Document:

Exhibit 4.1

 

NRFC NNN HOLDINGS,
LLC

 

11.50% EXCHANGEABLE SENIOR NOTES DUE 2013

 

 

INDENTURE

 

 

DATED AS OF MAY 28, 2008

 

 

NORTHSTAR REALTY FINANCE CORP.,

 

NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP,

 

and

 

NRFC SUB-REIT CORP.,

 

as Guarantors,

 

WILMINGTON TRUST COMPANY,

 

as Trustee

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE 1      DEFINITIONS
  AND INCORPORATION BY REFERENCE

  	
  1

  
	
   

  	
   

  
	
  Section 1.01.

  	
  Definitions

  	
  1

  
	
  Section 1.02.

  	
  Other Definitions

  	
  16

  
	
  Section 1.03.

  	
  Rules of Construction

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2      THE
  SECURITIES

  	
  18

  
	
   

  	
   

  
	
  Section 2.01.

  	
  Title and Terms

  	
  18

  
	
  Section 2.02.

  	
  Denominations

  	
  19

  
	
  Section 2.03.

  	
  Form and Dating

  	
  19

  
	
  Section 2.04.

  	
  Execution and Authentication

  	
  21

  
	
  Section 2.05.

  	
  Registrar, Paying Agent and Exchange Agent

  	
  22

  
	
  Section 2.06.

  	
  Intentionally Omitted

  	
  23

  
	
  Section 2.07.

  	
  Lists of Holders of Securities

  	
  23

  
	
  Section 2.08.

  	
  Transfer and Exchange

  	
  23

  
	
  Section 2.09.

  	
  Replacement Securities

  	
  24

  
	
  Section 2.10.

  	
  Outstanding Securities

  	
  25

  
	
  Section 2.11.

  	
  Treasury Securities

  	
  25

  
	
  Section 2.12.

  	
  Temporary Securities

  	
  25

  
	
  Section 2.13.

  	
  Cancellation

  	
  26

  
	
  Section 2.14.

  	
  Legend; Additional Transfer and Exchange
  Requirements

  	
  26

  
	
  Section 2.15.

  	
  CUSIP Numbers

  	
  28

  
	
  Section 2.16.

  	
  Payment of Interest; Interest Rights Preserved

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3      REPURCHASE

  	
  30

  
	
   

  	
   

  
	
  Section 3.01.

  	
  Repurchase at Option of Holders upon a Change in
  Control

  	
  30

  
	
  Section 3.02.

  	
  Repayment to the Issuer

  	
  32

  
	
  Section 3.03.

  	
  Securities Purchased in Part

  	
  32

  
	
  Section 3.04.

  	
  Repurchase of Securities by Third Parties

  	
  32

  
	
  Section 3.05.

  	
  Purchase of Securities in Open Market

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4      EXCHANGE

  	
  33

  
	
   

  	
   

  
	
  Section 4.01.

  	
  Right to Exchange

  	
  33

  
	
  Section 4.02.

  	
  Exercise of Exchange Right; No Adjustment for
  Interest or Dividends

  	
  35

  
	
  Section 4.03.

  	
  Exchange Rate Adjustment After Certain Change in
  Control

  	
  37

  
	
  Section 4.04.

  	
  Adjustment of Exchange Rate

  	
  39

  
	
  Section 4.05.

  	
  Exchange Rate

  	
  46

  
	
  Section 4.06.

  	
  Cash Payments in Lieu of Fractional Shares

  	
  46

  
	
  Section 4.07.

  	
  Taxes on Shares Issued

  	
  46

  

 

i

 

	
  Section 4.08.

  	
  Reservation of Shares, Shares to be Fully Paid;
  Compliance with Governmental Requirements; Listing of Common Stock

  	
  46

  
	
  Section 4.09.

  	
  Responsibility of Trustee

  	
  47

  
	
  Section 4.10.

  	
  Notice to Holders Prior to Certain Actions

  	
  47

  
	
  Section 4.11.

  	
  Settlement upon Exchange

  	
  48

  
	
  Section 4.12.

  	
  Ownership Limit

  	
  49

  
	
  Section 4.13.

  	
  Calculation in Respect of Securities

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5      COVENANTS

  	
  49

  
	
   

  	
   

  
	
  Section 5.01.

  	
  Payment of Securities

  	
  49

  
	
  Section 5.02.

  	
  Money for Securities Payments to be Held in Trust

  	
  50

  
	
  Section 5.03.

  	
  Reports

  	
  51

  
	
  Section 5.04.

  	
  Compliance Certificates

  	
  52

  
	
  Section 5.05.

  	
  Further Instruments and Acts

  	
  52

  
	
  Section 5.06.

  	
  Maintenance of Existence as a Limited Partnership

  	
  52

  
	
  Section 5.07.

  	
  Stay, Extension and Usury Laws

  	
  52

  
	
  Section 5.08.

  	
  Calculation of Original Issue Discount

  	
  52

  
	
  Section 5.09.

  	
  Maintenance of Office or Agency

  	
  52

  
	
  Section 5.10.

  	
  Registration Rights

  	
  53

  
	
  Section 5.11.

  	
  Prohibited Indebtedness

  	
  53

  
	
  Section 5.12.

  	
  Prohibited Liens

  	
  55

  
	
  Section 5.13.

  	
  Prohibited Pre-Payments of Indebtedness

  	
  55

  
	
  Section 5.14.

  	
  Prohibition on Consensual Restrictions on
  Distributions

  	
  56

  
	
  Section 5.15.

  	
  Prohibition on Asset Transfers

  	
  56

  
	
  Section 5.16.

  	
  Prohibition on Change of Business

  	
  57

  
	
  Section 5.17.

  	
  Deposits into the Collateral Accounts

  	
  57

  
	
  Section 5.18.

  	
  Withdrawals from the Collateral Accounts

  	
  58

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6      CONSOLIDATION;
  MERGER; CONVEYANCE; TRANSFER OR LEASE

  	
  60

  
	
   

  	
   

  
	
  Section 6.01.

  	
  Issuer and the Guarantors May Consolidate,
  Etc., Only on Certain Terms

  	
  60

  
	
  Section 6.02.

  	
  Successor Substituted

  	
  61

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7      DEFAULT
  AND REMEDIES

  	
  61

  
	
   

  	
   

  
	
  Section 7.01.

  	
  Events of Default

  	
  61

  
	
  Section 7.02.

  	
  Acceleration

  	
  64

  
	
  Section 7.03.

  	
  Other Remedies

  	
  65

  
	
  Section 7.04.

  	
  Waiver of Defaults and Events of Default

  	
  66

  
	
  Section 7.05.

  	
  Limitations on Suits

  	
  66

  
	
  Section 7.06.

  	
  Rights of Holders to Receive Payment and to Exchange

  	
  66

  
	
  Section 7.07.

  	
  Collection Suit by Trustee

  	
  67

  
	
  Section 7.08.

  	
  Trustee May File Proofs of Claim

  	
  67

  
	
  Section 7.09.

  	
  Priorities

  	
  67

  
	
  Section 7.10.

  	
  Undertaking for Costs

  	
  68

  

 

ii

 

	
  ARTICLE 8      TRUSTEE

  	
  68

  
	
   

  	
   

  
	
  Section 8.01.

  	
  Obligations of Trustee

  	
  68

  
	
  Section 8.02.

  	
  Rights of Trustee

  	
  70

  
	
  Section 8.03.

  	
  Individual Rights of Trustee

  	
  71

  
	
  Section 8.04.

  	
  Trustee’s Disclaimer

  	
  71

  
	
  Section 8.05.

  	
  Notice of Default or Events of Default

  	
  71

  
	
  Section 8.06.

  	
  Reports by Trustee to Holders

  	
  72

  
	
  Section 8.07.

  	
  Compensation and Indemnity

  	
  72

  
	
  Section 8.08.

  	
  Replacement of Trustee

  	
  73

  
	
  Section 8.09.

  	
  Successor Trustee by Merger, Etc.

  	
  74

  
	
  Section 8.10.

  	
  Eligibility of Trustee

  	
  74

  
	
  Section 8.11.

  	
  Conflicting Interests of Trustee

  	
  74

  
	
  Section 8.12.

  	
  Preferential Collection of Claims Against Issuer

  	
  74

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9      SATISFACTION
  AND DISCHARGE OF INDENTURE

  	
  74

  
	
   

  	
   

  
	
  Section 9.01.

  	
  Discharge of Indenture

  	
  74

  
	
  Section 9.02.

  	
  Deposited Monies to Be Held in Trust by Trustee

  	
  75

  
	
  Section 9.03.

  	
  Paying Agent to Repay Monies Held

  	
  75

  
	
  Section 9.04.

  	
  Return of Unclaimed Monies

  	
  76

  
	
  Section 9.05.

  	
  Reinstatement

  	
  76

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10      AMENDMENTS;
  SUPPLEMENTS AND WAIVERS

  	
  76

  
	
   

  	
   

  
	
  Section 10.01.

  	
  Without Consent of Holders

  	
  76

  
	
  Section 10.02.

  	
  With Consent of Holders

  	
  77

  
	
  Section 10.03.

  	
  Revocation and Effect of Consents

  	
  78

  
	
  Section 10.04.

  	
  Notation on or Exchange of Securities

  	
  78

  
	
  Section 10.05.

  	
  Trustee to Sign Amendments, Etc.

  	
  79

  
	
  Section 10.06.

  	
  Effect of Supplemental Indentures

  	
  79

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11      REDEMPTION

  	
  79

  
	
   

  	
   

  
	
  Section 11.01.

  	
  Redemption

  	
  79

  
	
  Section 11.02.

  	
  Sinking Fund

  	
  81

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12      MISCELLANEOUS

  	
  81

  
	
   

  	
   

  
	
  Section 12.01.

  	
  Notices

  	
  81

  
	
  Section 12.02.

  	
  Communications by Holders with Other Holder

  	
  82

  
	
  Section 12.03.

  	
  Certificate and Opinion as to Conditions Precedent

  	
  82

  
	
  Section 12.04.

  	
  Record Date for Consent of Holders of Securities

  	
  83

  
	
  Section 12.05.

  	
  Rules by Trustee, Paying Agent, Registrar and
  Exchange Agent

  	
  83

  
	
  Section 12.06.

  	
  Legal Holidays

  	
  83

  
	
  Section 12.07.

  	
  Governing Law

  	
  83

  
	
  Section 12.08.

  	
  No Adverse Interpretation of Other Agreements

  	
  83

  
	
  Section 12.09.

  	
  No Recourse Against Others

  	
  83

  
	
  Section 12.10.

  	
  No Security Interest Created

  	
  84

  
	
  Section 12.11.

  	
  Successors

  	
  84

  
	
  Section 12.12.

  	
  Multiple Counterparts

  	
  84

  

 

iii

 

	
  Section 12.13.

  	
  Separability

  	
  84

  
	
  Section 12.14.

  	
  Table of Contents, Headings, Etc.

  	
  84

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13      GUARANTEE

  	
  84

  
	
   

  	
   

  
	
  Section 13.01.

  	
  Guarantee

  	
  84

  
	
   

  	
   

  	
   

  
	
  Exhibit

  	
   

  	
  A-1-1

  
	
   

  	
   

  	
   

  
	
  Exhibit

  	
   

  	
  B-1

  
	
   

  	
   

  	
   

  
	
  Schedule I

  	
  I-1

  

 

iv

 

THIS
INDENTURE dated as of May 28, 2008 is by and among NRFC NNN Holdings, LLC,
a Delaware limited liability company (the “Issuer”), NorthStar Realty
Finance Corp., a Maryland corporation (“NRF”), NorthStar Realty Finance
Limited Partnership, a Delaware limited partnership (“NRF LP”) and NRFC
Sub-REIT Corp., a Maryland corporation (“Sub-REIT”), as Guarantors (each of
NRF, NRF LP and Sub-REIT, a “Guarantor” and, together, the “Guarantors”),
and Wilmington Trust Company, a Delaware banking corporation, as Trustee (the “Trustee”).

 

RECITALS

 

The
Issuer has duly authorized the creation of an issue of its 11.50% Exchangeable
Senior Notes due 2013 of substantially the tenor and amount hereinafter set
forth, and to provide therefor the Issuer has duly authorized the execution and
delivery of this Indenture.

 

Each
Guarantor has duly authorized the creation of an irrevocable and unconditional
guarantee of the Securities of substantially the tenor and amount hereinafter
set forth, and to provide therefor each Guarantor has duly authorized the
execution and delivery of this Indenture and of the Guarantee provided for
herein.

 

All
things necessary to make the Securities, when duly executed by the Issuer and
authenticated and delivered hereunder, and the Guarantees (as defined herein),
when duly executed by each Guarantor, and delivered hereunder, and the
Securities and the Guarantees duly issued by the Issuer and each Guarantor, the
obligations of the Issuer and each Guarantor, and to make this Indenture a
valid agreement of the Issuer and each Guarantor, in accordance with its terms,
have been done.

 

NOW,
THEREFORE, THIS INDENTURE WITNESSETH:

 

For
and in consideration of the premises and the purchase of the Securities by the
Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:

 

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01.       Definitions.

 

“ADS
Property” means the Property located at 3100 Easton Square Place, Columbus,
Ohio.

 

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

 

 

“Agent”
means any Registrar, Paying Agent or Exchange Agent.

 

“Aggregate
Realized Property Net Cash Flow” means, for any period, the aggregate
Realized Property Net Cash Flow from all the Properties during such period.

 

“Applicable
Exchange Measurement Period” means (i) for Securities that are
exchanged on or after the 23rd Scheduled Trading Day prior to
the Final Maturity Date, the 20 consecutive Trading Day period beginning
on the third trading day following the 23rd Scheduled Trading
Day prior to the Final Maturity Date, and (ii) in all other cases, the
20 consecutive Trading Day period commencing on the third Trading Day
following the Exchange Date.

 

“Applicable
Exchange Rate” means, as of any Trading Day, the Exchange Rate in effect on
such date, after giving effect to any adjustment provided under
Sections 4.03 and 4.04 hereof.

 

“Applicable
Procedures” means, with respect to any transfer or exchange of beneficial
ownership interests in a Global Security, the rules and procedures of the
Depositary, to the extent applicable to such transfer or exchange.

 

“Asset
Transfer Sub Account” means the sub-account of the Operating Account
referred to as the “Asset Transfer Sub Account.”

 

“Board
of Directors” means the board of directors of NRF or a committee of such
board duly authorized to act on its behalf hereunder; provided,
that in the definition of the term “Change in Control”, Board of Directors
means the Board of Directors of NRF.

 

“Business
Day” means, with respect to any Security, each Monday, Tuesday, Wednesday,
Thursday and Friday, other than a day on which banking institutions in The City
of New York are authorized or obligated by law or executive order to close.

 

“Capital
Expenditures” means any costs or expenses that are required to be
capitalized according to GAAP.

 

“Capital
Stock” of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, but excluding any debt
securities convertible into such equity.

 

“cash”
means such coin or currency of the United States as at any time of payment is
legal tender for the payment of public and private debts.

 

“Cash
Equivalents” means any of the following (including investments for which
the Trustee or its Affiliates provides services and charges and collects a fee
for such services):  (i) marketable securities issued by the United
States Government and supported by the full faith and credit of the United
States Treasury, either by statute or an opinion of the Attorney General of the
United States; (ii) marketable debt securities, rated Aaa by Moody’s and/
or AAA by Standard & Poor’s, issued by United States
government-sponsored enterprises, United States Federal agencies, United States
Federal financing banks, and international institutions whose capital stock has
been subscribed for by the United States; (iii) certificates of deposit,
time deposits, and bankers acceptances of any bank or trust company
incorporated under the laws of 

 

2

 

the United States or any state, provided that,
at the date of acquisition, such investment, and/or the commercial paper or
other short term debt obligation of such bank or trust company has a short-term
credit rating or ratings from Moody’s and/or Standard & Poor’s, each
at least P-1 or A-1; (iv) commercial paper of any corporation incorporated
under the laws of the United States or any state thereof which on the date of
acquisition is rated by Moody’s and/or Standard & Poor’s, provided
each such credit rating is at least P-1 and/or A-1; and (v) money market
mutual funds that are registered with the SEC under the Investment Company Act
of 1940, as amended, and operated in accordance with Rule 2a-7 and that at
the time of such investment are rated Aaa by Moody’s and/or AAAm by Standard &
Poor’s.

 

“Cash
Flow Sub Account” means the sub-account of the Operating Account referred
to as the “Cash Flow Sub-Account.”

 

“CDO
Subsidiary” means any Subsidiary of the Issuer or a Guarantor which is an
issuer of collateralized debt obligations.

 

“Certificated
Security” means a Security that is in substantially the form attached as Exhibit A
but that does not include the information or the schedule called for by
footnote 1 thereof.

 

“Change
in Control” means the occurrence at any time any of any of the following
events:

 

(1)           consummation of any
transaction or event (whether by means of a liquidation, share exchange, tender
offer, consolidation, recapitalization, reclassification, combination, merger
of the Issuer or any sale, lease or other transfer of all or substantially all
of the consolidated assets of NRF and its consolidated subsidiaries) or a
series of related transactions or events pursuant to which the Common Stock is
exchanged for, converted into or constitutes solely the right to receive cash,
securities or other property more than 10% of which consists of cash,
securities or other property that are not, or upon issuance will not be, traded
on a national securities exchange;

 

(2)           any “person” or “group”
(as such terms are used for purposes of Sections 13(d) and 14(d) of
the Exchange Act, whether or not applicable), other than the Guarantors, the
Issuer or any majority-owned subsidiary of the Issuer or of the Guarantors, is
or becomes the beneficial owner (as such term is defined for purposes of Section 13(d)(3) under
the Exchange Act), directly or indirectly, of more than 50% of the total voting
power in the aggregate of all classes of the capital stock of NRF then
outstanding entitled to vote generally in elections of directors;

 

(3)           during any period of
12 consecutive months after the date of this Indenture persons who at the
beginning of such 12-month period constituted the Board of Directors (together
with any new persons whose election was approved by a vote of a majority of the
persons then still comprising the Board of Directors who were either members of
the Board of Directors at the beginning of such period or whose election,
designation or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors, then in office;

 

3

 

(4)           the Common Stock (or
other Capital Stock or securities into which the Securities are then
exchangeable) ceases to be listed on a U.S. national securities exchange for 30
consecutive days;

 

(5)           NRF (or any
successor thereto permitted pursuant to the terms of this Indenture) ceases to
be the direct or indirect controlling parent of the Issuer or otherwise ceases
to control the Issuer; or

 

(6)           the members of the
Issuer, shareholders of NRF or the equity holders of any other Guarantor
approve any plan or proposal for the liquidation of the Issuer, NRF, NRF LP or
Sub-REIT.

 

Notwithstanding the
foregoing, even if any of the events specified in the preceding clauses (1) through
(6) have occurred, a Change in Control will not be deemed to have occurred
and the Issuer shall not be required to deliver a notice incidental thereto if
either:

 

(A)          the Closing Sale
Price per share of Common Stock for any five Trading Days within (i) the
period of 10 consecutive Trading Days ending immediately after the later
of the Change in Control or the public announcement of the Change in Control, in
the case of a Change in Control relating to an acquisition of Capital Stock, or
(ii) the period of 10 consecutive Trading Days ending immediately
after the Change in Control, in the case of a Change in Control relating to a
merger, consolidation or asset sale, equals or exceeds 105% of the Exchange
Price in effect on each of those Trading Days; provided,
however, that the exception to the
definition of “Change in Control” specified in this clause (A) shall
not apply in the context of a Change in Control for purposes of Section 4.01(b)(v) or
4.03; or

 

(B)           at least 90% of the
consideration (excluding cash payments for fractional shares and cash payments
made pursuant to dissenters’ appraisal rights) in a merger, consolidation or
other transaction otherwise constituting a Change in Control consists of shares
of common stock, depositary receipts or other certificates representing common
equity interests traded on a U.S. national securities exchange or quoted on an
established automated over-the-counter trading market in the United States (or
will be so traded or quoted immediately following such merger, consolidation or
other transaction) and as a result of the merger, consolidation or other
transaction the Securities become exchangeable for such shares of common stock,
depositary receipts or other certificates representing common equity interests.

 

For
the purposes of this definition, “person” includes any syndicate or group that
would be deemed to be a “person” under Section 13(d)(3) of the
Exchange Act.

 

“Change
in Control Purchase Date” has the meaning provided in Section 3.01(b) hereof.

 

“Change
in Control Purchase Notice” has the meaning provided in Section 3.01(c) hereof.

 

4

 

“Change
in Control Purchase Price” of any Security, means 100% of the principal
amount of the Security to be purchased plus accrued and unpaid interest, if
any, to, but excluding, the Change in Control Purchase Date.

 

“Closing
Sale Price” of the Common Stock or other Capital Stock or similar equity
interests or other publicly traded securities on any date means the closing
sale price per share (or, if no closing sale price is reported, the average of
the closing bid and ask prices or, if more than one in either case, the average
of the average closing bid and the average closing ask prices) on such date as
reported on the principal U.S. securities exchange on which the Common Stock or
such other Capital Stock or similar equity interests or other publicly traded
securities are listed or, if the Common Stock or such other Capital Stock or similar equity interests or other
publicly traded securities are not listed on a U.S. securities exchange, by the
National Quotation Bureau Incorporated or another established over-the-counter
trading market in the United States.  The
Closing Sale Price shall be determined without regard to after-hours trading or
extended market making.  In the absence
of the foregoing, the Issuer shall determine the Closing Sale Price on such
basis as it considers appropriate.

 

“Collateral
Accounts” means, collectively (i) the Interest Reserve Account and (ii) the
Operating Account.

 

“Common
Stock” means, subject to Section 4.11, the common stock, par value
$0.01 per share of NRF, at the date of this Indenture and any shares of any
class or classes of Capital Stock of NRF resulting from any reclassification or
reclassifications thereof, or, in the event of a merger, consolidation or other
similar transaction involving NRF that is otherwise permitted hereunder in
which NRF is not the surviving corporation, the common stock, common equity
interests, ordinary shares or depositary shares or other certificates
representing common equity interests of such surviving corporation or its
direct or indirect parent corporation, and which have no preference in respect
of dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of NRF and which are not subject to
redemption by NRF; provided, however, that if at any time there shall be more than one
such resulting class, the shares of each such class then so issuable on
exchange of the Securities shall be substantially in the proportion which the
total number of shares of such class resulting from all such reclassifications
bears to the total number of shares of all such classes resulting from all such
reclassifications.

 

“Comparable
Treasury Issue” means the United States Treasury security selected by the
Issuer that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt
securities having a maturity to June 15, 2011.

 

“Comparable
Treasury Price” means, with respect to an Exchange Date, (1) the
average of the Reference Treasury Dealer Quotations for such Exchange Date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (2) if fewer than three such Reference Treasury Dealer
Quotations are reasonably obtainable, the average of all such quotations.

 

“Control
Agreements” has the meaning provided in the Security Agreement.

 

5

 

“Corporate
Trust Office” means the office of the Trustee at which at any particular
time the trust created by this Indenture shall be administered, which initially
will be the office of Wilmington Trust Company located at Rodney Square North,
1100 North Market Street, Wilmington, DE 19890, attention:  Kristin L. Moore – NRFC NNN Holdings, LLC
Notes due 2013.

 

“Cott
Beverages Property” means the Property located at 1002 Patriot Parkway,
Reading, Pennsylvania.

 

“Covance
Property” means the Property located at 8211 SciCor Drive, Indianapolis,
Indiana.

 

“Daily
Exchange Value” means, for each of the 20 consecutive Trading Days during
the Applicable Exchange Measurement Period, one-twentieth (1/20) of the product
of (1) the Applicable Exchange Rate and (2) the Daily VWAP of the
Common Stock on such day.

 

“Daily VWAP” for the Common Stock means, for
each of the 20 consecutive Trading Days during the Applicable Exchange
Measurement Period, the per share volume-weighted average price as displayed
under the heading “Bloomberg VWAP” on Bloomberg (or any successor service) page NRF.N<equity>AQR
in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City
time) on such trading day (or if such volume-weighted average price is
unavailable, the market value of one share of the Common Stock on such Trading
Day as determined by the Board of Directors in good faith using a
volume-weighted method or by a nationally recognized independent investment
banking firm retained for this purpose by NRF).

 

“Default”
means, when used with respect to the Securities, any event that is or, after
notice or passage of time, or both, would be, an Event of Default.

 

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

 

“Exchange
Price” per share of Common Stock as of any day means the result obtained by
dividing (i) $1,000 by (ii) the then Applicable Exchange Rate,
rounded to the nearest cent.

 

“Ex-Dividend
Date” means the first date upon which a sale of shares of Common Stock does
not automatically transfer the right to receive the relevant distribution from
the seller of such shares of Common Stock to the buyer.

 

“Final
Maturity Date” means June 15, 2013.

 

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

 

“Global
Security” means a Security in global form that is in substantially the form
attached as Exhibit A and that includes the information and schedule
called for in footnote 1 thereof and which is deposited with the Depositary or
its custodian and registered in the name of the Depositary or its nominee.

 

6

 

“GSA
Property” means the Property located at 2222 West 2300 Street, Salt Lake
City, Utah.

 

“Guarantee”
shall mean the unconditional guarantee of the payment of the principal of, or
any premium or interest on, the Securities by the Guarantors, as more fully set
forth in Article 13 hereof.

 

“Guarantor”
or “Guarantors” shall mean each Person named as a “Guarantor” in the
first paragraph of this Indenture until a successor Person shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter “Guarantor”
shall mean such successor Person.

 

“Holder”
means the person in whose name a Security is registered on the Registrar’s
books.

 

“Indebtedness”
means, as applied to any Person, (i) all indebtedness for borrowed money, (ii) that
portion of obligations with respect to capital leases that, as of the date of
the consummation of the lease in question, is properly classified as a liability
on a balance sheet of such Person in conformity with GAAP, (iii) notes
payable and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or services
purchased by such Person (other than trade debt incurred in the ordinary course
of business and due within six months of the incurrence thereof) that would
appear as liabilities on a balance sheet of such Person; provided,
however, that this clause (iv) shall not apply to tenant
improvement allowances and leasing brokerage commissions incurred in the
ordinary course of business, (v) any of the foregoing indebtedness secured
by any Lien on any property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed by that Person
or is nonrecourse to the credit of that Person, and (vi) guarantees of any
of the foregoing indebtedness.

 

“Indenture”
means this Indenture, as amended or supplemented from time to time pursuant to
the terms hereof.

 

“Initial
Purchasers” means Wachovia Capital Markets, LLC and JMP
Securities LLC.

 

“Interest
Make-Whole Payment” means, with respect to each $1,000 principal amount of Securities,
a payment in cash by the Issuer equal to the sum of the present values of the
scheduled payments of interest thereon through and including the Interest
Payment Date on June 15, 2011, which interest would otherwise be paid but
for a Holder’s exercise of its exchange right pursuant to Section 4.10(b)(i),
discounted to the Exchange Date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the U.S. Treasury Yield, and paid by the
Issuer along with the other consideration received in connection with the
exchange.

 

“Interest
Payment Date” means June 15 and December 15 of each year,
commencing December 15, 2008.

 

“Interest
Reserve Account” means that certain account established on or before the
date hereof with Wilmington Trust Company by the Trustee into which an amount
equal to one semi-annual

 

7

 

interest payment on the Securities shall be deposited
concurrently with the initial issuance of the Securities, and any successor
account established pursuant to this Indenture or the Security Agreement from
time to time.

 

“Issue
Date” of any Security means the date on which the Security was originally
issued or deemed issued as set forth on the face of the Security.

 

“Issuer
Request” or “Issuer Order” means a written request or order (which
may be in the form of a standing order or request) signed in the name of the
Issuer by an Officer of Sub-REIT (in its capacity as managing member of the
Issuer) and delivered to the Trustee.

 

“Lease
Termination Payment” means, with respect to any Property, any payments made
to the Property Owning Entity that holds an interest in such Property on
account of the rejection, buy-out, termination, surrender or cancellation of
any space lease for such Property (including in connection with any bankruptcy
proceeding).

 

“Lease
Termination Payment Sub-Account” means the sub-account of the Operating
Account referred to as the “Lease Termination Payment Sub-Account.”

 

“Lien”
means any lien, security interest, pledge, collateral assignment, deed of
trust, mortgage, charge or other encumbrance (including any conditional sale or
other title retention agreement, and any agreement to give any security
interest) and any option, trust or preferential arrangement having the
practical effect of any of the foregoing.

 

“Liquidated
Damages” has the meaning provided in the Form of Note attached as Exhibit A
hereto.

 

“Market
Disruption Event” means the occurrence or existence for more than a
one-half hour period in the aggregate on a Scheduled Trading Day for the Common
Stock of any suspension or limitation imposed on trading (by reason of
movements in price exceeding limits permitted by the stock exchange or
otherwise) in the Common Stock or in any options, contracts or futures
contracts relating to the Common Stock, and such suspension or limitation
occurs or exists at any time before 1:00 p.m. (New York City time) on such
day.

 

“Measurement
Period” is the period from and including the 11th Trading Day in
a fiscal quarter up to but excluding the 11th Trading Day of the
following fiscal quarter.

 

“Moody’s”
means Moody’s Investor’s Service and any successor thereto.

 

“NRF”
has the meaning given in the first paragraph of this Indenture.

 

“NRF
LP” has the meaning given in the first paragraph of this Indenture.

 

“NRF
Request” or “NRF Order” means a written request or order (which may
be in the form of a standing order or request) signed in the name of NRF by an
Officer of NRF and delivered to the Trustee.

 

“NYSE”
means the New York Stock Exchange.

 

8

 

“Officer”
means any person holding any of the following positions:  the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Chief Financial
Officer, the Chief Operating Officer, the Secretary or any Assistant Secretary.

 

“Officer’s
Certificate”, when used with respect to the Issuer or a Guarantor, as the
case may be, means a certificate signed by an Officer of the applicable Person
(or, if applicable, of the general partner or managing member of such Person in
its capacity as such) and delivered to the Trustee.

 

“Operating
Account” means that certain account established on or before the date
hereof with Wilmington Trust Company by the Issuer into which Realized Property
Net Cash Flow, Net Transfer Proceeds and Required Lease Termination Deposit
Amounts shall be deposited from time to time in accordance with this Indenture,
including, without limitation, all sub-accounts thereof, and any successor account
and related sub-accounts established pursuant to this Indenture or the Security
Agreement from time to time.

 

“Opinion
of Counsel” means a written opinion from legal counsel reasonably
acceptable to the Trustee.  The counsel
may be an employee of or counsel to the Issuer, a Guarantor or the Trustee.

 

“Outstanding
Loan Amount” for any Property means, on any date, the sum of (i) the
outstanding principal balance, as of such date, of all mortgage loans that
encumber the applicable Property Owning Entity’s interest in such Property,
plus (ii) if applicable, the outstanding principal balance, as of such
date, of all mezzanine loans that encumber the ownership interests in such
Property Owning Entity, plus (iii) if applicable, the outstanding
principal balance, as of such date, of any other then outstanding loans under
which such Property Owning Entity (and/or, if applicable, any other
wholly-owned Subsidiary of the Issuer that directly or indirectly owns the
equity interests in such Property Owning Entity) is the borrower; provided, however, that if, on the date of the relevant
calculation, the Quantum Percentage Ownership Interest for a Quantum Property
is less than 100%, then the “Outstanding Loan Amount” for such Quantum Property
as of such date shall mean only the applicable Quantum Percentage Ownership
Interest of such outstanding principal loan balances with respect to such
Quantum Property as of such date (in instances where a wholly-owned Subsidiary
of the Issuer is not fully responsible for such outstanding loan balances).

 

“Person”
or “person” means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any syndicate or group that would be deemed to be a “person” under Section 13(d)(3) of
the Exchange Act or any other entity.

 

“Projected
Asset Transfer Sub-Account Income”, for any period, means income projected
to be earned on proceeds of the Asset Transfer Sub-Account during such period
and not withdrawn during such period.

 

“Projected
Available Cash” for any Property, means, for any period, (i) the
Projected Property Income for such Property for such period, as reasonably
determined by the Issuer, 

 

9

 

minus (ii) the Projected Property Expenses for
such Property for such period, as reasonably determined by the Issuer.

 

“Projected
Capital Expenditures”, for any Property, means any Capital Expenditures that
are budgeted by the applicable Property Owning Entity to be incurred by such
Property Owning Entity during the period in question in connection with any
alterations, improvements or replacements to such Property; provided, however,
that, with respect to any period in which the Quantum Percentage Ownership
Interest for a Quantum Property is less than 100%, the “Projected Capital
Expenditures” for such Quantum Property for such period shall mean only the
applicable Quantum Percentage Ownership Interest of the foregoing budgeted
Capital Expenditures with respect to such Quantum Property for such period.

 

“Projected
Cash Coverage Ratio” means the ratio of (i) the Projected Excess Cash
Flow for the first four full calendar quarters immediately following the date
of calculation (so that if the date of calculation is not the first day of a
calendar quarter, then such four quarter period shall commence on the first day
of the calendar quarter immediately following the calendar quarter in which
such date of calculation occurs), as reasonably determined by the Issuer, to (ii) the
projected interest payments that would be payable under the Securities for such
first four full calendar quarters at an interest rate of 11.50%.

 

“Projected
Excess Cash Flow”, for any period, means (i) the sum of (a) the
aggregate Projected Property Income from all the Properties for such period
plus (b) the aggregate Projected Asset Transfer Sub-Account Income for
such period, minus (ii) the aggregate Projected Property Expenses for all
the Properties for such period.

 

“Projected
Loan Payments”, for any Property, means (i) all projected scheduled
interest, principal, escrow and reserve payments for the period in question
under any mortgage loan that encumbers the applicable Property Owning Entity’s
interest in such Property, plus (ii) if applicable, all projected
scheduled interest, principal, escrow and reserve payments for the period in
question under any mezzanine loan that encumbers the applicable Subsidiary’s
ownership interest in such Property Owning Entity, plus (iii) if
applicable, all projected scheduled interest, principal, escrow and reserve
payments for the period in question under any other then outstanding loans
under which such Property Owning Entity (and/or, if applicable, any other
wholly-owned Subsidiary of the Issuer that directly or indirectly owns the
equity interests in such Property Owning Entity) is the borrower; provided,
however, that, with respect to any period in which the Quantum Percentage
Ownership Interest for a Quantum Property is less than 100%, the “Projected
Loan Payments” for such Quantum Property for such period shall mean only the
applicable Quantum Percentage Ownership Interest of the foregoing projected
amounts with respect to such Quantum Property for such period (in instances
where a wholly-owned Subsidiary of the Issuer is not fully responsible for the
foregoing projected amounts).

 

“Projected
Operating Expenses”, for any Property, means all costs and expenses
projected to be incurred by the applicable Property Owning Entity in connection
with the operation, maintenance and management of such Property for the period
in question, including costs and expenses for utilities, repairs and
maintenance, property taxes and assessments, insurance premiums, and rent under
any ground, master or other underlying lease; provided, however, that the term “Projected
Operating Expenses” does not include (i) any such costs or 

 

10

 

expenses that are to be paid directly by any tenants
of such Property to third parties or reimbursed to the applicable Property
Owning Entity by such tenants, (ii) Capital Expenditures, or (iii) depreciation,
amortization, non-cash or non-recurring expenses; provided further, however,
that, with respect to any period in which the Quantum Percentage Ownership
Interest for a Quantum Property is less than 100%, the “Projected Operating
Expenses” for such Quantum Property for such period shall mean only the
applicable Quantum Percentage Ownership Interest of the foregoing projected
costs and expenses with respect to such Quantum Property for such period.

 

“Projected
Property Expenses”, for any Property, means the sum of the following for
the period in question:  (i) all
Projected Operating Expenses for such Property for such period; (ii) all
Projected Loan Payments for such Property for such period; and (iii) all
Projected Capital Expenditures for such Property for such period.

 

“Projected
Property Income”, for any Property, means all projected rental and similar
income to be derived by the applicable Property Owning Entity from such
Property for the period in question; provided, however, that, with respect to
any period in which the Quantum Percentage Ownership Interest for a Quantum
Property is less than 100%, the “Projected Property Income” for such Quantum
Property for such period shall mean only the applicable Quantum Percentage
Ownership Interest of the foregoing projected rental and similar income with
respect to such Quantum Property for such period.

 

“Property”
means each real property listed on Schedule I annexed hereto, together with any
Replacement Property and any other real property interest acquired after the
date hereof by a Subsidiary of the Issuer; provided, however,
that, from and after the conveyance of any Replaced Property (or the ownership
interests of the Subsidiary that owns an interest in such Replaced Property) in
accordance with Section 5.15, the term “Property” shall not include such
Replaced Property.

 

“Property
Cost Amount”, for any Property, means the amount set forth next to such
Property on Schedule I annexed hereto; provided, however, that if
such Property is a Replacement Property, then the Property Cost Amount for such
Replacement Property shall be equal to the aggregate cost incurred by the
applicable Property Owning Entity for such Replacement Property (or, if
applicable, for the ownership interests of the entity that holds fee or
leasehold title to such Replacement Property), including (i) the amount of
any debt assumed by such Property Owning Entity, and/or by any Subsidiary that
owns such Property Owning Entity, in connection with such Property Owning
Entity’s acquisition of such Replaced Property (or, if applicable, in
connection with such acquisition of the ownership interests of the entity that
holds fee or leasehold title to such Replacement Property), and (ii) all
transaction costs incurred by the applicable Subsidiaries in connection with
such acquisition.

 

“Property
Cost Coverage Ratio” means the ratio of (i) the sum of (x) the
aggregate Property Cost Amounts for all the Properties as of the date of
calculation less the then aggregate Outstanding Loan Amounts for all the
Properties as of such date of calculation, plus (y) the aggregate amount
then on deposit in the Asset Transfer Sub-Account, plus (z) the aggregate
amount then on deposit in the Lease Termination Payment Sub-Account, to (ii) the
outstanding principal balance of the Securities as of the date of calculation.

 

11

 

“Property
Owning Entity”, (i) for any Property other than the Quantum Properties
or the ADS Property, means the Subsidiary that owns fee title to such Property
(or, in the case of any Property to which a Subsidiary has a leasehold, rather
than a fee, interest, the Subsidiary that is the holder of such leasehold
interest), (ii) for Quantum Property A, means CS/Federal Drive AB LLC, a
Delaware limited liability company, (iii) for Quantum Property B, means
CS/Federal Drive AB LLC, a Delaware limited liability company, (iv) for
Quantum Property C, means CS/Federal Drive C LLC, a Delaware limited liability
company, and (v) for the ADS Property means, collectively, NRFC Easton
Holdings, LLC and NRFC Easton Holdings 2, LLC, each a Delaware limited
liability company.

 

“Quantum
Buy-Sell Provision” means Section 6.2 of that certain Operating
Agreement of C/S Federal Drive LLC, dated as of January 11, 2006.

 

“Quantum
Percentage Ownership Interest” for a Quantum Property, means, at any time,
the aggregate indirect ownership interest held by the Issuer in such Quantum
Property at such time.  As of the date
hereof, the Quantum Percentage Ownership Interest for each Quantum Property is
50%.

 

“Quantum
Property” means any of Quantum Property A or Quantum Property B or Quantum
Property C.  “Quantum Properties” has the
corresponding plural meaning.

 

“Quantum
Property A” means the Property located at 10125 Federal Drive, Colorado
Springs, Colorado.

 

“Quantum
Property B” means the Property located at 10205 Federal Drive, Colorado
Springs, Colorado.

 

“Quantum
Property C” means the Property located at 10285 Federal Drive, Colorado
Springs, Colorado.

 

“Rated”
as to any Person means having a Rating.

 

“Rating”
means a credit rating, creditworthiness rating, corporate default rating or any
similar designation given by a Rating Agency.

 

“Rating
Agency” means S&P or Moody’s or any other company qualified as a “nationally
recognized statistical rating agency” pursuant to the rules and
regulations of the SEC.

 

“Realized
Property Net Cash Flow” for any Property, means, for any period (i) the
aggregate rental and similar income actually derived and received by the
applicable Property Owning Entity from such Property for such period, minus (ii) the
sum of (x) the aggregate amounts paid (and not released) during such
period to the holder or servicer of any mortgage loan encumbering such Property
Owning Entity’s interest in such Property, including interest, principal,
escrows, and reserves, (y) if applicable, the aggregate amounts paid (and
not released) during such period to the holder or servicer of any mezzanine
loan that encumbers the ownership interests in such Property Owning Entity,
including interest, principal, escrows, and reserves, and (z) the
aggregate amounts paid (and not released) during such period to the holder or
servicer of any other then outstanding loans under which such Property Owning
Entity (and/or, if 

 

12

 

applicable, any other wholly-owned Subsidiary of the
Issuer that directly or indirectly owns the equity interests in such Property
Owning Entity) is the borrower; provided, however, that, with
respect to any period in which the Quantum Percentage Ownership Interest for a
Quantum Property is less than 100%, the “Realized Property Net Cash Flow” for
such Quantum Property for such period shall mean only the applicable Quantum
Percentage Ownership Interest of each of the foregoing amounts with respect to
such Quantum Property for such period (in instances where a wholly-owned
Subsidiary of the Issuer is not fully responsible for the foregoing projected
amounts). For the avoidance of doubt, in no event shall “Realized Property Net
Cash Flow” include any such rental income or other income that is paid, during
the period in question, into a lockbox account (or other blocked or controlled
account) controlled by any such holder or servicer and not actually released
during such period.

 

“Redemption
Date” means, with respect to any Security or portion thereof to be redeemed
in accordance with the provisions of Section 11.01 hereof, the date fixed
for such redemption in accordance with the provisions of Section 11.01
hereof.

 

“Reference
Treasury Dealer” means (1) Wachovia Capital Markets, LLC and its
successors; provided, however, that if the foregoing shall cease
to be a primary U.S.  Government
securities dealer in New York City (a “Primary Treasury Dealer”), the
Issuer shall substitute therefor another Primary Treasury Dealer and (2) at
least two other Primary Treasury Dealers of nationally recognized standing
selected by the Issuer.

 

“Reference
Treasury Dealer Quotations” means, with respect to each Reference Treasury
Dealer and an Exchange Date on which an Interest Make-Whole Payment is due, the
average, as determined by the Issuer, of the bid and ask prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Issuer by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the second Business Day preceding
such Exchange Date.

 

“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the
date hereof, between NRF and the Initial Purchasers, as amended from time to
time in accordance with its terms.

 

“Regular
Record Date” means, with respect to each Interest Payment Date, June 1
or December 1 as the case may be, next preceding such Interest Payment
Date.

 

“Replaced
Property” means any Property disposed of (or with respect to which the
direct or indirect ownership interests in the Property Owning Entity that is
the holder of such Property are disposed of) pursuant to Section 5.15.

 

“Required
Lease Termination Deposit Amount” shall mean, with respect to any Lease
Termination Payment, an amount equal to such Lease Termination Payment, less
(i) the portion of such Lease Termination Payment that is paid to and/or
deposited with (or for the benefit of) the holder or servicer of any mortgage
loan with respect to the Property to which such Lease Termination Payment
relates, (ii) the portion of such Lease Termination Payment that is paid
to and/or deposited with the holder or servicer of any mezzanine loan with
respect to the Property to which such Lease Termination Payment relates, and (iii) a
reserve that is established and held 

 

13

 

by the Property Owning Entity in question for the
reasonably anticipated tenant improvement, work allowance and leasing
commission costs with respect to such Property; provided, however,
that if (x) such Lease Termination Payment is with respect to a Quantum
Property, and (y) on the date such Lease Termination Payment is received
by the relevant Property Owning Entity, the Quantum Percentage Ownership
Interest for such Quantum Property is less than 100%, then the “Required Lease
Termination Deposit Amount” with respect to such Lease Termination Payment
shall mean only the applicable Quantum Percentage Ownership Interest of each of
the foregoing amounts described in this definition.

 

“Responsible
Officer” means, when used with respect to the Trustee, any officer within
the corporate client services division of the Trustee with direct
responsibility for the administration of this Indenture and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of such person’s knowledge of and familiarity with
the particular subject.

 

“Restricted
Common Stock” means Common Stock issued upon exchange of any Security that
is required to bear a restrictive legend pursuant to Section 2.14(e) hereof.

 

“Restricted
Global Security” means a Global Security that is a Restricted Security.

 

“Restricted
Security” means a Security required to bear the restrictive legend set
forth in the form of Security annexed as Exhibit A.

 

“Rule 144”
means Rule 144 under the Securities Act or any successor to such Rule.

 

“Rule 144A”
means Rule 144A under the Securities Act or any successor to such Rule.

 

“Scheduled
Monthly Debt Service” for any Indebtedness existing as of the date of this
Indenture, means, for any period, the monthly principal and interest that would
be payable with respect to such Indebtedness during such period, assuming that (i) there
have been no modifications to any of the terms of such Indebtedness (as such
terms exist as of the date of this Indenture), and (ii) there have been no
pre-payments of the principal amount of such Indebtedness (other than the
regularly scheduled amortization payments pursuant to the terms of such
Indebtedness, as such terms exist as of the date of this Indenture).

 

“Scheduled
Trading Day” means a day that is scheduled to be a Trading Day on the
principal United States securities exchange or market on which the Common Stock
is listed or admitted for trading or, if the Common Stock is not listed or
admitted for trading on any exchange or market, a Business Day.

 

“SEC”
means the Securities and Exchange Commission.

 

“Securities”
means the $80,000,000 aggregate principal amount of 11.50% Exchangeable Senior
Notes due 2013, or any of them (each a “Security”), as amended or
supplemented from time to time, that are issued under this Indenture on the
initial Issue Date together with any Additional Securities issued in accordance
with Section 2.01 of this Indenture.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

14

 

“Securities
Custodian” means the Trustee, as custodian with respect to the Global
Securities, or any successor thereto.

 

“Security
Agreement” means the Security Agreement, dated as of the date hereof,
between the Trustee and the Issuer, as amended.

 

“Significant
Subsidiary” means any Subsidiary of NRF, NRF LP or Sub-REIT which is a
significant subsidiary (as defined in Regulation S-X as promulgated under
the Securities Act as in effect as of May 28, 2008).

 

“Standard &
Poor’s” means Standard & Poor’s Ratings Services, a division of
The McGraw-Hill Companies, and its any successor thereto.

 

“Sub-REIT”
has the meaning given in the first paragraph of this Indenture.

 

“Subsidiary”
means, in respect of any Person, any corporation, association, partnership or
other business entity of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any
contingency within the control of such Person to satisfy) to vote in the
election of directors, managers, general partners or trustees thereof is at the
time owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.

 

“Trading
Day” means a day during which (i) trading in securities generally
occurs on the NYSE or, if the subject securities are not then listed on the
NYSE, on the principal other national or regional securities exchange on which
such securities are then listed or, if such securities are not then listed on a
national or regional securities exchange, on the principal other market on
which the subject securities are then traded, (ii) there is no Market
Disruption Event and (iii) a Closing Sale Price for the Common Stock is
available for such day.

 

“Trading
Price” means, with respect to the Securities on any date of determination,
the average of the secondary market bid quotations per $1,000 principal amount
of Securities obtained by the Trustee for a $2,000,000 principal amount of
Securities at approximately 3:30 p.m., New York City time, on such
determination date from two independent nationally recognized securities
dealers selected by the Issuer, which may include the Initial Purchasers; provided that if at least two such bids cannot reasonably be
obtained by the Trustee, but one such bid can reasonably be obtained by the
Trustee, the one bid shall be used.  If
the Trustee cannot reasonably obtain at least one bid for a $2,000,000
principal amount of Securities from a nationally recognized securities dealer
or, in the reasonable judgment of the Issuer, the bid quotations are not
indicative of the secondary market value of the Securities, then the Trading
Price per $1,000 principal amount of Securities shall be deemed to be less than
102% of the Closing Sale Price of the Common Stock multiplied by the Applicable
Exchange Rate on such determination date.

 

“Triple
Net Holdings Entity” means the Issuer or any Subsidiary thereof.

 

15

 

“Trustee”
means the party named as such in the first paragraph of this Indenture until a
successor replaces it in accordance with the provisions of this Indenture, and
thereafter means the successor.

 

“Trust
Officer” means, with respect to the Trustee, any officer assigned to the
Corporate Trust Office, and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer’s
knowledge of and familiarity with the particular subject.

 

“U.S.
Treasury Yield” means, with respect to the payment of an Interest
Make-Whole Payment on an Exchange Date, the rate per annum equal to the
semiannual equivalent yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed as a percentage
of its principal amount) equal to the Comparable Treasury Price for such
Exchange Date.

 

“Vice
President,” when used with respect to NRF or the Trustee, means any vice
president, whether or not designated by a number or a word or words added
before or after the title “vice president.”

 

Section 1.02.                             Other Definitions.

 

	
  Term

  	
   

  	
  Defined in Section

  
	
   

  	
   

  	
   

  
	
  Additional Securities

  	
   

  	
  2.01

  
	
  Additional Shares Change in Control

  	
   

  	
  4.03(a)

  
	
  Agent Members

  	
   

  	
  2.03(d)

  
	
  Change in Control Event Shares

  	
   

  	
  4.03(a)

  
	
  Consolidated Net Assets

  	
   

  	
  7.01(11)

  
	
  Daily Partial Cash Amount

  	
   

  	
  4.11(a)(3)

  
	
  Defaulted Interest

  	
   

  	
  2.16

  
	
  Depositary

  	
   

  	
  2.03(c)

  
	
  DTC

  	
   

  	
  2.03(c)

  
	
  Effective Date

  	
   

  	
  4.03(b)

  
	
  Event of Default

  	
   

  	
  7.01

  
	
  Exchange Agent

  	
   

  	
  2.05(a)

  
	
  Exchange Date

  	
   

  	
  4.02

  
	
  Exchange Notice

  	
   

  	
  4.02

  
	
  Exchange Obligation

  	
   

  	
  4.11(a)

  
	
  Exchange Rate

  	
   

  	
  4.05

  
	
  Expiration Time

  	
   

  	
  4.04(e)

  
	
  Initial Securities

  	
   

  	
  2.01

  
	
  Issuer Notice

  	
   

  	
  3.01(b)

  
	
  Legal Holiday

  	
   

  	
  12.06

  
	
  Make Whole Cap

  	
   

  	
  4.03(e)(2)

  
	
  Make Whole Floor

  	
   

  	
  4.03(e)(3)

  
	
  Outstanding

  	
   

  	
  2.10(a)

  
	
  Partial Cash Amount

  	
   

  	
  4.11(a)(3)

  
	
  Paying Agent

  	
   

  	
  2.05(a)

  

 

16

 

	
  Term

  	
   

  	
  Defined in Section

  
	
   

  	
   

  	
   

  
	
  Primary Registrar

  	
   

  	
  2.05(a)

  
	
  Purchase Agreement

  	
   

  	
  2.01

  
	
  QIB

  	
   

  	
  2.03(c)

  
	
  Redemption Notice

  	
   

  	
  11.01(b)

  
	
  REIT

  	
   

  	
  11.01(a)

  
	
  Reference Dividend

  	
   

  	
  4.04(d)

  
	
  Reference Event

  	
   

  	
  7.01(11)

  
	
  Reference Property

  	
   

  	
  4.01

  
	
  Registrable Security

  	
   

  	
  5.10

  
	
  Registrar

  	
   

  	
  2.05(a)

  
	
  Restrictive Legend

  	
   

  	
  2.14(a)

  
	
  Special Record Date

  	
   

  	
  2.16

  
	
  Spin-Off

  	
   

  	
  4.04(c)

  
	
  Stock Price

  	
   

  	
  4.03(b)

  
	
  TIA

  	
   

  	
  8.06(a)

  

 

Section 1.03.                     Rules of Construction. 
Unless the context otherwise requires:

 

(1)                                  a term has the meaning assigned to it;

 

(2)                                  an accounting term not otherwise defined
has the meaning assigned to it in accordance with GAAP;

 

(3)                                  words in the singular include the plural,
and words in the plural include the singular;

 

(4)                                  provisions apply to successive events and
transactions;

 

(5)                                  the term “merger” includes a statutory
share exchange and the term “merged” has a correlative meaning;

 

(6)                                  the masculine gender includes the
feminine and the neuter;

 

(7)                                  references to agreements and other
instruments include subsequent amendments thereto; and

 

(8)                                  all “Article”, “Exhibit” and “Section”
references are to Articles, Exhibits and Sections, respectively, of or to this
Indenture unless otherwise specified herein, and the terms “herein”, “hereof”
and other words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.

 

17

 

ARTICLE 2

THE SECURITIES

 

Section 2.01.                             Title and Terms. 
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture, except for Securities authenticated and
delivered in exchange for, or in lieu of, other Securities pursuant to Section 2.08,
2.09, 2.12, 2.14, 3.04, 10.04 or 11.01, is limited to U.S. $80,000,000.  The Issuer
may, subject to the prior written consent of Wachovia Capital Markets, LLC
(which consent may be granted or withheld by Wachovia Capital Markets, LLC in
its sole discretion) and in accordance with the purchase agreement, dated as of May 22, 2008 (the
“Purchase Agreement”), among the Issuer, the Guarantors and the Initial
Purchasers, but without the consent
of the Holders, issue additional Securities (the “Additional Securities”)
within 90 days after the initial Issue Date; provided
that the Issuer shall use the same CUSIP number for any such Additional
Securities as the Securities (the “Initial Securities”) issued on the
initial Issue Date; provided
further that the Additional Securities, together with the Initial Securities,
shall in no event exceed an aggregate principal amount of $100 million; provided, however, that
no Additional Securities may be issued unless fungible with the Initial
Securities for U.S. Federal tax purposes.  Any Additional Securities would rank equally
and ratably in right of payment with the Securities issued under this Indenture
on the initial Issue Date for the Securities of this series and would be
treated as a single series of debt securities for all purposes under this
Indenture.

 

The
Securities shall be known and designated as the “11.50% Exchangeable Senior
Notes due 2013” of the Issuer.  Their
Final Maturity Date shall be June 15, 2013 and they shall bear interest on
their principal amount from May 28, 2008, or the most recent Interest
Payment Date to which interest has been paid or duly provided for, as the case
may be, payable semi-annually in arrears on June 15 and December 15
of each year, commencing December 15, 2008, at 11.50% per annum until the
principal thereof is due and at the rate of 11.50% per annum on any overdue
principal and, to the extent permitted by applicable law, on any overdue
interest.

 

The
Securities shall constitute direct, unsecured, irrevocable and unconditional
obligations of the Issuer and will rank pari passu
among themselves and with all other present and future unsecured and
unsubordinated indebtedness of the Issuer.

 

Interest
on the Securities will be based on a 360-day year consisting of twelve 30-day
months.  If any Interest Payment Date
(other than an Interest Payment Date coinciding with the Final Maturity Date,
Redemption Date or Change in Control Purchase Date) of a Security falls on a
day that is not a Business Day, such Interest Payment Date will be postponed
until the next succeeding Business Day. 
If the Final Maturity Date, Redemption Date or Change in Control
Purchase Date of a Security would fall on a day that is not a Business Day, the
required payment of interest, if any, and principal will be made on the next
succeeding Business Day and no interest on such payment will accrue for the
period from and after the Final Maturity Date, Redemption Date or Change in
Control Purchase Date to such next succeeding Business Day.

 

Upon receipt by the Trustee of an Officer’s
Certificate stating that all conditions herein to the issuance of Additional
Securities have been satisfied, and in accordance with the Purchase Agreement,
the Trustee shall authenticate and make available for delivery such aggregate
principal amount of such Additional Securities, not to exceed a total of
$20,000,000, as specified 

 

18

 

in, and upon receipt of, an
Issuer Request, and such specified aggregate principal amount of such
Additional Securities shall be considered part of the original aggregate
principal amount of the Securities for all purposes hereof.

 

The
principal of, premium, if any, and interest on the Securities shall be payable
as provided in the form of Securities set forth in Section 2.03.

 

The
Securities shall be redeemable at the option of the Issuer, as provided in Article 11
and shall be issued in the form of Securities set forth in Section 2.03.

 

The
Registrable Securities are entitled to the benefits of the Registration Rights
Agreement as provided by Section 5.10 and in the form of Security set
forth in Section 2.03.  The
Securities are entitled to the payment of Liquidated Damages as provided by Section 5.10.

 

The
Securities shall be guaranteed by each Guarantor as provided in Article 13
and shall have endorsed thereon the Guarantee substantially in the form set
forth in Section 2.03, executed by each Guarantor.

 

The
Securities shall not have the benefit of any sinking fund obligations.

 

The Securities shall be exchangeable as provided in Article 4.

 

The
Securities shall be subject to repurchase by the Issuer at the option of the
Holders as provided in Article 3.

 

Section 2.02.                             Denominations. 
The Securities shall be issuable only in registered form, without
coupons, in denominations of U.S.$1,000 and integral multiples thereof.

 

Section 2.03.                             Form and Dating.

 

(a)                                  The Securities and the Trustee’s
certificate of authentication shall be substantially in the respective forms
set forth in Exhibit A, which Exhibit is incorporated in and made
part of this Indenture.  The Securities
may have notations, legends or endorsements required by law, stock exchange or
automated quotation system rule or regulation or usage, in each case as
the Issuer shall determine as evidenced by the Issuer’s execution of Securities
bearing the same.   Each Security shall
be dated the date of its authentication.

 

(b)                                 There shall be endorsed on the Securities
a guarantee in substantially the form attached hereto as Exhibit B, or in
such other form as shall be established by or pursuant to a resolution of the
Board of Directors or in or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture.

 

(c)                                  Restricted Global Securities. 
All of the Securities are initially being offered and sold through the
Initial Purchasers to qualified institutional buyers as defined in Rule 144A
(collectively, “QIBs” or individually, each a “QIB”) in reliance
on Rule 144A under the Securities Act and shall be issued initially in the
form of one or more Restricted Global Securities, which shall be deposited on
behalf of the purchasers of the securities represented 

 

19

 

thereby with the
Securities Custodian, as custodian for the depositary, The Depository Trust
Company (“DTC”, and such depositary, or any successor thereto, being
hereinafter referred to as the “Depositary”), and registered in the name
of its nominee, Cede & Co. (or any successor thereto), for the
accounts of participants in the Depositary, duly executed by the Issuer and
authenticated by the Trustee as hereinafter provided.  Any adjustment of the aggregate principal
amount of a Restricted Global Security to reflect the amount of any increase or
decrease in the amount of outstanding Restricted Securities represented thereby
shall be made by the Trustee in accordance with instructions given by the
Holder thereof as required by Section 2.14 or otherwise in accordance with
the customary procedures of the Depositary and shall be made on the records of
the Trustee and the Depositary.

 

(d)                                 Global Securities In General. 
The Securities issued in global form shall be substantially in the form
of Exhibit A attached hereto (including the Global Security legend thereon
and the “Schedule of Exchanges of Securities” attached thereto).  The Securities issued in definitive form
shall be substantially in the form of Exhibit A attached hereto (but
without the Global Security legend thereon and without the “Schedule of
Exchanges of Securities” attached thereto). Each Global Security shall
represent such of the outstanding Securities as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and that the aggregate amount of
outstanding Securities represented thereby may from time to time be reduced or
increased, as appropriate, to reflect replacements, exchanges, purchases or
redemptions of such Securities.  Any
adjustment of the aggregate principal amount of a Global Security to reflect
the amount of any increase or decrease in the amount of outstanding Securities
represented thereby shall be made by the Trustee in accordance with instructions
given by the Holder thereof as required by Section 2.14 or otherwise in
accordance with the customary procedures of the Depositary and shall be made on
the records of the Trustee and the Depositary.

 

Members
of, or participants in, the Depositary (“Agent Members”) shall have no
rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary or under the Global Security, and the Depositary
(including, for this purpose, its nominee) may be treated by the Issuer, the Guarantors,
the Trustee and any agent of the Issuer, the Guarantors or the Trustee as the
absolute owner and Holder of such Global Security for all purposes
whatsoever.  Notwithstanding the
foregoing, nothing herein shall (1) prevent the Issuer, the Guarantors,
the Trustee or any agent of the Issuer, the Guarantors or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depositary or (2) impair, as between the Depositary and
its Agent Members, the operation of customary practices governing the exercise
of the rights of a Holder of any Security.

 

(e)                                  Book Entry Provisions. 
The Issuer shall execute and the Trustee shall, in accordance with this Section 2.03(e),
authenticate and deliver initially one or more Global Securities that (1) shall
be registered in the name of the Depositary or its nominee, (2) shall be
held by the Trustee, as Securities Custodian for the Depositary or pursuant to
the Depositary’s instructions and (3) shall bear legends substantially to the
following effect:

 

“UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, 

 

20

 

EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF.  THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.”

 

Section 2.04.                             Execution and Authentication.

 

(a)                                  The aggregate principal amount of
Securities which may be authenticated and delivered under this Indenture is
limited as provided in Section 2.01.

 

(b)                                 An Officer of Sub-REIT, in its capacity
as managing member of the Issuer, on behalf of the Issuer, shall sign the
Securities for the Issuer, and an Officer of each Guarantor on behalf
of such Guarantor (or in the case of NRF LP, an Officer of NRF, in its capacity
as general partner of NRF LP, on behalf of NRF LP) shall sign the Guarantees
for each Guarantor, respectively, by manual or facsimile signature.  Typographic and other minor errors or defects
in any such facsimile signature shall not affect the validity or enforceability
of any Security that has been authenticated and delivered by the Trustee.

 

(c)                                  If an Officer whose signature is on a
Security or Guarantee no longer holds that office at the time the Trustee
authenticates the Security, the Security and Guarantee shall be valid
nevertheless.

 

(d)                                 Each Security shall be dated the date of
its authentication. No Security or Guarantee thereof shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose unless
there appears on such Security a certificate of authentication substantially in
the form provided for herein executed by the Trustee by manual signature of an
authorized officer, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder and is entitled 

 

21

 

to the benefits of this
Indenture.  Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered
hereunder but never issued and sold by the Issuer, and the Issuer shall deliver
such Security to the Trustee for cancellation as provided in Section 2.13,
for all purposes of this Indenture such Security shall be deemed never to have
been authenticated and delivered thereunder and shall never be entitled to the
benefits of this Indenture.

 

(e)                                  The Trustee shall authenticate and make
available for delivery Securities for issue upon receipt of an Issuer Order
with endorsed thereon the Guarantees executed by each Guarantor.  The Issuer Order shall specify the amount of
Securities to be authenticated and to whom such Securities shall be delivered,
shall provide that all such Securities will be initially represented by a
Restricted Global Security and the date on which each original issue of
Securities is to be authenticated.

 

(f)                                    The Trustee shall act as the initial
authenticating agent.  Thereafter, the
Trustee may appoint an authenticating agent acceptable to the Issuer to
authenticate Securities.  An
authenticating agent may authenticate Securities whenever the Trustee may do
so.  Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent.  An authenticating agent shall have the same
rights as an Agent to deal with the Issuer or an Affiliate of the Issuer.

 

Section 2.05.                             Registrar, Paying Agent and Exchange
Agent.

 

(a)                                  The Issuer shall maintain one or more
offices or agencies where Securities may be presented for registration of
transfer or for exchange (each, a “Registrar”), one or more offices or
agencies where Securities may be presented for payment (each, a “Paying
Agent”), one or more offices or agencies where Securities may be presented
for exchange (each, an “Exchange Agent”) and one or more offices or
agencies where notices and demands to or upon the Issuer in respect of the
Securities and this Indenture may be served. 
The Issuer will at all times maintain a Paying Agent, Exchange Agent,
Registrar and an office or agency where notices and demands to or upon the
Issuer in respect of the Securities and this Indenture may be served in the
United States.  One of the Registrars
(the “Primary Registrar”) shall keep a register of the Securities and of
their transfer and exchange.

 

(b)                                 The Issuer shall enter into an
appropriate agency agreement with any Agent not a party to this Indenture,
provided that the Agent may be an Affiliate of the Trustee.  The agreement shall implement the provisions
of this Indenture that relate to such Agent. 
The Issuer shall notify the Trustee of the name and address of any Agent
not a party to this Indenture.  If the Issuer
fails to maintain a Registrar, Paying Agent, Exchange Agent, or agent for
service of notices and demands in any place required by this Indenture, or
fails to give the foregoing notice, the Trustee shall act as such.  The Issuer or any Affiliate of the Issuer may
act as Paying Agent (except for the purposes of Section 5.01 and Article 9).

 

(c)                                  The Issuer hereby initially designates
the Trustee as Paying Agent, Primary Registrar, Securities Custodian and
Exchange Agent, and initially designates the Corporate Trust Office of the
Trustee as an office or agency where notices and demands to or upon the Issuer
in respect of the Securities and this Indenture shall be served.

 

22

 

Section 2.06.                             Intentionally Omitted.

 

Section 2.07.                             Lists of Holders of Securities. 
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders of Securities. If the Trustee is not the Registrar, the Issuer shall
furnish to the Trustee, in writing at least seven Business Days before each
Interest Payment Date and at such other times as the Trustee may reasonably
request in writing within 15 days, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of Holders.

 

Section 2.08.                             Transfer and Exchange.

 

(a)                                  Subject to compliance with any applicable
additional requirements contained in Section 2.14, when a Security is
presented to a Registrar with a request to register a transfer thereof or to
exchange such Security for an equal principal amount of Securities of other
authorized denominations, the Registrar shall register the transfer or make the
exchange as requested; provided, however, that every Security presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by
an assignment form and, if applicable, a transfer certificate each in the form
included in Exhibit A, and completed in a manner satisfactory to the
Registrar and duly executed by the Holder thereof or its attorney duly
authorized in writing.  To permit
registration of transfers and exchanges, upon surrender of any Security for
registration of transfer or exchange at an office or agency maintained pursuant
to Section 2.05, the Issuer shall execute and the Trustee shall
authenticate Securities of a like aggregate principal amount at the Registrar’s
request.  Any exchange or transfer shall
be without charge, except (i) as provided in Section 2.09(c) and
(ii) that the Issuer or the Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto; provided that clause (ii) of
this sentence shall not apply to any exchange pursuant to Section 2.12,
2.14(a), 3.03 or 4.04.

 

(b)                                 In the event of any redemption in whole
or any redemption in part, the Issuer shall not be required to: (i) issue
or register the transfer or exchange of any Security for another Security
during a period beginning at the opening of business 15 days before any
selection of Securities for redemption and ending at the close of business on
the date of selection, or (ii) register the transfer or exchange of any
Security so selected for redemption, in whole or in part, for another Security
except the unredeemed portion of any Security being redeemed in part.

 

(c)                                  All Securities issued upon any transfer
or exchange of Securities shall be valid obligations of the Issuer and each
Guarantor evidencing the same debt and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such transfer or exchange.

 

(d)                                 Any Registrar appointed pursuant to Section 2.05
shall provide to the Trustee such information as the Trustee may reasonably
require in connection with the delivery by such Registrar of Securities upon
transfer or exchange of Securities.

 

(e)                                  Each Holder of a Security, by its
acceptance thereof, agrees to indemnify the Issuer, each Guarantor and the
Trustee against any liability that may result from the transfer, 

 

23

 

exchange or assignment of
such Holder’s Security in violation of any provision of this Indenture and/or
applicable United States federal or state securities law.

 

(f)                                    The Trustee shall have no obligation or
duty to monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers between or
among Agent Members or other beneficial owners of interests in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and
when expressly required by the terms of, this Indenture, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof; provided, that
the Trustee shall have no such duty to require delivery of certificates or
examine the same concerning transfers between or among Agent Members or other
beneficial owners of interests in any Global Security.

 

Section 2.09.                             Replacement Securities.

 

(a)                                  If any mutilated Security is surrendered
to the Issuer, a Registrar or the Trustee, or the Issuer, the Guarantors, a
Registrar and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Issuer, the Guarantors, the applicable Registrar and the Trustee such security
or indemnity as will be required by them to save each of them harmless, then,
in the absence of notice to the Issuer, the Guarantors, such Registrar or the
Trustee that such Security has been acquired by a protected purchaser, the
Issuer shall execute, and upon its written request the Trustee shall
authenticate and deliver, in exchange for any such mutilated Security or in
lieu of any such destroyed, lost or stolen Security, a new Security of like
tenor and principal amount having a Guarantee endorsed thereon, and bearing a
number not contemporaneously outstanding.

 

(b)                                 If any such mutilated, destroyed, lost or
stolen Security has become or is about to become due and payable, or is about
to be purchased by the Issuer pursuant to Article 3, or exchanged pursuant
to Article 4, the Issuer in its discretion may, instead of issuing a new
Security, pay, purchase or exchange such Security, as the case may be.

 

(c)                                  Upon the issuance of any new Securities
under this Section 2.09, the Issuer may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto as a result of any Securities, at the request of any Holder,
being issued to a Person other than such Holder and any other reasonable
expenses (including the reasonable fees and expenses of the Trustee or the
Registrar) in connection therewith.

 

(d)                                 Every new Security issued pursuant to
this Section 2.09 in lieu of any mutilated, destroyed, lost or stolen
Security shall constitute an original additional contractual obligation of the
Issuer and each Guarantor whether or not the mutilated, destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.

 

(e)                                  The provisions of this Section 2.09
are (to the extent lawful) exclusive and shall preclude (to the extent lawful)
all other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities.

 

24

 

Section 2.10.                             Outstanding Securities.

 

(a)                                  Securities outstanding (“Outstanding”)
at any time are all Securities authenticated by the Trustee, except for those
canceled by it, those purchased pursuant to Article 3, those exchanged
pursuant to Article 4, those redeemed by the Issuer pursuant to Article 11,
those delivered to the Trustee for cancellation or surrendered for transfer or
exchange and those described in this Section 2.10 as not outstanding.

 

(b)                                 If a Security is replaced pursuant to Section 2.09,
it ceases to be Outstanding unless the Issuer receives proof satisfactory to it
that the replaced Security is held by a protected purchaser.

 

(c)                                  If a Paying Agent (other than the Issuer
or an Affiliate of the Issuer) holds in respect of the outstanding Securities
on a Change in Control Purchase Date, Redemption Date or the Final Maturity
Date money sufficient to pay the principal of, accrued interest, if any, on
Securities (or portions thereof) payable on that date, then on and after such
Change in Control Purchase Date, Redemption Date or Final Maturity Date, as the
case may be, such Securities (or portions thereof, as the case may be) shall
cease to be Outstanding and interest on them shall cease to accrue.

 

(d)                                 Subject to the restrictions contained in Section 2.14,
a Security does not cease to be Outstanding because the Issuer, the Guarantors
or an Affiliate of the Issuer or the Guarantors holds the Security.

 

Section 2.11.                             Treasury Securities. 
In determining whether the Holders of the required principal amount of
Securities have concurred in any notice, direction, waiver or consent,
securities owned by the Issuer or any other obligor on the Securities or by any
Affiliate of the Issuer or of such other obligor shall be disregarded, except
that, for purposes of determining whether the Trustee shall be protected in
relying on any such notice, direction, waiver or consent, only Securities which
a Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded.  Securities so owned which
have been pledged in good faith shall not be disregarded if the pledgee
establishes to the satisfaction of the Trustee the pledgee’s right so to act
with respect to the Securities and that the pledgee is not the Issuer or any
other obligor on the Securities or any Affiliate of the Issuer or of such other
obligor.

 

Section 2.12.                             Temporary Securities. 
Until definitive Securities are ready for delivery, the Issuer may
prepare and execute, and, upon receipt of an Issuer Order, the Trustee shall
authenticate and deliver, temporary Securities. Temporary Securities shall be
substantially in the form of definitive securities and have endorsed thereon
the Guarantees duly executed by each Guarantor, but may have variations that
the Issuer considers appropriate for temporary Securities.  Without unreasonable delay, the Issuer shall
prepare and the Trustee shall authenticate and deliver definitive Securities in
exchange for temporary Securities with Guarantees duly executed and endorsed
thereon.

 

After
the preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities of such series upon surrender of the
temporary Securities to a Registrar, without charge to the Holder.  Upon surrender for cancellation of any one or
more 

 

25

 

temporary Securities, the Issuer shall execute and the
Trustee shall authenticate and deliver in exchange therefor one or more
definitive Securities with Guarantees duly executed and endorsed thereon, of
any authorized denominations and of like tenor. 
Until so exchanged, Holders of temporary Securities shall be entitled to
all of the benefits of this Indenture.

 

Section 2.13.                             Cancellation. 
The Issuer or any Guarantor at any time may deliver Securities to the
Trustee for cancellation.  The Registrar,
the Paying Agent and the Exchange Agent shall forward to the Trustee or its
agent any Securities surrendered to them for transfer, exchange, purchase or
payment.  The Trustee and no one else
shall cancel, in accordance with its standard procedures, all Securities
surrendered for transfer, exchange, purchase, payment or cancellation and shall
dispose of the canceled Securities in accordance with its customary procedures
or deliver the canceled Securities to the Issuer.  All Securities which are purchased, redeemed
or otherwise acquired by the Issuer or any of its Subsidiaries prior to the
Final Maturity Date pursuant to Article 3 shall be delivered to the
Trustee for cancellation, and the Issuer may not hold or resell such Securities
or issue any new Securities to replace any such Securities or any Securities
that any Holder has exchanged pursuant to Article 4.

 

Section 2.14.                             Legend; Additional Transfer and Exchange
Requirements.

 

(a)                                  If Securities are issued upon the
transfer, exchange or replacement of Securities such Securities shall bear the
legends set forth on the forms of Securities attached as Exhibit A
relating to restrictions on transfer of the Securities (collectively, the “Restrictive
Legend”).

 

(b)                                 A Global Security may not be transferred,
in whole or in part, to any Person other than the Depositary or a nominee or
any successor thereof, and no such transfer to any such other Person may be
registered; provided that the foregoing shall not
prohibit any transfer of a Security that is issued in exchange for a Global
Security but is not itself a Global Security. 
No transfer of a Security to any Person shall be effective under this
Indenture or the Securities unless and until such Security has been registered
in the name of such Person. 
Notwithstanding any other provisions of this Indenture or the
Securities, transfers of a Global Security, in whole or in part, shall be made
only in accordance with this Section 2.14.

 

(c)                                  Subject to Section 2.14(b), every
Security shall be subject to the restrictions on transfer provided in the
Restrictive Legend.  Whenever any
Restricted Security other than a Restricted Global Security is presented or
surrendered for registration of transfer or in exchange for a Security
registered in a name other than that of the Holder, such Security must be
accompanied by a certificate in substantially the form set forth in Exhibit A,
dated the date of such surrender and signed by the Holder of such Security, as
to compliance with such restrictions on transfer.  The Registrar shall not be required to accept
for such registration of transfer or exchange any Security not so accompanied
by a properly completed certificate.

 

As
used in this Section 2.14(c), the term “transfer” encompasses any sale,
pledge, transfer, hypothecation or other disposition of any Security.

 

(d)                                 The provisions below shall apply only to
Global Securities:

 

(1)                                  Each Global Security authenticated under
this Indenture shall be registered in the name of the Depositary or a nominee
thereof and delivered to such Depositary or a 

 

26

 

nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for purposes of this Indenture.

 

(2)                                  Notwithstanding any other provisions of
this Indenture or the Securities, a Global Security shall not be exchanged in
whole or in part for a Security registered, and no transfer of a Global
Security in whole or in part shall be registered, in the name of any Person
other than the Depositary or one or more nominees thereof; provided that a
Global Security may be exchanged for securities registered in the names of any
person designated by the Depositary in the event that (A) the Depositary has
notified the Issuer that it is unwilling or unable to continue as Depositary
for such Global Security or such Depositary has ceased to be a “clearing agency”
registered under the Exchange Act, and a successor Depositary is not appointed
by the Issuer within 90 days after receiving such notice or becoming aware
that the Depositary has ceased to be a “clearing agency,” or (B) an Event
of Default has occurred and is continuing with respect to the Securities.  Any Global Security exchanged pursuant to
subclause (A) above shall be so exchanged in whole and not in part,
and any Global Security exchanged pursuant to subclause (B) above may be
exchanged in whole or from time to time in part as directed by the
Depositary.  Any Security issued in
exchange for a Global Security or any portion thereof shall be a Global
Security; provided further that any such Security so issued that is registered
in the name of a Person other than the Depositary or a nominee thereof shall
not be a Global Security.

 

(3)                                  Securities issued in exchange for a
Global Security or any portion thereof shall be issued in definitive, fully
registered form, shall have an aggregate principal amount equal to that of such
Global Security or portion thereof to be so exchanged, shall be registered in
such names and be in such authorized denominations as the Depositary shall
designate and shall bear the applicable legends provided for herein.  Any Global Security to be exchanged in whole
shall be surrendered by the Depositary to the Trustee, as Registrar.  With regard to any Global Security to be
exchanged in part, either such Global Security shall be so surrendered for
exchange or, if the Trustee is acting as custodian for the Depositary or its
nominee with respect to such Global Security, the principal amount thereof shall
be reduced, by an amount equal to the portion thereof to be so exchanged, by
means of an appropriate adjustment made on the records of the Trustee.  Upon any such surrender, the Trustee shall
authenticate and deliver the Security issuable on such exchange to or upon the
order of the Depositary or an authorized representative thereof.

 

(4)                                  Subject to clause (6) of this Section 2.14
(d), the registered Holder may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.

 

(5)                                  In the event of the occurrence of any of
the events specified in clause (2) of this Section 2.14(d), the
Issuer will promptly make available to the Trustee a reasonable supply of
Certificated Securities in definitive, fully registered form, in the event that
any such Security so issued is registered in the name of a Person other than
the Depositary.

 

27

 

(6)                                  Neither Agent Members nor any other
Persons on whose behalf Agent Members may act shall have any rights under this
Indenture with respect to any Global Security registered in the name of the
Depositary or any nominee thereof, or under any such Global Security, and the
Depositary or such nominee, as the case may be, may be treated by the Issuer,
the Trustee and any agent of the Issuer or the Trustee as the absolute owner
and Holder of such Global Security for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein
shall prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee
from giving effect to any written certification, proxy or other authorization furnished
by the Depositary or such nominee, as the case may be, or impair, as between
the Depositary, its Agent Members and any other Person on whose behalf an Agent
Member may act, the operation of customary practices of such Persons governing
the exercise of the rights of a Holder of any Security.

 

(7)                                  At such time as all interests in a Global
Security have been converted, canceled or exchanged for Securities in
certificated form, such Global Security shall, upon receipt thereof, be
canceled by the Trustee in accordance with standing procedures and instructions
existing between the Depositary and the Securities Custodian, subject to Section 2.13
of this Indenture.  At any time prior to
such cancellation, if any interest in a Global Security is converted, canceled
or exchanged for Securities in certificated form, the principal amount of such
Global Security shall, in accordance with the standing procedures and
instructions existing between the Depositary and the Securities Custodian, be
appropriately reduced, and an endorsement shall be made on such Global
Security, by the Trustee or the Securities Custodian, at the direction of the
Trustee, to reflect such reduction.

 

(e)                                  Until the expiration of the holding
period applicable to sales thereof under Rule 144(k) under the
Securities Act (or any successor provision thereto), any stock certificate
representing Common Stock issued upon exchange of any Security shall bear the
restrictive legend required to be included with a Restricted Security, until
such time as the Common Stock has been sold pursuant to a registration
statement that has been declared effective under the Securities Act (and which
continues to be effective at the time of such transfer) or transferred in
compliance with Rule 144 (or any successor provision thereto), or unless
otherwise agreed by the Issuer in writing with written notice thereof to the
transfer agent.

 

Any
such Common Stock as to which such restrictions on transfer shall have expired
in accordance with their terms or as to which the conditions for removal of the
restrictive legend set forth therein have been satisfied may, upon surrender of
the certificates representing such Common Stock for exchange in accordance with
the procedures of the transfer agent for the Common Stock, be exchanged for a
new certificate or certificates for a like number of Common Stock, which shall
not bear the restrictive legend required by this section.

 

Section 2.15.                             CUSIP Numbers. 
The Issuer in issuing the Securities may use one or more “CUSIP” numbers
(if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers
in notices of purchase or redemption as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a purchase or redemption and
that reliance may be placed only on the other identification numbers printed on
the Securities, and 

 

28

 

any such purchase or
redemption shall not be affected by any defect in or omission of such
numbers.  The Issuer will promptly notify
the Trustee of any change in the “CUSIP” numbers.

 

Section 2.16.                             Payment of Interest; Interest Rights
Preserved.

 

Interest
on any Security which is payable, and is punctually paid or duly provided for,
on any Interest Payment Date shall be paid to the Person in whose name that
Security (or one or more predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.

 

Any
interest on any Security which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date (herein called “Defaulted
Interest”) shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Issuer, at its election in each case, as
provided in Clause (1) or (2) below:

 

(1)                                  The Issuer may elect to make payment of
any Defaulted Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of business on a
date fixed by the Issuer for such purpose (the “Special Record Date”)
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Issuer shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Issuer shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to
the date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Issuer of such Special Record Date, and in the name and at
the expense of the Issuer, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Securities at his address as it
appears in the Security Register not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following clause
(2).

 

(2)                                  The Issuer may make payment of any
Defaulted Interest on the Securities in any other lawful manner not
inconsistent with the requirements of any securities exchange on which such
Securities may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Issuer to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.

 

29

 

Subject
to the foregoing provisions of this Section, each Security delivered under this
Indenture upon registration of transfer of or in exchange for or in lieu of any
other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.

 

Article 3

repurchase

 

Section 3.01.                             Repurchase at Option of Holders upon a
Change in Control.

 

(a)                                  If a Change in Control occurs, a Holder
of Securities shall have the right, at its option, to require the Issuer to
repurchase such Holder’s Securities not previously called for redemption, in
whole or in part (in principal amounts of $1,000 or an integral multiple
thereof) for cash equal to the Change in Control Purchase Price, subject to
satisfaction by or on behalf of the Holder of the requirements set forth below.

 

(b)                                 Within 15 days after the occurrence of a
Change in Control, the Issuer shall provide written notification to the Holders
of the Change in Control and of the repurchase right arising as a result of the
Change in Control (the “Issuer Notice”). 
The Issuer Notice shall also be delivered to the Trustee.  The notice shall include a form of Change in
Control Purchase Notice to be completed by the Holder containing the
information contemplated by Section 3.01(c) and shall state:

 

(1)                                  the date of such Change in Control and
the clause in the definition of “Change in Control” herein under which such
Change in Control falls;

 

(2)                                  the date by which the Change in Control
Purchase Notice must be delivered to the Paying Agent;

 

(3)                                  the date on which the Issuer will
repurchase Securities in connection with a Change in Control, which must be not
less than 30 days nor more than 40 days after the date of the Issuer
Notice (such date, the “Change in Control Purchase Date”);

 

(4)                                  the Change in Control Purchase Price;

 

(5)                                  the name and address of the Trustee, the
Paying Agent and the Exchange Agent;

 

(6)                                  that Securities in respect of which a
Change in Control Purchase Notice is provided by a Holder shall not be
exchangeable;

 

(7)                                  that Securities must be surrendered to
the Paying Agent (which surrender may, if applicable, be effected through the
facilities of the Depositary) to collect payment of the Change in Control
Purchase Price;

 

30

 

(8)                                  that the Change in Control Purchase Price
for any Security as to which a Change in Control Purchase Notice has been duly
given will be paid within five Business Days after the later of the Change in
Control Purchase Date or the time at which such Securities are surrendered for
repurchase;

 

(9)                                  that, unless the Issuer defaults in
making payment of the Change in Control Purchase Price, such Securities shall
cease to be Outstanding and interest on such Securities shall cease to accrue
and all rights of the Holders of such Securities shall terminate on and after
the Change in Control Purchase Date; and

 

(10)                            the CUSIP number of the Securities.

 

The
Issuer shall also disseminate a press release through Dow Jones &
Company, Inc. or Bloomberg Business News announcing the occurrence of such
Change in Control and publish on NRF’s website, or through such other public
medium as the Issuer shall deem appropriate at such time.

 

(c)                                  A Holder may exercise its rights
specified in this Section 3.01 upon delivery of a written notice of such
Holder’s exercise of its repurchase right (a “Change in Control Purchase
Notice”) to the Trustee (or any Paying Agent) at any time prior to the
close of business on the second Business Day prior to the Change in Control
Purchase Date, stating:

 

(1)                                  if such Securities are in certificated
form, the certificate number(s) of the Securities which the Holder will
deliver to be repurchased (if such Securities are Global Securities, the Change
in Control Purchase Notice shall comply with Applicable Procedures);

 

(2)                                  the portion of the principal amount of
the Securities to be repurchased, in multiples of $1,000, provided that the remaining
principal amount of Securities is in an authorized denomination; and

 

(3)                                  that such Security shall be repurchased
pursuant to the applicable provisions hereof and of the Securities.

 

The
Trustee (or any Paying Agent) shall promptly notify the Issuer in writing of
the receipt by it of any Change in Control Purchase Notice.

 

Transfers
of interests in a Global Security in compliance with the Applicable Procedures
or delivery of Securities in certificated form (together with all necessary
endorsements) to the Paying Agent at the offices of the Paying Agent and
delivery of such Security shall be conditions to the receipt by the Holder of
the Change in Control Purchase Price therefor. 
Holders electing to require the Issuer to repurchase Securities must effect
such transfer or delivery to the Paying Agent prior to the Change in Control
Purchase Date to receive payment of the Change in Control Purchase Price.

 

(d)                                 A Change in Control Purchase Notice is
irrevocable and may not be withdrawn.

 

31

 

(e)                                  On or before 11:59 a.m. (New York
City time) on the Change in Control Purchase Date, the Issuer shall deposit
with the Paying Agent money sufficient to pay the aggregate Change in Control
Purchase Price of the Securities to be purchased pursuant to this Section 3.01.  If the Paying Agent holds, in accordance with
the terms of the Indenture, money sufficient to pay the Change in Control
Purchase Price of such Securities on the Change in Control Purchase Date or the
Business Day following the Change in Control Purchase Date, then, on and after
such date, such Securities shall cease to be Outstanding and interest on such
Securities shall cease to accrue and all rights of the Holders of such
Securities shall terminate (other than the right to receive the Change in
Control Purchase Price after delivery or transfer of the Securities).  Such will be the case whether or not book
entry transfer of the Securities in book entry form is made and whether or not
Securities in certificated form, together with the necessary endorsements, are
delivered to the Paying Agent.

 

(f)                                    Notwithstanding the foregoing, no
Securities may be repurchased by the Issuer in accordance with the provisions
of this Section 3.01 if there has occurred and is continuing an Event of
Default with respect to the Securities and the principal amount of the
Securities has been accelerated and such acceleration has not been rescinded on
or prior to such dates.

 

Section 3.02.                             Repayment to the Issuer. 
To the extent that the aggregate amount of cash deposited by the Issuer
pursuant to Section 3.01 exceeds the aggregate Change in Control Purchase
Price of the Securities or portions thereof that the Issuer is obligated to
purchase, then promptly after the Change in Control Purchase Date, the Trustee
or a Paying Agent, as the case may be, shall return any such excess cash to the
Issuer.

 

Section 3.03.                             Securities Purchased in Part. 
Any Global Security that is to be purchased only in part shall be
adjusted to reflect the amount of any decrease in the amount of outstanding
Securities represented thereby by the Trustee in accordance with instructions
given by an Issuer Order and shall be made on the records of the Trustee and
the Depositary. Any Security issued that in certificated form that is to be
purchased only in part shall be surrendered at the office of a Paying Agent,
and promptly after the Change in Control Purchase Date, the Issuer shall
execute and the Trustee shall authenticate and deliver to the Holder of such
Security, without service charge, a new Security or Securities, of such
authorized denomination or denominations as may be requested by such Holder
(which must be equal to $1,000 principal amount or any integral thereof), in
aggregate principal amount equal to, and in exchange for, the portion of the
principal amount of the Security so surrendered that is not purchased.

 

Section 3.04.                             Repurchase of Securities by Third Parties. 
The Issuer may arrange for a third party to purchase any Securities for
which the Issuer has received a valid Change in Control Purchase Notice that is
not withdrawn, in the manner and otherwise in compliance with the requirements
set forth herein. If a third party purchases any Securities under these
circumstances, then interest will continue to accrue on those Securities and
those Securities will continue to be Outstanding after the Change in Control
Purchase Date. The third party subsequently may resell those purchased
Securities to other Holders, and those Securities will be fungible with all
other Securities then Outstanding.

 

Section 3.05.                             Purchase of Securities in Open Market. 
The Issuer may from time to time repurchase the Securities in open
market purchases or negotiated transactions at varying 

 

32

 

prices without prior
notice to Holders. Any Security that the Issuer purchases or a third party
purchases may, to the extent permitted by applicable law and subject to
restrictions contained in the purchase agreement with the Initial Purchasers,
be reissued or resold or may, at the Issuer’s or such third party’s option, be
surrendered to the Trustee for cancellation. Any Securities surrendered for
cancellation may not be reissued or resold and will be canceled promptly in
accordance with Section 2.13.

 

Article 4

EXCHANGE

 

Section 4.01.                             Right to Exchange. 
Subject to the restrictions on ownership of Common Stock as set forth in
Section 4.12 hereof and the conditions set forth in this Article 4, a
Holder of any Securities not previously redeemed or repurchased shall have the
right, at such Holder’s option, to exchange each $1,000 principal amount of
Securities, into cash, shares of Common Stock or a combination of cash and
shares of Common Stock, at the Issuer’s option, by surrender of such Securities
so to be exchanged in whole or in part, together with any required funds, under
the circumstances and in the manner described in this Article 4, (a) at
any time on or after March 15, 2013 and prior to the close of business on
the second Business Day immediately prior to the Final Maturity Date, and (b) upon
occurrence of any of the following events:

 

(i)                                     Exchange Upon Satisfaction of
Market Price Condition. During any Measurement Period (and only during such period) prior to
the second Business Day prior to the Final Maturity Date, if the Closing Sale
Price of a share of Common Stock for at least 20 Trading Days in the period of
30 consecutive Trading Days beginning on the first day of such Measurement
Period is more than 130% of the Exchange Price per share of Common Stock in
effect on the first day of such Measurement Period.

 

The Issuer, or the Trustee at the request of the Issuer, (or other
Exchange Agent appointed by the Issuer) shall, on behalf of the Issuer,
determine on a daily basis during the time period specified in this Section 4.01(b)(i) whether
the Securities shall be exchangeable as a result of the occurrence of an event
specified in this clause (i) and, if the Securities shall be so
exchangeable, the Trustee (or other Exchange Agent appointed by the Issuer)
shall promptly deliver to the Issuer and the Trustee (if the Trustee is not the
Exchange Agent) written notice thereof. 
A Holder who validly submits Securities for exchange prior to June 15,
2011 pursuant to this Section 4.01(b)(i) will be entitled to an
Interest Make-Whole Payment.

 

(ii)                                  Exchange Upon Satisfaction of
Trading Price Condition. During the five consecutive Trading Day period following any five
consecutive Trading Days in which the average of the Trading Prices per $1,000 principal
amount of Securities during such five consecutive Trading Day period was less
than 102% of the product of the average of Closing Sale Prices of the Common
Stock for such period, multiplied by the average of the Applicable Exchange
Rates for each Trading Day in effect during such five consecutive Trading Day
period.

 

33

 

The Trustee shall have no obligation to determine the Trading Price of
the Securities unless the Issuer shall have requested such determination, and
the Issuer shall have no obligation to make such request unless a Holder
provides the Issuer with reasonable evidence that the Trading Price per $1,000
principal amount of Securities would be less than 102% of the Closing Sale
Price per share of Common Stock multiplied by the Applicable Exchange Rate,
whereupon the Issuer shall instruct the Trustee to determine the Trading Price
of the Securities beginning on the next Trading Day and on each successive
Trading Day until the Trading Price per $1,000 principal amount of Securities
is greater than or equal to 102% of the Closing Sale Price per share of Common
Stock multiplied by the Applicable Exchange Rate.  If the Issuer does not request a
determination from the Trustee when so required by the Holders, the Trading
Price of the Securities shall be deemed to be less than 102% of the Closing
Sale Price per share of Common Stock multiplied by the Applicable Exchange Rate
on each day that the Issuer fails to do so.

 

(iii)                               Exchange Upon Notice of Redemption. Such Securities have been called for
redemption, in which event a Holder may surrender for exchange any of the
Securities called for redemption at any time prior to the close of business on
the third Business Day immediately prior to Redemption Date even if the
Securities are not otherwise exchangeable at such time.

 

(iv)                              Exchange Upon Delisting of the
Common Stock. At
any time beginning on the first Business Day after the Common Stock shall have
ceased to be listed on a U.S. national securities exchange for a period of
30 consecutive Trading Days.  The
Issuer shall give notice to Holders within five Business Days following the
completion of such 30 consecutive Trading Day period.

 

(v)                                 Exchange Upon Specified
Transactions.  NRF elects to:

 

(1)                                  distribute to all holders of Common Stock
rights, warrants or options entitling them to purchase, for a period of up to
45 days after the issuance thereof, shares of Common Stock at a price per share
that is less than the Closing Sale Price per share of Common Stock on the
Trading Day immediately preceding the declaration date of such distribution; or

 

(2)                                  distribute to all holders of Common Stock
the Issuer’s assets, debt securities or rights to purchase securities of the
Issuer, which distribution has a per share value exceeding 15% of the Closing
Sale Price of the Common Stock on the Trading Day immediately preceding the
declaration date of such distribution,

 

in which event, the Issuer must notify the Holders at least
20 calendar days prior to the Ex-Dividend date for such distribution,
giving Holders the right to surrender their Securities for exchange at any time
until the earlier of the close of business on the Business Day immediately
preceding the Ex-Dividend Date or an announcement by the Issuer that such
distribution will not take place; provided, however, that a Holder may not exercise the right to
exchange if the Holder may participate, on an as-exchanged basis, in the
distribution without exchange of the Securities.

 

34

 

In addition, if NRF is a party to a consolidation, merger or binding
share exchange pursuant to which Common Stock would be converted into cash,
securities or other property (the “Reference Property”), a Holder may
surrender Securities for exchange at any time from and after the date that is
15 Business Days prior to the anticipated effective date of the
transaction until 15 Business Days after the actual date of such
transaction.  The Issuer shall notify Holders
as promptly as practicable following the date NRF publicly announces such
transaction (but in no event less than 15 days prior to the anticipated
effective date of the transaction).  If
NRF is a party to a consolidation, merger or binding share exchange pursuant to
which Common Stock would be exchanged into Reference Property, then at the
effective time of the transaction, the Holder’s right to exchange the
Securities for Common Stock shall be changed into a right to exchange the
Securities into the kind and amount of Reference Property that the Holder would
have received if the Holder had exchanged its Securities immediately prior to
the effective time of the transaction. 
For purposes of the foregoing, where a consolidation, merger or binding
share exchange involves a transaction that causes Common Stock to be converted
into the right to receive more than a single type of consideration based upon
any form of stockholder election, such consideration will be deemed to be the
weighted average of the types and amounts of consideration received by stockholders
that affirmatively make such an election in such transaction.

 

If a Holder exchanges its Securities pursuant to this Section 4.01(b)(v) and,
if such Holder shall be entitled to an adjustment for additional Common Stock
as provided by Section 4.03 hereof, the exchange of the Securities shall
settle after the effective time of the transaction.  If a Holder exchanges its Securities at any
time following the effective time of the transaction, the amount will be paid
based on the kind and amount of Reference Property.

 

A Holder of Securities is
not entitled to any rights of a Holder of Common Stock until such Holder has
exchanged its Securities and received upon exchange thereof Common Stock.

 

Section 4.02.                             Exercise
of Exchange Right; No Adjustment for Interest or Dividends.  In order to exercise the exchange right with
respect to any Security in certificated form, the Issuer must receive at the
office or agency of the Issuer maintained for that purpose in the City of New
York or, at the option of such Holder, the Corporate Trust Office, such
Security with the original or facsimile of the form entitled “Exchange Notice”
on the reverse thereof (the “Exchange Notice”), duly completed and
signed manually or by facsimile, together with such Securities duly endorsed
for transfer, accompanied by the funds, if any, required by this Section 4.02.
Such notice shall also state the name or names (with address or addresses) in
which the certificate or certificates for Common Stock that shall be issuable
on such exchange shall be issued, and shall be accompanied by transfer or
similar taxes, if required pursuant to Section 4.07.

 

To
exchange the Securities, a Holder must (a) complete and manually sign the
Exchange Notice on the reverse of the Security (or complete and manually sign a
facsimile of such notice) and deliver such notice to the Exchange Agent at the
office maintained by the Exchange Agent for such purpose, (b) with respect
to Securities that are in certificated form, surrender the Securities to the
Exchange Agent, (c) furnish appropriate endorsements and transfer
documents 

 

35

 

if required by the Exchange Agent and (d) pay any
transfer or similar tax, if required. The date on which the Holder satisfies
all such requirements shall be deemed to be the date on which the applicable
Securities shall have been tendered for exchange (the “Exchange Date”).

 

Whether
the Securities to be exchanged are Global Securities or held in certificated
form, the Exchange Notice will require the Holder to certify that it or the
Person on whose behalf the Securities are being exchanged is a qualified
institutional buyer within the meaning of Rule 144A under the Securities
Act.

 

Upon
surrender of a Security for exchange by a Holder, such Holder shall deliver to
the Issuer cash equal to the amount that the Issuer is required to deduct and
withhold under applicable law in connection with the exchange; provided, however, if the
Holder does not deliver such cash, the Issuer may deduct and withhold from the
amount of consideration otherwise deliverable to such Holder the amount
required to be deducted and withheld under applicable law (and not otherwise
delivered by the Holder in cash).

 

If the
Issuer is required to deliver Common Stock upon settlement in accordance with
Sections 4.03 and 4.11, if applicable, not later than the third Trading Day
following the end of the Applicable Exchange Measurement Period, after
satisfaction of the requirements for exchange set forth above, subject to compliance
with any restrictions on transfer if shares of Common Stock issuable on
exchange are to be issued in a name other than that of the Holder (as if such
transfer were a transfer of the Security or Securities (or portion thereof) so
exchanged), and in accordance with the time periods set forth in this Article 4,
the Issuer shall deliver to such Holder at the office or agency maintained by
the Issuer for such purpose pursuant to Section 2.05 hereof, (i) a
certificate or certificates for the number of full shares of Common Stock
issuable upon the exchange of such Security or portion thereof as determined by
the Issuer in accordance with the provisions of Sections 4.03 and 4.11, (ii) a
check or cash in respect of any fractional interest in respect of a share of
Common Stock arising upon such exchange, calculated by the Issuer as provided
in Section 4.06, and (iii) if applicable, an amount in cash equal to
any applicable Interest Make-Whole Payment. The cash, and, if applicable, a
certificate or certificates for the number of full shares of Common Stock into
which the Securities are exchanged (and cash in lieu of fractional shares) will
be delivered to an exchanging holder after satisfaction of the requirements for
exchange set forth above, in accordance with this Section 4.02 and
Sections 4.03 (if applicable) and 4.11.

 

The
Person in whose name any certificate or certificates for Common Stock shall be
issuable upon such exchange shall be deemed to have become on said date the
holder of record of the shares represented thereby, to the extent permitted by
applicable law; provided that any such surrender
on any date when the stock transfer books of NRF shall be closed shall
constitute the Person in whose name the certificates are to be issued as the
record holder thereof for all purposes on the next succeeding day on which such
stock transfer books are open, but such exchange shall be at the Exchange Rate
in effect on the Exchange Date.

 

Any
Security or portion thereof surrendered for exchange during the period from 5:00 p.m.,
New York City time, on the Regular Record Date for any Interest Payment Date to
5:00 p.m., New York City time, on the applicable Interest Payment Date
shall be accompanied by payment, in immediately available funds or other funds
acceptable to the Issuer, of an amount 

 

36

 

equal to the interest otherwise payable on such
Interest Payment Date on the principal amount being exchanged; provided that no such payment need be made (1) if a
Holder exchanges its Securities in connection with a redemption and the Issuer
has specified a Redemption Date that is after a Regular Record Date and on or
prior to the Business Day immediately succeeding the next Interest Payment
Date, (2) if a Holder exchanges its Securities in connection with a Change
in Control and the Issuer has specified a Change in Control Purchase Date that
is after a Regular Record Date and on or prior to the corresponding Interest
Payment Date, (3) on Securities that are exchanged after the last Regular
Record Date for the payment of interest on the Securities, or (4) with
respect to overdue interest if any overdue interest exists at the time of
exchange with respect to such Securities. Except as otherwise provided above in
this paragraph, no payment or other adjustment shall be made for interest
accrued on any Security exchanged or for dividends on any shares issued upon
the exchange of such Security as provided in this Section 4.02.

 

Upon
the exchange of an interest in a Global Security, the Trustee (or other
Exchange Agent appointed by the Issuer), or the Securities Custodian at the
direction of the Trustee (or other Exchange Agent appointed by the Issuer),
shall make a notation on such Global Security as to the reduction in the
principal amount represented thereby. The Issuer shall notify the Trustee in
writing of any exchanges of Securities effected through any Exchange Agent
other than the Trustee.

 

Upon the exchange of a Security, a Holder will not
receive any cash payment of interest (unless such exchange occurs between a
Regular Record Date and the Interest Payment Date to which it relates as
described above) and the Issuer will not adjust the Exchange Rate to account
for accrued and unpaid interest. The Issuer’s delivery to the Holder of cash or
shares of Common Stock will be deemed to satisfy the Issuer’s obligation with
respect to such Security. Accordingly, the accrued but unpaid interest
attributable to the period from the Issue Date of the Security, or from the
most recent date on which interest has been duly paid or provided for, if
later, to the Exchange Date, with respect to the exchanged Security, shall not
be deemed canceled, extinguished or forfeited, but rather shall be deemed to be
paid in full to the Holder thereof through delivery of cash and, if applicable,
Common Stock (together with the cash payment, if any in lieu of fractional
shares, as well as any Interest Make-Whole Payment, if and as applicable) in
exchange for the Security being exchanged pursuant to the provisions hereof.

 

In
case any Security of a denomination greater than $1,000 shall be surrendered
for partial exchange, and subject to Section 2.02 hereof, the Issuer shall
execute and the Trustee shall authenticate and deliver to the Holder of the
Security so surrendered, without charge to the Holder, a new Security or
Securities in authorized denominations in an aggregate principal amount equal
to the unexchanged portion of the surrendered Security.

 

Section 4.03.                             Exchange
Rate Adjustment After Certain Change in Control.

 

(a)                                  Subject
to the provisions hereof, if a Holder elects to exchange its Securities
following the consummation of any transaction described in clause (1) or
clause (2) of the definition of Change in Control (the “Additional
Shares Change in Control”) and a Holder elects to exchange Securities in
connection with such transaction pursuant to Section 4.01(b)(v), the
Issuer will increase the Applicable Exchange Rate for the Securities
surrendered for exchange by a number of additional shares of Common Stock
described below (the “Change in Control Event 

 

37

 

Shares”).  An exchange of Securities will be deemed for
these purposes to be “in connection with” such Additional Shares Change in
Control if the notice of exchange of the Securities is received by the Exchange
Agent on or after the date which is 15 days prior to the anticipated effective
date of the Additional Shares Change in Control and, on or prior to the
fifteenth Business Day following the effective date of the Additional Shares
Change in Control (or if earlier and to the extent applicable, the close of
business on the second Trading Day immediately preceding the day on which the
Issuer is required to repurchase Securities pursuant to Section 3.01 hereof).

 

(b)                                 The
number of Change in Control Event Shares shall be determined by reference to
the table in paragraph (e) below and shall be based on the date on which
the Additional Shares Change in Control becomes effective (the “Effective
Date”) and the price (the “Stock Price”) paid per share of Common
Stock in such transaction. If the holders of Common Stock receive only cash in
the relevant Change in Control transaction, the Stock Price will equal the cash
amount paid per share of Common Stock. In all other cases, the Stock Price will
equal the average of the Closing Sale Prices of the Common Stock on the ten
consecutive Trading Days up to but excluding the Effective Date.

 

(c)                                  Notwithstanding
anything herein to the contrary, in no event shall the total number of shares
of Common Stock issuable upon exchange exceed 100 shares per $1,000
principal amount of Securities, subject to adjustment in the same manner as the
Exchange Rate as set forth in Section 4.04 hereof.

 

(d)                                 The
Stock Prices set forth in the first row of the table below shall be adjusted as
of any date on which the Exchange Rate of the Securities is adjusted pursuant
to Section 4.04. The adjusted Stock Prices will equal the Stock Prices
applicable immediately prior to such adjustment, multiplied by a fraction, (i) the
numerator of which is the Exchange Rate immediately prior to the adjustment
giving rise to the Stock Price adjustment and (ii) the denominator of
which is the Exchange Rate as so adjusted. 
In addition, the number of additional shares of Common Stock will be
subject to adjustment in the same manner as the Exchange Rate set forth under Section 4.04
hereof.

 

(e)                                  Subject
to paragraph (c) of this Section 4.03, the following table sets
forth the Stock Price and number of Change in Control Event Shares issuable per
$1,000 principal amount of Securities:

 

 

	
   

  	
   

  	
  Stock Price

  	
   

  
	
  Effective Date

  	
   

  	
  $10.00

  	
   

  	
  $10.50

  	
   

  	
  $11.00

  	
   

  	
  $11.50

  	
   

  	
  $12.00

  	
   

  	
  $12.50

  	
   

  	
  $13.00

  	
   

  	
  $13.50

  	
   

  
	
  May 28, 2008

  	
   

  	
  16.67

  	
   

  	
  13.92

  	
   

  	
  10.12

  	
   

  	
  6.79

  	
   

  	
  4.67

  	
   

  	
  2.06

  	
   

  	
  0.35

  	
   

  	
  0.00

  	
   

  
	
  June 15, 2009

  	
   

  	
  16.67

  	
   

  	
  13.21

  	
   

  	
  9.53

  	
   

  	
  6.55

  	
   

  	
  4.03

  	
   

  	
  1.91

  	
   

  	
  0.17

  	
   

  	
  0.00

  	
   

  
	
  June 15, 2010

  	
   

  	
  16.67

  	
   

  	
  12.86

  	
   

  	
  9.19

  	
   

  	
  6.22

  	
   

  	
  3.74

  	
   

  	
  1.73

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  
	
  June 15, 2011

  	
   

  	
  16.67

  	
   

  	
  12.70

  	
   

  	
  9.08

  	
   

  	
  6.03

  	
   

  	
  3.50

  	
   

  	
  1.46

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  
	
  June 15, 2012

  	
   

  	
  16.67

  	
   

  	
  12.11

  	
   

  	
  8.26

  	
   

  	
  5.06

  	
   

  	
  2.49

  	
   

  	
  0.50

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  
	
  June 15, 2013

  	
   

  	
  16.67

  	
   

  	
  11.40

  	
   

  	
  7.07

  	
   

  	
  3.12

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  

 

38

 

The exact Stock Price and
Effective Dates may not be set forth in the table, in which case:

 

(1)                                  if
the Stock Price is between two Stock Price amounts in the table or the
Effective Date is between two Effective Dates in the table, the number of
Change in Control Event Shares will be determined by a straight-line
interpolation between the number of Change in Control Event Shares set forth
for the higher and lower Stock Prices and the earlier and later Effective
Dates, as applicable, based on a 365-day year;

 

(2)                                  if
the Stock Price is in excess of $13.50 per share of Common Stock, subject
to adjustment (the “Make Whole Cap”), no Change in Control Event Shares
will be issued upon exchange; and

 

(3)                                  if
the Stock Price is less than $10.00 per share of Common Stock, subject to
adjustment (the “Make Whole Floor”), no Change in Control Event Shares
will be issued upon exchange.

 

The
Make Whole Cap and Make Whole Floor shall be adjusted as of any date on which
the Exchange Rate of the Securities is adjusted pursuant to Section 4.04
hereof

 

Section 4.04.                             Adjustment
of Exchange Rate.  The Exchange Rate
shall be adjusted from time to time by the Issuer as follows:

 

(a)                                  If
NRF issues shares of Common Stock as a dividend or distribution on the Common
Stock to all holders of Common Stock, or if NRF effects a share split or share
combination, the Exchange Rate will be adjusted based on the following formula:

 

ER1 = ER0 × OS1/OS0

 

where

 

ER0 = the Exchange
Rate in effect immediately prior to the Ex-Dividend Date for such dividend or
distribution or the effective date of such share split or share combination, as
applicable;

 

ER1 = the Exchange
Rate in effect on and immediately after the Ex-Dividend Date for such dividend
or distribution or the effective date of such share split or share combination,
as applicable;

 

OS0 = the number of
shares of Common Stock outstanding on the Ex-Dividend Date for such dividend or
distribution, or the effective date of such share split or share combination,
as applicable; and

 

OS1 = the number of
shares of Common Stock outstanding on the Ex-Dividend Date for such dividend or
distribution or the effective date of such share split or share combination, as
applicable, as if such dividend, distribution, split or combination occurred at
that time.

 

39

 

If any
dividend or distribution described in this paragraph (a) is declared but
not so paid or made, the Exchange Rate shall be readjusted to the Exchange Rate
that would then be in effect if such dividend or distribution had not been
declared.

 

(b)                                 If
NRF issues to all holders of Common Stock any rights, warrants, options or
other securities entitling them for a period of not more than 45 days after the
date of issuance thereof to subscribe for or purchase Common Stock or
securities convertible into Common Stock within 45 days after the issuance
thereof, in either case at an exercise price per share of Common Stock or a
conversion price per share less than the Closing Sale Price of Common Stock on
the Business Day immediately preceding the time of announcement of such
issuance, the Exchange Rate will be adjusted based on the following formula
(provided that the Exchange Rate will be readjusted to the extent that such
rights, warrants, options, or other securities or convertible securities are
not exercised or converted prior to the expiration of the exercisability or
convertibility thereof):

 

ER1 = ER0 × (OS0 + X)/(OS0 + Y)

 

where

 

ER0 = the Exchange Rate in effect immediately
prior to the Ex-Dividend Date for such issuance;

 

ER1 = the Exchange Rate in effect on and
immediately after the Ex-Dividend Date for such issuance;

 

OS0 = the number of shares of Common Stock
outstanding immediately prior to the Ex-Dividend Date for such issuance;

 

X =
the number of shares of Common Stock issuable pursuant to such rights,
warrants, options, other securities or convertible securities; and

 

Y =
the number of shares of Common Stock equal to the quotient of (A) the
aggregate price payable to exercise such rights, warrants, options, other
securities or convertible securities and (B) the average of the Closing
Sale Prices of the Common Stock for the ten consecutive Trading Days prior to
the Business Day immediately preceding the date of announcement for the
issuance of such rights, warrants, options, other securities or convertible
securities.

 

For
purposes of this paragraph (b), in determining whether any rights, warrants,
options, other securities or convertible securities entitle the Holders to
subscribe for or purchase or exercise a conversion right for Common Stock at
less than the average Closing Sale Price of the Common Stock, and in
determining the aggregate exercise or conversion price payable for such Common
Stock, there shall be taken into account any consideration received by NRF for
such rights, warrants, options, other securities or convertible securities and
any amount payable on exercise or conversion thereof, with the value of such
consideration, if other than cash, to be determined by the Board of Directors.

 

40

 

If any
right, warrant, option, other security or convertible security described in
paragraph (b) is not exercised or converted prior to the expiration
of the exercisability or convertibility thereof, the new Exchange Rate shall be
readjusted to the exchange rate that would then be in effect if such right,
warrant, option, other security or convertible security had not been so issued.

 

(c)                                  If
NRF distributes shares of capital stock, evidences of indebtedness or other
assets or property of NRF to all holders of Common Stock, excluding:

 

(1)                                  dividends,
distributions, rights, warrants, options, other securities or convertible
securities referred to in paragraph (a) or (b) above;

 

(2)                                  dividends
or distributions paid exclusively in cash; and

 

(3)                                  Spin-Offs
described below in this paragraph (c),

 

then the Exchange Rate will be adjusted based on the following formula:

 

ER1 = ER0 × SP0/(SP0 - FMV)

 

where

 

ER0 = the Exchange Rate in effect
immediately prior to the Ex-Dividend Date for such distribution;

 

ER1 = the Exchange Rate in effect on and
immediately after the Ex-Dividend Date for such distribution;

 

SP0 = the average of the Closing Sale Prices of
the Common Stock for the ten consecutive Trading Days prior to the Business Day
immediately preceding  the Ex-Dividend
Date for such distribution; and

 

FMV =
the fair market value (as determined in good faith by the Board of Directors)
of the shares of capital stock, evidences of indebtedness, assets or property
distributed with respect to each outstanding share of Common Stock on the
Ex-Dividend Date for such distribution;

 

With respect
to an adjustment pursuant to this paragraph (c), where there has been a payment
of a dividend or other distribution on Common Stock or shares of capital stock
of any class or series, or similar equity interest, of or relating to a
subsidiary or other business unit of NRF (a “Spin-Off”), the Exchange
Rate will be adjusted based on the following formula:

 

ER1 = ER0 × (FMV0 + MP0)/MP0

 

where

 

ER0 = the Exchange Rate in effect
immediately prior to the effective date of the Spin-Off;

 

41

 

ER1 = the Exchange Rate in effect
on and immediately after the effective date of the Spin-Off;

 

FMV0 = the average of the Closing Sale Prices of
the capital stock or similar equity interest distributed to holders of Common Stock
applicable to one share of Common Stock over the first ten consecutive Trading
Days after the effective date of the Spin-Off; and

 

MP0 = the average of the Closing Sale Prices of
the Common Stock over the first ten consecutive Trading Days after the effective
date of the Spin-Off.

 

If any
such dividend or distribution described in this paragraph (c) is declared
but not paid or made, the Exchange Rate shall be readjusted to be the Exchange
Rate that would then be in effect if such dividend or distribution had not been
declared.

 

(d)                                 If
following the date of original issuance of the Securities, NRF makes any cash
dividend or distribution to all holders of Common Stock in aggregate amount
that, together with other cash dividends or distributions during such quarterly
fiscal period, on a per share basis, exceeds $0.36 (the “Reference Dividend”)
the Exchange Rate will be adjusted based on the following formula:

 

ER1 = ER0 × SP0 /(SP0 - C)

 

where

 

ER0 = the Exchange Rate in effect immediately
prior to the Ex-Dividend Date for such distribution;

 

ER1 = the Exchange Rate in effect on and
immediately after the Ex-Dividend Date for such distribution;

 

SP0 = the average of the Closing Sale Prices of
the Common Stock over the period of the ten consecutive Trading Days ending on
the Business Day immediately preceding the Ex-Dividend Date for such
distribution; and

 

C =
the amount in cash per share that NRF distributes to holders of Common Stock
during such quarterly fiscal period in excess of the Reference Dividend.

 

If any
dividend or distribution described in this paragraph (d) is declared but
not so paid or made, the Exchange Rate shall be readjusted to the Exchange Rate
that would then be in effect if such dividend or distribution had not been
declared.

 

The
Reference Dividend amount is subject to adjustment in a manner inversely
proportional to adjustments to the Exchange Rate; provided
that no adjustment will be made to the Reference Dividend for any adjustment to
the Exchange Rate under this paragraph (d).

 

(e)                                  If
NRF or any of its subsidiaries makes a payment in respect of a tender offer or
exchange offer for shares of Common Stock to the extent that the cash and value
of any other 

 

42

 

consideration included in
the payment per share of Common Stock exceeds the Closing Sale Price of a share
of Common Stock on the Trading Day next succeeding the last date on which
tenders or exchanges may be made pursuant to such tender offer or exchange
offer (the “Expiration Time”), the Exchange Rate will be adjusted based
on the following formula:

 

ER1 = ER0 × (AC + (SPI ×
OS1))/(SP1 × OS0)

 

where

 

ER0 = the Exchange Rate in effect on the date such
tender offer or exchange offer expires;

 

ER1 = the Exchange Rate in effect on the day next
succeeding the date such tender offer or exchange offer expires;

 

AC =
the aggregate value of all cash and any other consideration (as determined by
the Board of Directors) paid or payable for the shares of Common Stock
purchased in such tender or exchange offer;

 

OS0 = the number of shares of Common Stock
outstanding immediately prior to the date such tender offer or exchange offer
expires;

 

OS1 = the number of shares of Common Stock
outstanding immediately after such tender or exchange offer expires (after
giving effect to the purchase or exchange of shares of Common Stock pursuant to
such tender offer or exchange offer); and

 

SP1 = the average of the Closing Sale Price of the
Common Stock for the 10 consecutive Trading Days commencing on the Trading Day
next succeeding the date such tender offer or exchange offer expires.

 

If the
application of the foregoing formula would result in a decrease in the Exchange
Rate, no adjustment to the Exchange Rate will be made.

 

If NRF or one of its
subsidiaries is obligated to purchase Common Stock pursuant to any such tender
offer or exchange offer, but it or such subsidiary is permanently prevented by
applicable law from effecting any such purchases or all such purchases are
rescinded, the Exchange Rate shall be readjusted to be the Exchange Rate that
would be in effect if such tender offer or exchange offer had not been made.

 

(f)                                    Notwithstanding
the foregoing, in no event shall the adjustments arising under paragraph (d) or
(e) of this Section 4.04 cause the Exchange Rate to exceed 100
shares per $1,000 principal amount of Securities, subject to the
adjustments in paragraphs (a), (b) and (c) of this Section 4.04.

 

(g)                                 If
NRF adopts a shareholder rights plan while any Securities remain outstanding,
Holders of Securities will receive, upon an exchange of Securities for shares
of Common Stock, in addition to Common Stock, rights under such shareholder
rights plan unless, prior to exchange, the rights have expired, terminated or
been redeemed or unless the rights have 

 

43

 

separated from the Common
Stock.  If the rights provided for in the
rights plan adopted by NRF have separated from the Common Stock in accordance
with the provisions of the applicable shareholder rights agreement so that
Holders of Securities would not be entitled to receive any rights in respect of
Common Stock issuable upon exchange of the Securities, the Exchange Rate will
be adjusted at the time of separation as if NRF had distributed, to all holders
of Common Stock, shares of capital stock, evidences of indebtedness or other
assets or property pursuant to Section 4.04(c) hereof, subject to
readjustment upon the subsequent expiration, termination or redemption of the
rights.  In lieu of any such adjustment,
NRF may amend such applicable shareholder rights agreement to provide that upon
exchange of Securities, the Holders will receive, in addition to Common Stock
issuable upon such exchange, the rights which would have attached to such
Common Stock if the rights had not become separated from the Common Stock under
such shareholders rights plan.

 

(h)                                 In
addition to the adjustments pursuant to paragraphs (a) through (g) above,
the Issuer may increase the Exchange Rate in order to avoid or diminish any income
tax to holders of the capital stock of NRF resulting from any dividend or
distribution of capital stock (or rights to acquire shares of Common Stock) or
from any event treated as such for income tax purposes. The Issuer may also,
from time to time, to the extent permitted by applicable law increase the
Exchange Rate by any amount for any period if the Issuer has determined that
such increase would be in the best interests of the Issuer or NRF. If the
Issuer makes such determination, it will be conclusive and the Issuer shall
mail to Holders a notice of the increased Exchange Rate at least 15 days
prior to the date the increased Exchange Rate takes effect in accordance with
applicable law and such notice shall state the increased exchange rate and the
period during which it will be in effect.

 

The
Issuer shall not make any adjustment to the Exchange Rate if Holders are
permitted to participate in the dividend, distribution or transaction, on an
as-exchanged basis, in the transactions in this Section 4.04.

 

(i)                                     Notwithstanding
anything to the contrary contained herein, the applicable Exchange Price and
Exchange Rate will not be adjusted upon certain events, including but not
limited to:

 

(1)                                  the
issuance of any shares of Common Stock pursuant to any present or future plan
providing for the reinvestment of dividends or interest payable on securities
of the Issuer or those of NRF and the investment of additional optional amounts
in shares of Common Stock under any plan;

 

(2)                                  the
issuance of any shares of Common Stock or Issuer partnership units or options
or rights to purchase those shares or units pursuant to any present or future
employee, director, trustee or consultant benefit plan, employee agreement or
arrangement or program of the Issuer or NRF;

 

(3)                                  the
issuance of any shares of Common Stock pursuant to any option, warrant, right,
or exercisable, exchangeable or convertible security outstanding as of the date
the Securities were first issued;

 

44

 

(4)                                  a
change in the par value of the Common Stock;

 

(5)                                  accumulated
and unpaid dividends or distributions; and

 

(6)                                  as
a result of a tender offer solely to holders of less than 100 shares of Common
Stock; and

 

(7)                                  for
the avoidance of doubt, the issuance of limited partnership units by NRF LP,
the issuance of any membership interests by the Issuer, the issuance of the
Common Stock or the common stock of Sub-REIT or the payment of cash upon
redemption thereof.

 

(j)                                     No
adjustment in the applicable Exchange Price will be required unless the
adjustment would require an increase or decrease of at least 1% of the
applicable Exchange Price.  If the
adjustment is not made because the adjustment does not change the Exchange
Price by at least 1%, then the adjustment that is not made will be carried
forward and taken into account in any future adjustment. All required
calculations will be made to the nearest cent or 1/1000th of a share, as the
case may be. Notwithstanding the foregoing, upon exchange of the Securities,
upon required repurchases of the Securities in connection with a Change in
Control pursuant to Section 3.01, upon redemption of the Securities
pursuant to Section 11.01 and five Business Days prior to the Final
Maturity Date, all adjustments not previously made shall be made.  Except as specifically described above, the
applicable Exchange Price shall not be subject to adjustment in the case of the
issuance of any shares of Common Stock or NRF’s preferred shares, or securities
exchangeable for or convertible into common stock or NRF’s preferred shares.

 

(k)                                  Whenever
the Exchange Rate is adjusted as herein provided, NRF or the Issuer shall as
promptly as reasonably practicable file with the Trustee and any Exchange Agent
other than the Trustee an Officer’s Certificate setting forth the Exchange Rate
after such adjustment and setting forth a brief statement of the facts
requiring such adjustment. Promptly after delivery of such certificate, NRF or
the Issuer shall prepare a notice of such adjustment of the Exchange Rate setting
forth the adjusted Exchange Rate and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Exchange Rate to
the Holders within 20 Business Days of the Effective Date of such adjustment.
Failure to deliver such notice shall not affect the legality or validity of any
such adjustment.

 

(l)                                     For
purposes of this Section 4.04, the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of NRF but shall
include shares issuable in respect of scrip certificates issued in lieu of
fractions of Common Stock.

 

(m)                               For
purposes of this Section 4.04, “record date” shall mean, with respect to
any dividend, distribution or other transaction or event in which the Holders of
Common Stock have the right to receive any cash, securities or other property
or into which the Common Stock (or other applicable security) is exchanged or
converted into any combination of cash, securities or other property, the date
fixed for determination of shareholders entitled to receive such cash, security
or other property (whether or not such date is fixed by the Board of Directors
or by statute, contract or otherwise).

 

45

 

Section 4.05.                             Exchange
Rate.  The initial Exchange Rate for
the Securities is 83.3333 shares of Common Stock per each $1,000 principal
amount of the Securities, subject to adjustment as provided in Sections 4.03
and 4.04 (herein called the “Exchange Rate”).

 

Section 4.06.                             Cash
Payments in Lieu of Fractional Shares. 
No fractional shares of Common Stock or scrip certificates representing
fractional shares shall be issued upon exchange of Securities. If more than one
Security shall be surrendered for exchange at one time by the same Holder, the
number of full shares of Common Stock that shall be issuable upon exchange
shall be computed on the basis of the aggregate principal amount of the
Securities (or specified portions thereof to the extent permitted hereby) so
surrendered. If any fractional share of Common Stock would be issuable upon the
exchange of any Security or Securities, the Issuer shall make an adjustment and
payment therefor in cash to the Holder of Securities at a price equal to the
Closing Sale Price of the Common Stock on the last day of the Applicable
Exchange Measurement Period.

 

Section 4.07.                             Taxes
on Shares Issued.  If a Holder
exchanges Securities, the Issuer will pay any documentary stamp or similar
issue or transfer tax due on the delivery of Common Stock upon the exchange, if
any, unless the tax is due because the Holder requests the shares to be
delivered to a person other than the Holder, in which case the Holder will pay
the tax.  Shares of Common Stock shall
not be issued or delivered unless all taxes and duties, if any, payable by the
Holder have been paid.

 

Section 4.08.                             Reservation
of Shares, Shares to be Fully Paid; Compliance with Governmental Requirements;
Listing of Common Stock.  NRF shall
provide, free from preemptive rights, out of its authorized but unissued shares
or shares held in treasury, sufficient Common Stock to provide for the exchange
of the Securities as required by this Indenture from time to time as such
Securities are presented for exchange to the extent the Issuer has elected to
settle the exchange of the Securities in Common Stock.

 

The Issuer covenants that all Common Stock issued upon
exchange of Securities will upon issue be fully paid and non-assessable by NRF
and free from all taxes, liens and charges with respect to the issue thereof, provided that if certain of the possible adjustments to the
exchange price are made, a Holder shall be deemed to have a received a
distribution from the Issuer even though such Holder has not received any cash
or property as a result of such adjustments, the Issuer intends to withhold
Federal income tax (in the case of Foreign Note Holders) on any deemed
distribution from the Issuer from cash payments of interest otherwise payable
on the Securities and payments upon a redemption or exchange of the Securities.

 

The Issuer covenants that, if any Common Stock to be
provided for the purpose of exchange of Securities hereunder require
registration with or approval of any governmental authority under any federal
or state law before such shares may be validly issued upon exchange, NRF shall,
as expeditiously as practicable, secure such registration or approval, as the
case may be, provided, however, that Common Stock provided for exchange
hereunder need not be registered under the U.S. Federal securities laws and
each recipient of such Common Stock shall have the rights set forth in the
Registration Rights Agreement.

 

46

 

Section 4.09.                             Responsibility
of Trustee.  The Trustee and any other
Exchange Agent shall not at any time be under any duty or responsibility to any
Holder to determine the Exchange Rate, Interest Make-Whole Payment or Exchange
Price or whether any facts exist which may require any adjustment of the
Exchange Rate, or with respect to the nature or extent or calculation of any
such adjustment when made, or with respect to the method employed, or herein or
in any supplemental indenture provided to be employed, in making the same. The
Trustee and any other Exchange Agent shall not be accountable with respect to
the validity or value (or the kind or amount) of any Common Stock, or of any
capital stock, other securities or other assets or property, which may at any
time be issued or delivered upon the exchange of any Security; and the Trustee
and any other Exchange Agent make no representations with respect thereto.
Neither the Trustee nor any Exchange Agent shall be responsible for any failure
of the Issuer to issue, transfer or deliver any Common Stock or stock
certificates or other securities or property or cash upon the surrender of any
Security for the purpose of exchange or to comply with any of the duties,
responsibilities or covenants of the Issuer contained in this Article 4.
Without limiting the generality of the foregoing, neither the Trustee nor any
Exchange Agent shall be under any responsibility to determine the correctness
of any provisions contained in any supplemental indenture entered into pursuant
to Section 4.03 relating either to the kind or amount of shares of capital
stock or other securities or other assets or property (including cash)
receivable by Holders upon the exchange of their Securities after any event
referred to in such Section 4.03 or to any adjustment to be made with
respect thereto, but, subject to the provisions of Section 8.01(f), may
accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, the Officer’s Certificate (which the Issuer
shall be obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto. The Trustee shall not at any time
be under any duty or responsibility to any holder of Securities to determine
the accuracy of the method employed in calculating the Trading Price or whether
any facts exist which may require any adjustment of the Trading Price.

 

Section 4.10.                             Notice
to Holders Prior to Certain Actions. 
In case:

 

(a)                                  NRF
shall declare a dividend (or any other distribution) on the Common Stock that
would require an adjustment in the Exchange Rate pursuant to Section 4.04;
or

 

(b)                                 NRF
shall authorize the granting to the holders of all or substantially all of the
Common Stock of rights or warrants to subscribe for or purchase any share of
any class or any other rights or warrants; or

 

(c)                                  of
any reclassification or reorganization of the Common Stock (other than a
subdivision or combination of its outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par value),
or of any consolidation, combination, merger or share exchange to which the
Issuer or NRF is a party and for which approval of any stockholders of NRF is
required, or of the sale or transfer of all or substantially all of the assets
of NRF; or

 

(d)                                 of
the voluntary or involuntary dissolution, liquidation or winding up of NRF;

 

the Issuer shall cause to be filed with the Trustee a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or rights or warrants, or, if a record is 

 

47

 

not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution or rights are to be
determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective or occur, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.

 

Section 4.11.                             Settlement
upon Exchange.  (a)  Upon
exchange of any Securities, subject to Sections 4.01, 4.02 and this Section 4.11,
the Issuer shall satisfy its obligation upon exchange (the “Exchange
Obligation”) by payment and delivery on or prior to the third Trading Day
immediately following the last day of the Applicable Exchange Measurement
Period, at the Issuer’s option, of cash, shares of Common Stock or a
combination of cash and shares of Common Stock for each $1,000 aggregate
principal amount of Securities tendered for exchange in accordance with their
terms, as follows:

 

(1)                                  Share Settlement.  If
the Issuer elects to satisfy the entire Exchange Obligation in shares of Common
Stock, then the Issuer shall deliver, for each Trading Day in the Applicable
Exchange Measurement Period, a number of shares of Common Stock equal to the
Applicable Exchange Rate divided by 20.

 

(2)                                  Cash Settlement.  If
the Issuer elects to satisfy the entire Exchange Obligation in cash, then the
Issuer shall deliver, for each Trading Day in the Applicable Exchange
Measurement Period, cash in an amount equal to the Daily Exchange Value.

 

(3)                                  Combined Settlement. 
If the Issuer elects to satisfy a portion of the Exchange Obligation in
cash (expressed either as a dollar amount or as a percentage of the Daily
Exchange Value, each, the “Partial Cash Amount”) and a portion in shares
of Common Stock, then the Issuer shall deliver, for each Trading Day in the
Applicable Exchange Measurement Period, (A) the lesser of (x) such
Partial Cash Amount divided by 20 or, if expressed as a percentage of the
exchange obligation, such Partial Cash Amount will be calculated as a percentage
of the Daily Exchange Value (the “Daily Partial Cash Amount”) and (y) the
Daily Exchange Value, plus (B) a number of shares of Common Stock equal to
(x) the excess, if any, of the Daily Exchange Value over such Daily
Partial Cash Amount divided by (y) the Daily VWAP of the Common Stock for
such day.

 

(b)                                 The
Issuer shall initially elect the Partial Cash Amount to be the principal amount
of the Securities and shall deliver any amount of the aggregate Daily Exchange
Value in excess of the principal amount of the Securities, if any, in Common
Stock; provided that such election is revocable
and the Issuer may make any future election revocably or irrevocably.  Upon changing such election, the Issuer shall
promptly (i) issue a press release and post such information on NRF’s
website or otherwise publicly disclose such information and (ii) provide
written notice to the Trustee of the Securities in the manner contemplated
herein.  The Issuer may not make any
change to such election subsequent to May 15, 2013.  No change in election on or after the 

 

48

 

Exchange Date shall
affect the exchanging Holder with respect to Securities submitted for exchange
by such Holder.

 

(c)                                  The
Issuer will deliver cash in lieu of any fractional share of Common Stock
issuable in connection with the payment of the shares of the Common Stock on
the last day of the Applicable Exchange Measurement Period.

 

Section 4.12.                             Ownership
Limit.  Notwithstanding any other
provision of the Securities, no Holders of Securities shall be entitled to
receive shares of Common Stock upon an exchange of Securities to the extent
that receipt of such shares of Common Stock would cause such Holder (together
with such Holder’s Affiliates) to exceed the ownership limit contained in NRF’s
charter.  Any attempted exchange of
Securities in excess of such ownership limit, in the absence of such a waiver,
shall be void to the extent of such excess, and the related Securities or
portions thereof shall be returned by the Issuer to the Holder as promptly as
practicable.  The Issuer shall have no
further obligation to the Holder with respect to such voided exchange and such
Securities will be treated as if they had not been submitted for exchange.  A Holder of returned Securities may resubmit
such Securities for exchange at a later date subject to compliance with the
terms hereof and the ownership limitations described in this Section 4.12.  Notwithstanding the foregoing provisions of
this Section 4.12, in the event a Holder attempts to exchange Securities
but is prevented from doing so as a result of the ownership limitation, the
Issuer may, at its option, pay cash to such Holder upon such exchange as
provided herein.

 

Section 4.13.                             Calculation
in Respect of Securities.  Except as
otherwise specifically stated herein or in the Securities, all calculations to
be made in respect of the Securities shall be the obligation of the Issuer.
These calculations include, but are not limited to, determinations of the
Closing Sale Price of the Common Stock, any accrued interest payable on the
Securities and the Exchange Rate of the Securities.  All calculations made by the Issuer or its
agent as contemplated pursuant to the terms hereof and of the Securities shall
be made in good faith and be final and binding on the Securities and the
Holders absent manifest error. The Issuer shall provide a schedule of
calculations to the Trustee, and the Trustee shall be entitled to rely upon the
accuracy of the calculations by the Issuer without independent verification.
The Trustee shall forward calculations made by the Issuer to any Holder of
Securities upon request.

 

ARTICLE 5

COVENANTS

 

Section 5.01.                             Payment
of Securities.

 

(a)                                  The
Issuer shall promptly make all payments in respect of the Securities on the
dates and in the manner provided in the Securities and this Indenture.  Any payment hereunder shall be considered
paid on the applicable date due if on such date the Trustee or the Paying Agent
holds, in accordance with this Indenture, money sufficient to pay all such
amounts then due.  Subject to Section 4.02,
accrued and unpaid interest on any Security that is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security is registered at the close of business on
the Regular Record Date for such interest at the office or agency of the Issuer
maintained for such purpose.  The Issuer
shall, 

 

49

 

to the fullest extent
permitted by law, pay interest in immediately available funds on overdue
principal amount and interest at the annual rate borne by the Securities
compounded semiannually, which interest shall accrue from the date such overdue
amount was originally due to the date payment of such amount, including
interest thereon, has been made or duly provided for.  All such overdue interest shall be payable on
demand.

 

(b)                                 Payment
of the principal of and interest, if any, on the Securities shall be made at
the office or agency of the Issuer maintained for that purpose or at the
Corporate Trust Office of the Trustee in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Issuer payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address appears in the Register; provided
further that a Holder with an aggregate principal amount in excess of
$5,000,000 will be paid by wire transfer in immediately available funds at the
election of such Holder if such Holder has provided wire transfer instructions
to the Trustee at least 10 Business Days prior to the payment date.  Any wire transfer instructions received by the
Trustee will remain in effect until revoked by the Holder.

 

(c)                                  The
Issuer shall comply with any requirement to withhold any taxes with respect to (i) payments
made pursuant to the terms of this Indenture (including without limitation,
interest and original issue discount), (ii) redemption payments, (iii) any
exchange of the Securities and (iv) any deemed payment or distribution
made with respect to the Securities as a result of an adjustment to the
Exchange Rate.  To the extent the Issuer
determines in its sole discretion that the Issuer is required to withhold any
taxes with respect to a deemed payment or distribution with respect to a
Security on account of an adjustment to the Exchange Rate, the Issuer shall
withhold such amount from payments otherwise due hereunder to the holder of
such Security and report such withholding to the Holders affected if and as
required by law.  Any amount withheld by
the Issuer pursuant to this Section 5.01(c) with respect to a
Security shall be treated for all purposes of this Indenture as if it had been
paid directly to the holder of such Security.

 

Section 5.02.                             Money
for Securities Payments to be Held in Trust.  If the Issuer, any Guarantor or any of their
Affiliates shall at any time act as its own Paying Agent with respect to the
Securities, the Issuer or the Guarantor, as the case may be, will, on or before
each due date of the Persons entitled thereto a sum sufficient to pay the
principal and any interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee of its action or failure to so act.

 

(a)                                  Whenever
the Issuer or any Guarantor shall have one or more Paying Agents for any series
of Securities, the Issuer or such Guarantor, as the case may be, will, prior to
each due date of the principal of or any interest on any Securities of that
series, deposit with a Paying Agent a sum sufficient to pay such amount and
(unless such Paying Agent is the Trustee) the Issuer or such Guarantor, as the
case may be, will promptly notify the Trustee of its action or failure to act.

 

(b)                                 The
Issuer or any Guarantor will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provision of this Section 5.02, that 

 

50

 

such Paying Agent will,
during the continuance of any default by the Issuer or the Guarantors (or any
other obligor upon the Securities of that series) in the making of any payment
in respect of the Securities of that series, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent for payment in respect of the Securities of that series.

 

(c)                                  The
Issuer or any Guarantor may, at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by an Issuer Order or NRF Order, as the case may be, direct any Paying Agent to
pay, to the Trustee all sums held in trust by the Issuer or any Guarantor, as
the case may be, or such Paying Agent, such sums to be held by the Trustee upon
the same trusts as those upon which such sums were held by the Issuer, NRF or
such Paying Agent; and upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.

 

(d)                                 Any
money deposited with the Trustee or the Paying Agent, or then held by the
Issuer or any Guarantor in trust for the payment of the principal of or any
interest on any Security of any series and remaining unclaimed for two years
after such principal or interest has become due or payable shall be paid to the
Issuer or any Guarantor or (if then held by the Issuer or any Guarantor, as
applicable) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Issuer or the Guarantors for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Issuer and the Guarantors, as trustee thereof, shall thereupon cease; provided that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Issuer cause to
be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in New
York, New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Issuer.

 

Section 5.03.                             Reports.

 

(a)                                  So
long as the Issuer is not subject to the information requirements of Section 13
or 15(d) of the Exchange Act, the Issuer shall furnish to Holders of
Securities and beneficial owners and prospective purchasers thereof the
information with respect to the Issuer required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act in order to permit compliance with Rule 144A in
connection with resales of such Securities.

 

(b)                                 The
Issuer shall provide the Trustee, upon request, within 15 days after NRF
is required to file the same with the SEC, copies of the annual reports and
information, documents and other reports (or copies of such portions any of the
foregoing as the SEC may prescribe) which NRF is required to file with the SEC
pursuant to Section 13 or Section 15(d) of the Exchange
Act.  If NRF is not required to file
information, documents or reports pursuant to either of those sections, then
the Issuer shall provide to the Trustee upon request and to the SEC such
reports as may be prescribed to be filed by NRF by the SEC at such time.  To the extent that NRF has filed such
information with the SEC through the SEC’s EDGAR system, or any successor
system employed by the SEC, the Issuer shall be deemed to have complied with
the requirement of this Section 5.03(b).

 

51

 

Section 5.04.                             Compliance
Certificates.  The Issuer and the
Guarantors shall deliver to the Trustee, within 120 days after the end of each
fiscal year of the Issuer (beginning with the fiscal year ending on December 31,
2008), an Officer’s Certificate as to the signer’s knowledge of the Issuer’s
compliance with all terms, conditions and covenants on its part contained in
this Indenture and stating whether or not the signer knows of any Default or
Event of Default.  If such signer knows
of such a Default or Event of Default, the Officer’s Certificate shall describe
the Default or Event of Default and the efforts to remedy the same.  For the purposes of this Section 5.04,
compliance shall be determined without regard to any grace period or
requirement of notice provided pursuant to the terms of this Indenture.

 

Section 5.05.                             Further
Instruments and Acts.  Upon request
of the Trustee, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purposes of this Indenture.

 

Section 5.06.                             Maintenance
of Existence as a Limited Partnership. 
Subject to Article 6, the Issuer and the Guarantors will do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence as a limited partnership or corporation, respectively.

 

Section 5.07.                             Stay,
Extension and Usury Laws.  The Issuer
and each Guarantor covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law or other law
which would prohibit or forgive the Issuer from paying all or any portion of
the principal of or accrued but unpaid interest, if any, on the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Indenture, and the
Issuer and the Guarantors (to the extent they may lawfully do so) hereby
expressly waive all benefit or advantage of any such law and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.

 

Section 5.08.                             Calculation
of Original Issue Discount.  The
Issuer shall file with the Trustee promptly at the end of each calendar year a
written notice specifying the amount of original issue discount (including
daily rates and accrual periods) accrued on the Securities as of the end of
such year, but only if as of the end of such year Securities issued at an
original issue discount are then outstanding.

 

Section 5.09.                             Maintenance
of Office or Agency.  The Issuer will
maintain an office or agency of the Trustee, Registrar and Paying Agent where
securities may be presented or surrendered for payment, where Securities may be
surrendered for registration of transfer, purchase or redemption and where
notices and demands to or upon the Issuer in respect of the Securities and this
Indenture may be served.  The Corporate
Trust Office shall initially be one such office or agency for all of the
aforesaid purposes. The Issuer shall give prompt written notice to the Trustee
of the location, and of any change in the location, of any such office or
agency (other than a change in the location of the office of the Trustee).  If at any time the Issuer shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served 

 

52

 

at the address of the
Trustee set forth in Section 12.01. 
The Issuer may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Issuer of its obligation to maintain an office or agency.

 

Section 5.10.                             Registration
Rights.

 

The
Issuer agrees that the Holders from time to time of Registrable Securities (as
defined below) are entitled to the benefits of the Registration Rights
Agreement.

 

Whenever
in this Indenture there is mentioned, in any context, the payment of the
principal of, premium, if any, or interest on, or in respect of, any Security,
such mention shall be deemed to include mention of the payment of Liquidated
Damages provided for in the Securities to the extent that, in such context,
Liquidated Damages are, were or would be payable in respect thereof pursuant to
the provisions of the Securities and express mention of the payment of
Liquidated Damages (if applicable) in any provisions hereof or thereof shall
not be construed as excluding Liquidated Damages in those provisions
hereof  or thereof where such express
mention is not made.

 

For
the purposes of this Indenture and the Registration Rights Agreement, “Registrable
Securities” means all or any portion of the shares of Common Stock issued
or issuable upon exchange of such Securities; provided,
however, that a security ceases to be a
Registrable Security when it is no longer Restricted Common Stock.

 

If the
shares of Common Stock issued or issuable upon exchange of a Security, are
Registrable Securities, and if the Holder thereof elects to sell such
Registrable Securities pursuant to a registration statement filed pursuant to
the Registration Rights Agreement then, by its acceptance thereof, the Holder
of such Registrable Securities will have agreed to be bound by the terms of the
Registration Rights Agreement relating to the Registrable Securities which are
the subject of such election.

 

For
the purposes of the Registration Rights Agreement, the term “Holder”
means any Person that is a Holder of Securities or a holder of record of
Registrable Securities.

 

If
Liquidated Damages are payable under the Registration Rights Agreement, the
Issuer shall deliver to the Trustee a certificate to that effect stating (i) the
amount of Liquidated Damages that is payable and (ii) the date on which
Liquidated Damages are payable.  Unless
and until a Responsible Officer of the Trustee receives at the Corporate Trust
Office such a certificate, the Trustee may assume without inquiry that no
Liquidated Damages are payable.  If
Liquidated Damages have been paid by the Issuer directly to the persons
entitled to them, the Issuer shall deliver to the Trustee a certificate setting
forth the particulars of such payment.

 

Section 5.11.                             Prohibited
Indebtedness.  The Issuer agrees that
it shall not, and shall not permit any Subsidiary thereof to, incur, assume or
otherwise permit to exist any Indebtedness of any Triple Net Holdings Entity,
other than:

 

(a)                                  Indebtedness
of the Issuer evidenced by the Securities;

 

53

 

(b)                                 Indebtedness
of the Issuer to one or more of its wholly-owned Subsidiaries, provided that
such Indebtedness is unsecured and expressly subordinated to the Securities and
expressly provides that no payment will be made under such Indebtedness during
the continuance of an Event of Default;

 

(c)                                  Indebtedness
of any wholly-owned Subsidiary of the Issuer to the Issuer or any other
wholly-owned Subsidiary of the Issuer;

 

(d)                                 Indebtedness
existing on the date of this Indenture;

 

(e)                                  Indebtedness
of any Triple Net Holdings Entity incurred to finance the acquisition, construction
or improvement of real estate or related fixed or capital assets used or useful
in the business of such Triple Net Holdings Entity (including any mezzanine
financing and any Indebtedness assumed by any such Subsidiary in connection
with such acquisition), provided that (1) such Indebtedness is incurred
prior to or within one year after such acquisition or the completion of such
construction or improvement, (2) the maturity of such Indebtedness does
not exceed the anticipated useful life of the asset being financed, and (3) any
Lien created or assumed in connection with any such Indebtedness shall be
limited to the specified asset being financed (including (x) additions,
improvements, fixtures, ascensions and the proceeds of the foregoing and (y) in
the case of a mezzanine loan obtained in connection with the acquisition of any
Replacement Property, the ownership interests in the Property Owning Entity
that acquires such Replacement Property); provided, however, that this clause (3) shall
not apply to Indebtedness incurred in connection with the expansions of the
improvements at the Cott  Beverages
Property and/or the Covance Property;

 

(f)                                    Indebtedness
incurred to finance the acquisition, by the Issuer or a wholly-owned Subsidiary
thereof, of all or a portion of the indirect ownership interests in the Quantum
Properties that are not held by the Issuer or a Subsidiary thereof as of the
date of this Indenture (including in connection with the exercise of the
Quantum Buy-Sell Provision); provided that
such Indebtedness is incurred within one year after such acquisition;

 

(g)                                 Indebtedness
of any person that becomes a Subsidiary of the Issuer, provided that such
Indebtedness exists at the time such Person becomes such a Subsidiary and is
not created in contemplation of or in connection with such Person becoming such
a Subsidiary; and

 

(h)                                 extensions,
renewals, modifications and replacements of any Indebtedness described above
that do not  (1) accelerate the
maturity date thereof to a date that occurs on or prior to the maturity date of
the Securities, (2) increase (excluding all fees and reasonable expenses
incurred and financed in connection therewith) the outstanding principal amount
of such Indebtedness over the amount of such Indebtedness (x) existing as
of the date of this Indenture (if such Indebtedness existed as of the date of
this Indenture) or (y) over the amount of such Indebtedness at the time it
was incurred (if such Indebtedness was incurred after the date of this
Indenture in compliance with this Section 5.11), or (3) accelerate
the scheduled amortization on such Indebtedness in a manner that, during the
period from the date of such extension, renewal, modification or replacement
through and including the maturity date of the Securities, would increase the
weighted average scheduled monthly debt service thereunder (x) over the
amount of the weighted average Scheduled Monthly Debt Service for such
Indebtedness for such 

 

54

 

period, if such
Indebtedness existed as of the date of this Indenture, or (y) over the
amount of the weighted average scheduled monthly debt service for such period
under such Indebtedness (assuming no change in the terms thereof after such
Indebtedness was first incurred), if such Indebtedness was incurred after the
date of this Indenture in compliance with this Section 5.11; provided, however, that
the preceding clause (3) shall not apply to any extension, renewal,
modification or replacement of any existing Indebtedness with respect to the
Cott Beverages Property or the GSA Property.

 

Section 5.12.                             Prohibited
Liens.  The Issuer agrees that it
shall not, and shall not permit any of its Subsidiaries to, create, incur,
assume or permit to exist any Lien on (1) the Collateral Accounts, the
Cash Equivalents on deposit in the Collateral Accounts and the other proceeds
at any time on deposit therein, (2) any equity interests owned by the
Issuer or any of its Subsidiaries in any Subsidiaries of the Issuer, or (3) any
inter-company debt among the Issuer and its Subsidiaries, other than (in each
of the foregoing instances) the following (each, a “Permitted Lien”):

 

(a)                                  Liens
in favor of the Trustee for its benefit and the benefit of the Holders;

 

(b)                                 Liens
for taxes, assessments or governmental charges or levies not yet due and
payable or delinquent and Liens for taxes, assessments or governmental charges
or levies which are being contested in good faith by appropriate proceedings
for which adequate reserves have been established in accordance with GAAP,
which proceedings (or orders entered in connection with such proceedings) have
the effect of preventing the forfeiture or sale of the property subject to any
such Lien;

 

(c)                                  Liens
in favor of a financial institution (under common or statutory law) encumbering
deposits (including the right of set off) held by such financial institution in
the ordinary course of its commercial business and that are within the general
parameters customary in the banking industry and do not secure indebtedness for
borrowed money;

 

(d)                                 Liens
arising out of judgments, attachments or awards not resulting in an Event of
Default;

 

(e)                                  with
respect to equity interests owned by the Issuer or any of its Subsidiaries,
Liens in favor of the holders of Indebtedness permitted under this Indenture,
so long as such Liens are limited to the equity of the relevant Subsidiary or
its parent that incurred such Indebtedness; and

 

(f)                                    with
respect to inter-company Indebtedness, liens in favor of the Issuer.

 

In addition, the Guarantors
shall not create, incur, assume or permit to exist any Lien on the  membership interests in the Issuer, other
than a Permitted Lien.

 

Section 5.13.                             Prohibited
Pre-Payments of Indebtedness.  The
Issuer shall not, and shall not permit any of its Subsidiaries to, use any
Realized Property Net Cash Flow to pre-pay principal on any Indebtedness of any
Triple Net Holdings Entity except (a) any payments (including reserves,
escrows and pre-payments) that are required by the terms of any Indebtedness
permitted by this Indenture, (b) payment in full of the applicable
Indebtedness in 

 

55

 

connection with, and with
the proceeds of, the transfer of a Property (or the equity interest in a
Subsidiary that holds a Property) that is permitted under this Indenture, (c) payment
in full of the applicable Indebtedness in connection with, and with the
proceeds of, any extension, renewal, modification or replacement of such
Indebtedness that is permitted under this Indenture, (d) payment in whole
or in part of the applicable Indebtedness with the proceeds of a Lease
Termination Payment, and (e) pre-payment in whole or in part of the
Securities, to the extent that such pre-payment is otherwise permitted by this
Indenture; provided, however,
that the restrictions in this Section 5.13 shall not apply to any Realized
Property Net Cash Flow that is deposited into the Cash Flow Sub Account and
subsequently withdrawn therefrom in accordance with Section 5.18.

 

Section 5.14.                             Prohibition
on Consensual Restrictions on Distributions.  The Issuer shall not, and shall not permit
any of its Subsidiaries to, create any consensual encumbrance or consensual
restriction on the ability of any such Subsidiary of the Issuer to (i) 
make any distributions on any of such Subsidiary’s equity interests owned by
the Issuer or by any other Subsidiary of the Issuer, (ii) repay or prepay
any Indebtedness owed by such Subsidiary to the Issuer or to any other
Subsidiary of the Issuer, (iii) make loans or advances to the Issuer or to
any other Subsidiary of the Issuer, or (iv) transfer any of its property
or assets to the Issuer or to any other Subsidiary of the Issuer, except (in
each of the above instances) (a) as required by the terms of any
Indebtedness existing as of the date of this Indenture, and (b) as
required by the terms of any new Indebtedness permitted by this Indenture, so
long as such terms are then customarily included in mortgage loans or mezzanine
loans that are similar to such new Indebtedness.

 

Section 5.15.                             Prohibition
on Asset Transfers.  The Issuer shall
not cause or permit (i) any Property Owning Entity to convey to a third
party (other than the Issuer or a wholly-owned Subsidiary thereof) such
Property Owning Entity’s interest in a Property, or (ii) any Triple Net
Holdings Entity to convey to a third party (other than Triple Net Holdings or a
wholly-owned Subsidiary thereof) such Triple Net Holdings Entity’s direct or
indirect ownership interest in a Property Owning Entity.  Notwithstanding anything to the contrary
contained in this Section:

 

(a)                                  provided
that an Event of Default is not then continuing nor would exist immediately
after giving effect thereto, any Property Owning Entity may convey its interest
in a Property to a third party (or any Triple Net Holdings Entity may convey to
a third party such Triple Net Holdings Entity’s direct or indirect ownership
interest the Property Owning Entity that holds an interest in such Property),
so long as, immediately after such conveyance, the following conditions (the “Automatic
Release Conditions”) are satisfied (and that satisfaction of such
conditions is certified to the Trustee pursuant to an Officer’s Certificate
setting forth the basis of all calculations, in each case, calculated as of the
proposed date of the transfer): (i) the Property Cost Coverage Ratio is at
least 1.5 to 1, and (ii) the Projected Cash Coverage Ratio is at least 1.5
to 1 (and, for the avoidance of doubt, no portion of the proceeds of such
conveyance shall be required to be deposited into the Collateral Accounts or
any sub-account thereof if the preceding clauses (i) and (ii) are
satisfied), and

 

(b)                                 provided
that an Event of Default is not then continuing nor would exist immediately
after giving effect thereto, any Property Owning Entity may convey its interest
in a 

 

56

 

Property to a third party
(or any Triple Net Holdings Entity may convey to a third party such Triple Net
Holdings Entity’s direct or indirect ownership interest in the Property Owning
Entity that holds an interest in such Property, including in connection with
the exercise of the Quantum Buy-Sell Provision), so long as (in cases where the
Automatic Release Conditions will not be satisfied immediately following such
conveyance) the net proceeds from such conveyance, after first deducting the
amount necessary to pay any Indebtedness (including any mezzanine loan
Indebtedness) associated with such Property and the aggregate transaction costs
(including any and all brokerage commissions, attorneys’ fees, defeasance
costs, prepayment penalties, transfer taxes and similar amounts, but
excluding  any brokerage commissions,
attorneys’ fees, defeasance costs, prepayment penalties, transfer taxes and
similar amounts that are payable to Affiliates of the Issuer other than
pursuant to the terms of any Indebtedness that is in existence on the date of
this Indenture) associated with such conveyance, are deposited into the Asset
Transfer Sub Account (such net proceeds, after deducting all such amounts and
costs, “Net Transfer Proceeds”).

 

Notwithstanding anything to
the contrary contained herein, in no event shall a foreclosure, deed-in-lieu of
foreclosure, exercise of a power of sale, or similar action by or on behalf of
the holder of any first mortgage loan or mezzanine loan with respect to any
Property constitute a breach of this Section 5.15; provided,
however ̧ that the Issuer shall cause any net proceeds actually
received by a Triple Net Holdings Entity in connection with any of the foregoing
actions described in this sentence to be deposited into the Asset Transfer
Sub-Account.

 

Section 5.16.                             Prohibition
on Change of Business.  The Issuer
will not, and will not permit any of its Subsidiaries to, engage in any
business activities other than the business engaged in by the Issuer and its
subsidiaries on the date of this Indenture and activities incidental to such
business.

 

Section 5.17.                             Deposits
into the Collateral Accounts.

 

(a)                                  On
the date of this Indenture, the Issuer shall deposit $4,600,000 into the
Interest Reserve Account.  Immediately
upon the issuance of any Additional Securities, the Issuer shall deposit an
amount equal to one semi-annual interest payment applicable to such Additional
Securities into the Interest Reserve Account.

 

(b)                                 For
each period that occurs from and after the date hereof (until the termination
of this Indenture), Triple Net Holdings shall cause all Aggregate Realized
Property Net Cash Flow for such period to be deposited into the Cash Flow
Sub-Account promptly after receipt thereof.

 

(c)                                  The
Issuer will make each deposit to the Asset Transfer Sub-Account required by Section 5.15(b) above.

 

(d)                                 If
any Property Owning Entity receives any Lease Termination Payment, then the
Issuer shall cause the Required Lease Termination Deposit Amount (if any) with
respect to such Lease Termination Payment to be deposited into the Lease
Termination Payment Sub Account promptly upon receipt thereof.

 

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Section 5.18.                             Withdrawals
from the Collateral Accounts.

 

(a)                                  Subject
to and in accordance with the terms of the Security Agreement, the Issuer shall
ensure that all amounts in the Collateral Accounts shall be invested at the
direction of the Issuer in Cash Equivalents.

 

(b)                                 So
long as no Event of Default is then continuing, the Issuer may from time to
time withdraw all amounts in the Interest Reserve Account that are in excess of
an amount equal to one semi-annual interest payment under the Securities.  The Issuer agrees that an amount equal to one
semi-annual interest payment under the Securities in the Interest Reserve
Account shall be deemed for all purposes to be unconditionally and irrevocably
owned by the Trustee for the benefit of the Trustee and the Holders, and the
Issuer shall have no right to remove or otherwise use such proceeds; provided, however, that upon the termination of this
Indenture pursuant to Section 9.01 below and the satisfaction of the
conditions set forth in Section 22(b) of the Security Agreement, any
remaining amounts then contained in the Interest Reserve Account (including, if
applicable, an amount equal to such semi-annual interest payment) shall be
returned to the Issuer, as provided in such Section 22(b).

 

(c)                                  So
long as no Event of Default is then continuing, the Issuer may, on a daily (or
less frequent) basis, withdraw all amounts in the Cash Flow Sub-Account.  In addition, during the continuance of an
Event of Default but prior to the acceleration of the Securities, the Issuer
may from time to time withdraw amounts from the Cash Flow Sub-Account to (1) pay
to the Holders all required interest payments under the Securities, and/or (2) pay
operating expenses, real estate taxes and ground rent payments that (A) pertain
to any Property, (B) are then due and payable (or will become due and
payable within the following 30 days), (C) are not payable (or, even if
payable, are not reasonably expected to be paid) by the tenants of Property,
and (D) except in the case of real estate taxes and ground rent, do not
exceed in any 30 day period the average monthly amount of the relevant
operating expenses for the 12 month period preceding the  applicable withdrawal date, as certified to
the Trustee pursuant to an Officer’s Certificate.

 

(d)                                 So
long as no Event of Default is then continuing, the Issuer may from time to
time withdraw all amounts in the Asset Transfer Sub-Account that are in excess
of the aggregate Net Transfer Proceeds deposited therein. In addition, the
Issuer may from time to time withdraw amounts in the Asset Transfer Sub-Account
to prepay the Securities, if such prepayment is otherwise permitted by this
Indenture.

 

(e)                                  If,
in connection with the conveyance of a Replaced Property (or the applicable
Triple Net Holdings Entity’s direct or indirect ownership interest in the
Property Owning Entity that held an interest in such Replaced Property), the
Net Transfer Proceeds from such conveyance are deposited into the Asset
Transfer Sub-Account, then such Net Transfer Proceeds may be withdrawn by the
Issuer or any wholly-owned Subsidiary thereof and used for (or as reimbursement
to the applicable Subsidiary for the amounts expended by such Subsidiary in
connection with) the acquisition by a Subsidiary that is wholly-owned directly
or indirectly by the Issuer of fee or leasehold title to (or one hundred
percent of the direct or indirect ownership interests in an entity that holds
fee or leasehold title to) a real property that satisfies the following
criteria, as reasonably determined by the Issuer and as certified to the
Trustee by an Officer’s Certificate (any such real property so acquired, a “Replacement
Property”; and the Replaced 

 

58

 

Property the Net Transfer Proceeds of which the Issuer desires to have
so withdrawn from the Asset Transfer Sub-Account, the “Designated Replaced
Property”):

 

(i)                                     each
space tenant of the proposed Replacement Property in question must be
responsible for paying (or reimbursing the applicable Property Owning Entity
for) such space tenant’s proportionate share of substantially all real estate
taxes and non-capital operating expenses incurred with respect to such
Replacement Property during the term of such space tenant’s lease;

 

(ii)                                  as
of the date of such acquisition of such Replacement Property, the space lease
for such Replacement Property must have an unexpired term that is equal to the
lesser of (x) ten years, and (y) the unexpired term, as of the date
of the conveyance of (or of the ownership interests of the applicable
Subsidiary in) the Designated Replaced Property in question, of the space lease
for such Designated Replaced Property that existed on the date of such
conveyance (with the understanding that if, at the time in question, there is
more than one space lease for such Designated Replaced Property and/or such
Replacement Property, then this clause (ii), and the applicable unexpired space
lease term comparison, shall be applied on a weighted average basis, based on
the rentable square footage covered by the relevant space leases);

 

(iii)                               the
Projected Available Cash for such Replacement Property must, for the first four
full calendar quarters immediately following the date of the acquisition of
such Replacement Property, be at least equal to the lesser of (x) what the
Projected Available Cash for such Designated Replaced Property would have been
for such first full calendar quarters if such Designated Replaced Property were
not conveyed as described above (and assuming that the space lease for such
Designated Replaced Property that is in effect on the date of this Indenture,
or if applicable any space lease that is executed after the date of this
Indenture in replacement of such space lease in effect as of the date hereof,
is in effect on the date of such acquisition of such Replacement Property and
that the tenant under such space lease is then in compliance with all of its
rental obligations thereunder), as reasonably determined by the Issuer, and (y) the
amount of Projected Available Cash for such Replacement Property for such first
full calendar quarters that is necessary for the Projected Cash Coverage Ratio
for such first full calendar quarters to be at least 1.5 to 1, as reasonably
determined by the Issuer;

 

(iv)                              the
aggregate mortgage loan financing and mezzanine loan financing (if any)
pertaining directly to such Replacement Property (immediately following the
acquisition thereof by the applicable Subsidiary) must not exceed eighty
percent (80%) of the aggregate cost (including the amount of any assumed debt)
to such Subsidiary for such Replacement Property (or, if applicable, for the
ownership interests in an entity that holds fee or leasehold title to such
Replacement Property); and

 

(v)                                 if,
as of the date of such conveyance of such Designated Replaced Property, the
space tenant of such Designated Replaced Property was Rated, then, as of the
date of the acquisition of such Replacement Property, the space tenant of such
Replacement Property must have a Rating that is equal to or greater than the
Rating of the space tenant of such Designated Replaced Property as of the date
of such conveyance 

 

59

 

(with the understanding
that if, at the time in question, there is more than one space tenant of such
Designated Replaced Property and/or such Replacement Property, then this clause
(v), and the applicable Rating comparison, shall be applied on a weighted
average basis, based on the rentable square footage leased to the relevant
space tenants).

 

(f)                                    So
long as no Event of Default is then continuing, the Issuer may from time to
time withdraw all amounts in the Lease Termination Payment Sub-Account that are
in excess of the aggregate Required Lease Termination Deposit Amounts deposited
therein. In addition, if any Required Lease Termination Deposit Amount is
deposited into the Lease Termination Payment Sub-Account, then the Issuer may
withdraw such Required Lease Termination Deposit Amount (i) on any date
when the Projected Cash Coverage Ratio is at least 1.5 to 1, as certified to
the Trustee pursuant to an Officer’s Certificate setting forth the basis of all
calculations, or (ii) from and after the date on which the applicable
Property Owning Entity has executed space leases covering at least ninety
percent (90%) of the rentable square footage of the space that was leased
pursuant to the space lease for which such Property Owning Entity received such
Required Lease Termination Deposit Amount.

 

(g)                                 The
Issuer acknowledges and agrees that the Interest Reserve Account is in the name
of and owned by the Trustee.

 

(h)                                 Notwithstanding
anything to the contrary contained herein, upon the termination of this
Indenture pursuant to Section 9.01 below and the satisfaction of the
conditions set forth in Section 22(b) of the Security Agreement, the
Issuer may withdraw all amounts then contained in the Operating Account, as
provided in such Section 22(b).

 

ARTICLE 6

CONSOLIDATION; MERGER; CONVEYANCE; TRANSFER OR LEASE

 

Section 6.01.                             Issuer
and the Guarantors May Consolidate, Etc., Only on Certain Terms.  Each of the Issuer, NRF, NRF LP and Sub-REIT
shall not (a) consolidate with or merge with or into any other Person or
sell, convey, lease or transfer the Issuer’s, NRF’s, NRF LP’s or Sub-REIT’s
properties and assets substantially as an entirety to any other Person in any
one transaction or series of related transactions, or (b) permit any
Person to consolidate with or merge into the Issuer, NRF, NRF LP or Sub-REIT,
unless:

 

(1)                                  in
the case of a merger or consolidation, the Issuer, NRF, NRF LP or Sub-REIT, as
applicable, is the surviving person or if the Issuer, NRF, NRF LP or Sub-REIT,
as applicable, is not the surviving person, the surviving person formed by such
consolidation or into which the Issuer, NRF, NRF LP or Sub-REIT, as applicable,
is merged or the person to which the Issuer’s, NRF’s, NRF LP’s or Sub-REIT’s,
as applicable, properties and assets are so transferred shall be an entity
organized and existing under the laws of the United States of America, any
state thereof or the District of Columbia and shall execute and deliver to the
Trustee a supplemental indenture expressly assuming, in the case of a
transaction involving the Issuer, the payment when due of the principal of and
interest on the Securities and the performance of the Issuer’s other covenants
under this Indenture; or

 

60

 

(2)                                  if
the successor person is the successor entity to NRF, NRF LP or Sub-REIT, the
successor person shall expressly assume, by supplemental indenture executed by
the successor person and delivered to the Trustee, the observance of all of the
covenants and conditions contained in the Guarantee of the Securities and in
this Indenture to be performed or observed by NRF, NRF LP or Sub-REIT, as applicable;
and

 

(3)                                  in
either case, (a) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing, and (b) an
Officer’s Certificate and legal opinion concerning the conditions precedent
will be delivered to the Trustee.

 

In the
event that the Issuer, NRF, NRF LP or Sub-REIT, as the case may be, is not the
continuing entity, then, for purposes of above, the references to the Issuer,
NRF, NRF LP or Sub-REIT shall be deemed to refer to the successor entity.

 

Section 6.02.                             Successor
Substituted.  Upon any consolidation
of the Issuer, NRF, NRF LP or Sub-REIT with, or merger of the Issuer, NRF, NRF
LP or Sub-REIT into, any other Person or any sale, conveyance, lease or
transfer of the Issuer’s, NRF’s, NRF LP’s or Sub-REIT’s properties and assets
substantially as an entirety to any other Person, in each case in accordance
with Section 6.01, the successor Person formed by such consolidation or
into which the Issuer, NRF, NRF LP or Sub-REIT is merged or to which such sale,
conveyance, lease or transfer is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Issuer, NRF, NRF LP or Sub-REIT
under this Indenture with the same effect as if such successor Person had been
named as the Issuer, NRF, NRF LP or Sub-REIT herein, and thereafter, except for
obligations the predecessor Person may have under a supplemental indenture, the
predecessor Person shall be relieved of all obligations and covenants under
this Indenture, the Securities and the Guarantees, as applicable.

 

ARTICLE 7

DEFAULT AND REMEDIES

 

Section 7.01.                             Events
of Default.  “Event of Default,”
wherever used herein with respect to the Securities, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule,
regulation of any administrative or governmental body):

 

(1)                                  default
by the Issuer in the payment of any interest upon any Security when it becomes
due and payable, and continuance of such default for a period of 30 days; or

 

(2)                                  default
by the Issuer in the payment of principal of or any premium, if any, on any
Securities on the Final Maturity Date; or

 

(3)                                  default
by the Issuer or a Guarantor in the performance, or breach, of any other
covenant in this Indenture for the benefit of the Securities and continuance of
such 

 

61

 

default or breach for a
period of 60 days after there has been given, by registered or certified
mail, to the Issuer or the applicable Guarantor by the Trustee or to the Issuer
or the applicable Guarantor and the Trustee by Holders of at least 25% in
principal amount of the Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a “Notice
of Default” hereunder; or

 

(4)                                  failure
by the Issuer to deliver the amount due upon an exchange of Securities (including,
if applicable, any Interest Make-Whole Payment), which failure continues for 10
days; or

 

(5)                                  failure
by the Issuer to provide notice of the occurrence of a Change in Control as
required by Section 3.01 hereof; or

 

(6)                                  default
by the Issuer or a Guarantor, as the case may be, under any bond, debenture,
note or other evidence of indebtedness for money borrowed by the Issuer or a
Guarantor, as the case may be, having an aggregate principal amount outstanding
of at least $25,000,000, or under any mortgage, indenture or instrument
(including this Indenture) under which there may be issued or by which there
may be secured or evidenced any indebtedness for money borrowed by the Issuer
having an aggregate principal amount outstanding of at least $25,000,000,
whether such indebtedness now exists or shall hereafter be created, which
default (A) shall constitute a failure to pay any portion of the principal
of such indebtedness when due and payable after the expiration of any
applicable grace period with respect thereto or (B) shall have resulted in
such indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable, without, in the case
of Clause (A), such indebtedness having been discharged or without, in the
case of Clause (B), such indebtedness having been discharged or such
acceleration having been rescinded or annulled, in each such case within a
period of 10 days after there shall have been given, by registered or certified
mail, to the Issuer and NRF by the Trustee or to the Issuer, NRF and the
Trustee by the Holders of at least 25% in principal amount of the Securities a
written notice specifying such default and requiring the Issuer or the
applicable Guarantor to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled, as the case may be, and stating that
such notice is a “Notice of Default” hereunder; provided,  that, subject to the provisions of Sections
8.01 and 8.02 hereof, the Trustee shall not be deemed to have knowledge of such
default unless either (A) a Responsible Officer of the Trustee shall have
knowledge of such default or (B) the Trustee shall have received written
notice thereof from the Issuer, from a Guarantor, from any Holder, from the
holder of any such indebtedness or from the trustee under any such mortgage,
indenture or other instrument; or

 

(7)                                  the
Issuer or a Guarantor, as the case may be, fails to pay a final, non-appealable
judgment entered by a court of competent jurisdiction against the Issuer or a
Guarantor, as the case may be, in excess of $25,000,000, which judgment is not
paid, discharged or stayed within 30 days after such judgment becomes final and
non-appealable;

 

62

 

(8)                                  the
entry by a court having jurisdiction in the premises of (A) a decree or
order for relief in respect of the Issuer or a Guarantor in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Issuer or a Guarantor a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of or
in respect of the Issuer or a Guarantor under any applicable Federal or State
law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Issuer or a Guarantor of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of
60 consecutive days;

 

(9)                                  the
commencement by the Issuer or a Guarantor of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Issuer, a Guarantor, or any of the Guarantors’
Significant Subsidiaries that are not CDO Subsidiaries in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable Federal
or State law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Issuer, a
Guarantor or any of such Significant Subsidiaries that are not CDO Subsidiaries
or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due, or the taking of
corporate action by the Issuer, a Guarantor or any of such Significant
Subsidiaries that are not CDO Subsidiaries in furtherance of any such action;
or

 

(10)                            the
Security Agreement or any lien purported to be created under the Security
Agreement shall cease to be, or shall be asserted by the Issuer or a Guarantor
not to be, a valid and perfected first priority lien on the Blocked Account and
related collateral; or

 

(11)                            either
(A) the entry by a court having jurisdiction in the premises of (1) a
decree or order for relief in respect of a CDO Subsidiary in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (2) a decree or order
adjudging a CDO Subsidiary a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of a CDO Subsidiary under any applicable Federal or State law,
or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of a CDO Subsidiary of any substantial
part of its property, or ordering the winding up or liquidation of its affairs,
and the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days, or (B) the commencement by a CDO Subsidiary of a voluntary case or
proceeding under any applicable Federal or State 

 

63

 

bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of a CDO Subsidiary, in an involuntary
case or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable Federal
or State law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the CDO Subsidiary
or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due, or the taking of
corporate action by the CDO Subsidiary in furtherance of any such action (any
such filing or event described in the foregoing, a “Reference Event”); provided, however, in each case, that it shall be an Event
of Default under this Section 7.01(11) only if  the potential loss in the case of a complete
loss of the NRF’s capital at risk in such CDO Subsidiary, together with such
potential losses from any other CDO Subsidiaries that have filed for bankruptcy
or commenced such other events described in this Section 7.01(11) within a
period of 90 days prior to a Reference Event, exceeds 10% of the Consolidated
Net Assets of NRF as of the fiscal quarter immediately prior to the date of the
Reference Event.  For purposes of this Section 7.01(11),
“Consolidated Net Assets” means the excess of consolidated assets over
consolidated liabilities.

 

Section 7.02.                             Acceleration.  If an Event of Default (other than an Event
of Default specified in clause (8), (9) or (11) of Section 7.01)
occurs and is continuing, then in every such case the Trustee, upon receipt of
a request made in accordance with Section 12.01, from the Holders of not
less than 25% in principal amount of the Securities then outstanding, may, by
written notice to the Issuer and the Guarantors (and to the Trustee if given by
the Holders), declare the outstanding principal amount as of the date of
declaration on all the Securities to be immediately due and payable. Upon such
a declaration, such principal amount and such accrued and unpaid interest
thereon, if any, shall be due and payable immediately.  If an Event of Default specified in clause
(8), (9) or (11) of Section 7.01 occurs and is continuing, the
principal amount of the Securities shall automatically, become immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holders of Securities.  At any time
after such a declaration of acceleration with respect to the Securities has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the
Holders of not less than a majority in principal amount of the Securities, by
written notice to the Issuer, the Guarantors and the Trustee, may rescind and
annul such declaration and its consequences if:

 

(1)                                  the
Issuer or any Guarantor has paid or deposited with the Trustee a sum sufficient
to pay:

 

(A)                              all overdue installments
of interest on all outstanding Securities,

 

64

 

(B)                                the principal of any
outstanding Securities which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate or rates borne by or provided
for in the Securities,

 

(C)                                to the extent that
payment of such interest is lawful, interest upon overdue installments of
interest at the rate or rates borne by or provided for in the Securities, and

 

(D)                               all sums paid or
advanced by the Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel; and

 

(2)                                  all
Events of Default with respect to the Securities, other than the nonpayment of
the principal of (or specified portion thereof) or interest on the Securities
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 7.04.

 

No such rescission shall
affect any subsequent default or impair any right consequent thereon.

 

Notwithstanding
anything herein to the contrary, to the extent elected by the Issuer, the sole
remedy for an Event of Default relating to the failure by the Issuer to comply
with the obligation set forth in Section 5.03(b), will for the first 90
days after the occurrence of such an Event of Default, consist exclusively of
the right for Holders to receive additional interest on the Securities equal to
0.25% per annum of the principal amount of the Securities.  If the Issuer so elects, such additional
interest will be payable in the same manner and on the same dates as the stated
interest payable on the Securities.  The
additional interest will accrue on all outstanding Securities from and including
the date on which such Event of Default first occurs to but not including the
90th day thereafter (or such earlier date on which such Event of Default shall
have been cured or waived). On such 90th day after such Event of Default (if
the Event of Default relating to such obligation is not cured or waived prior
to such 90th day),
the Securities will be subject to acceleration as provided above.  The provisions of this paragraph will not
affect the rights of Holders in the event of the occurrence of any other Event
of Default.  In the event the Issuer does
not elect to pay the additional interest upon such Event of Default in
accordance with this paragraph, the Securities will be subject to acceleration
as provided above.

 

In
order to elect to pay the additional interest as the sole remedy during the
first 90 days after the occurrence of an Event of Default relating to the
failure by the Issuer to comply with the obligation set forth in Section 5.03(b) in
accordance with the immediately preceding paragraph, the Issuer must notify all
Holders, the Trustee and the Paying Agent of such election.  Upon the Issuer’s failure to give timely such
notice or pay the additional interest specified in the immediately preceding
paragraph, the Securities will be subject immediately to acceleration as
provided above.

 

Section 7.03.                             Other
Remedies.

 

(a)                                  If
an Event of Default occurs and is continuing, the Trustee may, but shall not be
obligated to, pursue any available remedy by proceeding at law or in equity to
collect payment of 

 

65

 

the principal amount and accrued and unpaid interest, if any, on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.

 

(b)                                 The
Trustee may maintain a proceeding even if it does not possess any of the
Securities or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any
Holder in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default.  No remedy is
exclusive of any other remedy.  All
available remedies are cumulative to the extent permitted by applicable law.

 

Section 7.04.                             Waiver
of Defaults and Events of Default. 
Subject to Sections 7.07 and 10.02, the Holders of no less than a
majority in aggregate principal amount of the Securities then outstanding by
written notice to the Trustee may waive any past Default or Event of Default
and its consequences, except an uncured Default or Event of Default in the
payment of the principal of or any accrued but unpaid interest on any Security,
or any Default or Event of Default in respect of any provision of this
Indenture which, under Section 10.02, cannot be modified or amended
without the consent of the Holder of each outstanding Security affected.  When a Default or Event of Default is waived,
it is cured and ceases to exist.

 

Section 7.05.                             Limitations
on Suits.

 

(a)                                  A
Holder may not pursue any remedy with respect to this Indenture or the
Securities (except actions for payment of overdue principal or interest or for
the exchange of the Securities pursuant to Article 4) unless:

 

(1)                                  the
Holder gives to the Trustee written notice of a continuing Event of Default;

 

(2)                                  the
Holders of at least 25% in aggregate principal amount of the then outstanding
Securities make a written request to the Trustee to pursue the remedy;

 

(3)                                  such
Holder or Holders offer to the Trustee reasonable security or indemnity to the
Trustee against any loss, liability or expense;

 

(4)                                  the
Trustee does not comply with the request within 60 days after receipt of the
request and the offer of security or indemnity; and

 

(5)                                  no
direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority in aggregate principal
amount of the Securities then outstanding.

 

(b)                                 No
Holder of a Security shall have any right under any provision of this Indenture
or the Securities to affect, disturb, or prejudice the rights of another Holder
of a Security or to obtain a preference or priority over another Holder of a
Security.

 

Section 7.06.                             Rights
of Holders to Receive Payment and to Exchange.  Notwithstanding any other provision of this
Indenture, the right of any Holder of a Security to receive payment of the
principal or interest in respect of the Securities held by such Holder, on or 

 

66

 

after the respective due dates expressed in the Securities and this
Indenture (whether upon repurchase or otherwise), and to exchange such Security
in accordance with Article 4, and to bring suit for the enforcement of any
such payment on or after such respective due dates or for the right to exchange
in accordance with Article 4, is absolute and unconditional and shall not
be impaired or affected without the consent of the Holder.

 

Section 7.07.                             Collection
Suit by Trustee.  If an Event of
Default described in clause (1) or (2) of Section 7.01 occurs
and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Issuer or another obligor on the
Securities for the whole amount owing with respect to the Securities and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

 

Section 7.08.                             Trustee
May File Proofs of Claim.  The
Trustee may, but is not required to, file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the Holders
allowed in any judicial proceedings relative to the Issuer or the Guarantors
(or any other obligor on the Securities), its creditors or its property and
shall be entitled and empowered to collect and receive any money or other
property payable or deliverable on any such claims and to distribute the same,
and any receiver in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due to the Trustee under Section 8.07, and to the extent
that such payment of the reasonable compensation, expenses, disbursements and
advances in any such proceedings shall be denied for any reason, payment of the
same shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other property which the
Holders may be entitled to receive in such proceedings, whether in liquidation
or under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to,
or, on behalf of any Holder, to authorize, accept or adopt any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

 

Section 7.09.                             Priorities.

 

(a)                                  If
the Trustee collects any money pursuant to this Article 7, it shall pay
out the money in the following order:

 

(1)                                  First,
to the Trustee for amounts due under Section 8.07 and amounts due under
the Security Agreement and amounts due the depositary under the Control
Agreements, including, without limitations, payment of all compensation,
expenses and liabilities incurred, and all advances made, by the Trustee and
the costs and expenses of collection;

 

67

 

(2)           Second,
to Holders for amounts due and unpaid on the Securities for the principal and
interest, as applicable, ratably, without preference or priority of any kind,
according to such respective amounts due and payable on the Holders’
Securities; and

 

(3)           Third,
the balance, if any, to the Issuer.

 

(b)           The Trustee may fix a
record date and payment date for any payment to Holders pursuant to this Section 7.09.

 

Section 7.10.          Undertaking for Costs.  In any suit for the enforcement of any right
or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys’ fees and expenses, against any party litigant
in the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section 7.10 does not apply to a
suit made by the Trustee, a suit by a Holder pursuant to Section 7.07, or
a suit by Holders of more than 25% in aggregate principal amount of the
Securities then outstanding.

 

Article 8

TRUSTEE

 

Section 8.01.          Obligations of
Trustee.

 

(a)           If an Event of Default
of which a Responsible Officer of the Trustee shall have actual knowledge has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.

 

(b)           Except during the
continuance of an Event of Default of which a Responsible Officer of the
Trustee shall have actual knowledge:

 

(1)           the
Trustee need perform only those duties as are specifically set forth in this
Indenture and no others and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and

 

(2)           in the
absence of bad faith on its part, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Trustee.  The Trustee, however, shall examine any
certificates and opinions which by any provision hereof are specifically
required to be delivered to the Trustee to determine whether or not they
conform to the requirements of this Indenture, but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated
therein.

 

68

 

(c)           The Trustee may not be
relieved from liability for its own grossly negligent action, its own grossly
negligent failure to act, or its own willful misconduct, except that:

 

(1)           this paragraph
does not limit the effect of Section 8.01(b);

 

(2)           the
Trustee shall not be liable in its individual capacity for any error of
judgment made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and

 

(3)           the
Trustee shall not be liable in its individual capacity with respect to any
action it takes or omits to take in good faith in accordance with any direction
from the Issuer, a Guarantor or the Holders permitted or required under this
Indenture.

 

(d)           Subject to the
provisions hereof relating to the Trustee’s duties in case of an Event of
Default, the Trustee shall be under no obligation to exercise any of its rights
or powers under the Indenture at the request or direction of any Holders then
outstanding hereunder, unless the Holders shall have offered to the Trustee
security or indemnity reasonably satisfactory to the Trustee against the costs,
expenses (including reasonable attorneys’ fees and expenses) and liabilities
that might be incurred by it in compliance with such request or direction.  The Holder of not less than a majority in
principal amount of the outstanding Securities (or of all Securities then
outstanding, as the case may be) shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or of exercising any trust or power conferred upon the Trustee; provided that the Trustee may refuse to follow any direction
which is in conflict with applicable law or this Indenture, or which may be
unduly prejudicial to the Holders not joining therein.

 

(e)           Every provision of this
Indenture that in any way relates to the Trustee is subject to subsections (a),
(b), (c), (d), (f), (g) and (h) of this Section 8.01.

 

(f)            The Trustee shall not
be liable for interest on any money received by it except as the Trustee may
agree in writing with the Issuer.  Money
held in trust by the Trustee need not be segregated from other funds except to
the extent required by law.

 

(g)           Notwithstanding the
foregoing, no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.

 

(h)           The provisions of this
Indenture, to the extent that they restrict the duties and liabilities of the
Trustee otherwise existing at law or in equity, are agreed to by the Issuer and
the Holders to replace such other duties and liabilities of the Trustee to the
extent permitted by applicable law.

 

(i)            The Issuer hereby
directs the Trustee to enter into the Security Agreement and the Control
Agreements.

 

69

 

Section 8.02.          Rights of Trustee.

 

(a)           Subject to Section 8.01:

 

(1)           the
Trustee may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties.

 

(2)           any
request or direction of the Issuer or any Guarantor mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer Order or NRF Request or
NRF Order, as the case may be, and any action of the Board of Directors shall
be sufficiently evidenced by a resolution or other evidence of action of NRF.

 

(3)           whenever
in the administration of this Indenture the Trustee shall deem it desirable
that a matter be proved or established prior to taking, suffering or omitting
any action hereunder, the Trustee may, in the absence of bad faith on its part,
rely upon an Officer’s Certificate.

 

(4)           the
Trustee may consult with counsel of its selection and the advice of such
counsel (to be confirmed in writing) or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.

 

(5)           the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall have offered to
the Trustee reasonable security or indemnity reasonably satisfactory to the Trustee
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction.

 

(6)           the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Issuer and the Guarantors, personally or by agent
or attorney.

 

(7)           the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.

 

70

 

(8)           the
Trustee shall not be liable for any action taken, suffered, or omitted to be
taken by it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture.

 

(9)           the
Trustee shall not be deemed to have notice of any Default or Event of Default
unless a Responsible Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is received
by the Trustee at the Corporate Trust Office of the Trustee, and such notice
references the Securities and this Indenture.

 

(10)         the rights,
privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to,
and shall be enforceable by, the Trustee in each of its capacities hereunder,
including, without limitation, as Paying Agent, Registrar, Securities Custodian
and Exchange Agent.

 

(11)         the Trustee
may request that the Issuer and/or the Guarantors deliver an Officer’s
Certificate setting forth the names of individuals and or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officer’s Certificate may be signed by any person authorized to sign an
Officer’s Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.

 

Section 8.03.          Individual Rights of
Trustee.  The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Issuer or an Affiliate of the Issuer with the
same rights it would have if it were not Trustee.  Any Agent may do the same with like
rights.  However, the Trustee is subject
to Sections 8.10 and 8.11.

 

Section 8.04.          Trustee’s Disclaimer.  The Trustee makes no representation as to the
validity or adequacy of this Indenture or the Securities and the Trustee
assumes no responsibility for their correctness.  It shall not be accountable for the Issuer’s
use of the proceeds from the Securities and it shall not be responsible for any
statement in the Securities other than its certificate of authentication.

 

Section 8.05.          Notice of Default or
Events of Default.  If a Default or
an Event of Default occurs and is continuing and if it is known to the Trustee
in the manner described in Section 8.02(a)(9), the Trustee shall send to
each Holder of a Security notice of all uncured Defaults or Events of Default
known to it within 90 days after it occurs or, if later, within
15 days after it becomes known to the Trustee.  However, the Trustee may withhold the notice
if and for so long as a committee of its Trust Officers in good faith determines
that withholding notice is in the interests of Holders of Securities, except in
the case of a Default or an Event of Default in payment of the principal of or
interest on any Security when due or in the payment of any redemption or
purchase obligation, or the Issuer’s failure to exchange Securities when
obligated to exchange them.

 

71

 

Section 8.06.          Reports by Trustee to
Holders.

 

(a)           If a report would be
required by Trust Indenture Act (“TIA”) Section 313, if this
Indenture were qualified thereunder, within 60 days after each July 15,
beginning with July 15, 2008, the Trustee shall mail to each Holder of
Securities a brief report dated as of such July 15 that complies with TIA Section 313(a).  If required by TIA Section 313 were this
Indenture qualified thereunder, the Trustee also shall comply with TIA Sections
313(b)(2) and (c).

 

(b)           A copy of each report
at the time of its mailing to Holders of Securities shall be mailed to the
Issuer and the Guarantors and, to the extent required by the TIA, filed with
the SEC, and each stock exchange, if any, on which the Securities are
listed.  The Issuer or the Guarantors
shall notify the Trustee whenever the Securities become listed on any stock
exchange or listed or admitted to trading on any quotation system and any
changes in the stock exchanges or quotation systems on which the Securities are
listed or admitted to trading and of any delisting thereof.

 

Section 8.07.          Compensation and
Indemnity.

 

(a)           The Issuer shall pay to
the Trustee from time to time pursuant to an agreement between the Issuer and
the Trustee such compensation (as agreed to from time to time by the Issuer and
the Trustee in writing) for its services (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust).  The Issuer shall
reimburse the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. 
Such expenses may include the reasonable compensation, disbursements and
expenses of the Trustee’s agents and counsel.

 

(b)           The Issuer shall
indemnify the Trustee or any predecessor Trustee (which for purposes of this Section 8.07
shall include its officers, directors, employees and agents) for, and hold it
harmless against, any and all loss, liability or expense including taxes (other
than franchise taxes and taxes based upon, measured by or determined by the
income of the Trustee), incurred by it, arising out of or in connection with the
acceptance or administration of its duties under this Indenture or any action
or failure to act as authorized or within the discretion or rights or powers
conferred upon the Trustee hereunder including the reasonable costs and
expenses of the Trustee (including reasonable legal fees and expenses) in
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.  The Trustee shall notify the Issuer promptly
of any claim asserted against the Trustee for which it may seek indemnity.  The Issuer need not pay for any settlement
effected without its prior written consent, which consent shall not
unreasonably be withheld.  Anything in
this Indenture to the contrary notwithstanding, in no event shall the Trustee
be liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Trustee has
been advised of the likelihood of such loss or damage and regardless of the form
of action.

 

(c)           The Issuer need not
reimburse the Trustee for any expense or indemnify it against any loss or
liability incurred by it resulting from its gross negligence, willful
misconduct or bad faith.

 

72

 

(d)           Without prejudice to
any other rights available to the Trustee under applicable law, when the
Trustee incurs expenses or renders services after an Event of Default specified
in clause (8), (9) or (11) of Section 7.01 occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any bankruptcy law. 
The provisions of this Section shall survive the termination of
this Indenture.

 

(e)           The provisions of this Section 8.07
shall survive the satisfaction and discharge of this Indenture or the
resignation or removal of the Trustee.

 

(f)            To secure the Issuer’s
payment obligations in this Section 8.07, the Issuer hereby grants to the
Trustee a lien prior to the Securities on all money or property held or collected
by the Trustee, other than money or property held in trust to pay principal and
interest on particular Securities.  Such
lien shall survive the satisfaction and discharge of this Indenture or the
resignation or removal of the Trustee.

 

Section 8.08.          Replacement of
Trustee.

 

(a)           The Trustee may resign
by so notifying the Issuer and the Guarantors. 
The Holders of a majority in aggregate principal amount of the
Securities then outstanding may remove the Trustee by so notifying the Trustee,
the Issuer, and the Guarantors and may, with the Issuer’s written consent,
appoint a successor Trustee.  The Issuer
may remove the Trustee at any time, so long as no Default or Event of Default
has occurred and is continuing, and appoint a Successor Trustee in accordance
with this Section 8.08.

 

(b)           If the Trustee resigns
or is removed or if a vacancy exists in the office of Trustee for any reason,
the Issuer shall promptly appoint a successor Trustee.  If the Issuer fails to promptly appoint a
successor Trustee, the Trustee shall have the right to choose a qualified
Trustee as successor, and the Issuer shall appoint such successor as
Trustee.  The resignation or removal of a
Trustee shall not be effective until a successor Trustee shall have delivered
the written acceptance of its appointment as described below.

 

(c)           If a successor Trustee
does not take office within 30 days after the retiring Trustee resigns or is
removed, the retiring Trustee, the Issuer or the Holders of 10% in principal
amount of the Securities then outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee at the expense of the
Issuer.

 

(d)           If the Trustee fails to
comply with Section 8.10, any Holder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

 

(e)           A successor Trustee
shall deliver a written acceptance of its appointment to the retiring Trustee,
the Issuer, and the Guarantors. 
Immediately after that, the retiring Trustee shall transfer all property
held by it as Trustee to the successor Trustee and be released from its
obligations (exclusive of any liabilities that the retiring Trustee may have
incurred while acting as Trustee) hereunder, the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture.  A successor Trustee shall mail notice of its
succession to each Holder.

 

73

 

(f)            A retiring Trustee
shall not be liable for the acts or omissions of any successor Trustee after
its succession.

 

(g)           Notwithstanding
replacement of the Trustee pursuant to this Section 8.08, the Issuer’s
obligations under Section 8.07 shall continue for the benefit of the
retiring Trustee.

 

Section 8.09.          Successor Trustee by
Merger, Etc.  If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business (including the administration of this
Indenture) to, another corporation, the resulting, surviving or transferee
corporation, without any further act, shall be the successor Trustee; provided
such transferee corporation shall qualify and be eligible under Section 8.10.  Such successor Trustee shall promptly mail
notice of its succession to the Issuer and each Holder.

 

Section 8.10.          Eligibility of
Trustee.  There shall at all times be
a Trustee hereunder which shall be a Person that is eligible pursuant to the
Trust Indenture Act to act as such and has a combined capital and surplus of at
least $50,000,000 (or if such Person is a member of a bank holding company
system, its bank holding company shall have a combined capital and surplus of
at least $50,000,000). If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of any supervising or
examining authority, then for the purposes of this Section the combined
capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
If at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.10, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.

 

Section 8.11.          Conflicting Interests
of Trustee.  If the Trustee has or
shall acquire a conflicting interest within the meaning of the Trust Indenture
Act, the Trustee shall either eliminate such interest or resign, to the extent
and in manner provided by, and subject to the provisions of, the Trust
Indenture Act and this Indenture.

 

Section 8.12.          Preferential
Collection of Claims Against Issuer. 
If and when the Trustee shall be or become a creditor of the Issuer (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of the claims
against the Issuer (or any such obligor).

 

Article 9

SATISFACTION AND DISCHARGE OF INDENTURE

 

Section 9.01.          Discharge of
Indenture.

 

This Indenture shall cease to be of further effect (except as to any
surviving rights of exchange, registration of transfer or exchange of
Securities herein expressly provided for and except as further provided below),
and the Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when (a) either: (1) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost or
stolen and which have been replaced or paid as 

 

74

 

provided in Section 2.09 and (ii) Securities
for whose payment monies have theretofore been deposited in trust and
thereafter repaid to the Issuer as provided in Section 9.04) have been
delivered to the Trustee for cancellation; or (2) all such Securities not
theretofore delivered to the Trustee for cancellation (i) have become due
and payable, whether at the Final Maturity Date, Redemption Date or the Change
in Control Purchase Date, or upon exchange or otherwise, or (ii) are to be
called for redemption under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and at the expense,
of the Issuer, and the Issuer, the Guarantors, in the case of clause (1) or
(2) above, has irrevocably deposited or caused to be irrevocably deposited
with the Trustee a Paying Agent or the Exchange Agent (other than the Issuer or
any of its Affiliates), as applicable, as trust funds in trust cash and/or
shares of Common Stock (as applicable under the terms of the Indenture) in an
amount sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation, for
principal and interest to the date of such deposit (in the case of Securities
which have become due and payable) or to the Final Maturity Date, the
Redemption Date or the Change in Control Purchase Date, as the case may be; provided, that there shall not exist, on the date of such
deposit, an Event of Default; provided, further, that such deposit shall not result in a breach or
violation of, or constitute a default under, this Indenture or any other
material agreement or instrument to which the Issuer, or any Guarantor is a
party or to which the Issuer or any Guarantor, as the case may be, is bound; (b) the
Issuer or any Guarantor has paid or caused to be paid all other sums payable
hereunder and under the Security Agreement and the Control Agreements by the
Issuer or the Guarantors, as the case may be; and (c) the Issuer has
delivered to the Trustee an Officer’s Certificate stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.

 

Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the Issuer
to the Trustee under Section 8.07 shall survive and, if monies shall have
been deposited with the Trustee pursuant to subclause (2) of clause (a) of
this Section, the provisions of Sections 2.05, 2.08, 2.09, 3.04, 3.05,
5.01, 5.02 and this Article 9 shall survive until the Securities have been
paid in full.

 

Section 9.02.          Deposited Monies to
Be Held in Trust by Trustee.  Subject
to Section 9.04, all monies deposited with the Trustee pursuant to Section 9.01
shall be held in trust for the sole benefit of the Holders, and such monies
shall be applied by the Trustee to the payment, either directly or through any
Paying Agent (including the Issuer or any Guarantor if acting as its own Paying
Agent), to the Holders of the particular Securities for the payment or
redemption of which such monies have been deposited with the Trustee, of all
sums due and to become due thereon for principal and interest. All monies
deposited with the Trustee pursuant to Section 9.01 (and held by it or any
Paying Agent) for the payment of Securities subsequently exchanged shall be
returned to the Issuer upon request. The Trustee is not responsible to anyone
for interest on any deposited funds except as agreed in writing.

 

Section 9.03.          Paying Agent to Repay
Monies Held.

 

Subject
to the provisions of Section 9.04, the Trustee or a Paying Agent shall
hold in trust, for the benefit of the holders, all monies deposited with it
pursuant to Sections 3.01, 3.02 and 11.01 and shall apply the deposited
monies in accordance with this Indenture and the Securities to the payment of
the principal of and interest on the Securities.

 

75

 

Section 9.04.          Return of Unclaimed
Monies.  The Trustee and each Paying
Agent shall pay to the Issuer upon request any monies held by them for the
payment of principal or interest that remains unclaimed for two years after a
right to such monies have matured; provided, however, that the Trustee or such Paying Agent, before being
required to make any such payment, may, at the expense of the Issuer, either
publish in a newspaper of general circulation in The City of New York, or cause
to be mailed to each Holder entitled to such monies, notice that such monies
remains unclaimed and that after a date specified therein, which shall be at
least 30 calendar days from the date of such mailing or publication, any
unclaimed balance of such monies then remaining will be repaid to the Issuer.
After payment to the Issuer, Holders entitled to monies must look to the Issuer
for payment as general creditors unless an applicable abandoned property law
designates another person, and the Trustee and each Paying Agent shall be
relieved of all liability with respect to such monies.

 

Section 9.05.          Reinstatement.  If the Trustee or the Paying Agent is unable
to apply any monies in accordance with Section 9.02 by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuer’s obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 9.01 until such time as the Trustee
or the Paying Agent is permitted to apply all such monies in accordance with Section 9.02;
provided that if the Issuer makes any
payment of principal of or interest on any Security following the reinstatement
of its obligations, the Issuer shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the monies held by the Trustee
or Paying Agent.

 

Article 10

AMENDMENTS; SUPPLEMENTS AND WAIVERS

 

Section 10.01.        Without Consent of
Holders.  Without the consent of any
Holders, the Issuer, the Guarantors and the Trustee may enter into an indenture
to indentures supplemental hereto for any of the following purposes:

 

(a)           to evidence a successor
to the Issuer or any Guarantor under this Indenture;

 

(b)           to add to the covenants
of the Issuer or the Guarantors for the benefit of the Holders or to surrender
any right or power conferred upon the Issuer or the Guarantors in this
Indenture or the Security Agreement;

 

(c)           to add any additional
Events of Default for the benefit of the Holders of all the Securities;

 

(d)           to amend or supplement
any provisions of this Indenture; provided that
no amendment or supplement shall adversely affect the interests of the Holders
of any Securities then outstanding in any material respect;

 

(e)           to permit or facilitate
the issuance of the Securities in uncertificated form, provided that such
action shall not adversely affect the interests of the Holders in any material
respect.

 

76

 

(f)            to further secure the
Securities or the Guarantees;

 

(g)           to evidence and provide
for the acceptance of appointment by a successor Trustee and to add to or
change any of the provisions of this Indenture as is necessary to provide for
or facilitate the administration of the trusts under this Indenture by more
than one Trustee;

 

(h)           to provide for rights
of Holders if any reclassification or change of Common Stock or any
consolidation, merger or sale of all or substantially all of the property or
assets of the Issuer or any Guarantor occurs;

 

(i)            to cure any ambiguity,
defect or inconsistency in, or supplement, this Indenture provided that such
action shall not adversely affect the interests of Holders in any material
respect;

 

(j)            to supplement any of
the provisions of this Indenture to the extent necessary to defease and/or
discharge the Securities under this Indenture, provided
that the action shall not adversely affect the interests of the Holders in any
material respect;

 

(k)           to modify the Indenture
and the Securities to increase the Exchange Rate or reduce the Exchange Price; provided that the increase or reduction, as the case may be,
is in accordance with the terms of the Securities or will not adversely affect
the interests of the Holders; or

 

(l)            to conform the text of
this Indenture or the Securities to any provision of the “Description of Notes”
section of the Offering Circular dated May 22, 2008 pursuant to which the
Securities were offered and sold to the extent that such provision in the “Description
of Notes” section reflects a verbatim recitation of a provision of this
Indenture or the Securities.

 

Section 10.02.        With Consent of Holders.

 

(a)           The Issuer and the
Trustee may amend or supplement this Indenture or the Securities with the
written consent of the Holders of not less than a majority in aggregate
principal amount of the Securities then outstanding and affected by such
amendment or supplement (voting together as a single class).  However, subject to Section 10.01
hereof, without the written consent of each Holder affected, an amendment,
supplement or waiver may not:

 

(i)            change
the stated maturity of the principal of, or any installment of principal of, or
interest on, the Securities;

 

(ii)           reduce
the principal amount of, the rate of interest or the premium payable upon the
redemption of the Securities;

 

(iii)          change
the timing for, or reduce any amount (including accrued interest and premium,
if any) payable upon, the repurchase or redemption of the Securities;

 

(iv)          change the
currency of any payment of the Securities;

 

77

 

(v)           change the place of
payment on the Securities;

 

(vi)          impair a holder’s right
to sue for the enforcement of any payment on or with respect to the Securities
or the delivery of the exchange value as required by this Indenture upon an
exchange of Securities;

 

(vii)         reduce the percentage of
principal amount of outstanding Securities necessary to modify or amend this
Indenture, to waive compliance with certain provisions thereof or certain
defaults and consequences thereunder;

 

(viii)        modify any of the foregoing
provisions or any of the provisions relating to the waiver of certain past
defaults or certain covenants, except to increase the required percentage to
effect the action or to provide that certain other provisions may not be
modified or waived without the consent of the Holders;

 

(ix)           modify the provisions
with respect to the rights of the Holders upon a Change in Control in a manner
adverse to the Holders, including the Issuer’s obligation to repurchase the
Securities following a Change in Control; or

 

(x)            adversely affect the
rights of Holders to receive payment of shares of Common Stock or cash
contained in Articles 3 and 4 hereof.

 

(b)           After an amendment,
supplement or waiver under this Section 10.02 becomes effective, the
Issuer shall promptly send to the Holders affected thereby a notice briefly
describing the amendment, supplement or waiver. 
Any failure of the Issuer to send such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amendment, supplement or waiver.

 

(c)           For purposes of this
Indenture, Securities will be deemed outstanding if they have been
authenticated and delivered under this Indenture unless, among other things,
the Securities have matured or been cancelled, exchanged, redeemed or
repurchased.

 

Section 10.03.        Revocation and Effect of Consents.

 

(a)           Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder’s
Security, even if notation of the consent is not made on any Security.  However, any such Holder or subsequent Holder
may revoke the consent as to its Security or portion of a Security if the
Trustee receives the notice of revocation before the date the amendment,
supplement or waiver becomes effective.

 

(b)           After an amendment,
supplement or waiver becomes effective, it shall bind every Holder of a
Security.

 

Section 10.04.        Notation on or Exchange of Securities.  If an amendment, supplement or waiver changes
the terms of a Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee.  The Trustee
may place an appropriate notation on the Security about the changed terms and
return it to the Holder.  Alternatively,
if the Issuer or the 

 

78

 

Trustee so determines, the Issuer in exchange for the Security shall
issue and the Trustee shall authenticate a new Security that reflects the
changed terms.

 

Section 10.05.        Trustee to Sign Amendments, Etc.  The Trustee shall sign any amendment or
supplemental indenture authorized pursuant to this Article 10 if the
amendment or supplemental indenture does not adversely affect the rights,
duties, liabilities or immunities of the Trustee.  If it does, the Trustee may, in its sole
discretion, but need not sign it.  In
signing or refusing to sign such amendment or supplemental indenture, the
Trustee shall be entitled to receive and, subject to Section 8.01, shall
be fully protected in relying upon, an Opinion of Counsel stating that such
amendment or supplemental indenture is authorized or permitted by this
Indenture.  The Issuer and the Guarantors
may not sign an amendment or supplemental indenture until the Board of
Directors approves it.

 

Section 10.06.        Effect of Supplemental Indentures.  Upon the execution of any supplemental
indenture under this Article 10, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.

 

Article 11

REDEMPTION

 

Section 11.01.        Redemption.

 

(a)           The Issuer shall not
have the right to redeem any Securities prior to June 15, 2011, except as
provided in this Section 11.01(a) or Section 11.01(b).  If, at any time, the Issuer determines it is
necessary to redeem the Securities in order to preserve NRF’s qualification as
a real estate investment trust under the Internal Revenue Code of 1986, as
amended (“REIT”), the Issuer, upon not less than 30 nor more than 60
days’ prior written notice delivered to the Holders, may redeem all of the
Securities then outstanding at 100% principal amount of the Securities, plus
accrued and unpaid interest, if any, to the Redemption Date.  In such case, the Issuer shall provide the
Trustee with an Officer’s Certificate evidencing that the Board of Directors
has, in good faith, made the determination that it is necessary to redeem the
Securities in order to preserve NRF’s qualification as a REIT for U.S. federal
income tax purposes.

 

(b)           The Issuer shall have
the right on or after June 15, 2011, upon not less than 30 nor more than
60 days’ prior written notice delivered to the Holders, if during any period of
30 consecutive Trading Days, the Closing Sale Price of the Common Stock is
greater than or equal to 130% of the Exchange Price at the beginning of such
period for at least 20 Trading Days within such period of
30 consecutive Trading Days, to redeem all of the Securities then
outstanding for 100% of the principal amount of the Securities to be redeemed
plus any accrued but unpaid interest to but excluding the Redemption Date set
forth by the Issuer in such notice (the “Redemption Notice”).

 

(c)           In the event that the
Issuer shall redeem fewer than all outstanding Securities, the Trustee will
select the Securities redeemed on a pro rata basis, by lot, or by such other
method 

 

79

 

the Trustee considers fair and
appropriate or is required by the Depositary for the Securities.  The Trustee shall make the selection at least
30 days but not more than 60 days before the Redemption Date from Outstanding
Securities not previously called for redemption.  Securities and portions of the principal
amount thereof selected for redemption shall be in integral multiples of
$1,000.  The Trustee shall notify the
Issuer promptly of the Securities or portions of the principal amount thereof
to be redeemed.  If the Trustee selects a
portion of a Security for partial redemption and a Holder exchanges a portion
of the same Security in accordance with the provisions of Article 4 hereof
before termination of the exchange right with respect to the portion of the
Security so selected, the exchanged portion of such Security shall be deemed to
be from the portion selected for redemption. 
Securities that have been exchanged during a selection of Securities to
be redeemed shall be treated by the Trustee as Outstanding for the purpose of
such selection.

 

(d)           In the event of any redemption in part,
the Issuer shall not be required to:  (i) issue
or register the transfer or exchange of any Security during a period beginning
at the opening of business 15 days before any selection of Securities for
redemption and ending at the close of business on the earliest date on which
the relevant notice of redemption is deemed to have been given to all Holders
of Securities to be so redeemed, or (ii) register the transfer or exchange
of any Security so selected for redemption, in whole or in part, except the
unredeemed portion of any Security being redeemed in part.

 

(e)           A notice of redemption sent to the
Holders of Securities to be redeemed in accordance with the provisions of the
two preceding paragraphs shall state:

 

(1)           the name and address of the Paying Agent and
Exchange Agent;

 

(2)           the then current
Exchange Rate;

 

(3)           that Securities called for redemption may
be exchanged at any time prior to the close of business on the third Business
Day immediately preceding the Redemption Date; and

 

(4)           that Holders who wish to exchange
Securities must comply with the procedures relating thereto specified in Section 4.02
hereof.

 

(f)            If the Paying Agent holds funds sufficient to
pay the redemption price of the Securities on the redemption date, then on and
after such date:

 

(i)            such Securities will cease to be
outstanding;

 

(ii)           interest on such Securities will cease to accrue;
and

 

(iii)          all rights of Holders of
such Securities will terminate except the right to receive the redemption
price.

 

(g)           Any
Security which is to be redeemed only in part shall be surrendered at an office
or agency of the Issuer designated for that purpose pursuant to Section 5.01
(with, if the Issuer or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form 

 

80

 

satisfactory to the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Issuer shall execute, and the
Trustee shall authenticate and make available for delivery to the Holder of
such Security without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.  Upon
redemption, interests in Global Securities shall be reduced in accordance with
the Applicable Procedures.

 

Section 11.02.        Sinking Fund.  No sinking fund is provided for the
Securities.

 

Article 12

MISCELLANEOUS

 

Section 12.01.        Notices. 
(a)  Any demand, authorization notice, request, consent or
communication shall be given in writing and delivered in person or mailed by
first-class mail, postage prepaid, addressed as follows (confirmed by delivery
in person or mail by first-class mail, postage prepaid, or by guaranteed
overnight courier) or by electronic transmission to the following facsimile
numbers or email addresses:

 

if to the Issuer or the Guarantors, to:

 

399 Park Avenue, 18th Floor

New York, NY 
10022

Attention: 
Albert Tylis

Fax:  (212)
202-4103

email: 
tylis@nrfc.com

 

with copies to:

 

Sullivan & Cromwell LLP

Attention: 
Robert W. Downes

125 Broad Street

New York, NY 
10004

Fax:  (212)
558-3588

email: 
downesr@sullcrom.com

 

if to the Trustee, to:

 

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, DE 
19890

Attention: 
Kristin L. Moore

Fax: 
302-636-4145

email: 
klmoore@wilmingtontrust.com

 

81

 

Such notices or communications shall be effective when
received.

 

(b)           The Issuer, the
Guarantors or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.

 

(c)           Any notice or
communication sent to a Holder of a Security shall be sent by electronic
transmission or by first-class mail or delivered by an overnight delivery
service to it at its address shown on the register kept by the Primary
Registrar.

 

(d)           Failure to send a notice or communication to a
Holder of a Security or any defect in it shall not affect its sufficiency with
respect to other Holders of Securities. 
If a notice or communication to a Holder of a Security is sent in the
manner provided above, it is duly given, whether or not the addressee receives
it.

 

(e)           If the Issuer sends any notice to a Holder of
a Security, it shall send a copy to the Trustee and each Registrar, Paying
Agent and Exchange Agent.

 

Section 12.02.        Communications by Holders with Other Holder.  Holders of Securities may communicate with
other Holders of Securities with respect to their rights under this Indenture
or the Securities.  The Issuer, the
Trustee, the Registrar and any other person shall have the protection of TIA Section 312(c).

 

Section 12.03.        Certificate and Opinion as to Conditions
Precedent.

 

(a)           Upon any request or
application by the Issuer to the Trustee to take any action under this
Indenture, the Trustee may request:

 

(1)           an Officer’s
Certificate stating that, in the opinion of the signer, all conditions
precedent (including any covenants, compliance with which constitutes a
condition precedent), if any, provided for in this Indenture relating to the
proposed action have been complied with; and

 

(2)           an Opinion of Counsel
stating that, in the opinion of such counsel, all such conditions precedent
(including any covenants, compliance with which constitutes a condition
precedent) have been complied with.

 

(b)           Each Officer’s Certificate
with respect to compliance with a condition or covenant provided for in this
Indenture shall include:

 

(1)           a statement that the
person making such certificate or opinion has read such covenant or condition;

 

(2)           a brief statement as to
the nature and scope of the examination or investigation upon which the
statements or opinions contained in such certificate or opinion are based;

 

82

 

(3)           a statement that, in the opinion of such person,
he or she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and

 

(4)           a statement as to whether or not, in the opinion
of such person, such condition or covenant has been complied with.

 

Section 12.04.        Record Date for Consent of Holders of
Securities.  The Issuer (or, in the
event deposits have been made pursuant to Section 9.01, the Trustee) may set a record date for
purposes of determining the identity of Holders entitled to consent to any
action by consent authorized or permitted under this Indenture, which record
date shall not be more than 30 days prior to the date of the commencement of
solicitation of such action. Notwithstanding the provisions of Section 10.03,
if a record date is fixed, those persons who were Holders of Securities at the
close of business on such record date (or their duly designated proxies), and
only those persons, shall be entitled to take such action by vote or consent or
to revoke any vote or consent previously given, whether or not such persons
continue to be Holders after such record date.

 

Section 12.05.        Rules by
Trustee, Paying Agent, Registrar and Exchange Agent.  The Trustee may make reasonable rules (not
inconsistent with the terms of this Indenture) for action by or at a meeting of
Holders.  Any Registrar, Paying Agent or
Exchange Agent may make reasonable rules for its functions.

 

Section 12.06.        Legal
Holidays.  A “Legal Holiday”
is a Saturday, Sunday or a day on which state or federally chartered banking
institutions in The City of New York, New York or a place of payment are
authorized or obligated to close.  If a
payment date is a Legal Holiday, payment shall be made on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.  If a Regular Record
Date is a Legal Holiday, the record date shall not be affected.

 

Section 12.07.        Governing
Law.  This Indenture and the
Securities shall be governed by, and construed in accordance with, the internal
laws of the State of New York.

 

Section 12.08.        No Adverse Interpretation of Other Agreements.  This Indenture may not be used to interpret
another indenture, loan or debt agreement of the Issuer or a Subsidiary of the
Issuer.  Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.

 

Section 12.09.        No Recourse Against Others.  Neither any member of
the Issuer, limited partner of NRF LP, nor any principal, stockholder,
officer, director, or employee of the Issuer or any Guarantor or any member or
limited or general partner of the Issuer or NRF LP or of any successor of any
member or limited or general partner of NRF LP has any obligation for
payment of the Issuer’s obligations under the Securities or NRF’s, NRF LP’s or
Sub-REIT’s obligations under the Guarantees or for any of the Issuer’s, NRF’s,
NRF LP’s or Sub-REIT’s obligations, covenants or agreements contained in this
Indenture or the Guarantee.  Sub-REIT and
its successors as the managing member of Sub-REIT and NRF and its successors as general partner of NRF LP will only have obligations as specified
under the this Indenture and the 

 

83

 

Guarantee, and not by reason of either of its
or their capacity as managing member of the Issuer or the general partner of NRF LP.  By
accepting the Securities and the Guarantee, each Holder waives and releases all
liability of this kind.  The waiver and
release are part of the consideration for the issuance of the Guarantee.

 

Section 12.10.        No Security Interest
Created.  Nothing in this Indenture
or in the Securities, express or implied, shall be construed to constitute a
security interest under the Uniform Commercial Code or similar legislation, now
in effect or hereafter enacted and made effective, in any jurisdiction.

 

Section 12.11.        Successors.  All agreements of the Issuer and the
Guarantors in this Indenture and the Securities shall bind each of their
respective successors.  All agreements of
the Trustee in this Indenture shall bind its successor.

 

Section 12.12.        Multiple Counterparts.  The parties may sign multiple counterparts of
this Indenture.  Each signed counterpart
shall be deemed an original, but all of them together represent the same agreement.

 

Section 12.13.        Separability.  If any provisions in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

 

Section 12.14.        Table of Contents,
Headings, Etc.  The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.

 

ARTICLE 13

GUARANTEE

 

Section 13.01.        Guarantee.

 

(a)           Each Guarantor hereby
unconditionally guarantees to each Holder of a Security authenticated and
delivered by the Trustee the due and punctual payment of the principal of, any
premium and interest on, such Security, whether at the Final Maturity Date, by
acceleration, redemption, repayment or otherwise, in accordance with the terms
of such Security and this Indenture.  In
case of the failure of the Issuer punctually to pay any such principal,
premium, interest or any additional amounts, each Guarantor hereby agrees to
cause any such payment to be made punctually when and as the same shall become
due and payable, whether at Stated Maturity, upon acceleration, redemption,
repayment or otherwise, and as if such payment were made by the Issuer.  The Guarantee shall be unsecured and
unsubordinated indebtedness of each Guarantor and rank equally with other
unsecured and unsubordinated indebtedness of each Guarantor that is currently
outstanding or that it may issue in the future.

 

(b)           Each Guarantor hereby
agrees that its obligations hereunder shall be as principal and not merely as
surety, and shall be absolute, irrevocable and unconditional, irrespective of, 

 

84

 

and shall be unaffected by, any invalidity, irregularity or
unenforceability of any Security or this Indenture, any failure to enforce the
provisions of any Security or this Indenture, or any waiver, modification,
consent or indulgence granted with respect thereto by the Holder of such
Security or the Trustee, the recovery of any judgment against the Issuer or any
action to enforce the same, or any other circumstances which may otherwise
constitute a legal or equitable discharge of a surety or guarantor; provided, however, that, notwithstanding
the foregoing, no such waiver, modification or indulgence shall, without the
consent of each Guarantor, increase the principal amount of such Security or
the interest rate thereon or impose or increase any premium payable upon
redemption thereof.  Each Guarantor
hereby waives diligence, presentment, demand of payment, filing of claims with
a court in the event of merger, insolvency or bankruptcy of the Issuer, any
right to require a proceeding first against the Issuer, protest or notice with
respect to any such Security or the indebtedness evidenced thereby and all
demands whatsoever, and covenants that this Guarantee will not be discharged except
by payment in full of the principal of, any premium and interest on, and any
additional amounts required with respect to, the Securities and the complete
performance of all other payment obligations contained in the Securities.

 

(c)           This Guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time
payment on any Security, in whole or in part, is rescinded or must otherwise be
repaid to the Issuer or any Guarantor upon the bankruptcy, liquidation or
reorganization of the Issuer, any Guarantor or otherwise.

 

(d)           Each Guarantor shall be
subrogated to all rights of the Holder of any Security against the Issuer in
respect of any amounts paid to such Holder by such Guarantor pursuant to the
provisions of this Guarantee; provided, however, that each Guarantor shall not be entitled to
enforce, or to receive any payments arising out of or based upon, such right of
subrogation until the principal of, any premium and interest on, and any
additional amounts required with respect to, all Securities shall have been
paid in full.

 

[SIGNATURE PAGE
FOLLOWS]

 

85

 

IN WITNESS WHEREOF, the parties hereto have hereunto
set their hands as of the date and year first above written.

 

	
   

  	
  NRFC NNN HOLDINGS, LLC, as Issuer

  
	
   

  	
   

  
	
   

  	
  By:

  	
  NRFC Sub-REIT Corp., 

  
	
   

  	
   

  	
  in its capacity as managing member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  NORTHSTAR REALTY FINANCE CORP., 

  
	
   

  	
  as Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Andrew Richardson

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President and 

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NORTHSTAR REALTY FINANCE 

  
	
   

  	
  LIMITED PARTNERSHIP, as Guarantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  NorthStar Realty Finance Corp., in its 

  
	
   

  	
   

  	
  capacity as general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Andrew Richardson

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President and

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NRFC SUB-REIT CORP., as Guarantor 

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Andrew Richardson

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President and

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST COMPANY, as

  
	
   

  	
  Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
					

Signature Page To Indenture

 

 

EXHIBIT A-1

 

[FORM OF
FACE OF SECURITY]

 

A-1-1

 

FACE OF SECURITY

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.  THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.  THIS SECURITY IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND
UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED
FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER AGREES (1) THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY, EXCEPT (A) TO THE
ISSUER, NORTHSTAR REALTY FINANCE CORP., OR A SUBSIDIARY OF THE ISSUER; OR (B) TO
A PERSON THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A ADOPTED UNDER THE SECURITIES ACT) THAT IS PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER AND
TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, ALL IN COMPLIANCE WITH RULE 144A (IF AVAILABLE).

 

 

NRFC NNN HOLDINGS, LLC

 

11.50% EXCHANGEABLE SENIOR NOTES DUE 2013

 

FULLY AND UNCONDITIONALLY GUARANTEED BY

NORTHSTAR REALTY FINANCE CORP.,

NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP

AND NRFC SUB-REIT CORP.

 

	
  No. 1

  	
   

  	
  CUSIP: 62941QAA2

  

 

NRFC NNN HOLDINGS, LLC, a Delaware limited liability company (the “Issuer”,
which term includes any successor Person under the Indenture referred to on the
reverse hereof), for value received, promises to pay to Cede & Co., or
registered assigns, the principal sum of Eighty Million United States Dollars
(U.S.$ 80,000,000) (which principal amount may from time to time be increased
or decreased to such other principal amounts (which, taken together with the
principal amounts of all other Outstanding Securities, shall not exceed
$100,000,000 solely as a result of the issuance of Additional Securities
pursuant to the terms of the Indenture and Purchase Agreement)) by adjustments
made on the records of the Trustee hereinafter referred to in accordance with the
Indenture) on June 15, 2013 and to pay interest thereon, from May 28,
2008, or from the most recent Interest Payment Date (as defined below) to which
interest has been paid or duly provided for, semi-annually in arrears on June 15
and December 15 in each year (each, an “Interest Payment Date”),
commencing December 15, 2008, at the rate of 11.50% per annum, until the
principal hereof is due, and at the rate of 11.50% per annum, on any overdue
principal and, to the extent permitted by law, on any overdue interest. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in the Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the June 1 or December 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.  Except as otherwise provided in the
Indenture, any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Issuer, notice whereof shall be given to Holders of Securities not less than 10
days prior to the Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any automated quotation
system or securities exchange on which the Securities may be quoted or listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. Payment of the principal of and interest, if any, on
the Securities shall be made at the office or agency of the Issuer maintained
for that purpose or at the Corporate Trust Office of the Trustee in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided,
however, that at the option of the
Issuer payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address appears in the Register; provided further that a Holder with an aggregate principal
amount in excess of $5,000,000 will be paid by wire transfer in immediately
available funds at the election of such Holder if such Holder has provided wire
transfer instructions to the

 

2

 

Trustee at least 10 Business Days prior to the
payment date.  Any wire transfer
instructions received by the Trustee will remain in effect until revoked by the
Holder.

 

Interest
on this Security will be based on a 360-day year consisting of twelve 30-day
months.  If any Interest Payment Date
(other than an Interest Payment Date coinciding with the Final Maturity Date or
Redemption Date or Change in Control Purchase Date) of this Security falls on a
day that is not a Business Day, such Interest Payment Date will be postponed
until the next succeeding Business Day. 
If the Final Maturity Date, Redemption Date or Change in Control
Purchase Date of this Security would fall on a day that is not a Business Day,
the required payment of interest, if any, and principal will be made on the
next succeeding Business Day and no interest on such payment will accrue for
the period from and after the Final Maturity Date, Redemption Date or Change in
Control Purchase Date to such next succeeding Business Day.

 

Unless
the certificate of authentication hereon has been executed by the Trustee
referred to on the reverse hereof by the manual signature of one of its
authorized signatories, this Security shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.

 

This
Security is exchangeable as specified on the reverse hereof.

 

As
provided in the Indenture, the obligations of the Issuer under the Indenture
and this Security are fully and unconditionally guaranteed pursuant to the
Guarantees endorsed hereon as provided in the Indenture.  Each Holder, by holding this Security, agrees
to all of the terms and provisions of said Guarantees and the Indenture.

 

Reference
is hereby made to the further provisions of this Security set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.

 

SIGNATURE
PAGE FOLLOWS

 

3

 

IN
WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed.

 

	
   

  	
  NRFC NNN HOLDINGS, LLC,
  as Issuer

  
	
   

  	
   

  
	
   

  	
  By:

  	
  NRFC Sub-REIT Corp., 

  
	
   

  	
   

  	
  in its capacity as
  managing member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Trustee’s Certificate of Authentication:  This is one of the Securities referred to in
the within-mentioned Indenture.

 

Wilmington Trust Company, as Trustee

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  

 

 

Dated:  May 28, 2008

 

4

 

EXHIBIT A-2

 

[FORM OF
REVERSE OF SECURITY]

 

A-2-1

 

REVERSE SIDE OF SECURITY

 

NRFC NNN HOLDINGS, LLC

 

11.50% EXCHANGEABLE SENIOR NOTES DUE 2013

 

FULLY AND UNCONDITIONALLY GUARANTEED 

BY NORTHSTAR REALTY FINANCE CORP.,

NORTHSTAR REALTY FINANCE LIMITED PARTNERSHIP

AND NRFC SUB-REIT CORP.

 

This Security is one of a duly authorized issue of securities of the
Issuer designated as its “11.50%
Exchangeable Senior Notes due June 15,
2013” (herein called the “Securities”), limited in aggregate principal
amount not to exceed U.S. $80,000,000, as such amount may be increased, but not
to an amount in excess of $100,000,000,
solely as a result of the issuance of Additional Securities pursuant to the
terms of the Indenture and the Purchase Agreement, issued and to be issued under an Indenture, dated as of May 28,
2008 (herein called the “Indenture”), between the Issuer,
NorthStar Realty Finance Corp. (“NRF”), NorthStar Realty Finance Limited
Partnership (“NRF LP”) and NRFC Sub-REIT Corp. (“Sub-REIT”), as
Guarantors (each of NRF, NRF LP and Sub-REIT, a “Guarantor” and, together,
the “Guarantors”), and Wilmington Trust Company, a Delaware banking
corporation, as Trustee (herein called the “Trustee,” which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Issuer, the Guarantors, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be, authenticated and
delivered.  As provided in the Indenture
and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of any
authorized denominations as requested by the Holder surrendering the same upon
surrender of the Security or Securities to be exchanged, at the Corporate Trust
Office of the Trustee.  Upon such
surrender by the Holder, the Issuer will issue and the Trustee will authenticate
the new Securities in the requested denominations.  Terms used herein without definition and
which are defined in the Indenture have the meanings assigned to them in the
Indenture.

 

1.                                       PAYING
AGENT, EXCHANGE AGENT AND REGISTRAR

 

Initially,
the Trustee shall act as Paying Agent, Exchange Agent and Registrar of the
Securities.  The Issuer hereby initially
designates the Corporate Trust Office of the Trustee in Wilmington, Delaware as
the office to be maintained by it where this Security may be presented for
payment, registration of transfer or exchange, where notices or demands to or
upon the Issuer in respect of this Security or the Indenture may be served and
where the Securities may be surrendered for exchange in accordance with the
provisions of paragraph 6 hereof and the Indenture.

 

5

 

2.                                       REDEMPTION
BY THE ISSUER

 

The
Issuer shall not have the right to redeem any Securities prior to June 15,
2011, except as provided in this paragraph. 
If, (i) at any time, the Issuer determines it is necessary to
redeem the Securities in order to preserve the qualification of NRF as a real
estate investment trust under the Internal Revenue Code of 1986, as amended, or
(ii) on or after June 15, 2011, during any period of 30 consecutive
trading days, the closing sale price of a share of NRF’s common stock is
greater than or equal to 130% of the exchange price at the beginning of such
period for at least 20 trading days within such period of 30 consecutive
trading days, the Issuer may redeem all of the Securities then outstanding at
100% of the principal amount of the Securities, plus accrued and unpaid
interest, if any, to but excluding the Redemption Date.

 

Securities
in denominations larger than $1,000 principal amount may be redeemed in part
but only in integral multiples of $1,000 principal amount.

 

3.                                       REPURCHASE
AT OPTION OF HOLDER

 

If a
Change in Control occurs, a Holder shall have the right, at such Holder’s
option and subject to the terms and conditions of the Indenture, to require the
Issuer to repurchase all or any of such Holder’s Securities having a principal
amount equal to $1,000 or an integral multiple thereof on the date (the “Change
in Control Purchase Date”) specified by the Issuer in the Issuer Notice
(which date shall be no earlier than 30 days and no later than 40 days after
the date of such Issuer Notice) for cash equal to the 100% of the principal
amount of the Securities to be repurchased plus unpaid interest accrued thereon
to but excluding the Change in Control Purchase Date (the “Change in Control
Purchase Price”) by delivering a Change in Control Purchase Price Notice to
the Trustee or any Paying Agent no later than the close of business on the
second business day prior to the Change in Control Purchase Date. A Change in
Control Purchase Price notice is irrevocable and may not be withdrawn.

 

If the
Paying Agent holds, in accordance with the terms of the Indenture, money
sufficient to pay the Change in Control Purchase Price of such Securities on
the Change in Control Purchase Date or the Business Day following such date,
then, on and after such date and set forth in the Indenture, such Securities
shall cease to be Outstanding and interest on such Securities shall cease to
accrue, and all other rights of the Holder shall terminate (other than the
right to receive the Change in Control Purchase Price upon delivery or transfer
of the Securities).

 

4.                                       EXCHANGE
OF SECURITY FOR COMMON STOCK

 

The
Securities shall be exchangeable into the consideration specified in the
Indenture at such times, upon compliance with such conditions and upon the
terms set forth in the Indenture.

 

The
initial Exchange Rate shall be 83.3333 shares of Common Stock per $1,000 principal amount of
Securities, subject to adjustment in certain circumstances as specified in the
Indenture.  Securities tendered for
exchange by a Holder after the close of business on any Regular Record Date for
an interest payment and on or prior to the corresponding Interest Payment Date
must be accompanied by payment of an amount equal to the interest that such
Holder is to receive on such Securities on such Interest Payment Date; provided, however, that
no such payment of interest shall be required (1) if such Securities have
been called for redemption on a Redemption 

 

6

 

Date that is after such Regular Record Date and on or
prior to such Interest Payment Date, (2) in connection with a Change in
Control and the Issuer has specified a Change in Control Purchase Date that is
after such Regular Record Date and prior to such Interest Payment Date, (3) if
the Regular Record Date is the last Regular Record Date prior to Maturity of
the Securities or (4) with respect to overdue interest if any overdue
interest exists at the time of exchange with respect to such notes.

 

To
exchange the Securities, a Holder must (a) complete and manually sign the
Exchange Notice on the reverse of the Security (or complete and manually sign a
facsimile of such notice) and deliver such notice to the Exchange Agent at the
office maintained by the Exchange Agent for such purpose, (b) with respect
to Securities that are in certificated form, surrender the Securities to the
Exchange Agent, (c) furnish appropriate endorsements and transfer
documents if required by the Exchange Agent and (d) pay any transfer or
similar tax, if required. The date on which the Holder satisfies all such
requirements shall be deemed to be the date on which the applicable Securities
shall have been tendered for exchange.  A
holder of a beneficial interest in a Global Security must comply with the
Applicable Procedures of the Depositary in connection with an exchange.

 

If a
Holder has delivered a Change in Control Purchase notice requiring the Issuer
to repurchase all or a portion of this Security pursuant to paragraph 3 hereof
then this Security (or portion hereof subject to such Change in Control
Purchase notice) may not be exchanged.

 

5.                                       RANKING

 

The
Securities are senior unsecured obligations of the Issuer and shall rank
equally in right of payment with all other senior unsecured indebtedness of the
Issuer from time to time outstanding.

 

6.                                       DENOMINATIONS;
TRANSFER; EXCHANGE

 

(a)                                  This
Security is issuable only in fully registered in denominations of $1,000 and
integral multiples thereof.  This
Security may be exchanged for a like aggregate principal amount of Securities
of other authorized denominations at the Corporate Trust Office of the Trustee
or in the manner and subject to the limitations provided herein and in the
Indenture, but without the payment of any charge except for any tax or other
governmental charge imposed in connection therewith.  Upon due presentment for registration of
transfer of this Security at the Corporate Trust Office of the Trustee, one or
more new Securities of authorized denominations in an equal aggregate principal
amount will be issued to the transferee in exchange therefor, and bearing such
restrictive legends as may be required by the Indenture, but without payment of
any charge except for any tax or other governmental charge imposed in
connection therewith.  In the event of
any redemption in part, the Issuer shall not be required to:  (i) issue or register the transfer or
exchange of any Security during a period beginning at the opening of business
15 days before any selection of Securities for redemption and ending at the
close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all Holders of Securities to be so
redeemed, or (ii) register the transfer or exchange of any Security so
selected for redemption, in whole or in part, except the unredeemed portion of
any Security being redeemed in part.

 

7

 

In the event of a deposit or withdrawal of an interest in this
Security, including an exchange, transfer, redemption, or repurchase of this
Security in part only, the Trustee, as custodian of the Depositary, shall make
an adjustment on its records to reflect such deposit or withdrawal in
accordance with the Applicable Procedures.

 

7.                                       PERSONS
DEEMED OWNERS

 

The
Holder of this Security may be treated as the owner of this Security for all
purposes, and none of the Issuer, any Guarantor or the Trustee nor any
authorized agent of the Issuer, any Guarantor or the Trustee shall be affected
by any notice to the contrary, except as required by law.

 

8.                                       ADDITIONAL
RIGHTS OF HOLDERS

 

In
addition to the rights provided to Holders of Securities under the Indenture
and each Guarantee endorsed hereon, the Holder of this Security is entitled to
the benefits of a Registration Rights Agreement, dated as of May 28, 2008 (the “Registration Rights
Agreement”) by and between NRF and the Initial Purchasers with respect to
resales of the shares of Common Stock, if any, issuable upon exchange of the
Securities.  A copy of the Registration
Rights Agreement is available to any Holder of Securities upon request to the
Issuer.

 

If a
Registration Default, as defined in the Registration Rights Agreement, occurs
and is continuing during a period of time that the Securities are exchangeable
for shares of Common Stock, liquidated damages consisting solely of additional
interest (“Liquidated Damages”) will be paid to Holders entitled to
interest payments on such dates semi-annually in arrears on each Interest
Payment Date and will accrue from and including the day following such
Registration Default to but excluding the day on which such Registration
Default has been cured at a rate per annum equal to one-quarter of one percent
(0.25%) of the outstanding principal amount of the Securities to and including
the 90th day following such Registration Default and at a rate per annum equal
to one-half of one percent (0.50%) of the outstanding principal amount thereof
from and after the 91st day following such Registration Default.

 

In no
event will any additional interest on the Securities exceed the rate per annum
of one-half of one percent (0.50%) of the outstanding principal amount thereof.
The Issuer will not pay Liquidated Damages on any Security after it has been
exchanged for the shares of Common Stock. If a Security ceases to be
outstanding during any period for which additional interest is accruing, the
Issuer will prorate the Liquidated Damages to be paid with respect to that
Security.

 

Whenever
in this Security there is a reference, in any context, to the payment of the
principal of, premium, if any, or interest on, or in respect of, any Security,
such mention shall be deemed to include mention of the payment of Liquidated
Damages payable as described in the preceding paragraph to the extent that, in
such context, Liquidated Damages are, were or would be payable in respect of
such Security and express mention of the payment of Liquidated Damages (if
applicable) in any provisions of this Security shall not be construed as excluding
Liquidated Damages in those provisions of this Security where such express
mention is not made.

 

8

 

9.                                       MODIFICATION
AND AMENDMENT; WAIVER

 

The
Indenture permits, with certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations of the Issuer and
the Guarantors and the rights of the Holders of the Securities under the
Indenture at any time by the Issuer, the Guarantors and the Trustee with the
consent of the Holders of a majority in the aggregate principal amount of all
Outstanding Securities affected thereby (voting together as a single
class).  The Indenture also provides that
certain amendments or modifications may not be made without the consent of each
Holder to be affected thereby. 
Furthermore, provisions in the Indenture permit the Holders of a
majority in the aggregate principal amount of the Outstanding Securities of any
series, in certain instances, to waive, on behalf of all of the Holders of Securities
of such series, certain past defaults under the Indenture and their
consequences.  Any such waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and other Securities issued upon the
registration of transfer hereof or in exchange hereof, or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

 

10.                                 DEFAULTS
AND REMEDIES

 

(a)                                  The
Indenture sets forth events that constitute an Event of Default under the
Indenture.  If an Event of Default shall
occur and be continuing, there may be declared due and payable the principal
amount (together with accrued and unpaid interest) on the Securities in the manner
and with the effect provided in the Indenture. 
If certain bankruptcy or insolvency events occur and continue with
respect to the Issuer, the Guarantors, or certain Subsidiaries of the Issuer or
the Guarantors, the Securities shall automatically become due and payable in
accordance with the terms of the Indenture.

 

(b)                                 Notwithstanding
anything in paragraph (a) of this section, to the extent elected by the
Issuer, the sole remedy for an Event of Default relating to the failure by the
Issuer to comply with the obligation to provide certain reports as set forth in
Section 5.03(b) of the Indenture, will for the first 90 days after
the occurrence of such an Event of Default, consist exclusively of the right
for Holders to receive additional interest on the Securities equal to 0.25% per
annum of the outstanding principal amount of the Securities.  If the Issuer so elects, such additional
interest will be payable in the same manner and on the same dates as the stated
interest payable on the Securities.  The
additional interest will accrue on all outstanding Securities from and
including the date on which such Event of Default first occurs to but not
including the 90th day thereafter (or such earlier date on which such Event of
Default shall have been cured or waived). On such 90th day after such Event of
Default (if the Event of Default relating to such obligation is not cured or
waived prior to such 90th day), the Securities will be subject to acceleration
as provided above.  In the event the
Issuer does not elect to pay the additional interest upon such Event of Default
in accordance with this paragraph, the Securities will be subject to
acceleration as provided above.

 

(c)                                  In
order to elect to pay the additional interest in accordance with paragraph (b) of
this section, the Issuer must notify all Holders, the Trustee and the Paying
Agent of such election.  Upon the failure
of the Issuer to give timely such notice or pay the additional interest 

 

9

 

specified in paragraph (b) of this section, the
Securities will be subject immediately to acceleration as provided in paragraph
(a) of this section.

 

11.                                 WITHOLDING

 

To the
extent the Issuer determines in its sole discretion that the Issuer is required
to withhold any taxes with respect to a deemed payment or distribution with
respect to this Security on account of an adjustment to the Exchange Rate, the
Issuer shall withhold such amount from payments otherwise due hereunder to the
Holder of such Security and report such withholding to the Holder if and as required
by law.  Any amount withheld by the
Issuer pursuant to Section 5.01(c) of the Indenture with respect to
this Security shall be treated for all purposes of the Indenture and this
Security as if it had been paid directly to the Holder hereof.

 

12.                                 TRUSTEE
DEALINGS WITH THE ISSUER AND THE GUARANTORS

 

The
Trustee in its individual or any other capacity may become the owner or pledgee
of Securities and may otherwise deal with the Issuer, the Guarantors or an
Affiliate of the Issuer or a Guarantor with the same rights it would have if it
were not Trustee.  Any Agent may do the
same with like rights.

 

13.                                 CALCULATIONS
IN RESPECT OF THE SECURITIES

 

Except
as otherwise specifically stated herein or in the Indenture, all calculations
to be made in respect of the Securities shall be the obligation of the
Issuer.  All calculations made by the
Issuer or its agent as contemplated pursuant to the terms hereof and of the
Securities shall be made in good faith and be final and binding on the
Securities and the Holders of the Securities absent manifest error.  The Issuer shall provide a schedule of
calculations to the Trustee, and the Trustee shall be entitled to rely upon the
accuracy of the calculations by the Issuer without independent
verification.  The Trustee shall forward
calculations made by the Issuer to any Holder of Securities upon request.

 

14.                                 GOVERNING
LAW

 

The
Indenture and this Security shall be governed by and construed in accordance
with the internal laws of the State of New York.

 

10

 

ASSIGNMENT FORM

 

To
assign this Security, fill in the form below:

 

I or
we assign and transfer this Security to

 

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

(Print or type assignee’s name, address and zip code)

 

and irrevocably appoint

 

agent to transfer this Security on the books of the Issuer. The agent
may substitute another to act for him or her.

 

	
   

  	
   

  	
   

  	
  Your Signature

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  (Sign exactly as your name appears on the 

  other side of this Security)

  

 

* Signature guaranteed by:

 

	
  By:

  	
   

  	
   

  	
   

  

 

*                 The signature
must be guaranteed by an institution which is a member of one of the following
recognized signature guaranty programs:  (i) the
Securities Transfer Agent Medallion Program (STAMP); (ii) the New York
Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion
Program (SEMP); or (iv) such other guaranty program acceptable to the
Trustee.

 

11

 

EXCHANGE NOTICE

 

To
exchange this Security for Common Stock of NRF, check the box:

 

To
exchange only part of this Security for Common Stock of NRF, state the
principal amount to be exchanged (must be $1,000 or an integral multiple of
$1,000): 
$              .

 

The undersigned Holder of this Security hereby irrevocably exercises
the option to exchange this Security, or any portion of the principal amount
hereof (which is U.S. $1,000 or an integral multiple of U.S. $1,000 in excess
thereof, provided that the unconverted portion of
such principal amount is U.S. $1,000 or any integral multiple of U.S. $1,000 in
excess thereof) below designated, into shares of Common Stock in accordance
with the terms of the Indenture referred to in this Security, and directs that
such shares, together with a check in payment for any fractional share, any
Interest Make-Whole Payment, if and as applicable and any Securities
representing any unconverted principal amount hereof, be delivered to and be
registered in the name of the undersigned unless a different name has been
indicated below. If shares of Common Stock or Securities are to be registered
in the name of a Person other than the undersigned, the undersigned will pay
all transfer taxes payable with respect thereto.

 

If you
want the stock certificate made out in another person’s name, fill in the form
below:

 

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

(Print or type assignee’s name, address and zip code)

 

	
   

  	
  Your Signature

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  (Sign exactly as your name appears on the

  other side of this Security)

  
				

 

* Signature guaranteed by:

 

	
  By:

  	
   

  	
   

  	
   

  

 

*                 The signature
must be guaranteed by an institution which is a member of one of the following
recognized signature guaranty programs:  (i) the
Securities Transfer Agent Medallion Program (STAMP); (ii) the New York
Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion
Program (SEMP); or (iv) such other guaranty program acceptable to the
Trustee.

 

12

 

SCHEDULE OF EXCHANGES OF SECURITIES

 

The
following exchanges, redemptions or purchases of a part of this Global Security
have been made:

 

	
  Principal Amount of this

  Global Security

  Following Such Decrease

  Date of Exchange (or 

  Increase)

  	
   

  	
  Authorized Signatory of

  Securities Custodian

  	
   

  	
  Amount of Decrease in

  Principal Amount of this

  Global Security

  	
   

  	
  Amount of Increase in

  Principal Amount of this 

  Global Security

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

13

 

CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION

OF TRANSFER OF RESTRICTED SECURITIES

 

Re:                               11.50% Exchangeable Senior Notes due
2013 (the “Securities”) of NRFC NNN Holdings, LLC.

 

This certificate relates to
$         principal amount of
Securities owned in (check applicable box) 

 

o
book-entry or o
definitive form by (the “Transferor”).

 

The Transferor
has requested a Registrar or the Trustee to exchange or register the transfer
of such Securities.

 

In
connection with such request and in respect of each such Security, the
Transferor does hereby certify that the Transferor is familiar with transfer
restrictions relating to the Securities as provided in Section 2.14 of the
Indenture dated as of May 28, 2008 among NRFC NNN Holdings, LLC, as Issuer, NorthStar
Realty Finance Corp., NorthStar Realty Finance Limited Partnership and NRFC
Sub-REIT Corp., as Guarantors, and Wilmington Trust Company, as trustee (the “Indenture”),
and the transfer of such Security is being made pursuant to (check applicable
box):

 

o                                    Such Security is
being acquired for the Transferor’s own account, without transfer.

 

o                                    Such Security is
being transferred to the Issuer, a Guarantor or a Subsidiary (as defined in the
Indenture) of the Issuer or a Guarantor.

 

o                                    Such Security is
being transferred to a person the Transferor reasonably believes is a “qualified
institutional buyer” (as defined in Rule 144A or any successor provision
thereto (“Rule 144A”) under the Securities Act) that is purchasing for its
own account or for the account of a “qualified institutional buyer”, in each
case to whom notice has been given that the transfer is being made in reliance
on such Rule 144A, and in each case in reliance on Rule 144A.

 

14

 

The Transferor
acknowledges and agrees that, if the transferee will hold any such Securities
in the form of beneficial interests in a Global Security, then such transfer
can only be made pursuant to Rule 144A under the Securities Act and such
transferee must be a “qualified institutional buyer” (as defined in Rule 144A).

 

The Transferor
hereby acknowledges and agrees that its obligation to indemnify the Issuer,
each Guarantor and the Trustee under the Indenture against any liability that
may result from the transfer described herein being in violation of the
Indenture and/or applicable United States federal or state securities laws
shall survive the transfer described herein.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  (Insert Name of Transferor)

  

 

15

 

EXHIBIT B

 

[FORM OF
GUARANTEE]

 

B-1

 

GUARANTEE

 

For value received, each of NorthStar Realty Finance
Corp., NorthStar Realty Finance Limited Partnership and NRFC Sub-REIT Corp.
(each a “Guarantor” and together the “Guarantors”) hereby fully and
unconditionally guarantees the cash payments in United States dollars of
principal of and interest on the Security on which this Guarantee is endorsed
in the amounts and at the time when due and interest on the overdue principal
and interest, if any, on this Security, if lawful, and the payment of all other
obligations of the NRFC NNN Holdings, LLC (the “Issuer”) under the Indenture or
the Security, to the Holder of this Security and the Trustee, all in accordance
with and subject to the terms and limitations of this Security, Article 13
of the Indenture and this Guarantee. This Guarantee will become effective in
accordance with Article 13 of the Indenture and its terms shall be
evidenced therein. Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Indenture, dated as of May 28, 2008, by
and among the Issuer, each of the undersigned, as Guarantors, and Wilmington
Trust Company, as Trustee, as amended or supplemented (the “Indenture”).

 

The obligations of each of the undersigned to the
Holder of this Security and to the Trustee pursuant to the Guarantee and the
Indenture are expressly set forth in Article 13 of the Indenture and
reference is hereby made to the Indenture for the precise terms and limitations
of the Guarantee and all of the other provisions of the Indenture to which this
Guarantee relates. Each Holder of the Security to which this Guarantee is
endorsed, by accepting such Security, agrees to and shall be bound by such
provisions.

 

This Guarantee shall be an unsecured and
unsubordinated obligation of each Guarantor and rank equally with other
unsecured and unsubordinated indebtedness of such Guarantor that is currently
outstanding or that it may issue in the future.

 

This Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the Security upon which
this Guarantee is endorsed shall have been executed by the Trustee under the
Indenture by manual signature.

 

THIS GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.

 

This Guarantee is subject to release upon the terms
set forth in the Indenture.

 

[Signature Page Follows]

 

1

 

IN WITNESS WHEREOF, each of the undersigned
Guarantors have caused this Guarantee to be duly executed.

 

Dated:  May 28, 2008

 

 

	
   

  	
  NORTHSTAR REALTY
  FINANCE CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Albert Tylis

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice-President
  and General 

  Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NORTHSTAR REALTY
  FINANCE 

  LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  NorthStar Realty
  Finance Corp., in its

  capacity as general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Andrew Richardson

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NRFC SUB-REIT CORP.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Andrew Richardson

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  
						

 

2

 

SCHEDULE I

 

ACQUISITION COST

 

	
  Property

  	
   

  	
  Acquisition Cost

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  36 W. 34th St. and 41 W. 33rd St. 

  New York, NY 10001

  	
   

  	
  $

  	
  4,469,880

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  987 Eighth Avenue 

  New York, NY 10019

  	
   

  	
  $

  	
  2,639,221

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  701 Seventh Avenue

  New York, NY 10036

  	
   

  	
  $

  	
  3,245,627

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10125 Federal Drive (Building A)

  Colorado Springs, CO

  	
   

  	
  $

  	
  13,660,598

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10205 Federal Drive (Building B)

  Colorado Springs, CO

  	
   

  	
  $

  	
  6,903,046

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10285 Federal Drive (Building C)

  Colorado Springs, CO

  	
   

  	
  $

  	
  7,070,906

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1080 West Entrance Drive

  Auburn Hills, MI

  	
   

  	
  $

  	
  7,200,052

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  985 West Entrance Drive

  Auburn Hills, Oakland, MI

  	
   

  	
  $

  	
  8,019,706

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  225 Grandview Avenue

  Camp Hill, PA

  	
   

  	
  $

  	
  30,133,078

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10888 White Rock Road

  Rancho Cordova, CA

  	
   

  	
  $

  	
  17,364,826

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1360 South Washington Street

  North Attleboro, MA

  	
   

  	
  $

  	
  5,572,853

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  328 West Army Trail Road

  Bloomingdale, IL

  	
   

  	
  $

  	
  7,105,513

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Executive Centre I

  111 Merchant Street

  Cincinnati, OH

  	
   

  	
  $

  	
  24,655,096

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Executive Centre III

  25 Merchant Street

  Cincinnati, OH

  	
   

  	
  $

  	
  24,855,732

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Executive Centre II

  55 Merchant Street

  Cincinnati, OH

  	
   

  	
  $

  	
  19,830,589

  	
   

  

 

I-1

 

	
  Property

  	
   

  	
  Acquisition Cost

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  295 Loudon Rd.

  Concord, NH

  	
   

  	
  $

  	
  8,199,745

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  299 Loudon Rd.

  Concord, NH

  	
   

  	
  $

  	
  3,294,165

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  750 South Richfield Street

  Aurora, CO

  	
   

  	
  $

  	
  43,625,431

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3100 Easton Square Place

  Columbus, OH

  	
   

  	
  $

  	
  33,826,243

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  605 Munn Road

  Fort Mill, SC

  	
   

  	
  $

  	
  34,302,886

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  309 E. Coliseum Blvd.

  Fort Wayne, IN

  	
   

  	
  $

  	
  4,690,583

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  25 Green Pond Road

  Rockaway, NJ

  	
   

  	
  $

  	
  21,954,783

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  870 Walt Whitman Road

  Huntington, NY

  	
   

  	
  $

  	
  5,438,547

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8211 Scicor Drive

  Indianapolis, IN

  	
   

  	
  $

  	
  34,518,845

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Monadnock Marketplace 

  42 Ash Brooke Road

  Keene, NH

  	
   

  	
  $

  	
  9,514,404

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  70 Worcester Providence Turnpike

  Millbury, MA

  	
   

  	
  $

  	
  5,943,429

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1355 California Circle

  Milpitas, CA

  	
   

  	
  $

  	
  15,234,680

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1421 California Circle

  Milpitas, CA

  	
   

  	
  $

  	
  14,909,411

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  385 Gorham Road

  South Portland, ME

  	
   

  	
  $

  	
  6,885,719

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1002 Patriot Parkway

  Reading, PA

  	
   

  	
  $

  	
  28,473,154

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2222 West 2300 South

  Salt Lake City, UT

  	
   

  	
  $

  	
  22,424,282

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  19850 Plummer Street

  Chatsworth, CA

  	
   

  	
  $

  	
  20,874,669

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  19860 Plummer Street

  Chatsworth, CA

  	
   

  	
  $

  	
  26,838,860

  	
   

  

 

I-2

 

	
  Property

  	
   

  	
  Acquisition Cost

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9401 Oakdale Avenue

  Chatsworth, CA 91311

  	
   

  	
  $

  	
  17,445,204

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4600 West Kellogg Dr.

  Wichita, KS

  	
   

  	
  $

  	
  7,858,265

  	
   

  

 

I-3Exhibit 4.2

 

FACE
OF SECURITY

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.  THIS SECURITY IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.  THIS SECURITY IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL
IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM,
THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER AGREES (1) THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY, EXCEPT (A) TO THE ISSUER,
NORTHSTAR REALTY FINANCE CORP., OR A SUBSIDIARY OF THE ISSUER; OR (B) TO A
PERSON THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A ADOPTED UNDER THE SECURITIES ACT) THAT IS PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER AND
TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, ALL IN COMPLIANCE WITH RULE 144A (IF AVAILABLE).

 

 

NRFC
NNN HOLDINGS, LLC

 

11.50%
EXCHANGEABLE SENIOR NOTES DUE 2013

 

FULLY
AND UNCONDITIONALLY GUARANTEED BY

NORTHSTAR
REALTY FINANCE CORP.,

NORTHSTAR
REALTY FINANCE LIMITED PARTNERSHIP

AND
NRFC SUB-REIT CORP.

 

	
  No. 1

  	
   

  	
  CUSIP: 62941QAA2

  

 

NRFC NNN HOLDINGS, LLC, a Delaware limited liability company (the “Issuer”,
which term includes any successor Person under the Indenture referred to on the
reverse hereof), for value received, promises to pay to Cede & Co., or
registered assigns, the principal sum of Eighty Million United States Dollars
(U.S.$ 80,000,000) (which principal amount may from time to time be increased
or decreased to such other principal amounts (which, taken together with the
principal amounts of all other Outstanding Securities, shall not exceed
$100,000,000 solely as a result of the issuance of Additional Securities
pursuant to the terms of the Indenture and Purchase Agreement)) by adjustments
made on the records of the Trustee hereinafter referred to in accordance with
the Indenture) on June 15, 2013 and to pay interest thereon, from May 28,
2008, or from the most recent Interest Payment Date (as defined below) to which
interest has been paid or duly provided for, semi-annually in arrears on June 15
and December 15 in each year (each, an “Interest Payment Date”),
commencing December 15, 2008, at the rate of 11.50% per annum, until the
principal hereof is due, and at the rate of 11.50% per annum, on any overdue
principal and, to the extent permitted by law, on any overdue interest. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in the Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the June 1 or December 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.  Except as otherwise provided in the
Indenture, any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Issuer, notice whereof shall be given to Holders of Securities not less than 10
days prior to the Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any automated quotation
system or securities exchange on which the Securities may be quoted or listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. Payment of the principal of and interest, if any, on
the Securities shall be made at the office or agency of the Issuer maintained
for that purpose or at the Corporate Trust Office of the Trustee in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided,
however, that at the option of the
Issuer payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address appears in the Register; provided further that a Holder with an aggregate principal
amount in excess of $5,000,000 will be paid by wire transfer in immediately
available funds at the election of such Holder if such Holder has provided wire
transfer instructions to the 

 

2

 

Trustee at least 10 Business Days prior to the
payment date.  Any wire transfer
instructions received by the Trustee will remain in effect until revoked by the
Holder.

 

Interest
on this Security will be based on a 360-day year consisting of twelve 30-day
months.  If any Interest Payment Date
(other than an Interest Payment Date coinciding with the Final Maturity Date or
Redemption Date or Change in Control Purchase Date) of this Security falls on a
day that is not a Business Day, such Interest Payment Date will be postponed
until the next succeeding Business Day. 
If the Final Maturity Date, Redemption Date or Change in Control
Purchase Date of this Security would fall on a day that is not a Business Day,
the required payment of interest, if any, and principal will be made on the next
succeeding Business Day and no interest on such payment will accrue for the
period from and after the Final Maturity Date, Redemption Date or Change in
Control Purchase Date to such next succeeding Business Day.

 

Unless
the certificate of authentication hereon has been executed by the Trustee
referred to on the reverse hereof by the manual signature of one of its
authorized signatories, this Security shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.

 

This
Security is exchangeable as specified on the reverse hereof.

 

As
provided in the Indenture, the obligations of the Issuer under the Indenture
and this Security are fully and unconditionally guaranteed pursuant to the
Guarantees endorsed hereon as provided in the Indenture.  Each Holder, by holding this Security, agrees
to all of the terms and provisions of said Guarantees and the Indenture.

 

Reference
is hereby made to the further provisions of this Security set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.

 

SIGNATURE
PAGE FOLLOWS

 

3

 

IN
WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed.

 

	
   

  	
  NRFC NNN HOLDINGS, LLC,
  as Issuer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  NRFC Sub-REIT Corp., 

  in its capacity as managing member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

Trustee’s Certificate of Authentication:  This is one of the Securities referred to in
the within-mentioned Indenture.

 

Wilmington Trust Company, as Trustee

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  

 

 

Dated:  May 28, 2008

 

4

 

REVERSE
SIDE OF SECURITY

 

NRFC
NNN HOLDINGS, LLC

 

11.50%
EXCHANGEABLE SENIOR NOTES DUE 2013

 

FULLY
AND UNCONDITIONALLY GUARANTEED 

BY NORTHSTAR REALTY FINANCE CORP.,

NORTHSTAR
REALTY FINANCE LIMITED PARTNERSHIP

AND
NRFC SUB-REIT CORP.

 

This Security is one of a duly authorized issue of securities of the
Issuer designated as its “11.50%
Exchangeable Senior Notes due June 15,
2013” (herein called the “Securities”), limited in aggregate principal
amount not to exceed U.S. $80,000,000, as such amount may be increased, but not
to an amount in excess of $100,000,000,
solely as a result of the issuance of Additional Securities pursuant to the
terms of the Indenture and the Purchase Agreement, issued and to be issued under an Indenture, dated as of May 28,
2008 (herein called the “Indenture”), between the Issuer,
NorthStar Realty Finance Corp. (“NRF”), NorthStar Realty Finance Limited
Partnership (“NRF LP”) and NRFC Sub-REIT Corp. (“Sub-REIT”), as
Guarantors (each of NRF, NRF LP and Sub-REIT, a “Guarantor” and,
together, the “Guarantors”), and Wilmington Trust Company, a Delaware
banking corporation, as Trustee (herein called the “Trustee,” which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Issuer, the Guarantors, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be, authenticated and
delivered.  As provided in the Indenture
and subject to certain limitations therein set forth, Securities are exchangeable
for a like aggregate principal amount of Securities of any authorized
denominations as requested by the Holder surrendering the same upon surrender
of the Security or Securities to be exchanged, at the Corporate Trust Office of
the Trustee.  Upon such surrender by the
Holder, the Issuer will issue and the Trustee will authenticate the new
Securities in the requested denominations. 
Terms used herein without definition and which are defined in the
Indenture have the meanings assigned to them in the Indenture.

 

1.             PAYING
AGENT, EXCHANGE AGENT AND REGISTRAR

 

Initially,
the Trustee shall act as Paying Agent, Exchange Agent and Registrar of the
Securities.  The Issuer hereby initially
designates the Corporate Trust Office of the Trustee in Wilmington, Delaware as
the office to be maintained by it where this Security may be presented for
payment, registration of transfer or exchange, where notices or demands to or
upon the Issuer in respect of this Security or the Indenture may be served and
where the Securities may be surrendered for exchange in accordance with the
provisions of paragraph 6 hereof and the Indenture.

 

5

 

2.             REDEMPTION
BY THE ISSUER

 

The
Issuer shall not have the right to redeem any Securities prior to June 15,
2011, except as provided in this paragraph. 
If, (i) at any time, the Issuer determines it is necessary to
redeem the Securities in order to preserve the qualification of NRF as a real
estate investment trust under the Internal Revenue Code of 1986, as amended, or
(ii) on or after June 15, 2011, during any period of 30 consecutive
trading days, the closing sale price of a share of NRF’s common stock is
greater than or equal to 130% of the exchange price at the beginning of such
period for at least 20 trading days within such period of 30 consecutive
trading days, the Issuer may redeem all of the Securities then outstanding at
100% of the principal amount of the Securities, plus accrued and unpaid
interest, if any, to but excluding the Redemption Date.

 

Securities
in denominations larger than $1,000 principal amount may be redeemed in part
but only in integral multiples of $1,000 principal amount.

 

3.             REPURCHASE
AT OPTION OF HOLDER

 

If a
Change in Control occurs, a Holder shall have the right, at such Holder’s
option and subject to the terms and conditions of the Indenture, to require the
Issuer to repurchase all or any of such Holder’s Securities having a principal
amount equal to $1,000 or an integral multiple thereof on the date (the “Change
in Control Purchase Date”) specified by the Issuer in the Issuer Notice
(which date shall be no earlier than 30 days and no later than 40 days after
the date of such Issuer Notice) for cash equal to the 100% of the principal
amount of the Securities to be repurchased plus unpaid interest accrued thereon
to but excluding the Change in Control Purchase Date (the “Change in Control
Purchase Price”) by delivering a Change in Control Purchase Price Notice to
the Trustee or any Paying Agent no later than the close of business on the
second business day prior to the Change in Control Purchase Date. A Change in
Control Purchase Price notice is irrevocable and may not be withdrawn.

 

If the
Paying Agent holds, in accordance with the terms of the Indenture, money
sufficient to pay the Change in Control Purchase Price of such Securities on
the Change in Control Purchase Date or the Business Day following such date,
then, on and after such date and set forth in the Indenture, such Securities
shall cease to be Outstanding and interest on such Securities shall cease to
accrue, and all other rights of the Holder shall terminate (other than the
right to receive the Change in Control Purchase Price upon delivery or transfer
of the Securities).

 

4.             EXCHANGE
OF SECURITY FOR COMMON STOCK

 

The
Securities shall be exchangeable into the consideration specified in the
Indenture at such times, upon compliance with such conditions and upon the
terms set forth in the Indenture.

 

The
initial Exchange Rate shall be 83.3333 shares of Common Stock per $1,000 principal amount of
Securities, subject to adjustment in certain circumstances as specified in the
Indenture.  Securities tendered for
exchange by a Holder after the close of business on any Regular Record Date for
an interest payment and on or prior to the corresponding Interest Payment Date
must be accompanied by payment of an amount equal to the interest that such
Holder is to receive on such Securities on such Interest Payment Date; provided, however, that
no such payment of interest shall be required (1) if such Securities have
been called for redemption on a Redemption 

 

6

 

Date that is after such Regular Record Date and on or
prior to such Interest Payment Date, (2) in connection with a Change in
Control and the Issuer has specified a Change in Control Purchase Date that is
after such Regular Record Date and prior to such Interest Payment Date, (3) if
the Regular Record Date is the last Regular Record Date prior to Maturity of
the Securities or (4) with respect to overdue interest if any overdue
interest exists at the time of exchange with respect to such notes.

 

To
exchange the Securities, a Holder must (a) complete and manually sign the
Exchange Notice on the reverse of the Security (or complete and manually sign a
facsimile of such notice) and deliver such notice to the Exchange Agent at the
office maintained by the Exchange Agent for such purpose, (b) with respect
to Securities that are in certificated form, surrender the Securities to the
Exchange Agent, (c) furnish appropriate endorsements and transfer
documents if required by the Exchange Agent and (d) pay any transfer or
similar tax, if required. The date on which the Holder satisfies all such
requirements shall be deemed to be the date on which the applicable Securities
shall have been tendered for exchange.  A
holder of a beneficial interest in a Global Security must comply with the
Applicable Procedures of the Depositary in connection with an exchange.

 

If a
Holder has delivered a Change in Control Purchase notice requiring the Issuer
to repurchase all or a portion of this Security pursuant to paragraph 3 hereof
then this Security (or portion hereof subject to such Change in Control
Purchase notice) may not be exchanged.

 

5.             RANKING

 

The
Securities are senior unsecured obligations of the Issuer and shall rank
equally in right of payment with all other senior unsecured indebtedness of the
Issuer from time to time outstanding.

 

6.             DENOMINATIONS;
TRANSFER; EXCHANGE

 

(a)           This Security is issuable only in
fully registered in denominations of $1,000 and integral multiples
thereof.  This Security may be exchanged
for a like aggregate principal amount of Securities of other authorized
denominations at the Corporate Trust Office of the Trustee or in the manner and
subject to the limitations provided herein and in the Indenture, but without
the payment of any charge except for any tax or other governmental charge
imposed in connection therewith.  Upon
due presentment for registration of transfer of this Security at the Corporate
Trust Office of the Trustee, one or more new Securities of authorized
denominations in an equal aggregate principal amount will be issued to the
transferee in exchange therefor, and bearing such restrictive legends as may be
required by the Indenture, but without payment of any charge except for any tax
or other governmental charge imposed in connection therewith.  In the event of any redemption in part, the
Issuer shall not be required to:  (i) issue
or register the transfer or exchange of any Security during a period beginning
at the opening of business 15 days before any selection of Securities for
redemption and ending at the close of business on the earliest date on which
the relevant notice of redemption is deemed to have been given to all Holders
of Securities to be so redeemed, or (ii) register the transfer or exchange
of any Security so selected for redemption, in whole or in part, except the
unredeemed portion of any Security being redeemed in part.

 

7

 

In the event of a deposit or withdrawal of an interest in this
Security, including an exchange, transfer, redemption, or repurchase of this
Security in part only, the Trustee, as custodian of the Depositary, shall make
an adjustment on its records to reflect such deposit or withdrawal in
accordance with the Applicable Procedures.

 

7.             PERSONS
DEEMED OWNERS

 

The
Holder of this Security may be treated as the owner of this Security for all
purposes, and none of the Issuer, any Guarantor or the Trustee nor any
authorized agent of the Issuer, any Guarantor or the Trustee shall be affected
by any notice to the contrary, except as required by law.

 

8.             ADDITIONAL
RIGHTS OF HOLDERS

 

In
addition to the rights provided to Holders of Securities under the Indenture
and each Guarantee endorsed hereon, the Holder of this Security is entitled to
the benefits of a Registration Rights Agreement, dated as of May 28, 2008 (the “Registration Rights
Agreement”) by and between NRF and the Initial Purchasers with respect to
resales of the shares of Common Stock, if any, issuable upon exchange of the
Securities.  A copy of the Registration
Rights Agreement is available to any Holder of Securities upon request to the
Issuer.

 

If a
Registration Default, as defined in the Registration Rights Agreement, occurs
and is continuing during a period of time that the Securities are exchangeable
for shares of Common Stock, liquidated damages consisting solely of additional
interest (“Liquidated Damages”) will be paid to Holders entitled to
interest payments on such dates semi-annually in arrears on each Interest
Payment Date and will accrue from and including the day following such
Registration Default to but excluding the day on which such Registration Default
has been cured at a rate per annum equal to one-quarter of one percent (0.25%)
of the outstanding principal amount of the Securities to and including the 90th
day following such Registration Default and at a rate per annum equal to
one-half of one percent (0.50%) of the outstanding principal amount thereof
from and after the 91st day following such Registration Default.

 

In no
event will any additional interest on the Securities exceed the rate per annum
of one-half of one percent (0.50%) of the outstanding principal amount thereof.
The Issuer will not pay Liquidated Damages on any Security after it has been
exchanged for the shares of Common Stock. If a Security ceases to be
outstanding during any period for which additional interest is accruing, the Issuer
will prorate the Liquidated Damages to be paid with respect to that Security.

 

Whenever
in this Security there is a reference, in any context, to the payment of the
principal of, premium, if any, or interest on, or in respect of, any Security,
such mention shall be deemed to include mention of the payment of Liquidated
Damages payable as described in the preceding paragraph to the extent that, in
such context, Liquidated Damages are, were or would be payable in respect of
such Security and express mention of the payment of Liquidated Damages (if
applicable) in any provisions of this Security shall not be construed as
excluding Liquidated Damages in those provisions of this Security where such
express mention is not made.

 

8

 

9.             MODIFICATION
AND AMENDMENT; WAIVER

 

The
Indenture permits, with certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations of the Issuer and
the Guarantors and the rights of the Holders of the Securities under the
Indenture at any time by the Issuer, the Guarantors and the Trustee with the
consent of the Holders of a majority in the aggregate principal amount of all
Outstanding Securities affected thereby (voting together as a single
class).  The Indenture also provides that
certain amendments or modifications may not be made without the consent of each
Holder to be affected thereby. 
Furthermore, provisions in the Indenture permit the Holders of a
majority in the aggregate principal amount of the Outstanding Securities of any
series, in certain instances, to waive, on behalf of all of the Holders of
Securities of such series, certain past defaults under the Indenture and their
consequences.  Any such waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and other Securities issued upon the
registration of transfer hereof or in exchange hereof, or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

 

10.           DEFAULTS
AND REMEDIES

 

(a)           The Indenture sets forth events that
constitute an Event of Default under the Indenture.  If an Event of Default shall occur and be
continuing, there may be declared due and payable the principal amount
(together with accrued and unpaid interest) on the Securities in the manner and
with the effect provided in the Indenture. 
If certain bankruptcy or insolvency events occur and continue with
respect to the Issuer, the Guarantors, or certain Subsidiaries of the Issuer or
the Guarantors, the Securities shall automatically become due and payable in
accordance with the terms of the Indenture.

 

(b)           Notwithstanding anything in paragraph
(a) of this section, to the extent elected by the Issuer, the sole remedy
for an Event of Default relating to the failure by the Issuer to comply with
the obligation to provide certain reports as set forth in Section 5.03(b) of
the Indenture, will for the first 90 days after the occurrence of such an Event
of Default, consist exclusively of the right for Holders to receive additional
interest on the Securities equal to 0.25% per annum of the outstanding
principal amount of the Securities.  If
the Issuer so elects, such additional interest will be payable in the same manner
and on the same dates as the stated interest payable on the Securities.  The additional interest will accrue on all
outstanding Securities from and including the date on which such Event of
Default first occurs to but not including the 90th day thereafter (or such
earlier date on which such Event of Default shall have been cured or waived).
On such 90th day after such Event of Default (if the Event of Default relating
to such obligation is not cured or waived prior to such 90th day), the
Securities will be subject to acceleration as provided above.  In the event the Issuer does not elect to pay
the additional interest upon such Event of Default in accordance with this
paragraph, the Securities will be subject to acceleration as provided above.

 

(c)           In order to elect to pay the
additional interest in accordance with paragraph (b) of this section, the
Issuer must notify all Holders, the Trustee and the Paying Agent of such
election.  Upon the failure of the Issuer
to give timely such notice or pay the additional interest 

 

9

 

specified in paragraph (b) of this section, the
Securities will be subject immediately to acceleration as provided in paragraph
(a) of this section.

 

11.           WITHOLDING

 

To the
extent the Issuer determines in its sole discretion that the Issuer is required
to withhold any taxes with respect to a deemed payment or distribution with
respect to this Security on account of an adjustment to the Exchange Rate, the
Issuer shall withhold such amount from payments otherwise due hereunder to the
Holder of such Security and report such withholding to the Holder if and as
required by law.  Any amount withheld by
the Issuer pursuant to Section 5.01(c) of the Indenture with respect
to this Security shall be treated for all purposes of the Indenture and this
Security as if it had been paid directly to the Holder hereof.

 

12.           TRUSTEE
DEALINGS WITH THE ISSUER AND THE GUARANTORS

 

The
Trustee in its individual or any other capacity may become the owner or pledgee
of Securities and may otherwise deal with the Issuer, the Guarantors or an
Affiliate of the Issuer or a Guarantor with the same rights it would have if it
were not Trustee.  Any Agent may do the
same with like rights.

 

13.           CALCULATIONS
IN RESPECT OF THE SECURITIES

 

Except
as otherwise specifically stated herein or in the Indenture, all calculations
to be made in respect of the Securities shall be the obligation of the
Issuer.  All calculations made by the
Issuer or its agent as contemplated pursuant to the terms hereof and of the
Securities shall be made in good faith and be final and binding on the
Securities and the Holders of the Securities absent manifest error.  The Issuer shall provide a schedule of
calculations to the Trustee, and the Trustee shall be entitled to rely upon the
accuracy of the calculations by the Issuer without independent
verification.  The Trustee shall forward
calculations made by the Issuer to any Holder of Securities upon request.

 

14.           GOVERNING
LAW

 

The
Indenture and this Security shall be governed by and construed in accordance
with the internal laws of the State of New York.

 

10

 

ASSIGNMENT FORM

 

To
assign this Security, fill in the form below:

 

I or
we assign and transfer this Security to

	
   

  
	
   

  
	
  (Insert assignee’s soc.
  sec. or tax I.D. no.)

  
	
   

  
	
   

  
	
  (Print or type
  assignee’s name, address and zip code)

  

 

and irrevocably appoint

 

 

agent to transfer this Security on the books of the Issuer. The agent
may substitute another to act for him or her.

 

	
   

  	
  Your Signature

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  (Sign exactly as your name appears on the 

  other side of this Security)

  
				

 

* Signature guaranteed by:

 

	
  By:

  	
   

  	
   

  

 

*                 The signature
must be guaranteed by an institution which is a member of one of the following
recognized signature guaranty programs:  (i) the
Securities Transfer Agent Medallion Program (STAMP); (ii) the New York
Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion
Program (SEMP); or (iv) such other guaranty program acceptable to the
Trustee.

 

11

 

EXCHANGE
NOTICE

 

To
exchange this Security for Common Stock of NRF, check the box:

 

To exchange
only part of this Security for Common Stock of NRF, state the principal amount
to be exchanged (must be $1,000 or an integral multiple of $1,000): 
$              .

 

The undersigned Holder of this Security hereby irrevocably exercises
the option to exchange this Security, or any portion of the principal amount
hereof (which is U.S. $1,000 or an integral multiple of U.S. $1,000 in excess
thereof, provided that the unconverted portion of
such principal amount is U.S. $1,000 or any integral multiple of U.S. $1,000 in
excess thereof) below designated, into shares of Common Stock in accordance
with the terms of the Indenture referred to in this Security, and directs that
such shares, together with a check in payment for any fractional share, any
Interest Make-Whole Payment, if and as applicable and any Securities
representing any unconverted principal amount hereof, be delivered to and be
registered in the name of the undersigned unless a different name has been
indicated below. If shares of Common Stock or Securities are to be registered
in the name of a Person other than the undersigned, the undersigned will pay
all transfer taxes payable with respect thereto.

 

If you
want the stock certificate made out in another person’s name, fill in the form
below:

 

	
   

  
	
  (Insert assignee’s soc.
  sec. or tax I.D. no.)

  
	
   

  
	
   

  
	
  (Print or type
  assignee’s name, address and zip code)

  

 

	
   

  	
  Your Signature

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  (Sign exactly as your name appears on the 

  other side of this Security)

  
				

 

* Signature guaranteed by:

 

	
  By:

  	
   

  	
   

  

 

*                 The signature
must be guaranteed by an institution which is a member of one of the following
recognized signature guaranty programs:  (i) the
Securities Transfer Agent Medallion Program (STAMP); (ii) the New York
Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion
Program (SEMP); or (iv) such other guaranty program acceptable to the
Trustee.

 

12

 

SCHEDULE OF EXCHANGES OF SECURITIES

 

The
following exchanges, redemptions or purchases of a part of this Global Security
have been made:

 

	
  Principal Amount of this

  Global Security

  Following Such Decrease

  Date of Exchange (or

  Increase)

  	
   

  	
  Authorized Signatory of

  Securities Custodian

  	
   

  	
  Amount of Decrease in

  Principal Amount of this

  Global Security

  	
   

  	
  Amount of Increase in

  Principal Amount of this

  Global Security

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

13

 

CERTIFICATE
TO BE DELIVERED UPON EXCHANGE OR REGISTRATION

OF TRANSFER OF RESTRICTED SECURITIES

 

Re:          11.50% Exchangeable Senior Notes due
2013 (the “Securities”) of NRFC NNN Holdings, LLC.

 

This certificate relates to
$         principal amount of
Securities owned in (check applicable box) 

 

o
book-entry or o
definitive form by (the “Transferor”).

 

The
Transferor has requested a Registrar or the Trustee to exchange or register the
transfer of such Securities.

 

In
connection with such request and in respect of each such Security, the
Transferor does hereby certify that the Transferor is familiar with transfer
restrictions relating to the Securities as provided in Section 2.14 of the
Indenture dated as of May 28, 2008 among NRFC NNN Holdings, LLC, as Issuer, NorthStar
Realty Finance Corp., NorthStar Realty Finance Limited Partnership and NRFC
Sub-REIT Corp., as Guarantors, and Wilmington Trust Company, as trustee (the “Indenture”),
and the transfer of such Security is being made pursuant to (check applicable
box):

 

	
  o

  	
   

  	
  Such Security is being acquired for the Transferor’s
  own account, without transfer.

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Such Security is being transferred to the Issuer, a
  Guarantor or a Subsidiary (as defined in the Indenture) of the Issuer or a
  Guarantor.

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Such Security is being transferred to a person the
  Transferor reasonably believes is a “qualified institutional buyer” (as
  defined in Rule 144A or any successor provision thereto
  (“Rule 144A”) under the Securities Act) that is purchasing for its own
  account or for the account of a “qualified institutional buyer”, in each case
  to whom notice has been given that the transfer is being made in reliance on
  such Rule 144A, and in each case in reliance on Rule 144A.

  

 

14

 

	
   

  	
   

  	
  The Transferor acknowledges and agrees that, if the
  transferee will hold any such Securities in the form of beneficial interests
  in a Global Security, then such transfer can only be made pursuant to Rule 144A
  under the Securities Act and such transferee must be a “qualified
  institutional buyer” (as defined in Rule 144A).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Transferor hereby acknowledges and agrees that
  its obligation to indemnify the Issuer, each Guarantor and the Trustee under
  the Indenture against any liability that may result from the transfer
  described herein being in violation of the Indenture and/or applicable United
  States federal or state securities laws shall survive the transfer described
  herein.

  

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  (Insert Name of Transferor)

  
	
   

  	
   

  

15

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