x) a merger or
consolidation which would 

 

 

result in the
voting securities of the Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof) 50 percent or more of the combined voting power of the securities of
the Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (y) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 35 percent or
more of the combined voting power of the then outstanding securities of the
Company; or

 

(iii)          the consummation of an agreement for the
sale or disposition by the Company of all or substantially all of the assets of
the Company approved by the stockholders of the Company.

 

(n)           “Code” means Internal Revenue Code of 1986, as
amended.

 

(o)           “Committee” means the Compensation Committee of
the Board.

 

(p)           “Deferred Bonus” means a Bonus determined and
paid pursuant to Section 6.

 

(q)           “Deferred Bonus Pool Percentage” means a
percentage of the Bonus Pool awarded to a Participant and payable in the form
of a Deferred Bonus under this Plan.

 

(r)            “Disability” means, unless otherwise provided
in the Participant’s Service Agreement (if any), a disability which renders the
Participant incapable of performing all of his or her material duties for a
period of at least 180 consecutive or non-consecutive days during any
consecutive twelve-month period.

 

(s)           “DPO” means a discounted payoff of a loan in
advance of its final maturity date.

 

(t)            “Effective Date” means July 21, 2009, the
date this Plan was approved by the Committee.

 

(u)           “Equity Adjusted AFFO” means AFFO, plus
dividends paid on the Company’s preferred stock and trust preferred securities.

 

(v)           “Exchange Act” means the Securities Exchange
Act of 1934, as  amended.

 

(w)          “FFO” means funds from operations as computed
in accordance with the standards established by the National Association of
Real Estate Investment Trusts, as net income or loss (computed in accordance
with GAAP), excluding gains or losses from sales of depreciable properties, the
cumulative effect of changes in accounting principles, real estate-related
depreciation and amortization, and after adjustments for
unconsolidated/uncombined partnerships and joint ventures.  For purposes of this definition, FFO shall
also exclude SFAS 144 impairment charges relating to sales of depreciable properties
which otherwise would have been included in the gain/loss from sale of such
properties.

 

 

(x)            “Liquidity” means, as of a particular date of
determination, the sum of the Balance Sheet Liquidity and CDO Liquidity.

 

(y)           “Long-Term Bonus” means a Bonus determined and
paid pursuant to Section 7.

 

(z)            “Long-Term Bonus Performance Period” means the
three-year period commencing on January 1 of a Plan Year and ending on December 31
of the second calendar year that follows such Plan Year.  The first Long-Term Bonus Performance Period
runs from January 1, 2009 through December 31, 2011.  There shall be overlapping Long-Term Bonus
Performance Periods.

 

(aa)         “Long-Term Bonus Pool Percentage” means a
percentage of the Bonus Pool awarded to a Participant and payable in the form
of a Long-Term Bonus under this Plan.

 

(bb)         “NorthStar Adjusted Equity Capital” means  the cost basis of the Company’s Stock, preferred stock and
trust preferred securities as of January 1, 2009, as adjusted following January 1,
2009 (except as provided below) as follows: 
(i) minus realized losses on the Company’s real estate loans, real
estate securities, net lease properties (excluding depreciation) or other
assets relative to the cost basis of such assets; provided, that the aggregate
amount of any such losses shall not exceed the amount of capital at risk with
respect to any such asset (e.g., losses
within a CDO cannot exceed the Company’s equity investment in such CDO); (ii) minus
cash dividends paid to common equity holders since the Company’s initial public
offering and subsequently with respect to an applicable performance or
measurement period; (iii) minus any common, preferred stock or trust
preferred securities repurchased; (iv) plus the cost basis of any Stock,
preferred stock or trust preferred securities issued following January 1,
2009; (v) plus the amount of AFFO since the Company’s initial public
offering and subsequently with respect to an applicable performance or
measurement period; (vi) plus the discount attributable to any asset
acquired by the Company at a discount to the par value of such asset, but only
to the extent that the Company has realized on such discount (e.g., an asset purchased at a discount is subsequently sold
for an amount in excess of its purchase price); and (vii) plus the
discount to par attributable to any corporate bonds or other liabilities,
including CDO bonds, repurchased prior to or following January 1,
2009.  For purposes of the definition of
NorthStar Adjusted Equity Capital, AFFO shall be defined as set forth herein,
provided that AFFO for purposes of the definition of NorthStar Adjusted Equity
Capital shall be reduced or increased, as applicable, to reverse the effects of
any item hereunder that reduces or increases NorthStar Adjusted Equity Capital
and also would otherwise simultaneously reduce or increase AFFO so as not to
double-count any such increase or reduction for purposes of the definition of
NorthStar Adjusted Equity Capital.

 

(cc)         “Participant” means an executive or employee of
the Company selected by the Committee to participate in the Plan.

 

(dd)         “Person” means an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization, other entity or “group” (as defined in the
Exchange Act).

 

(ee)         “Plan Year” means any year of the Plan for
which a Bonus Pool is established, commencing on January 1 and ending on December 31.

 

 

(ff)           “Restricted Stock Unit” means a phantom stock
unit with a value equal to one share of Stock, which shall be settled as set
forth in Section 7, whether granted pursuant to the Company’s equity
compensation plans or otherwise.

 

(gg)         “Service Agreement” means as of a particular
date, any employment, consulting or similar service agreement(s) then in
effect between a Participant, on the one hand, and the Company on the other
hand, as amended or supplemented through such date.

 

(hh)         “Stock” means the Company’s common stock, par
value $0.01 per share.

 

(ii)           “Stock Price” means, as of a particular date,
the average of the Fair Market Value of one share of Stock for the 20 trading
days ending on, and including, such date (or, if such date is not a trading
day, the most recent trading day immediately preceding such date); provided, however, that for purposes of determining the
Stock Price in connection with a Transactional Change of Control (but only if
in due course such Transactional Change of Control is actually consummated by
the Company), the Stock Price shall be equal to the fair market value in cash
of the total consideration per share of Stock to be paid or payable in the
transaction resulting in the Transactional Change of Control, as determined by
the Committee as of the date that the Transactional Change of Control is
consummated.

 

(jj)           “Subsidiary”
means any corporation or other entity (other than the Company) in which the
Company has more than a 50 percent interest, either directly or indirectly.

 

(kk)         “Transactional Change of Control” means (i) a
Change of Control described in clause (i) of the definition thereof where
the Person makes a tender offer for Stock, or (ii) a Change of Control
described in clauses (ii) or (iii) of the definition thereof.

 

3.             Administration

 

(a)           The Plan shall be administered by the Committee.  The Committee shall have the discretionary
authority to make all determinations (including, without limitation, the
interpretation and construction of the Plan and the determination of relevant
facts) regarding the entitlement to any Bonus hereunder and the amount of any
Bonus to be paid under the Plan, provided such determinations are made in good
faith and are consistent with the purpose and intent of the Plan, and provided
further that, except as expressly provided herein, no such action shall
adversely affect the rights of the Participants to any outstanding Bonuses.  In particular, but without limitation and
subject to the foregoing, the Committee shall have the authority:

 

(i)            to select Participants under the Plan;

 

(ii)           to allocate Bonus Pool Percentages to
Participants each Plan Year;

 

(iii)          to determine the Bonus Pool and the
formula for calculating the Bonus Pool for each Plan Year;

 

(iv)          to establish and determine performance
conditions and measurements applicable to each Bonus and each Participant, not
inconsistent with the terms of this Plan;

 

 

(v)           to determine the terms and conditions,
not inconsistent with the terms of this Plan, which shall govern Bonus Award
Notices and all other written instruments evidencing the award of a Bonus or
allocation of a Bonus Pool Percentage hereunder, including the waiver or modification
of any such conditions;

 

(vi)          to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable; and

 

(vii)         to interpret the terms and provisions of
the Plan and any Bonus granted under the Plan (and any Bonus Award Notices or
other agreements relating thereto) and to otherwise supervise the
administration of the Plan.

 

(b)           In addition to Bonuses payable under the terms of the
Plan, the Committee reserves the right to grant additional discretionary
Bonuses.

 

(c)           Notwithstanding anything herein to the contrary, the
Committee shall make appropriate adjustments to any Bonus Pool, Bonus Pool
Percentage, or any performance targets applicable to any Bonus in connection
with or as a result of any of the following events which occur or have occurred
after January 1, 2009: reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other similar change in the
Company’s capital stock, if the outstanding shares of Stock are increased or
decreased or are exchanged for a different number or kind of shares or other
securities of the Company, or additional shares or new or different shares or
other securities of the Company or other non-cash assets are distributed with
respect to such shares of Stock or other securities.

 

(d)           Subject to the terms hereof, all decisions made by the
Committee pursuant to the Plan shall be final, conclusive and binding on all
persons, including the Company and the Participants.  No member of the Board or the Committee, nor
any officer or employee of the Company acting on behalf of the Board or the
Committee shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or Committee and each and any officer or employee of the
Company acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action, determination
or interpretation.

 

(e)           If the Company is required to prepare a material
accounting restatement with respect to any Plan Year and such restatement (i) would
have reduced the amount paid under the Plan to the executive officers with
respect to such Plan Year and (ii) was due to an untrue statement of a
material fact by an executive officer or an omission by an executive officer to
state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading, with
respect to the financial statement that is the subject of the restatement, the
Committee may seek (but is not required to seek) reimbursement from one or more
Participants, taking into consideration all relevant factors and circumstances,
all or a portion of the incentive compensation paid under this Plan with
respect to such Plan Year that would not otherwise have been earned based on
the restated financial results.

 

 

4.             Bonus Pool

 

(a)           The Committee shall calculate the amount of the Bonus
Pool for each Plan Year as of the last day of such Plan Year and shall
determine each Participant’s Bonus Pool Percentage and the performance goals
and targets for each Plan Year on an annual basis, provided that the formula to
determine the Bonus Plan shall be as provided herein and shall not be amended
or revised without the prior consent of the Participants entitled to a majority
of the then Bonus Pool Percentages.

 

(b)           The Bonus Pool for any Plan Year (and any Bonus Pool
Percentages allocated thereunder) may be adjusted in the Committee’s good faith
discretion during any Plan Year in order to account for any corporate
transaction involving the Company (whether or not a Change of Control), changes
to the Company’s capital structure, prevailing market and economic conditions,
or changes to accounting rules, or as otherwise may be required by law or the
economic needs of the Company; provided, however, that any adjustment by the
Committee shall in no event adversely affect the rights of the Participants
hereunder.

 

5.             Annual Bonus

 

(a)           If granted an Annual Bonus Pool Percentage by the
Committee, a Participant will be eligible to receive an Annual Bonus with
respect to a Plan Year.  Annual Bonuses
shall be tied to the Company’s performance for the relevant Plan Year.  Performance goals and targets for the Plan
Year shall be determined by the Committee on an annual basis.  The Committee shall also establish ranges within
such performance targets that correspond to the payout of different fixed percentages
of a Participant’s Maximum Annual Bonus (as defined in Section 5(b),
below).  By way of example, 100 percent
achievement of the applicable AFFO target shall correspond to the payout of 100
percent of the portion of a Participant’s Maximum Annual Bonus weighted with
reference to such AFFO target, while achievement of a lower AFFO for the Plan
Year will correspond to payout of a lower percent of such portion of the
Maximum Annual Bonus.  Annual Bonus
performance targets and payout ranges for the 2009 Plan Year are set forth on Exhibit A
hereto and annual performance targets and payout ranges for subsequent Plan
Years shall be set forth on separate exhibits hereto.  Exhibit A shall also serve as an
illustration of the operation of the Annual Bonus and payment thereof.

 

(b)           The amount of a Participant’s maximum Annual Bonus
will be equal to the product of (x) the Participant’s Annual Bonus Pool
Percentage, and (y) the Bonus Pool (the “Maximum Annual Bonus”).  For the 2009 Plan Year, a Participant’s Annual
Bonus will be weighted as follows: (i) 50 percent based on the Company’s
achievement of AFFO targets for the Plan Year, (ii) 25 percent based on
the Company’s achievement of Liquidity targets for the Plan Year, and (iii) 25
percent determined in the Committee’s discretion, as set forth on Exhibit A
hereto.  Such weighting may be changed
from year-to-year and shall be set forth on subsequent exhibits hereto.  The amount of a Participant’s actual Annual
Bonus shall be calculated at the end of the relevant Plan Year and shall equal
such portion of the Participant’s Maximum Annual Bonus that corresponds to the
payout range(s) within the performance targets actually achieved by the
Company, weighted as set forth above.

 

 

(c)           A Participant’s Annual Bonus, if any, shall be paid in
cash in a lump-sum, in the year following the Plan Year to which such Annual
Bonus relates, within ten days after the Company has received its approved
audited financial statements for such Plan Year, but in no event later than December 31
of such year, subject to the Participant’s continued employment with the
Company through such payment date except as otherwise provided herein.

 

6.             Deferred Bonus

 

(a)           If granted a Deferred Bonus Pool Percentage by the
Committee, a Participant will be eligible to receive a Deferred Bonus with
respect to a Plan Year.  Deferred Bonuses
shall be tied to the Company’s achievement of such performance targets
established by the Committee with respect to the Annual Bonuses for such Plan
Year.

 

(b)           The amount of a Participant’s maximum Deferred Bonus
will be equal to the product of (x) the Participant’s Deferred Bonus Pool
Percentage, and (y) the Bonus Pool. 
The amount of Participants’ actual Deferred Bonuses shall be determined
and weighted at the same time and in the same manner as Annual Bonuses for the
Plan Year.

 

(c)           A Participant shall vest with respect to the
Participant’s Deferred Bonus as follows: (x) 50 percent on December 31
of the calendar year following the Plan Year to which such Deferred Bonus
relates and (y) 50 percent on December 31 of the second calendar year
following the Plan Year to which such Deferred Bonus relates, subject in each
case to the Participant’s continued employment with the Company through each
such vesting date.  Each portion of the
Deferred Bonus shall be paid in cash in a lump-sum no later than ten days after
such portion has vested.

 

7.             Long-Term Bonus

 

(a)           If granted a Long-Term Bonus Pool Percentage, a
Participant will be eligible to receive a Long-Term Bonus with respect to a
Long-Term Bonus Performance Period. 
Long-Term Bonuses shall be tied to the Company’s cumulative performance
for the relevant Long-Term Bonus Performance Period.  Performance goals and targets for each
Long-Term Bonus Performance Period shall be determined by the Committee during
the first Plan Year of such period.  The
Committee shall also establish ranges within such performance targets that
correspond to the payout of different fixed percentages of Restricted Stock
Units held by Participants (as described in Section 7(b), below).  By way of example, 100 percent achievement of
the applicable AFFO target shall correspond to the payout of 100 percent of the
Restricted Stock Units granted with respect to such Long-Term Bonus Performance
Period, while achievement of a lower AFFO will correspond to payout of a lower
percent of such Restricted Stock Units. 
Achievement of the Stock Price return target shall also correspond to
the payout of 100 percent of the Restricted Stock Units granted with respect to
the Long-Term Bonus Performance Period. 
Long-Term Bonus performance targets and payout ranges for the 2009-2011
Long-Term Bonus Performance Period are set forth on Exhibit A
hereto and the Long-Term Bonus performance targets and payout ranges for
subsequent Long-Term Bonus Performance Periods shall be set forth on separate
exhibits hereto.  Exhibit A
shall also serve as an illustration of the operation of the Long-Term Bonus and
payment thereof.

 

 

(b)           With respect to each Long-Term Bonus, as soon as practicable
following the conclusion of the first Plan Year of the Long-Term Bonus
Performance Period, each Participant shall be granted a number of Restricted
Stock Units determined in accordance with the following formula: (x) (i) the
Participant’s Long-Term Bonus Pool Percentage for the applicable Plan Year
multiplied by (ii) the Bonus Pool for such Plan Year, divided by (y) the
Stock Price determined as of the last day of the first Plan Year of the
Long-Term Bonus Performance Period.  A
Participant’s actual Long-Term Bonus shall be determined after the end of the
Long-Term Bonus Performance Period and shall equal the percentage of the
Participant’s Restricted Stock Units that corresponds to the payout range of
the performance goals actually achieved by the Company for such Long-Term Bonus
Performance Period.

 

(c)           The Restricted Stock Units shall be paid in shares of
Stock to the extent available.  To the
extent shares of Stock are not available for issuance under the Company’s
equity incentive plans, the Restricted Stock Units (or a portion of the
Restricted Stock Units) shall be settled in cash.  If paid in cash, the amount of the Long-Term
Bonus payment shall equal the product of (1) the number of Restricted
Stock Units to be paid in cash and (2) the Stock Price as of the last day
of the relevant Long-Term Bonus Performance Period.  Additionally, a Participant shall be entitled
to receive the cash dividend(s) paid on each share of Stock during the
second calendar year and third calendar year of each Long-Term Bonus
Performance Period for each Restricted Stock Unit earned in a given Long-Term
Bonus Performance Period (the “Accumulated Dividend”).  With respect to the 2009-2011 Long-Term Bonus
Performance Period, no Participant shall receive an amount in cash (excluding
any Accumulated Dividend) upon settlement of Restricted Stock Units that
exceeds (i) the Participant’s Long-Term Pool Percentage multiplied by (ii) the
Bonus Pool established with respect to the 2009 Plan Year, notwithstanding the
Long-Term Bonus that would otherwise be payable to such Participant.  The Committee shall determine the maximum
amount of cash that may be payable in subsequent Long-Term Bonus Performance
Periods on an annual basis.

 

(d)           A Participant’s Long-Term Bonus and the applicable
Accumulated Dividend, if any, shall vest and be paid in the calendar year
following the conclusion of the relevant Long-Term Bonus Performance Period
within ten days after the Company has received its approved audited financial
statements for the last year of the Long-Term Bonus Performance Period, but in
no event later than December 31 of such year, subject to the Participant’s
continued employment with the Company through the applicable Long-Term Bonus
Performance Period.

 

8.             Termination of Employment

 

(a)           If at any time prior to payment of any Bonus hereunder
in accordance with the terms of the Plan a Participant’s employment or other
service relationship with the Company terminates for any reason other than
termination of employment by (x) the Company without Cause, (y) the
Participant for “Good Reason” (as defined in the applicable Service Agreement)
to the extent that the Participant is entitled to resign for “Good Reason” in
accordance with such Participant’s Service Agreement or (z) due to the
Participant’s death or Disability, then the Participant shall automatically and
immediately forfeit any and all right to receive any unpaid Bonus hereunder and
all Restricted Stock Units granted pursuant to Section 7 hereof.

 

 

(b)           Notwithstanding anything
herein to the contrary or in any Service Agreement with any Participant which
provides for accelerated vesting or payout of such a Participant’s bonuses and
incentive awards in the event of certain types of terminations of such
Participant’s employment relationship with the Company or a Subsidiary, as
applicable (such as, for example, termination at the end of the term,
termination without cause by the employer or termination for good reason by the
Participant), the treatment of any Bonuses under this Plan shall be governed
solely by the terms hereof and not by the terms of such Service Agreement,
except to the extent specifically provided in a Bonus Award Notice. 
In consideration of the opportunity to receive any Bonus under this
Plan, any such Service Agreement shall be deemed amended to the extent
necessary to effect the provisions of this Section 8(b).

 

(c)           If at any time prior to the applicable payment date
for a Bonus hereunder the Participant’s employment or service relationship with
the Company (x) is terminated by the Company without Cause, (y) is
terminated by the Participant for “Good Reason” (as defined in the applicable
Service Agreement) to the extent that the Participant is entitled to resign for
“Good Reason” in accordance with such Participant’s Service Agreement or (z) terminates
due to the Participant’s death or Disability, then the following shall occur:

 

(i)            If the Participant is eligible to receive
an Annual Bonus for the Plan Year that includes the date the Participant’s
employment terminates (the “Termination Date”), the amount of the
Participant’s actual Annual Bonus shall be calculated pursuant to Section 5
of the Plan, but shall be pro-rated by multiplying such amount by a fraction,
the numerator of which shall be the number of days in the Plan Year from and
including January 1 to and including the Termination Date, and the
denominator of which shall be 365.  Such
pro-rated Annual Bonus shall be payable in cash in a lump-sum in accordance
with the provisions of Section 5(c). 
The Participant shall also be entitled to the full amount of the Annual
Bonus earned for the Plan Year immediately preceding the Plan Year in which the
Termination Date occurs if such Annual Bonus has not been paid by the
Termination Date.  Such amount shall also
be payable in accordance with the provisions of Section 5(c).

 

(ii)           If the Participant is eligible to receive
any Deferred Bonus,

 

(A)          if such Deferred Bonus relates to the Plan Year that
includes the Termination Date, the amount of the Participant’s actual Deferred
Bonus shall be calculated pursuant to Section 6 of the Plan, but shall be
pro-rated by multiplying such amount by a fraction, the numerator of which
shall be the number of days in the Plan Year from and including January 1
to and including the Termination Date, and the denominator of which shall be
365, and such pro-rated Deferred Bonus shall be payable in cash in a lump-sum
in the year following such Plan Year within ten days after the Company has
received its approved audited financial statements for such Play Year, but in
no event later than December 31 of such year; and

 

(B)           if such Deferred Bonus relates to any completed Plan
Year, the Committee shall accelerate the vesting with respect to any unvested
and unpaid portion of such Deferred Bonus, and such amounts shall be paid in
cash in a lump-sum within ten days following the Termination Date.

 

 

(iii)          If the Participant is eligible to receive
any Long-Term Bonus, the amount of the Participant’s actual Long-Term Bonus
with respect to any outstanding Long-Term Bonus Performance Period shall be
calculated as of the end of such Long-Term Bonus Performance Period pursuant to
Section 7 of the Plan, but pro-rated by multiplying such amount by a
fraction, the numerator of which shall be the number of days from and including
January 1 of the first Plan Year of the Long-Term Bonus Performance Period
to and including the Termination Date, and the denominator of which shall be
1,096.  The pro-rated Long-Term Bonus for
each Long-Term Bonus Performance Period shall be payable in cash or shares of
Stock, in accordance with the provisions of Sections 7(c) and 7(d).

 

(iv)          Each payment described in Sections
8(c)(i)-(iii), above shall be paid to the Participant only if the Participant
has signed a general release of claims in favor of the Company and related
persons and entities in a form and manner satisfactory to the Company (the “Release”)
within the 21-day review period for the Release and the Participant has not
revoked the Release within the seven-day revocation period for the Release.

 

9.                                       Change of Control.

 

(a)           Notwithstanding anything herein to the contrary or in
any Service Agreement with any Participant which provides for accelerated
vesting or payout of such a Participant’s bonuses and incentive awards in the
event of a Change of Control or similar transaction, the treatment of any
Bonuses under this Plan shall be governed solely by the terms hereof and not by
the terms of such Service Agreement, except to the extent specifically provided
in a Bonus Award Notice.  In
consideration of the opportunity to receive any Bonus under this Plan, any such
Service Agreement shall be deemed amended to the extent necessary to effect the
provisions of this Section 9(a).

 

(b)           Unless otherwise provided in any Bonus Award Notice,
upon a Change of Control of the Company, the following shall occur:

 

(i)            If a Participant is eligible to receive
an Annual Bonus for the Plan Year that includes the effective date of the
Change of Control (the “Change of Control Date”), the amount of the
Participant’s actual Annual Bonus shall be calculated pursuant to Section 5
of the Plan, but with reference to a Bonus Pool that is adjusted by the
Committee on an equitable basis as of the Change of Control Date to reflect the
shortened Plan Year (the “Adjusted Bonus Pool”).  Performance targets for the Plan Year shall
not be adjusted or pro-rated, except to the extent necessary to apply the
Change of Control Adjustment Principles (as defined below).  In determining the achievement of performance
targets and the percentage of the Maximum Annual Bonus payable to Participants
for the applicable adjusted Plan Year, the Committee shall apply the following
principles: (x) the Committee shall not consider or give effect to any
discretionary Bonus component or subjective performance criteria and shall
equitably re-weight all remaining and applicable objective performance targets
and (y) to the extent possible, the Committee shall annualize or
extrapolate performance as of the Change of Control Date for the entire Plan
Year (or other applicable performance or measurement period) (the “Change of
Control Adjustment Principles”).  By
way of example, if a Change of Control occurs during the 2009 Plan Year,
application of the Change of Control Adjustment Principles would result in the
determination and weighting of a Participant’s Annual Bonus as follows: (a) two-thirds
based on the 

 

 

Company’s
achievement of AFFO targets, determined with reference to the Company’s actual
AFFO through the Change of Control Date, annualized for the entire 2009 Plan
Year, (b) one-third based on the Company’s achievement of Liquidity
targets as of the Change of Control Date and (c) elimination of the
portion of the Annual Bonus determined in the Committee’s discretion.

 

(ii)           If a Participant is eligible to receive a
Deferred Bonus,

 

(A)          if such Deferred Bonus relates to the Plan Year that
includes the Change of Control Date, the amount of Participant’s actual
Deferred Bonus shall be calculated pursuant to Section 6 of the Plan,
following application of the Change of Control Adjustment Principles, but with
reference to the Adjusted Bonus Pool; and

 

(B)           if such Deferred Bonus relates to any completed Plan
Year, the Committee shall accelerate the vesting with respect to any unvested
and unpaid portion of such Deferred Bonus.

 

(iii)          A Participant shall be deemed to have
earned a Long-Term Bonus equal to the product of (x) the Participant’s
Long-Term Bonus Pool Percentage for such Plan Year and (y) the Bonus Pool,
but pro-rated by multiplying such amount by a fraction, the numerator of which
shall be the number of days from and including January 1 of the first Plan
Year of the Long-Term Bonus Performance Period to and including the Change of
Control Date, and the denominator of which shall be 1,096 (such amount, the “Long-Term
Bonus COC Amount”).  For purposes of the
foregoing, all applicable performance targets relating to the Long-Term Bonus
shall be deemed to have been achieved in full. 
Notwithstanding anything to the contrary contained herein, the Long-Term
Bonus COC Amount shall be paid in cash to a Participant at the earliest of (i) nine
months following the Change of Control Date, (ii) the date on which the
Long-Term Bonus Performance Period would have concluded but for the Change of
Control, (iii) the termination of a Participant in connection with or
following the Change of Control without Cause, (iv) the resignation of a
Participant in connection with or following the Change of Control for “Good
Reason” (as defined in the applicable Service Agreement) to the extent that the
Participant is entitled to resign for “Good Reason” in accordance with such
Participant’s Service Agreement or (v) March 1 of the calendar year
following the Change of Control Date.

 

(c)           Each payment described in Sections 9(b)(i)-(ii) above
shall be paid to the Participant in one lump-sum in cash on the Change of
Control Date to the extent practicable or, if not practicable, as soon as
reasonably possible following the Change of Control Date, but in no event later
than 45 days following the Change of Control Date.

 

10.                                 Section 409A

 

(a)           Anything in this Plan to the contrary notwithstanding,
if at the time of a Participant’s separation from service within the meaning of
Section 409A of the Code, the Company determines that the Participant is a
“specified employee” within the meaning of Section 409A(a)(2)(B)(i) of
the Code, then to the extent any payment or benefit that the Participant
becomes entitled to under this Plan on account of the Participant’s separation
from service would be considered deferred compensation subject to the 20
percent additional tax imposed pursuant to Section 409A(a) of the
Code as a result of the application of Section 

 

 

409A(a)(2)(B)(i) of
the Code, such payment shall not be payable and such benefit shall not be
provided until the date that is the earlier of (A) six months and one day
after the Participant’s separation from service, or (B) the Participant’s
death.  If any such delayed cash payment
is otherwise payable on an installment basis, the first payment shall include a
catch-up payment covering amounts that would otherwise have been paid during
the six-month period but for the application of this provision, and the balance
of the installments shall be payable in accordance with their original
schedule.  Any such delayed cash payment
shall earn interest at an annual rate equal to the applicable federal
short-term rate published by the Internal Revenue Service for the month in
which the date of separation from service occurs, from such date of separation
from service until the payment.

 

(b)           To the extent that any payment or benefit described in
this Plan constitutes “non-qualified deferred compensation” under Section 409A
of the Code, and to the extent that such payment or benefit is payable upon a
Participant’s termination of employment, then such payments or benefits shall
be payable only upon the Participant’s “separation from service.”  The determination of whether and when a
separation from service has occurred shall be made in accordance with the
presumptions set forth in Treasury Regulation Section 1.409A-1(h).

 

(c)           This Plan is intended to be administered in accordance
with Section 409A of the Code.  To
the extent that any provision of this Plan or any agreement hereunder is
ambiguous as to its compliance with Section 409A of the Code, the
provision shall be read in such a manner so that all payments hereunder comply
with Section 409A of the Code.  This
Plan may be amended, as reasonably requested by either party, and as may be
necessary to fully comply with Section 409A of the Code and all related rules and
regulations in order to preserve the payments and benefits provided hereunder
without additional cost to either party.

 

(d)           The Company makes no representation or warranty and
shall have no liability to any Participant or any other person if any
provisions of this Plan are determined to constitute deferred compensation
subject to Section 409A of the Code but do not satisfy an exemption from,
or the conditions of, such Section.

 

11.                                 Miscellaneous

 

(a)           Non-Executive Officers.  The Bonus
Pool Percentage that is not allocated to the executive officers as set forth on
Exhibit A hereto or any other exhibit hereto with respect to
subsequent Plan Years, shall be the maximum amount allocable, in the discretion
of the Company’s management, to non-executive officers of the Company;
provided, that for the 2009 Plan Year the amount available for allocation to
the non-executive officers, taking into consideration the Company’s performance
and individuals’ performance, among other things, shall not be less than the
amount referred to as the “Non-Executive Allocable Amount” on Exhibit A
or any other exhibit hereto with respect to subsequent Plan Years.  Additionally, the Company’s chief executive
officer may recommend to the Committee that a portion of any such amount be
allocated to the executive officers set forth on Exhibit A or any
other exhibit hereto with respect to subsequent Plan Years, which the Committee
shall determine in its sole discretion.

 

 

(b)           No Contract for Continuing Services. 
This Plan shall not be construed as creating any contract for continued
services between the Company or any of its subsidiaries and any Participant and
nothing herein contained shall give any Participant the right to be retained as
an employee or consultant of the Company or any of its subsidiaries.

 

(c)           No Transfers. A Participant’s rights in an interest under the Plan
may not be assigned or transferred.

 

(d)           Unfunded Plan.  The Plan
shall be unfunded and shall not create (or be construed to create) a trust or
separate fund.  Likewise, the Plan shall
not establish any fiduciary relationship between the Company or any of
subsidiaries or affiliates and any Participant. To the extent that any
Participant holds any rights by virtue of an award under the Plan, such right
shall be no greater than the right of an unsecured general creditor of the
Company or any of its subsidiaries.

 

(e)           Governing Law.  The Plan and
each Bonus Plan Certificate awarded under the Plan shall be construed in
accordance with and governed the laws of the State of New York, without regard
to principles of conflict of laws of such state.

 

(f)            Tax Withholding.  The Company
shall have the right to deduct from all payments hereunder any taxes required
by law to be withheld with respect to such cash payments.

 

(g)           Construction.  Wherever
appropriate, the use of the masculine gender shall be extended to include the
feminine and/or neuter or vice versa; and the singular form of words shall be
extended to include the plural; and the plural shall be restricted to mean the
singular.

 

(h)           Headings.  The Section headings
and Section numbers are included solely for ease of reference.  If there is any conflict between such headings
or numbers and the text of this Plan, the text shall control.

 

(i)            Effect on Other Plans.  Nothing in
this Plan shall be construed to limit the rights of Participants under the
Company’s or its Subsidiaries’ benefit plans, programs or policies.

 

(j)            Effective Date.  The Plan
shall be effective as of the Effective Date.

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